News

Every single member of the FTSE 100 is in the red this morning in the wake of the collapse of US investment bank Lehman Brothers and the run for cover by "The Thundering Herd", Merrill Lynch.

Former Wall Street giant Lehman is to file for Chapter 11 bankruptcy after frenetic attempts to find a buyer for the struggling investment bank come to nothing.

The Chapter 11 filing will not include its broker-dealer operations and other units, including Neuberger Berman, which remain up for sale. Plans to sell its investment operation also remain ongoing.

UK bank Barclays confirmed it had considered a combination with Lehman but did not proceed with a proposal. "We confirm that Barclays considered a combination with Lehman Brothers and did not proceed because it was not possible to conclude a transaction in the best interests of Barclay's shareholders," said Barclays.

Meanwhile, Bank of America has agreed to buy investment bank Merrill Lynch, the world's largest broker, for $50bn.Most experts agree that Merrill chairman John Thain was left with little option given the perilous state of the US financial system and $50bn of write-downs at the Thundering Herd since the credit crisis began just over a year ago.

Not surprisingly, banks are bearing the brunt of the damage today. In an attempt to ease liquidity concerns the European Central Bank offered financial institutions additional funds this morning and called for bids at a minimum rate of 4.25%, while the Swiss central bank has also offered additional liquidity through its overnight facility. The Bank of England has also said it is ready to take appropriate action to soothe the money markets.

HBOS, Barclays and Royal Bank of Scotland are all sharply lower, with the latter drawing scant support from broker Collins Stewart's recommendation to short Barclays and go long on RBS.

Insurers are also weak as AIG struggles with funding problems. Old Mutual, Friends Provident and Prudential lead the sector lower.

Hedge fund manager Man Group also gets pounded, while outside of the financial sector housebuilders get pummelled on fears that the latest blow to the banking system will result in a renewed tightening of credit availability.

With the consolidation of its blue-chip client base financial information firm Thomson Reuters is on the back foot while at the smaller end of the market trading systems provider Fidessa also retreats.

Computer games developer SCi Entertainment suffered a big drop in revenue during a year that saw the Tomb Raider and Championship Manager firm raise cash and cut costs to keep going.

Coffeeheaven International, which operates coffee bars in central Europe, said to date it has experienced only a limited effect from the credit crunch as it narrowed losses for the full year. Pre-tax losses for the year to March were £70,000 from the £137,000 loss last year on sales that increased 63% to £16.4m. Like-for-like increased 16%. "Sales growth in most of our markets remains robust and Coffeeheaven, as central Europe's market leader, continues to improve market share," said the group.

Consultancy group White Young Green boosted full year pre-tax profit by 26% to £16.8m and boasted strong double digit organic growth. Revenue was up 28% to £282.1m, of which £22.4m came from acquisitions completed during the year.

Aggregates group Ennstone reports trading in recent weeks has shown a further marked deterioration and results are likely to be substantially behind current market forecasts for the year ended 31 December 2008.

Communications technology group Spirent is to return up to £50m to shareholders by way of a tender offer. The range has been set at between 70p and 85p per share inclusive, in increments of 1 penny only. The offer will close at 3pm on 14 October.

Heritage Oil is a rare bright spot after the Government of Tanzania approved farm-ins to four exploration licenses and the transfer of operational responsibilities to the group.

Support services firm to the energy sector Hargreaves Services is another winner after it delivered another set of record results with revenue, profits and margins improving in all divisions.

NHS staff supplier Nestor Healthcare is poorly after it agreed to sell its Carewatch business for up to £37m, subject to shareholder approval.