Friday evening's business news

Oct 10 2008 By Graeme King

London’s FTSE 100 Index has slumped almost 9% in Friday’s trading to cap the worst week for blue chip shares since ``Black Monday“ in 1987.

The Footsie fell 381.7 points to 3932.1, the index’s lowest level since May 2003.

It follows plunges of 8% on Monday, 5% on Tuesday and 1% yesterday - and means the index has dived a 21% this week alone, wiping £250bn off the market values of Britain’s biggest firms.

The bloodbath came amid mounting fears over a deep economic downturn and further uncertainty for the battered banking sector. More heavy falls for New York’s Dow Jones Industrial Average following yesterday’s 7.3% slump also aggravated the trading woes in London.

Banks dominated the Footsie’s numerous fallers amid few signs that the Government’s huge bail-out announced on Wednesday was having any impact.

Royal Bank of Scotland plunged 25%, or 24.3p to 71.7p, with Halifax Bank of Scotland not far behind, down 19%, or 29.3p to 124.2p.

Barclays was 14% lower, or 34.25p to 207.5p as it said it was considering a number of capital raising options in light of the UK government’s £25 billion industry-wide recapitalisation offer.

Barclays has confirmed it is looking at a range of options to boost its finances amid speculation the bank may go to existing investors before drawing on the Government’s £50bn rescue fund.

The under-pressure banking giant is reported to be planning to tap backers such as sovereign wealth funds in the Middle East and Asia for more cash in preference to being part-nationalised by the Government.

The UK’s major banks and biggest mutual, Nationwide Building Society, have agreed to increase their capital strength by a combined £25bn by the end of the year.

But not all the institutions that have so far signed up intend to use taxpayers’ money. HSBC has already said it would be able to fund the move through internal resources and only yesterday gave its UK arm a £750m capital lift.

Barclays says it is “considering a number of options, including capital raising“ relating to the industry-wide commitment to increase Tier 1 capital ratio - a key measure of a bank’s financial strength.

Administrators for home furnishing chain Rosebys have announced the closure of another 31 stores with the loss of 186 jobs.

A further 87 jobs have been axed from a distribution centre in Selby, North Yorkshire, which has also been closed.

Howard Smith, joint administrator of Rosebys, said the redundancies were made with ``regret“ but added that talks continued over the rest of the business.

Rosebys, which went into administration last month, had 280 stores country-wide and generated sales of around £100 million a year.

But it was hit by the downturn in consumer spending and lost £6 million in the year to March 31. The firm failed to claw back lost profits, and owes trade creditors around £11.7m and inter-company creditors £19m.

The pound at 5pm was 1.7011 dollars compared to 1.7222 dollars at the previous close.

The euro at 5pm was 0.7911 pounds compared to 0.7929 pounds at the previous close.

The FTSE-100 index at the close was down 381.74 at 3932.06.