PRESS DIGEST - Financial Times - May 8

The Financial Times

EUROPE AND U.S. UNITE ON DOLLAR RISE

Senior eurozone officials believe the dollar-euro rate has reached levels unhelpful in both the United States and Europe and have told the Financial Times that both sides of the Atlantic now have a united desire to see the dollar strengthen against the euro. Policy-makers want to avoid a situation in which the dollar falls too far before snapping back as investors realise the United States is not heading for a depression and that Europe's economy is also starting to soften. Abrupt currency fluctuations could fuel instability in financial markets. Officials also want to avoid dollar weakness reinforcing the rise in oil prices.

FACTORY OUTPUT FALLS AFTER PERIOD OF GROWTH

Data from the Office for National Statistics reveals that after two months of strong growth, there was an unexpected fall in manufacturing output in March of 0.5 percent. The Bank of England is unlikely to give too much weight to volatile monthly movements, but the data follows surveys suggesting growth has slowed close to a standstill in both manufacturing and services. The National Institute of Economic and Social Research said it expected GDP growth to remain constant at 0.4 percent in the three months to April, but added "slower growth could emerge" in the following month.

ECONOMIC UNCERTAINTY SEES FALL IN PRICE OF TOP LONDON HOMES

Property agent Savills (SVS.L) has said economic uncertainty and the squeeze on City jobs is putting pressure on the value of upmarket homes in London. There was a 1.5 percent drop in the first quarter in the price of London homes costing over one million pounds, and this follows a two percent fall in the last quarter of 2007. However, the market for homes above four million pounds in London performed much better in the first quarter, being the only sector to show growth. Savills reported a sharp fall in transaction volumes for the company's residential businesses in London and that falls were less dramatic in the rest of the country.

CARBON PERMITS TO COST 1.6 BILLION POUNDS

The CBI estimates businesses will spend around 1.6 billion pounds between now and 2012 on buying carbon permits. On Wednesday, the employers' body called for the government to spend the money on environmental initiatives. Most of the money will come from electricity companies which will be forced to buy at auction some of the carbon permits they need under the European Union's emissions trading scheme.

BT TRIES TO RECHARGE ITS CONSUMER MOBILE STRATEGY WITH SMARTPHONE

BT (BT.L) unveiled a Blackberry-type handset in an attempt to breathe new life into its faltering mobile phone strategy. The handset, called BT ToGo, offers wireless Internet access, music and video playbacks, voice calls and instant messaging. Analysts, however, have questioned the likely popularity of the handset and some have said the Web surfing experience could be poor. Since the 2001 demerger of its wireless phone business, BT has struggled to find a successful mobile strategy for the consumer market and has sought increased sales by supplying telecoms networks and IT services to multinational companies. The handset will be available only to the group's fixed-line broadband customers.

TCHENGUIZ INCREASES M&B STAKE

Property entrepreneur Robert Tchenguiz has purchased a further three percent in Mitchells & Butlers (MAB.L). His holding now stands at slightly less than 27 percent. The stake increase comes less than two weeks before the pub group is scheduled to announce the outcome of its strategic review. Tchenguiz has been in conflict with M&B's management as he wants the group to realise the value of its property assets. People familiar with the situation say M&B is keen to maintain its independence and the company has been talking to a number of private equity groups about taking stakes of up to 29.9 percent.

BHP COULD SELL 50 BILLION DOLLARS OF ASSETS IF IT CAPTURES RIO

The chief executive of BHP Billiton (BLT.L), Marius Kloppers, has said the company may sell more than 50 billion dollars worth of assets if it succeeds in taking over rival Rio Tinto (RIO.L). Kloppers said he was confident of getting takeover approval from the European Union's competition regulators "in the fourth quarter" of this year. Big customers have expressed concern about the pricing power a combination of the two companies would have in the iron ore market, but Kloppers said he is confident he can persuade the European Commission that a combined BHP-Rio would not be able to set prices.

FOCUS ON EMERGING MARKETS SUSTAINS BAT