Friday lunchtime business bulletin

Sep 26 2008 By Andrew Mernin

A nervous London market fell back into the red today with all eyes fixed on progress towards a banking rescue in the United States.

The FTSE 100 Index posted a rare winning session on Thursday amid optimism over a deal, but sank lower today with no firm news from Washington.

By the mid-session the Footsie was almost 2% lower, or 98.4 points, to 5098.6, with futures markets pointing to a difficult opening on Wall Street.

Among European indices, France’s CAC 40 and the German Dax traded around 2% lower.

In London, banking and insurance shares were unsurprisingly among the leading fallers as traders looked for a lead from the US Government.

Bank of England moves alongside other central banks to inject liquidity did little to lift the gloom.

Struggling furnishings chain MFI today faces a crucial weekend amid ongoing efforts to secure the future of the business.

MFI, which was bought by current owner Merchant Equity Partners for £1 in 2006, has been hit by a sharp fall in demand for big-ticket goods but faces a quarterly rent bill on Monday.

The business has reportedly written two letters to its landlords - one asking for a rent-free period, and the other saying it wants to continue trading despite going into administration - according to an email circulating among property sources cited by the Daily Telegraph.

MEP declined to comment but it is understood that four main options are likely to be weighed up over the weekend - a management buyout, further cash from existing investors, a sale to another private equity firm, or administration.

MFI, which is headquartered in north London, has around 3,100 staff and 185 stores.

JJB Sports lost more than half its market value today after worse than expected results fuelled worries about its finances.

Shares were down 60% after JJB axed its half-year dividend and interim losses of £9.7m led City analysts to slash full-year forecasts.

JJB was also forced to refute claims that it was in breach of a covenant relating to a £15m banking facility with Bank of Scotland.

Investors were earlier spooked by company auditor Deloitte & Touche’s view in the results that there were "material uncertainties which may cast significant doubt about the group’s ability to continue as a going concern".

The pound at noon was US41.8388 compared to US$1.8411 at the previous close while the euro at noon was £0.7929  compared to £0.7952 at the previous close.