PRESS DIGEST - Financial Times - May 21

Financial Times

MPC PREFERRED TOO MUCH STIMULUS OVER TOO LITTLE

The minutes of the Bank of England Monetary Policy Committee's latest meeting held two weeks ago -- released on Wednesday -- show it unanimously agreed to hold interest rates at 0.5 percent and to increase the bank's quantitative easing programme by 50 billion pounds. The minutes show the committee felt the risk of doing too little to stimulate the economy was greater and harder to overcome than over-stimulating. The committee also considered arguments from some members that there was a case for using the full 75 billion pounds of quantitative easing allocation still available.

PUBLIC FINANCES UNLIKELY TO STABILISE

A report compiled by the professional services firm PwC has calculated that additional tax increases or public spending cuts equivalent to between 25 billion pounds and 40 billion pounds are needed by 2017-18 to prevent public sector debt from increasing at an uncontrollable rate. John Hawksworth, head of macroeconomics at PwC, recommends the government raise taxes or reduce public spending "sooner rather than later" in order to "avoid unduly large increases in the tax burden on future generations of workers to pay for the future pensions and healthcare costs of current workers".

CBI ATTACKS BROWN ON TAX

Gordon Brown was given a "rough ride" over the introduction of the 50 pence income tax rate by CBI president Martin Broughton as the prime minister addressed business leaders at the CBI's annual dinner. Broughton challenged the government to review its spending priorities and focus on its core activities to bring down the budget deficit, saying that the additional tax take from the new top rate of income tax was likely to be minimal, but its effect would be to send a dispiriting message to wealth creators.

CARE UK BOOSTED BY NEW NHS REFORMS

Care UK (CUK.L), the health and social care group, recorded pre-tax profits of 7.8 million pounds for the six months to March, compared with a loss of 9.6 million pounds in the same period last year. Revenues rose 16 percent to 194 million pounds and earnings per share were 8.24 pence after the group was awarded 12 new contracts to run polyclinics and had contracts for primary care services extended.

ROLLET SAYS HE WILL GUIDE LSE INTO ALLIANCES

The chief executive of the London Stock Exchange (LSE.L), Xavier Rollet, signalled a break from the strategy of his predecessor, Dame Clara Furse. He said the exchange would push further into derivatives and look to form strategic alliances with exchanges in North America and Asia. Rollet said much would depend on whether European regulators and central banks would follow the United States in forging a more unified approach to the treatment of derivatives. Rollet also noted that the fruits of the LSE's acquisition of Borsa Italiana had not yet been "fully harvested" to allow for expansion of derivatives beyond Italy into other European markets.

DE LA RUE WINS EXTENSION ON BANK CURRENCY CONTRACT TO 2015

De La Rue (DLAR.L), the world's largest banknote printer, has agreed a deal with the Bank of England to print all of the Bank's banknotes up to 2015. The company also announced a rise in its full-year dividend from 21.4 pence to 41.1 pence, with pre-tax profits up 5.4 percent from 91.2 million pounds to 96.1 million pounds. Chief executive James Hussey said demand for banknotes from central banks last year was not greatly affected by the financial crisis.

YELL CONSIDERS DISPOSALS AFTER ONE BILLION POUND LOSS

Directories group Yell (YELL.L) has posted a one billion pound loss, weighed down by its Spanish acquisition, and is actively looking at all options to bolster its finances, according to chief executive John Condron. Chief financial officer John Davis said: "All options could mean disposals. There are no sacred cows here." Yell's South American unit is seen as a likely candidate for disposal. A rights issue is unlikely, according to analysts, due to the size of Yell's 361 million pound market capitalisation compared to its 4.2 billion pound net debt. Three billion pounds of the debt must be refinanced by 2011.

JD STEPS ACROSS THE CHANNEL TO BUY CHAUSPORT

JD Sports Fashion (JD.L) has bought French sportswear chain Chausport for eight million euros in a deal that will see JD, the UK's third-largest sportswear retailer, acquire all 78 stores and share capital of Chausport and take on its net debt of two million euros. Chausport had turnover of 40.7 million euros when it last reported figures in December 2007, with underlying profits at 600,000 euros. JD said: "This strategic acquisition gives JD the opportunity for further growth by entering a new and sizeable European market."

BRITVIC SPARKLES AS SOFT DRINKS OUTSHINE RIVALS

Britvic (BVIC.L), whose portfolio of soft drink brands includes Tango and Robinsons, has reported a 16 percent rise in underlying profits and a 70 basis point rise in British profit margins in the half-year to mid-April, sending shares 34.25 pence higher to 303 pence. UK sales of still and fizzy drinks were up steeply. Chief executive Paul Moody said: "We are seeing customers switch back into those core value categories." Irish sales were down 4.8 percent, tempering total sales, which were up 6.3 percent at 483 million pounds.

GORDON FOCUSES ON MOTHERCARE DEVELOPMENT

Mothercare (MTC.L) chief executive Ben Gordon defied speculation that he may be lured away to a bigger job, saying: "There is still a big job to be done here." His comments came as pre-tax profit at the firm leapt from 4.5 million pounds to 42.2 million pounds in the year to March 28. The previous year's figure had been dented by the 85 million pound acquisition of Early Learning Centre. Underlying profit was up 12.4 percent at 37.1 million pounds, with shares moving up 7 pence to 423 pence.

Prepared for Reuters by Durrants