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: Quote, Profile, Research, Stock Buzz) 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.