PRESS DIGEST - Financial Times - Oct 3

Financial Times

CITY INFLUENCE WOULD INCREASE UNDER CAMERON

According to new research, a Conservative election win would change the complexion of the House of Commons and see the City extend its influence, with at least 50 MPs coming from financial services backgrounds. This would end the current dominance of MPs who hail from teaching and the public services. Byron Criddle, co-author of the Almanac of British Politics which conducted the research, said: "The new Commons, with whatever size of Conservative victory, will see the reasserted dominance of the private sector over the public sector MP."

LONDON LURES MIDEAST BUYERS

The first half of the year saw Middle Eastern investors comprising the majority of investors in the London commercial property market. London has traditionally been the foreign base of Arab investors and, while falling oil prices have dampened their appetite for foreign investment, 25-year lows in valuations have proved the lure. The value of Arab investment in the UK, which is primarily focused on London, rose four percent to 2.8 billion dollars in the first half of 2009.

HOPES REST ON MOOD OF SPENDERS AND LENDERS

With a number of indicators suggesting the UK consumer is more inclined to save than spend in the current climate, there is concern this thriftiness could damage the nascent recovery. The prospects for a recovery also hinge on the health of the financial sector and, in particular, banks' willingness and ability to lend. Data provides a mixed picture, with the Bank of England's credit conditions survey showing mortgage lending in the three months to early September tightened, despite a rise in the number of home loans. The survey also showed banks were generally inclined to lend to big business, leaving small firms searching for funding.

CLOCK TICKING FOR XSTRATA CHIEF DAVIS TO STATE TERMS

After the Takeover Panel imposed an October 20 deadline, shareholders are waiting to see whether Xstrata (XTA.L) goes ahead with its "merger of equals" bid approach for rival Anglo American (AAL.L) or decides to make a premium offer. Under the Takeover Panel's ruling, Xstrata must clarify its position before the deadline or walk away from the deal for six months. The news is likely to spark another flurry of analyst comment on the merits of a tie-up between the two.

IPHONE CALLING

Both Vodafone (VOD.L) and Orange [ORNGF.UL] struck deals with Apple (AAPL.O) this week to sell the U.S. technology group's iPhone product in the UK market. The news comes as a blow to their rival O2, which until recent events, had exclusivity of the product. Analysts have suggested the new deals could spark a price war. Orange will start selling the device in November, taking advantage of the lucrative Christmas market, while Vodafone will begin selling iPhones in the new year.

SQUEEZING THE SUPERMARKET GIRDLE

The Competition Commission's call for a so-called competition test designed to curb the dominance of any one supermarket in a single area has divided opinion among the supermarkets themselves. Tesco (TSCO.L) said the commission has made the "wrong" decision, but Asda welcomed the test as it would benefit because it has the smallest number of stores. Sainsbury (SBRY.L) supports the test but is unhappy that it applies to larger extensions, but Morrison (MRW.L) is pleased with this particular detail. However, Greg Lawless, analyst at Collins Stewart, believes the test is irrelevant as "the horse has bolted" and Tesco already has a 30 percent grocery market share.

FASHION SHOWS OVERSEAS VAGARIES

Two of Britain's biggest fashion high street names have experienced contrasting fortunes in their overseas operations. Aurora, which owns Karen Millen and Oasis, said trading in France was "spectacular" while French Connection (FCCN.L) announced the closure of all of its 21 stores in Japan in an attempt to stem losses. Aurora's chairman Derek Lovelock said trading in Europe was encouraging, with particular emphasis placed on Germany and Spain. French Connection said its withdrawal would cost 2.5 million pounds with up to 200 job losses.

POWERLEAGUE BACKS PATRON TAKOVER OFFER

Five-a-side football operator Powerleague POPWR.L has recommended a 52 pence a share takeover offer from Patron Capital Partners, its leading shareholder, which values the company at 42.5 million pounds. The company finished the year to July 4 with net debt of 36 million pounds, while full-year pre-tax profits dropped from five million pounds to 3.7 million pounds on revenue up from 26 million pounds to 31 million pounds. Broker WH Ireland said the offer "fundamentally undervalued" Powerleague.

HELPHIRE DROPS 149 MILLION POUNDS INTO RED

Helphire (HHR.L) reported a loss of 149 million pounds in the year to June. This contrasts with the pre-tax profit in 2007-08 of 43 million pounds. The latest loss includes a 62.4 million pound provision against historic problem cases and it incurred 11.8 million pounds in restructuring costs as 800 jobs were axed and an 8.4 million pound charge as the vehicle fleet was reduced to 16,500 from 19,000. Founder Michael Jackson described the events that resulted in the loss as what "might almost be called a perfect storm".

NORTHERN FOODS BATTLES TO FIND RECIPE FOR SUCCESS

Food producer Northern Foods (NFDS.L) has not been immune to the recession, but sales of Fox's biscuits have increased eight percent in the year to March and sales of pizzas have also risen as consumers choose to stay home and eat. However, the key market of ready meals has fallen two percent in the year to March and the company was forced to close factories that supplied meals to Marks and Spencer (MKS.L) and Morrison (MRW.L). Northern Foods chief executive Stefan Barden believes further consolidation is probable in the 1.5 billion pound-a-year ready meal industry as food producers struggle to make a profit.

Prepared for Reuters by Durrants