PRESS DIGEST - Financial Times - June 3

The Financial Times

MORTGAGE APPROVALS SUFFER STEEP FALL

Data released on Monday by the Bank of England reveals that the number of mortgage approvals has more than halved since its peak at the end of 2006. The number approved for house purchases fell from 63,000 in March to 58,000 in April, 55 per cent below the peak of almost 130,000 in late 2006. The drop was greater than expected, after the British Bankers' Association said that approvals by their members had risen slightly in the same period. There was a resurgence in remortgage approvals, however, the monthly increase in net mortgage lending also fell from 6.7 billion pounds to 6.4 billion pounds, well below the six-month average.

BRITISH WIN ORDERS BACK FROM CHINA

Research conducted by the Financial Times has found that British manufacturers are winning back work from China as customers are finding the cost of using Chinese producers higher than expected. Smaller customers buying products and components from China are often finding that the lower prices quoted are outweighed by the additional costs of shipping and quality control issues that are expensive to resolve. Prices of Chinese manufacturing are also rising, John Dean, industrials analyst at Jeffries stockbrokers, says that the cost increases are a reflection of improving quality in Chinese manufacturing.

CHANCELLOR BOWS TO FOREIGN PROFITS CONCERNS

Alistair Darling has agreed to give a new forum of multinationals a 'key input' in shaping proposals to changes to the taxation of foreign profits. The chancellor initially intended the new working group to focus primarily on long-term taxation issues but on Monday the Treasury said that the group, which is dominated by eight multinational executives, would have a significant say on the final proposals that are put out for consultation. The 'key input' decision follows threats of a potential exodus of companies from the UK if the initial Treasury tax proposals are not substantially rewritten.

FOREIGN INVESTORS 'LOSING FAITH' IN STERLING

Bank of England data for April showing that non-residents sold off UK gilts and Treasury bills at the fastest rate for over five years suggests that foreign investors may be losing confidence in the underlying strength of the British economy. In April, non-residents sold a net 2.3 billion pounds of T-bills and gilts and the sell-off follows a long period in which countries with growing foreign exchange reserves have increased their holdings in sterling, and sovereign wealth funds have invested in sterling assets. If the trend continues, the pound may become more vulnerable.

SQUEEZE FUELS VAIN QUEST FOR COMPANY CHANGE

A study by the Economist Intelligence Unit has found that senior executives in large British businesses are responding to the credit squeeze by increasing spending on 'change programmes', many of which are doomed to fail. The programmes involve training employees in new ways of working. The search for efficiency is driving the trend which has seen British companies included in the survey spending 5.43 million pounds on change initiatives in the past year. However, despite the growing number of such programmes, 64 per cent of UK respondents to the survey said that half or fewer of those they had undertaken in the past five years had been a success.

NISSAN TO BE GIVEN FUNDING FOR SMALL SUV

Nissan (7201.T) is to announce on Tuesday that, with help from the government, it is bringing production of a new small sport utility vehicle to its Sutherland plant. People familiar with the plans says that Gordon Brown is to meet Nissan's chief executive Carlos Ghosn in London to announce a package of support that will include grant assistance. The new model is expected to be produced in volumes of at least 100,000. Nissan's Sunderland plant has remained one of the company's most productive plants worldwide and the recent weakening of the pound against the euro has helped the plant in its bid for the new vehicle.

SHELL JOINS ARROW IN AUSTRALIAN GAS PROJECT

Royal Dutch Shell (RDSa.L) is to join forces with Arrow Energy to develop projects in Australia and internationally. Shell is to invest up to 776 million Australian dollars to buy 30 per cent of Arrow's coal bed methane acreage in Queensland and 10 per cent of its international assets, including sites in India, China, Vietnam and Indonesia. Shell has a five-year option to acquire up to 50 per cent of individual Arrow projects. Shell's chief executive, Jeroen van der Veer, said more challenging resources were becoming important to big international oil companies. Arrow's shares rose 14 per cent in Sydney on Monday and Shell's fell 17 pence to 21 pounds.

CHLORIDE PROFITS BOOST