PRESS DIGEST - Financial Times - June 10

The Financial Times

INFLATION DATA TRIGGER RETHINK ON RATE RISES

Rocketing producer prices are expected to force the Bank of England to increase interest rates at least once within 2008. Figures released on Monday by the Office for National Statistics revealed annual factory gate inflation hit record levels in May, rising from 7.6 percent to 8.9 percent, while inflation in producers' costs jumped from 24.3 percent to 27.9 percent. Energy prices could rise as much as 20 percent as the wholesale price of gas has exceeded the one pound a therm barrier for the first time. Traders fear UK policy-makers could follow the European Central Bank which indicated last week it could raise interest rates in June in a bid to curb inflation.

ONLINE SPENDING COUNTERS SLUMP IN AD SALES

New statistics released by the Advertising Association have revealed soaring Internet ads have helped UK's overall advertising spending in 2007 to increase by 4.2 percent. While press remains the main market for advertisers, with 7.71 billion pounds of the total of 19.4 billion pounds spent in newspapers and magazines, it has posted a 1.9 percent decline and the figures for the first five months of the year suggest the fall will be bigger in 2008. Online spending has jumped 40 percent, accounting for 15.6 percent of all advertising and analysts are optimistic the increase could become even greater this year, suggesting it could surpass television advertising revenues.

SPRING FAILS TO REVIVE SPIRITS IN HOUSING MARKET

A new survey by the Royal Institution of Chartered Surveyors has shown a combination of faltering sales and declining prices continued to hurt the housing market in the spring, the season regarded as the peak time for house-hunters. House pricing confidence reached bottom levels in April and May, as up to 95 percent of surveyors believed prices were falling. Mark Thompson from Jackson Stops & Staff said: "Without exception, all deals in the pipeline that are due to exchange are being renegotiated downwards."

ODEY ASSET MANAGEMENT SHUTS JAPAN HEDGE FUND

Odey Asset Management has announced the closure of its Japan hedge fund, following its plunge from 1.2 billion dollars to less than 40 million dollars of assets in two years due to poor performance and investor withdrawals. David Stewart, chief executive of Odey, said: "This fund has simply performed too badly for two years, and therefore it is in everybody's interest to move on." The poor performance by the fund's banks holdings prompted a 25.7 percent dive in 2007 after a 10 percent drop in 2006 and a 14.2 percent fall this year.

THOMAS COOK SPREADS WINGS WITH TWO BUYS

Travel firm Thomas Cook (TCG.L) announced it was buying Jet Tours from Club Med (CMIP.PA) in a 55.7 million pounds deal that is expected to create the third largest travel company in France. The group also said it was purchasing Canada's TriWest Travel Holdings for 56.4 million pounds. Thomas Cook's boss Manny Fontenla-Novoa said: "Both of these acquisitions are fully in line with our strategy of becoming a leading independent travel provider and capturing growth and value in the mainstream business, as well as driving further consolidation across the sector." Shares climbed 1.25 pence to 235 pence.

PROPERTY VALUES HURT WORKSPACE

Falling property values have driven Workspace (WKP.L) into the danger zone as the business space developer announced a 37-million-pound pre-tax loss in the year to March 31, against a pre-tax profit of 112.5 million pounds last year. The company's properties are now valued at 993 million pounds as its portfolio valuation slipped 4.6 percent, or about 48 million pounds. Chief executive Harry Platt said like-for-like rental values increased 12.2 percent to 57.5 million pounds and like-for-like occupancy levels reached 88.8 percent, up from 87.9 percent. Trading profits increased 8.8 percent to 11.1 million pounds while operational net cash was up 12 percent to 41.6 million pounds.

JD SCORES AGAINST HIGH STREET RIVALS

JD Sports has posted strong recent sales as original sports-branded fashion continues to be popular among teenagers despite England's absence from the European football championship. The group reported like-for-like sales growth for the seven weeks to the end of May that improved upon the 4.2 percent growth for the ten weeks to April 12, while its gross margin remained largely unchanged at about 49.2 percent. Investec analyst David Jeary said the group "continued to outperform" most of its rivals, but that a lower growth rate for turnover, gross margin and operating profit was expected due to tough trading conditions. The shares dropped 2.5 pence to 350.5 pence.

NORD ANGLIA REJECTS APPROACH

Nord Anglia Education NAE.L has rejected a 179.5 million pounds approach from Baring Private Equity Asia. The company told investors on Monday BPEA's 450 pence a share offer "does not reflect the strong growth prospects of the company" and added that "the onus is on BPEA to indicate how it will follow up on its proposed bid". Geoff Allum of KBC Peel Hunt said the potential bid is "attractive" but does not take into consideration "the many schools that North Anglia is building in China, for which demand will be strong". Shares in the group jumped 117.75 pence to 427 pence.

MIDDLETON TO LEAVE H&T

Pawnbroker H&T Group (HTGR.L) has announced chairman Peter Middleton will be replaced by Peter McNamara in September. iddleton, former Lloyd's of London chief executive, said he was "proud of the results achieved by the group during my time". He led the group after a management buyout and subsequent listing. Under his leadership the company expanded its remit from the practice of borrowing against goods like jewellery.

BABCOCK & BROWN LIFTS FORTH STAKE

Forth Ports (FPT.L)said on Monday Babcock & Brown has increased its stake in the company to 22.2 percent from 19.4 percent. The move, announced in a statement to the Stock Exchange, has renewed rumours that the Australian investment company is planning a bid for control of the ports operator. Mark McVicar, an analyst at Dresdner Kleinwort which advises Forth Ports, maintained that Babcock & Brown "will have a well-thought out plan in terms of long-term ownership". Both companies declined to comment on the situation.

Prepared for Reuters by Durrants