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.

LLOYDS FACES PENSION DEMAND

The LTU union has demanded that Lloyds Banking Group(LLOY.L) provides a written guarantee that it will keep its final salary pension open for the scheme's existing 30,000 members. The LTU - the union with the largest membership amongst Lloyds' employees - made the demands following growing concern that Lloyds could follow rival Barclays(BARC.L) in closing its final salary scheme to existing members. Separately, a number of Lloyds shareholders have formed Lloyds Action Now -- a company limited by guarantee -- and have instructed solicitors to examine grounds for a legal action to recover losses to their investments incurred as a result of Lloyds' merger with HBOSHBOS.L.

CVC SELLS DEBENHAMS SHARE STAKE

The private equity group CVC Capital Partners, one of the two main shareholders in Debenhams(DEB.L), has used a 323 million pound share placing and open offer to sell a tranche of shares in the department store chain. The placing of the shares on Thursday by CVC was mired in confusion after Debenhams' chief executive, Rob Templeman, told analysts that CVC would not be able to sell the shares on Thursday -- only later to retract the statement under further questioning. CVC raised 41 million pounds through the sale reducing the company's stake in Debenhams from nine percent to 2.7 percent.

SIR STUART ROSE IS QUIDS IN AT M&S

Marks & Spencer(MKS.L) executive chairman, Sir Stuart Rose, has seen his total pay package increase from 1.38 million pounds to 1.76 million pounds at the end of the financial year. Rose received the boost in his remuneration package as a result of an additional 288,000 pounds of share dividends accrued between July 2005 and July 2008, as part of his bonus plan. Rose's shareholding in the retailer also increased from 750,000 to 1.22 million shares under the same plan, despite presiding over a year that saw M&S's profits fall 40 percent to 706 million pounds and the group making its first dividend cut in nine years.

AQUASCUTUM ON THE BRINK AS OFFER STALLS

The luxury goods group Aquascutum has placed its entire workforce on consultation after a firm offer from YGM Trading - a Hong Kong-based wholesaler that distributes the company's products in Hong Kong, China and the Far East -- failed to materialise. The move to begin a 90-day consultation process with Aquascutum's staff suggests the brand's chances of surviving as a thriving British business are fading fast. Aquascutum owner Renown said in a statement on Thursday it would hold the first meeting of the consultation process towards the end of June and stated that: "Details will not be clarified until it is confirmed whether YGM Trading will be pursuing their purchase of the business".

WINCANTON MAINTAINS FULL-YEAR PAY-OUT

The logistics provider Wincanton(WIN.L) has reported a fall in pre-tax profits to 20 million pounds for the year to April, down from 36.7 million pounds for the previous year. The group's turnover rose by 9.1 percent to 2.36 million pounds as it offset the loss of business from the failed retailer Woolworths by winning new clients including Argos, BAE Systems(BAES.L), and Marks & Spencer(MKS.L). The company said that in an effort to reduce the group's debt it had cut costs and frozen management pay and has reached a deal with its pension trustees to erase its deficit over the next 14 years.

Prepared for Reuters by Durrants