PRESS DIGEST - Financial Times - June 5

Financial Times

HOUSE PRICE INDEX POINTS TO GAINS

House prices rose by 2.6 percent in May to an average of 158,565 pounds, the largest month-on-month rise in seven years and the 11th-largest rise since the survey began in 1983. However, the gain came on the back of three months of steep declines, with prices in the quarter to the end of May still down 3.1 percent on the previous quarter and down 21 percent from their mid-2007 peak. Previous property crashes have also seen occasional gains; prices fell by 11 percent during 1991 and 1992, but still managed five months of gains during that period.

NEW CAR SALES FALL 25 PERCENT AS SCRAPPAGE LAUNCHES

The government's vehicle scrappage plan has failed to turn around new car sales, with figures down for the thirteenth consecutive month in May, and down 24.8 percent on a year ago. The Society of Motor Manufacturers and Traders said that, since the scheme began on May 18, 35,000 cars had been ordered, but that the orders would take time to turn into higher registration numbers. Car sales across western Europe were down 4.2 percent year-on-year in May.

SMOKERS COST BUSINESS TWO BILLION POUNDS

An NHS-funded study published on Friday found that smokers cost British business more than two billion pounds last year. The London School of Economics calculated that smoking-related illness absences cost business 1.1 billion pounds, while a further 914 million pounds was lost to smoking breaks, with the cost of smoking-related fire damage at 133 million pounds. The report also argued that annual indirect losses, such as damage to the company's image and dissatisfaction among non-smoking co-workers, could amount to a further 1.1 billion pounds.

CHINALCO READY TO WALK AWAY FROM RIO

State-backed aluminium company Chinalco is to back out of its 19.5 billion dollar investment in Rio Tinto(RIO.L), a deal which would have been China's largest foreign investment, following a Rio board meeting on Thursday to examine alternative ways of raising capital. Rio will now look to raise around 12 billion dollars through an issue of new shares to investors. A joint venture with rival BHP Billiton(BLT.L), which would combine both companies' iron ore assets in Australia's Pilbara region, is also a possibility.

MATTHEY SUFFERS CATALYTIC DECLINE

Johnson Matthey(JMAT.L), the world's leading supplier of catalytic converters to the automotive industry, has maintained its final dividend after a strong first-half performance was followed by a steep fall in demand in the second half. Chief executive Neil Carson would not predict when demand for autocatalysts would recover, but said that the firm had acted quickly to make ten million pounds' worth of savings from its worldwide network of suppliers, on top of a headcount reduction from 4,000 to around 3,500 in its autocatalyst business.