PRESS DIGEST - Financial Times - May 29

The Financial Times

HUTTON RULES OUT FURTHER WORK LAWS

In a speech to the Fabian Society on Thursday, Business Secretary John Hutton will attempt to allay business fears following this month's deal to give temporary and agency workers equal rights to those of permanent staff after 12 weeks' employment. Hutton will say "many people may hope -- and equally many will fear -- that the agreement on agency workers is the start of a new wave of employment regulation from government. It is not." He will also say the agency workers deal marks "the successful completion of perhaps one of New Labour's most important objectives to create the right framework of employment protection without compromising our essential labour market flexibility".

LENDERS INCREASE COST OF FIXED-RATE MORTGAGES

It is feared continued market uncertainty will force lenders to start pulling mortgage deals once again after Abbey and Woolwich both pushed up the cost of their fixed-rate mortgages on Wednesday. Abbey, owned by Spanish bank Santander (SAN.MC), raised its mortgage rates by an average of 0.44 percent while Woolwich, owned by Barclays (BARC.L), pushed up the price of its 10-year and two-year fixed rate mortgages. Both lenders cited the rising cost of the swap rates taken out to hedge the risk of offering fixed-rate deals to consumers, which have increased by 0.63 percent in the last two weeks, as a reason for their moves. Woolwich also said it wanted to manage its volumes of new business.

BUSINESS CALLS FOR FOREIGN OFFICES TO STAY AS SHOWCASE

London mayor Boris Johnson has been urged by business not to close the Greater London Authority's overseas offices, located in Caracas, Delhi, Mumbai, Beijing, Shanghai and Brussels, after he announced a review of their "strategic role and costs". Johnson said the review of the offices would look into "which functions could be performed by the UK's foreign embassies" and whether they "deliver value for money". The London Chamber of Commerce and Industry on Wednesday described the international outposts as "champions of London business" and called for them to be spared.

BG NEAR 6.2 BILLION POUND DEAL FOR ORIGIN

Origin (ORG.AX), Australia's second-largest gas and electricity supplier, on Wednesday requested its shares be suspended pending an announcement that was likely to be "material" to its share price. Last month BG Group (BG.L), the UK oil and gas exploration company, made an unsolicited 14.70 Australian dollar a share and cash offer for Origin, which Origin chief executive Grant King described as "not at all challenging". BG has been forced to lift its price in recent days to more than 15 Australian dollars a share and barring last-minute hitches, an agreed offer for Origin could be announced as early as Thursday. Prior to their suspension, shares in Origin last traded at 14.60 Australian dollars.

SHAFTESBURY SUFFERS ITS FIRST LOSS IN 16 YEARS

The fall in UK property prices has seen West End property specialist Shaftesbury (SHB.L) suffer its first pre-tax loss for 16 years. The company, which owns more than 400 properties across Chinatown, Covent Garden and Carnaby Street, returned a 93.6 million pound loss after the value of its properties fell 6.3 percent. Jonathan Lane, chief executive, said: "We expect yields to continue to rise, and values to fall, and for this to go on for probably longer than people think."

VIRGIN RADIO BRAND NAME COULD DISAPPEAR

Absolute Radio, which is backed by Irish investors and Bennett Coleman, owner of the Times of India group, is closing in on a deal for the SMG SCSMG.L owned Virgin Radio. The sale price is expected to be in the region of 50 million pounds to 60 million pounds, and may result in Virgin Radio disappearing as a nationwide brand. Absolute will use another name for the station, but Virgin Radio is likely to reappear in a different form, possibly as an FM station in a number of regions, along the lines of Global Radio's Heart.

CABLE AND WIRELESS MAKES APPROACH FOR SMALLER RIVAL THUS

Shares in telecoms company Thus THUS.L rose 28.5 pence to 138.5 pence on the news of an informal offer it received from its bigger rival Cable and Wireless (CW.L). The latter said it had made a "preliminary approach to the board of Thus in relation to a possible offer". With C&W being interested in Thus's customer base, which includes Scottish Power and Johnston Press, the approach could result in a much-needed consolidation among telecoms firms serving companies rather than consumers. "The main advantage for C&W is scale," said Gartner analyst Neil Rickard. He said that by combining with Thus, C&W would be able to compete better with BT (BT.L), its bigger competitor.

ICG PLANS TO RAISE ONE BILLION POUNDS FOR NEW RECOVERY FUND