PRESS DIGEST - Financial Times - Dec 20

The Financial Times

FSA PLEDGES TO TIGHTEN RULES BUT RUNS INTO DOWNING STREET CRITICISM

The City's watchdog, the Financial Services Authority, has pledged to tighten rules which govern banks' access to short-term liquidity and will demand that they prepare more fully for extreme market conditions. The FSA is facing renewed criticism from the chancellor and the prime minister for failing to raise the alarm about the Northern Rock NRK.L crisis. The FSA's managing director of wholesale markets, Thomas Huertas, said the watchdog intended to maintain a principles based approach to overseeing individual institutions but will back this by tighter rules to govern the amounts banks must hold in reserve.

MPC UNANIMOUS OVER RATE CUT MOVE

Minutes from the Bank of England show the decision this month to cut interest rates was unanimous. This is the first time since 2001 that all nine members of the Bank's monetary policy committee have voted for a cut and this signals policymakers' worries about risks of slowing growth and lower medium-term inflation. With some MPC members making hawkish comments, analysts expected there to be several dissenters, so the clear decision came as a surprise. Ben Broadbent, economist at Goldman Sachs, said the minutes were "almost uniformly dovish ... Future moves will hang more on realised weakness in demand or relatively muted pay deals".

PM TO LEAD GLOBAL ACTION ON TURMOIL

Gordon Brown on Wednesday promised a round of domestic and international activity early in 2008 to protect Britain from global economic turbulence. The prime minister told a Downing Street news conference he will take a lead in improving early warning systems and transparency in world financial markets, and that he will hold a summit with German and French leaders in January. There was also confirmation the Bank of England governor, Mervyn King, is expected to be given a second term next year in an attempt by the prime minister to provide stability in 2008.

FORECAST OF STABLE HOUSE PRICES NEXT YEAR

In a forecast that appears to fly in the face of sharply deteriorating sentiment in the housing market, the Royal Institute of Chartered Surveyors has predicted house prices will be unchanged at the end of 2008. RICS says in its annual forecast that predicted interest rate cuts will provide the housing market with a stable platform while low levels of unemployment will help prevent a large influx of supply from forced sales or repossessions.

JCB STAFF SCOOP 1,000 POUNDS BONUS

All 5,500 workers employed in the UK by the privately owned construction machinery company JCB are to receive a 1,000 pounds Christmas bonus. The company announced sales in 2007 would be over two billion pounds, up from 1.75 billion pounds last year. The company is to make more than 70,000 machines in 2007, compared with 55,000 in 2006. JCB's chairman, Sir Anthony Bamford, said: "We have always rewarded our people when the company has done well."

TRINITY MIRROR ON 175 MILLION POUND BUY-BACK

In an effort to shore up its weak share price, Trinity Mirror (TNI.L), the publisher of the Daily Mirror, Liverpool Echo and Birmingham Mail, unveiled a 175 million pounds share repurchase programme. This figure is about 35 million pounds higher than analysts expected but follows a 42 percent fall in the group's shares from this year's peak. The share buy-back and top-up are funded by the 263 million pounds of proceeds from disposals, including the sale of some regional titles and the Racing Post. Shares closed at 339.75 pence, up 1.5 pence.

ASTRAZENECA TO SELL DIRECT TO CHEMIST SHOPS

The Anglo-Swedish group AstraZeneca (AZN.L) is to introduce a "direct-to-pharmacy" scheme which will cut out wholesalers and sell its medicines directly to chemist shops. The scheme will allow the group to control the discounts on its medicines and work with pharmacists to reduce the widespread failure of patients to take their drugs as prescribed. AstraZeneca says the move could offer benefits to the NHS by improving patients' health and reducing waste from drugs which are not taken properly. However, only last week the Office of Fair Trading said direct-to-pharmacy schemes could cost the NHS more money and reduce service quality.

BIFFA OPENS BOOKS TO TWO BIDDERS

Biffa BIFF.L, the waste management company, has opened its books to a duo of private equity bidders and has indicated it is prepared to recommend an offer of 350 pence a share. A successful bid would value the company's equity at 1.23 billion pounds. Montagu Private Equity and Hg Pooled Management first approached Biffa in September with an offer of 330 pence, but were turned down. Biffa has agreed to a break fee under which it would pay Montagu and HG two million pounds if it recommended a rival offer. Biffa was demerged from Severn Trent in October 2006 at a price of 275 pence. Shares closed at 338.5 pence, up 23 pence.

PRICE COMPARISON SITE BEATS TARGETS

The price comparison site Moneysupermarket.com (MONY.L) is to meet or exceed full-year earnings expectations. The company has said analysts were forecasting earnings of 51.3 million pounds on revenue of 160.9 million pounds. Customer numbers were up in the second half to December 31 from the same period last year. Shares closed at 139.25 pence, up nine pence.

DTZ FEELS MARKET TURBULENCE

The property advisory group DTZ (DTZ.L) has seen its shares drop nearly 10 percent, with interim profits falling to 11.7 million pounds from 15.4 million pounds. Chairman Tim Melville-Rose said challenging conditions in the property market, caused by financial market turbulence, would be reflected in profits for the year to the end of April. Revenues rose 58 percent to 198.1 million pounds. Shares closed at 268 pence, down 28 pence.

Prepared for Reuters by Durrants.