Wednesday lunchtime business bulletin

Oct 8 2008 By Karen Dent

The Bank of England dramatically slashed interest rates by 0.5% today along with central banks around the world in response to the global financial turmoil.

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.

Sainsbury’s saw its shares tumble today after analysts worried that strong trading figures from the supermarket chain will be as "good as it gets".

The company posted like-for-like sales growth of 4.3% for the 16 weeks to October 4, which was slightly better than market expectations.

But analysts seized on chief executive Justin King’s comments that the economic environment was "particularly challenging" and that the company expected this to continue throughout the second half.

Panmure Gordon stockbrokers said today’s figures were above expectations. "However, we think that this is as good as it gets and see margin pressure evolving over the next 12 months," it added.

The stock was down by more than 10% in a depressed market.

Chocolate maker Thorntons unwrapped a 6.4% rise in quarterly sales today as consumers continued to buy treats in the economic downturn.

Price rises also boosted the chain after own store sales improved by 4.9% to £26.6m in 14 weeks to October 4 - an increase of 0.9% on a like-for-like basis. Sales at franchise stores increased 2.4% to £3.4m, while business through supermarkets and other retailers grew 11% to £14.5m.

Today’s figures represented the eighth quarter in a row of growth as the company continued to benefit from a renewed focus on its product range.

The confectioner last month said new products and a brand overhaul helped increase its appeal to consumers, while it has also launched new product areas such as ice cream in a bid to reduce dependency on Christmas and Easter.

The pound at midday was US$1.7453 compared to US$1.7589 at the previous close, while the euro at midday was £0.7801 compared to £0.7752 at the previous close.