Wednesday evening business news

Oct 8 2008 By Graeme King

North East business leaders have welcomed the Bank of England’s dramatic decision to slash interest rates by 0.5%.

The snap decision by the Bank - a day earlier than expected - came as the Treasury announced a £50bn bail-out of the banking system.

The Bank’s half-point cut is the first such move since the aftermath of the 9/11 terror attacks in November 2001.

The Bank is acting to cut rates alongside the European Central Bank, the US Federal Reserve and central banks in Canada, Sweden and Switzerland.

James Ramsbotham, chief executive of the North East Chamber of Commerce, said: ``This is an unprecedented move during an unprecedented period in global financial affairs.

``NECC strongly welcomes such a bold step and we hope it will inspire the activity needed to restore both confidence and financial liquidity to the market.

``It is crucial that confidence is maintained and we hope this cut will help to stimulate investment as we still believe that the region is better placed to cope with the challenges of an economic downturn than in previous decades due to the diversity of its economic activity and its considerable export success.”

Global recession fears have sent oil prices to their lowest level for almost a year.

Light, sweet crude for November delivery traded on the New York Mercantile Exchange (Nymex) dipped as low as $86.05 a barrel amid fears the global credit crisis would weaken demand. That was the lowest price since October 23 last year.

Crude ticked up a couple of dollars after co-ordinated action by central banks to cut interest rates by 0.5%, hovering around $88.50. Lower rates could tempt more investors to opt for oil rather than other investments.

In London, November Brent futures fell to $81.84, their lowest level since the middle of October.

Oil prices still remain around 40% less than the $147 high recorded three months ago.

Billionaire businessman Joe Lewis has become a major shareholder in Harvester and All Bar One owner Mitchells & Butlers.

He has secured a near 22% stake in Mitchells after property tycoon Robert Tchenguiz was forced to sell most of his holding because of his exposure to the collapse of Icelandic bank Kaupthing.

The bank is one of Mr Tchenguiz’s financial backers and called back a loan, prompting the sale of the Mitchells stake. Market speculation suggested that Mr Tchenguiz’s 10% stake in supermarket Sainsbury’s had also been sold.

Mr Lewis suffered his own credit crunch blow this year after he lost more than £500 million in the cut-price buyout of US bank Bear Stearns. He was the second largest shareholder with a near 10% stake.

The British-born entrepreneur, who is based in the Bahamas, holds investments in Tottenham Hotspur as well as a host of other worldwide companies.

The pound at 5pm was 1.7300 dollars compared to 1.7589 dollars at the previous close.

The euro at 5pm was 0.7905 pounds compared to 0.7752 pounds at the previous close.

The FTSE-100 index at the close was down 238.53 at 4366.69.