A Japanese district court yesterday ruled that government can be held liable for industrial pollution, setting an important precedent in environmental law.

The court, in Kyoto, awarded damages of Y193m (Pounds 1.2m) to 38 people who suffered mercury poisoning 37 years ago in a disaster has become a symbol of Japan's environmental conscience.

It was caused when a factory owned by Chisso, a chemicals group, pumped polluted sludge into the sea near Minamata, a southern Japanese fishing village in the prefecture where Mr Morihiro Hosokawa, the prime minister, later became governor.

It was not until eight years ago that the victims managed to bring their case to court. Out of 141 plaintiffs, eight have died waiting for Japan's tortuously slow legal system to produce an answer, and one has withdrawn.

This was despite Mr Hosokawa's efforts to obtain a quick out-of-court settlement during his tenure as governor of Kumamoto prefecture.

The Kyoto court yesterday ruled that the prefectural and national governments, as well as Chisso, failed to take proper action to prevent the outbreak and spread of so-called Minamata disease, paralysis caused by eating fish poisoned with mercury.

The main points at issue were whether government could be declared negligent and whether the victims really were suffering from mercury poisoning.

Friday's was the fifth such court ruling concerning the mercury poisoning.

The ruling affected only 46 plaintiffs. Other separate cases are still pending.

The popularity of Mr Morihiro Hosokawa's cabinet continues to defy economic gravity, according to a poll published yesterday.

A survey of 2,149 people by the Yomiuri Shimbun newspaper gave the cabinet 73.5 per cent support. This is up a fraction from a month ago, during which time Japan's recession has deepened.

The public shows no signs yet of blaming the divided seven-party coalition for failing to respond to widespread calls for a decisive step, such as an income tax cut, to stimulate the economy.

The prime minister's own party, the Japan New Party, saw a nearly full percentage point increase in popularity from September to October, to 15.5 per cent, making it Japan's second most popular party.

This is likely to reflect the straight-talking Mr Hosokawa's personal appeal, rather than his party's policies. The JNP supports liberalisation of the rice market, controversial with a large slice of the electorate, and otherwise pursues much the same policies as the opposition LDP.

Over the same period, the LDP's popularity has risen slightly from 23.8 per cent to 24 per cent, the highest score by a single party. This suggests, oddly, that the LDP has lost no support as a result of its humiliating defeat over the government's political reform plans in the lower house of parliament, two days before the Yomiuri poll was taken.

In an indication of just how fluid Japanese politics has become since the LDP's fall from power last July, yesterday's poll shows that 35.2 per cent of respondents support no party.

Brazil yesterday unveiled its toughest planned budget cuts in recent memory as finance minister Mr Fernando Henrique Cardoso pledged once again to tackle the country's annual inflation rate of close to 2,000 per cent.

Mr Cardoso outlined spending cuts and revenue measures to wipe out a projected Dollars 22.2bn deficit and balance next year's budget. The main savings will come from the government's personnel budget, which Mr Cardoso hoped to cut by Dollars 3.74bn, and from the transfer to local government of spending on health and basic education. This will save the federal government up to Dollars 8.4bn.

'There has probably never been a government attempt like this in this country to erase a budget deficit,' Mr Cardoso said. Brazil's budget deficit has in the past been covered by the government's inflationary practice of issuing short-term securities. Mr Cardoso said this would no longer happen.

The budget, which will be formally presented to President Itamar Franco and Congress next week, is expected to be the first of several measures to be announced over the coming months designed to try to stabilise the country's economy.

There is speculation Mr Cardoso will next week announce a new price index. This would be seen as the first step towards linking wage and price increases to the exchange rate which it is hoped would bring inflation down next year.

The budget won cautious backing from the government's coalition partners. But analysts pointed out that some of the spending cuts would be unpopular and difficult to implement, especially with presidential and congressional elections next year.

For example, one of Mr Cardoso's proposals would give the central government greater influence over money which otherwise goes straight to states and municipalities which may block the proposal, which needs a constitutional amendment to become law.

Mr Cardoso will also rely on congressional approval for a planned increase of 5 per centage points in all income taxes to give a new top rate of 35 per cent.

The budget is partly designed to please the International Monetary Fund which is holding off approving a restructuring of Brazil's commercial foreign debt until the country can demonstrate it is tackling its economic problems.

A balanced budget is thought to be one of several key requirements the IMF wants before it will approve the restructuring deal.

Even though the IMF has yet to approve the deal, Mr Cardoso is due to start signing the restructuring agreement with Brazil's private bank creditors on Monday in Toronto. He is expected to announce the next steps in his economic programme when he returns to Brazil next week.

Other measures to be announced included a 3 per cent tax on overseas fund raising, such as bond issues. This was designed to stop speculative foreign investment flows.

Also, a recent surge in foreign investment had inflationary effects because Brazil's central bank is still obliged to buy all foreign currency coming into the country, and issue local currency as payment.

Foreign ministers from the 52-nation Conference on Security and Co-operation in Europe (CSCE) meet in Rome next week to push forward the complex task of building a new co-operative framework for a Europe no longer divided into blocs but still beset by ancient fears and resurgent historical rivalries.

Top of the agenda will be discussion of the latest EU-inspired peace plan for Bosnia, Russian efforts to gain western support for Russian and CIS 'peace-keeping' missions in Trans-Caucasus and central Asia and a review of the other fault-lines of post-cold war Europe.

The CSCE originated in the 1970s as a Soviet-inspired proposal to legalise and formalise the post-war division of cold war Europe. It helped instead to end that division by the west's insistence on the inclusion of human and civil rights in the so-called 'Basket 3' of the CSCE Helsinki Final Act signed in 1975.

The end of the cold war was celebrated in November 1990 at the CSCE heads of government summit in Paris with signature of the Charter of Paris. Prematurely, the charter proclaimed 'a new era of democracy, peace and unity'. But a few months later war broke out in former Yugoslavia and the Soviet Union disintegrated into its 15 component republics.

The former Soviet states were admitted into the CSCE at the Prague meeting of foreign ministers in January 1992. The CSCE writ runs therefore way beyond Europe. It extends from Vancouver to Vladivostok, taking in Siberia and the central Asian republics of the former Soviet Union as well as the transatlantic Nato bastions, the US and Canada.

Its remit likewise has broadened. The Paris summit agreed to set up its own secretariat, a Conflict Prevention Centre, based in Vienna, and an Office for Democratic Institutions and Human rights based in Warsaw. But it has only minuscule bureaucratic back-up and a revolving chairmanship.

In short it is a friendly, well-intentioned but unwieldly creature. But it is charged, rather like the UN itself, with an impossible variety of difficult tasks thrown up by the re-emergence of ethnic and historical rivalries.

Many of its members, while mildly grateful for the psychological reassurance which CSCE membership provides, would much prefer to be full members of a security organisation like the West European Union (WEU) or Nato.

The CSCE's inability to prevent the violation of all its principles by the warring forces in former Yugoslavia remains a perpetual source of embarrassment. At the same time however conflict in the Balkans has spurred the CSCE into devising ways of calling on Nato and the European Union to provide muscle for the CSCE's peace-keeping aims.

A set of conflict prevention/crisis management measures were at the heart of the final document, entitled 'The Challenges of Change', approved at the Helsinki summit in July 1992. This empowered the CSCE to call on Nato, the WEU and others to help with peacekeeping. A new Forum for Security Co-operation was set up with a mandate covering arms control, disarmament and security building.

Since then, however, deep divisions within the EU, and between the Europeans and the Americans in Nato, have revealed how thin these institutional arrangements are.

Meanwhile, Mr Andrei Kozyrev, the Russian foreign minister, created a minor panic at the last meeting of foreign ministers in Stockholm a year ago when he made a spoof speech purporting to signal a sea-change in Russian foreign policy back to the confrontational 'nyet' politics of the Soviet past. The minister has been more circumspect in the run-up to this week's Rome meeting. But his message remains essentially the same.

Russia wants, and feels it deserves, western moral support and financial assistance to help Moscow shoulder the burden of peace-keeping in the Eurasian landmass, and especially along the ethnic and religious fault-lines of the trans-Caucasus and central Asian regions.

In an October speech in London, Mr Kozyrev reinforced his argument by adding 'No substitute for our efforts here is in sight. . . Russia's withdrawal from its peace-keeping role would threaten the former Soviet Union with a Yugoslav scenario.'

It is an argument which cuts little ice with the Baltic states, still battling to get Russian troops and installations out of Latvia and Estonia.

But in some west European chancelleries support is growing for carefully monitored, case-by-case, western backing for CIS peacekeeping activities, together with the dispatch of small teams of western observers to monitor the modalities.

France, Italy and Spain are discussing the creation of a southern 'Eurocorps' to maintain security in the Mediterranean region, a senior military officer said, David Buchan writes from Paris.

The plan follows their recent 'Ardente' troop exercise in Italy, and is designed to complement the increasing number of joint manoeuvres by the three countries' navies and air forces.

The scheme has been forwarded to the Western European Union, defence wing of the new European Union, as a formal initiative by Italy. 'The idea is to try to find a formula to bring together rapid deployment units of the three countries,' the officer said.

It was unlikely to be a copy of the Strasbourg-based Eurocorps, which is to have some 40,000 French, German and Belgian troops at its disposal by 1995, but 'perhaps a common command structure'.

France, Italy and Spain are already working, through the WEU, to institutionalise their naval co-operation in the Mediterranean in the form of 'pre-planning' for emergencies.

Behind the scheme is the realisation, particularly on the part of France, that the Strasbourg-based Eurocorps will be ill-suited for rapid mobile operations outside Europe. First, it is composed largely of heavy units designed for battle on the central European front, and second, there are still political, if not constitutional, constraints on German forces' range of action.

Spain is considering joining the Eurocorps, and once that decision is taken, the Strasbourg-based force will be of a satisfactory size and membership, the officer said. There is no expectation in Paris that Britain or the Netherlands might join the Strasbourg unit.

'One day there might be a Eurocorps 2, a Eurocorps 3, particularly if the US continues to pull its troops out of Europe,' said the officer.

The Russian foreign minister is expected to ask the 52-nation Conference on Security and Co-operation in Europe to adopt a resolution condemning 'aggressive nationalism' at the one-time cold war negotiating body's annual meeting in Rome next week.

The Russian diplomatic initiative, unveiled in Moscow this week by Foreign Ministry officials, is the latest move by the Kremlin to establish a more muscular Russian presence in the 'near abroad', as Russians describe the other former Soviet republics.

In the same vein, Russian resistance to an extension of membership of the North Atlantic Treaty Organisation to eastern Europe hardened yesterday when a presidential spokesman said that Mr Yeltsin agreed with the harsh attack on the notion of an expanded Nato delivered by Mr Yevgeny Primakov, the head of the Russian intelligence agency, earlier in the week.

By proposing that the CSCE adopt a resolution on 'aggressive nationalism' Mr Andrei Kozyrev, the Russian foreign minister, is seeking international legitimacy for his pledge this month to take tough action to defend the rights of ethnic Russians everywhere in the former Soviet Union.

The new, tougher Russian stance could first be put to the test by Latvia, which yesterday passed the first reading of a restrictive law on citizenship. The controversial legislation establishes quotas on the number of new citizens the country will naturalise every year.

Currently only 66 per cent of Latvia's 2.7m inhabitants are citizens. To qualify for citizenship the rest of the population, mainly Russians brought in to the republic after the second world war and their descendants, must demonstrate a conversational knowledge of Latvian and fulfil a 10-year residence requirement.

Mr Guntis Ulmanis, the Latvian president, justifies this restrictive legislation on the grounds that 'we could have a demographic explosion. The threat of our extinction forces us to take this step.'

The new hard line in Russian foreign policy was also in evidence yesterday when Moscow raised the stakes in its struggle with Kiev over the nuclear weapons stationed on Ukrainian soil.

The Russian cabinet threatened to stop servicing the nuclear weapons in Ukraine in retaliation for the Ukrainian parliament's decision this month to surrender only a part of its nuclear arsenal. The missiles could become unstable.

Belgium yesterday was brought to a virtual standstill by a one-day general strike - the first for 58 years - aimed at rolling back the austerity plan announced last week by the Christian Democrat-Socialist coalition government.

The action comes after localised strikes launched by the two main trade unions on November 15 and 24. It is is the first general strike in Belgium since 1936, when workers halted the country to demand a week's paid holiday a year.

The two main targets of the unions are a BFr75bn (Pounds 1.4bn) cut in forecast social security expenditure and a pay increase limit of 2 per cent for the next three years, which amounts to a freeze on wages once inflation is taken into account.

The public sector was almost totally paralysed yesterday, with the railways, post office, and schools all mostly shut down, and skeleton staffing of hospitals.

Most large private industry was at a halt. In Namur and Liege, even the police came out in sympathy. Sabena, the struggling national airline, claimed two thirds of its employees were at work and reported delays but only two cancellations because of fog.

The port of Antwerp was at a standstill, according to the Belga news agency. This was partly the result of effective use of flying pickets, which kept such companies as BASF, Bayer, and General Motors closed, and early yesterday blocked traffic using the southern approaches to Brussels.

The Belgian employers' federation put the cost of this week's strikes at BFr12bn, which they said was equivalent to 11,000 jobs over a year.

The BFr75bn saving, achieved by making eligibility for items such as child allowances dependent on income levels, is intended to keep the social security budget in balance.

Had the government of Mr Jean-Luc Dehaene not made it, officials and economists expected renewed pressures on the Belgian franc, because of the budget deficit of over 6 per cent and unsustainable public debt equivalent to 130 per cent of national output.

The franc, which shadows the D-Mark, has been severely tested by the markets since the August 2 European Union decision to float currencies in the European exchange rate mechanism within wide bands.

The wage freeze was as far as the centre-left coalition could go without risk of collapse, even though leading economists point out that pay has increased much faster than productivity over the past three years. The unions and, initially, the Socialist members of the government wanted to offset the cuts and the wage freeze by increases in property tax and withholding tax on investment income.

Mr Dehaene has offered to meet the unions but shows no signs of backing away from the austerity package.

Pressure mounted yesterday on the US and the European Union to agree a detailed package of tariff cuts in manufactured goods and farm products next week, as representatives of the 116 nations engaged in the Uruguay Round of talks on global trade liberalisation met in Geneva.

A meeting of all trade negotiators, held just 19 days ahead of the December 15 deadline for completing the seven-year negotiations, was repeatedly told that a top-level EU-US meeting in Brussels next Wednesday 'must reach a substantive result'.

The Brussels meeting follows two days of talks in Washington this week between Mr Mickey Kantor, the US trade representative, and Sir Leon Brittan, his EU counterpart. These were described as constructive, but produced no specific agreement.

Mr Peter Sutherland, director-general of the General Agreement on Tariffs and Trade, complained yesterday: 'Constructive meetings are no substitute for concrete results.'

He wants a clear outcome from the US and the EU by Wednesday so Gatt can complete by the end of the week a market access package embracing all 116 countries. 'We cannot afford further delay without jeopardising the round,' he said.

At the Geneva meeting, successive ambassadors complained of the difficulties being created by the US-EU delay, and by a handful of last-minute changes called for by the US in sensitive areas like anti-dumping policy, financial services, and internationally-even-handed tax treatment.

'The world is waiting for a market access package from the US and the EU in Brussels next week,' said Mr Don Kenyon, Australia's Gatt ambassador.

Mr Tran van Thinh, his EU counterpart, acknowledged the need for the US and EU to settle differences. He said that in spite of the difficulties faced by the community in terms of decision making, it was making every effort to reach a market access agreement by next week: 'The US and the EU do indeed shoulder a heavy responsibility for conclusion of the Uruguay Round.'

Delegates were digesting a list of proposed US changes to a text disciplining the use of anti-dumping laws, with most signalling strong opposition to the changes. Mr John Schmidt, the chief US Gatt negotiator, insisted that the US 'had approached this issue in a spirit of restraint' but noted that it was a matter of enormous importance in the US. Mr Sutherland called for all negotiations to be effectively completed by December 13, allowing translators to prepare texts of a prospective Uruguay Round agreement for approval at a meeting of all negotiators on December 15.

France requires a new industrial policy for its pharmaceuticals sector, said Mr Jean-Francois Dehecq, president of Elf-Sanofi, yesterday. The company, France's second largest drugs group is a subsidiary of state-owned Elf Aquitaine, the oil concern due to be privatised at the beginning of next year, Paul Abrahams writes.

French drugs groups' profitability over the last 20 years had been negligible compared with those of British or American companies, said Mr Dehecq.

'The lack of success has not been due to lack of innovation. Prices in France have been too low. There is no other reason for it. We must have a new convention between government and industry,' he told the Financial Times.

Mr Dehecq said the government must pay higher prices for innovative products. To compensate for additional spending on new products, it was imperative a way was found to lower the prices of older drugs. The possibility of reducing the number of prescriptions should also be addressed.

The government understood that innovation had to be rewarded and was leaning in this direction, added Mr Dehecq. Snip, the French pharmaceuticals manufacturers association, expects to conclude negotiations aimed at holding back drugs spending growth.

France spends more per capita on drugs than any other European country. During the first six months this year, it spent Dollars 108 (Pounds 72.40) per head, compared with Dollars 46 in the UK. French doctors prescribe five times as many items as British doctors and six times as many as their Danish counterparts. However, French prices are among the lowest in Europe.

The French market was the world's third largest last year, worth Dollars 12.26bn. For the first three quarters this year it grew 6 per cent, according to IMS International, the market research group.

The government launched a concerted ministerial drive yesterday to deliver an upbeat message over Britain's economic prospects, raising hopes that Tuesday's Budget will focus on boosting the recovery.

The campaign followed a favourable City response to Thursday's Commons hint from Mr Kenneth Clarke, the chancellor, that tax rises will fall on consumers rather than business.

The FT-SE 100 Index closed 18.3 points higher at 3,111.4, reflecting a widespread judgment that Mr Clarke's comments presage a Budget aimed at increasing industrial production.

The impression left by the chancellor was reinforced in a series of ministerial speeches on the economy co-ordinated by Conservative central office.

The campaign reinforced growing confidence among Tory MPs that Mr Clarke's main aim will be to stimulate industry and speed up the fall in unemployment.

It was led by Sir Norman Fowler, the party chairman, backed by several senior ministers.

Sir Norman told Conservatives in Worcester that economic recovery was 'well under way'. He said the government would ensure it was 'sustained and sustainable', and that it was not undermined by new costs on business or a spiralling budget deficit.

The upbeat message was underlined by Mr Michael Howard, home secretary, who said in Dymchurch: 'Britain is bouncing back, leading Europe out of recession, so the Budget will be building on fundamental economic strength.'

Mr David Hunt, employment secretary, told Eddisbury Tories: 'The sure way to jeopardise our recovery is to impose new regulatory burdens on business.'

Budget fears, Page 4

Glittering prizes, Page 8

Editorial Comment, Page 8

London stocks, Page 15

Lex, Page 24

----------------------------------------------------------------- STOCK MARKET INDICES ----------------------------------------------------------------- FT-SE 100: 3,111.4 (+18.3) Yield 3.82 FT-SE Eurotrack 100 1,346.66 (+3.60) FT-A All-Share 1,533.3 (+0.5%) FT-A World Index 161.66 (-0.9%) Nikkei 16,726.37 (-496.55) New York: Dow Jones Ind Ave 3,683.95 (-3.63) S&P Composite 463.06 (+0.7) ----------------------------------------------------------------- US RATES ----------------------------------------------------------------- Federal Funds: 3 1/8% (3 1/16%) 3-mo Treas Bills: Yld 3.11% (3.168%) Long Bond 100 1/32 (99 7/32) Yield 6.25% (6.303%) ----------------------------------------------------------------- LONDON MONEY ----------------------------------------------------------------- 3-mo Interbank 5 7/16% (5 3/8%) Liffe long gilt future: Dec 115 3/16 (Dec 115 9/16) ----------------------------------------------------------------- NORTH SEA OIL (Argus) ----------------------------------------------------------------- Brent 15-day (Jan) Dollars 14.46 (14.56) ----------------------------------------------------------------- Gold -----------------------------------------------------------------

New York Comex (Dec) Dollars 377.2 (377.3) London Dollars 377.0 (377.6) ----------------------------------------------------------------- STERLING ----------------------------------------------------------------- New York: Dollars 1.479 (1.4885) London: Dollars 1.48 (1.4855) DM 2.5325 (2.5425) FFr 8.75 (8.8075) SFr 2.2175 (2.2325) Y 160.75 (161.25) Pounds Index 81.2 (81.7) ----------------------------------------------------------------- DOLLAR -----------------------------------------------------------------

New York: DM 1.7138 (1.70235) FFr 5.9225 (5.906) SFr 1.499 (1.4922) Y 108.85 (108.145) London: DM 1.7115 (1.7085) FFr 5.9125 (5.9175) SFr 1.4975 (1.4995) Y 108.65 (108.30) Dollars Index 67.1 (66.9) Tokyo close Y 108.52 -----------------------------------------------------------------

Pressures on the French retail sector triggered a sharp fall in profits for FNAC, the dominant force in music and books retailing. In the year to August 31 net profits fell to FFr31.9m (Dollars 5.5m) from FFr159.5m in the previous year.

FNAC has in recent months been clouded by the controversy over the decision by GMF, its troubled parent company, to sell its controlling stake to a consortium composed of Altus Finance, part of the Credit Lyonnais banking group, and Compagnie Immobiliere Phenix, a property subsidiary of the Compagnie Generale des Eaux utility concern.

The uncertainty over its ownership, coupled with the strains of France's economic recession, took a toll on FNAC last year.

It faced the challenge of its first serious competitor in French cultural retailing due to the aggressive expansion in France of Virgin, the UK leisure company controlled Mr Richard Branson. FNAC mustered an overall increase in turnover of 8.3 per cent to FFr8.9bn from FFr8.2bn, but most of this growth came from new openings.

Sales at its existing stores rose by 0.3 per cent during the year.

The group increased operating profits by 14.3 per cent to FFr102.5m from FFr89.9m. But it was left with an exceptional debit of FFr77m having benefited from an exceptional credit of FFr107.8m in the previous year.

Pinault-Printemps, heavily indebted French retail group, may enter home shopping by launching a television shopping service through La Redoute, its mail order subsidiary, writes Alice Rawsthorn.

Home shopping, which has in recent years been one of the fastest growing areas of retailing in the US, is still in its infancy in Europe. Mr Pierre Blayau, executive chairman of Pinault-Printemps, yesterday announced that La Redoute, a leader in the French mail order catalogue market, has set up a team to assess the potential for the market in France.

MIM Holdings, the Australian metals group, and Germany's Metallgesellschaft, which holds a 14.9 per cent stake in MIM, are negotiating to swap interests in two loss-making German zinc smelters which they currently own on a joint basis.

Under the restructuring plan, MIM would acquire the 50 per cent interest which the German company holds in MHD 'Berzelius' Duisburg. This would give the Australian group full ownership of the Duisburg operation, which also takes in Rhine-Zink, a downstream product-manufacturing operation. The capacity at the smelter is around 100,000 tonnes.

Conversely, Metallgesellschaft would acquire MIM's 50 per cent interest in Ruhr-Zink, also achieving outright ownership. Capacity there is around 170,000 tonnes.

As a further element in the package, the German group would buy from MIM a 25 per cent stake in Metallgesellschaft Ltd, the London-based brokerage, lifting its stake to around 86 per cent. MIM would continue to own about 9 per cent and have board representation.

In Brisbane, MIM said that there might be some additional cash adjustment when the restructuring deal was finalised, hopefully by the end of 1993, but declined to give details at this stage.

It said that both groups were unhappy at the losses being made at the smelters, and claimed that the deal 'should improve the positions for both parties'. The restructuring will mean that MIM acquires full ownership of a second European zinc smelter using the Imperial Smelting Process (ISP), in a matter of months.

Only a few weeks ago, the Australian company completed the purchase of the Avonmouth zinc smelter from Pasminco, where it has since announced redundancies in an effort to boost cost-efficiency.

Although there has been talk of reducing zinc smelter capacity in Europe, MIM made clear yesterday that it intends to operate both smelters.

Any attempt to revive German exports and thereby curb domestic unemployment would be the 'wrong medicine', the Bundesbank's chief economist warned last night.

Speaking in Frankfurt, Mr Otmar Issing, member of the central bank's policy making council, appeared to be directing his remarks at calls for European countries to slash interest rates as a way of combating unemployment.

Mr Issing acknowledged that there had been a sharp fall in German exports since German reunification, and that this had contributed to German unemployment because lay-offs were concentrated in export-oriented industries. Germany's trade surplus has fallen from DM135bn (Pounds 53.50bn) in 1989 to DM34bn last year to DM28bn in the first eight months of the current year.

However, he rejected arguments that the fall in exports had been triggered by the strength of the D-Mark, pointing out that measured against the currencies of Germany's 18 most important trading partners the D-Mark had risen by a modest 3 per cent in the past two years, and had fallen by nearly 1 per cent since the end of last year.

He blamed the export decline on recession in Germany's most important trading partners. Any attempt to combat the decline in exports by competitive devaluation, would prove illusory, Mr Issing said, as it would only serve to worsen trading partners' recessions and diminish demand for German goods still further. A devaluation would stoke up inflationary pressures and trigger a wage-price spiral which would lead to more, not less inflation.

Mr Issing's comments follow Bundesbank president Mr Hans Tietmeyer's remarks on Wednesday that governments should not try to buy economic recovery by means of rate cuts.

Mr Johann Gaddum, Bundesbank vice-president, however, awakened speculation of further rate cuts in Germany in Paris yesterday. He was quoted as saying Germany was 'over the hump' on inflation and there was scope for further interest rate cuts.

Swiss voters pride themselves on using their direct democracy responsibly; if taxes need to be raised, this action will be approved in a referendum. That sense of responsibility will be tested on Sunday when the Swiss will be asked, for the fourth time, to vote on the introduction of a value added tax.

At a time when every other European government has long since introduced VAT, it may be asked why the Swiss have rejected the idea. The Swiss answer would be that no negative consequences have resulted from previous rejections in 1977, 1979 and 1991.

This time, however, there is a sense of urgency. Federal government finances are in disarray as soaring social security spending in the recession led to record deficits.

Another concern is the competitiveness of Swiss industry. Last December, Swiss voters rejected joining the European Economic Area (EEA), an expanded free trade area between the European Union and the countries of the European Free Trade Association.

Swiss manufacturing companies have become increasingly nervous that exports to Europe will face increased costs when the EEA comes into force next year. Thus, their campaign to replace the existing 6.2 per cent turnover tax, which applies only to goods and capital spending, with VAT has been more passionate than on previous outings.

It is estimated that Swiss industry would save SFr2.6bn a year if a 6.2 per cent VAT, applicable to services as well as goods and refunded from exports, were introduced.

As is often the case in Swiss referendums, the balloting process will require considerable concentration from voters. They can vote for 6.2 per cent VAT or 6.5 per cent, which the government would prefer because it would raise more revenue. There is also an opportunity to vote in favour of adding another 1 percentage point to help underwrite soaring public pension costs.

The VAT proposal has the full support of all the main political parties and business groups, with the exception of the restaurant and hairdressing trades which dread being brought into the tax net.

Polls indicate that it will probably be approved by a narrow majority, but that the people will only approve a 6.2 per cent rate. Swiss voters would prefer to keep the pressure on the politicians to cut spending rather than let them have more money.

In addition to VAT voters will also decide whether or not to abolish tobacco and liquor advertising, an issue brought to a referendum by concerned citizens.

Millions of pounds in value added tax rebates are unclaimed across the EU, according to a survey by accountants Deloitte Touche Tohmatsu.

Nearly 60 per cent of companies do not reclaim all the VAT they are entitled to receive from countries in which they are not registered, and more than 20 per cent do not claim any of their rebates.

The survey, which questioned more than 600 companies, notes that almost a quarter of businesses pay VAT in countries where they are not registered, on transactions such as one-off purchases, hotel bills and travel. About 8 per cent are paying more VAT than they were before 1993.

Most say the primary reason is that recoveries would cost too much. A number of companies highlighted administrative difficulties in receiving rebates in Italy, Germany and France. 'The system clearly needs to be simplified,' Deloitte said.

Across the EU, British companies are the most likely to fail to make refunds.

The survey showed that just 23 per cent of companies said they had found their transport costs becoming cheaper as a result of the new system, although 39 per cent said goods reached their destinations more quickly.

More than 100 Burundian refugees are dying of disease and malnutrition each day in crowded camps in Rwanda, the United Nations refugee agency said in Geneva. About 700,000 Burundians fled their country after a failed coup in October touched off ethnic clashes.

The biggest single influence on the Gloucestershire economy during the 1980s was the huge rise in jobs in banking, insurance and financial services.

The increase, between 1987 and 1989 alone, was almost 12,000, taking employment in the county to over 26,000, as indigenous companies expanded and others relocated, driven away from the London area by high rents, labour costs and the difficulties of recruitment.

By 1991, the recession had already cost some 2,000 of those jobs as the industry, as elsewhere in the UK, retrenched. The question is whether the sector, which is concentrated on Cheltenham and Gloucester, can now stabilise as a significant, although second-tier, regional centre.

If the community was restricted to a 'back office' function, then computerisation would mean future employment prospects were poor. In fact, the county has a good share of head offices, some of which are long established, and which should be able to continue to attract senior staff.

Cheltenham & Gloucester building society, the UK's sixth largest, has always been based in the county, as has the much smaller society, Stroud & Swindon, which has 25 branches. Chelsea building society, with 50 branches, set up its headquarters 20 years ago at Thirlestaine Hall, a Victorian mansion in Cheltenham, and extended it in 1987. Endsleigh, the insurance company which this season started sponsorship of the football league, moved to the town from London 20 years ago.

Northern Star Insurance, the Italian-owned general insurer, moved from Croydon to Gloucester 10 years ago and has expanded to over 350 staff locally. Ecclesiastical Insurance is also based there. Another headquarters is that of the Canadian-owned Laurentian Financial Group, which moved from Guildford in 1986 to set up shop at Barnswood, on the city's outskirts. (Also at Barnswood is one of the main computer centres of Barclays Bank.)

In Cheltenham, there is Royal Bank Leasing and Mercantile & General Reinsurance, which moved much of its operations there 20 years ago. Although its headquarters remains in London, it has more staff based in Cheltenham, nearly 400. There was, however, a reassessment of group staffing levels last year, which led to about 50 local redundancies.

The most important relocation has been by Eagle Star, the BAT Industries subsidiary. Last year it joined its life subsidiary in Cheltenham by moving its head office and general insurance business from London to a new 170,000 sq ft building at Bishop's Cleeve, just outside the town. The group employs 3,000 people locally.

Mr John Bishop, chairman of Eagle Star, which worldwide has Pounds 12bn of funds under management, says the relocation was initiated by the need to expand and the difficulties of finding a large enough building in London (the move was accelerated by IRA bomb damage to its existing City offices.)

Mr Bishop - whose office now overlooks a parkland of sheep - says of any disadvantages of being out of London: 'There is none at all as far as Eagle Star is concerned.' He points out that many insurance companies are now based outside the capital. 'We are a national company that happens to be based in Cheltenham.'

The company, he says, has been able to improve its efficiency. 'We are able to operate as an entity, and the whole thing works much better. We have our costs under control. We are convinced that, in the long term, this was the right thing to do, with real economies by being here and being able to operate in the way we do, and which will stand Eagle Star in good stead in the future.'

Mr Bishop sees no reason why the county should not continue to attract financial services companies. 'If I were in London looking for somewhere to come, this region would be high on my list.'

The Eagle Star Life subsidiary moved its own headquarters in 1968 to Cheltenham, where its 13-storey tower block, now being refurbished, is the most prominent landmark. The head office has moved this year to a building with a facade more in keeping with the town's architecture.

'I can think of very few disadvantages to being in Cheltenham, and the quality of life is very good,' says Mr Ian Owen, Eagle Star Life's managing director. 'There is good access, good employment, good schools and rents are cheaper than in London.'

Other than Eagle Star, the last sizeable relocation was that of the Bank of England's registrars department, which completed a move from the City of London in 1991. It occupies a Pounds 13m building of nearly 130,000 sq ft in Gloucester, where it employs 380 people, most of them recruited locally.

The Bank decided, in 1987, to move the department on cost grounds. It needed a large building at a lower cost than could be found at that time in the London region, but needed to stay within reach of the City, because of the physical exchange of paper - its main function is the registration of gilt-edged securities. It concluded that Gloucester fitted the bill.

One important factor in the future will be how support services develop to give the local sector more depth and range of employment. One new company is Marlborough Stirling, in Cheltenham, set up in 1988 to sell tailor-made software and business solutions for the sector. It has grown rapidly to over 90 staff, and its clients include some of the leading companies within and outside the county. Mr Huw Evans, its managing director, sees 'enormous scope' for further growth.

As a regional centre, a limiting factor is the proximity of the larger financial communities of Bristol and Birmingham, and the big companies tend to retain London-based auditors, law firms and advertising agencies. KPMG Peat Marwick, the accountancy firm, closed its Cheltenham office this year, although Coopers & Lybrand and Grant Thornton keep offices in Gloucester. 'A local presence is important, because the Gloucester office has its own expertise,' says Mr Nicholas Houghton-Brown, of Coopers & Lybrand.

Mr Darryl Whitehead, Grant Thornton's managing partner in Gloucester, says: 'Relative to the indigenous work, the indigenous professionals can handle it very well.' A leading Gloucestershire-based accountancy firm is Hazelwoods.

Even in the present climate, investment has not ceased in the county. Endsleigh, which employs 350 people on seven sites around Cheltenham, has just bought a 28-acre site on the outskirts where it plans to consolidate.

'It is a statement of our commitment to Gloucestershire as the future focal point of the company,' says Mr Stuart Wartalski, of Endsleigh.

Correction (published 27th November 1993) appended to this article.

Even Mr Edmond Alphandery, the ascetic economy minister, could scarcely conceal his glee yesterday when he announced that the public part of the FFr13bn sale of shares in Rhone-Poulenc, the second company to be sold in France's privatisation drive, had been heavily over-subscribed.

The Economy Ministry is today expected to report that the institutional part of the Rhone-Poulenc sale has also been comfortably over-subscribed.

The timing could scarcely be better. The successful sale of Rhone-Poulenc not only sets an encouraging precedent for the next round of privatisations, scheduled for next year, but comes at a propitious moment when the Paris stock market seems to be flagging.

The CAC-40 index, which soared to record levels during the summer and early autumn, has faltered recently on concern about the outcome of the Gatt negotiations, the Balladur government's cautious approach to cutting interest rates and the recent spate of industrial unrest in France.

'There is a great deal of uncertainty about the prospects for the market,' said Mr David Harrington, of James Capel's Paris office. 'The fundamentals are still strong, but investors are likely to remain nervous until the Gatt issue has been resolved and there is clear evidence of further falls in interest rates'.

Once these problems have been addressed, most analysts and economists expect the market to return to growth. Mr Didier Cherpitel, managing director of Morgan Stanley in Paris, predicts that the CAC-40 will rise to a new record of 2,500 next year.

'We are rather optimistic,' he admitted. 'But the economic environment does look encouraging. If Germany comes out of recession, interest rates could fall steadily in France and Germany, and that would be a big boost to the stock market'.

Other observers take a slightly less rosy view. But most are confident, barring a Gatt impasse, that the CAC-40 Index should reach a new record of around 2,400 in 1994.

One reason for their confidence is the corporate sector's promising outlook. Companies have had a tough time in the early 1990s due to the impact of high interest rates and rising unemployment on domestic demand and, since the September 1992 currency crisis, the depressive effect of the strong franc on exports: CAC-40 companies are now approaching the end of their fourth successive year of earnings decline.

Next year should mark the start of the recovery. Official figures show that consumer spending was slightly less sluggish during the summer.

The strong franc is still affecting the competitiveness of French exports, but companies are now achieving significant productivity gains after years of low inflation and pay restraint. JP Morgan in Paris forecasts an inflation rate of just 2 per cent in 1994, thereby fuelling further improvements in cost competitiveness next year.

James Capel expects to see a rebound in CAC-40 earnings of 35 per cent for 1994. But the eventual rate of growth will be heavily influenced by the progress of interest rate reduction and its impact on the economy.

Salomon Brothers forecasts a fall in short-term interest rates from the present level of 6.45 per cent to between 4.5 and 5 per cent next year.

The progress of the CAC-40 index will also be determined by the flow of funds into French equities.

One of the main reasons for the recent slowdown in the Paris market is that US investors, who invested heavily during the summer bull run, have stopped pouring new money into France because of the appeal of high yields in the US.

Most brokers expect to see a fresh influx of funds soon from domestic investors, thereby compensating for the US withdrawal. But the French have historically favoured cash over equity investments.

Savings ratios are still rising suggesting that, in spite of the government's efforts to coax investors into equities through initiatives such as this summer's highly successful 'Balladur bond' issue, the French are still not ready to convert their cash into shares.

Recent reductions in interest rates have already made equities seem more attractive against the dwindling returns on savings.

This trend should continue as interest rates fall further next year, thereby providing a new pool of money to bolster the market.

The other main influence will be the volume of new equity arriving on the market. Almost FFr100bn (Dollars 16bn) of new shares have already been added this year through the combination of the first two privatisations and a stream of private sector issues, from companies such as Schneider, Axa and Lafarge Coppee, thereby artificially depressing the index.

'So far, there has been no shortage of takers for these new issues and most have been healthily over-subscribed,' says Mr Harrington of James Capel. 'Unless there is a Gatt crisis there is no reason why next year's issues should not be as successful - unless, of course, the government is too greedy and privatises too many companies too quickly.'

CORRECTION

In yesterday's feature on the French equity market, a predicted level of 2,500 for the CAC-40 index was attributed to Mr Didier Cherpitel as managing director of Morgan Stanley in Paris. In fact, Mr Cherpitel holds the same position at JP Morgan in Paris.

Taiwan yesterday announced a package of reforms easing curbs on foreign investment in its financial markets to accompany the island's bid to join the General Agreement on Tariffs and Trade, Reuter reports from Taipei.

All curbs on remittances of capital gains and principal out of Taiwan by foreign investors in the island's securities markets would be removed, the finance ministry said. Foreign investors would have nine months after initial approval to bring funds into Taiwan, up from six months at present.

The 10 per cent ceiling on combined foreign investment in any individual stock, and a 5 per cent ceiling on investment by a single foreign institution, would both be raised. An official said the first ceiling would be raised to 20-30 per cent, and the second to 10-15 per cent.

The ministry planned to abolish all curbs on foreign investment in securities houses, insurance firms and investment companies. The reforms 'will open our markets, helping us to join Gatt and speeding our development into a regional financial centre,' the ministry added.

All relevant government agencies had agreed to the reforms, which still needed the approval of the cabinet and in some cases parliament. No schedule was set. Foreign fund managers welcomed the reforms. Curbs on fund remittances, such as a rule that capital gains can only be remitted out once a year, have helped deter inflows of foreign equity investment funds, totalling Dollars 1.86bn (Pounds 1.24bn) since 1991.

Equity capitalisation on the Istanbul Stock Exchange is currently estimated at just under Dollars 30bn. The figure given in an article in the Financial Times survey on Turkish finance and industry, published on November 25, was incorrect.

The continued weakness of European economies pushed KNP BT, the Dutch paper and packaging group, into a net loss of Fl 9m (Dollars 4.7m) before extraordinary items in the third quarter of 1993, compared with a net profit of Fl 7m the previous year.

The figures took results for the first nine months to a net loss before extraordinaries of Fl 25m, compared with a net profit of Fl 168m the year before.

KNP BT, which was formed from a three-way domestic merger in the Netherlands earlier this year, has already said that it plans to take a Fl 300m charge in 1993 to cover a restructuring.

The company said that market conditions were similar to those of the first two quarters. The paper sector continued to suffer from overcapacity and price pressure, while the graphic systems sector was still feeling the effects of reduced demand in southern Europe.

However, the company said that there were some signs of a hesitant improvement in business conditions.

The figures, which were slightly better than analysts had forecast, were released after the close of trading in Amsterdam.

Last week, the company's shares fell after a Belgian newspaper said that KNP BT's single biggest shareholder, Macmillan Bloedel, the Vancouver-based forest products group, wanted to sell its 16 per cent stake.

Macmillan Bloedel said yesterday that it would sell its stake 'when the price is right'. Mr Glen Ferguson, Macmillan Bloedel's vice-president and treasurer, said the sale of the KNP stake would depend mainly on market value and 'it may be quite a way down the road'.

In September, the Canadian company took up its share of a KNP BT rights offer, for CDollars 55m (USDollars 41.5m) to maintain its 16 per cent stake.

The Treasury is moving its Savings Bonds Division into the Bureau of Public Debt and is eliminating several political appointments from the US Mint, Mr Lloyd Bentsen, the Treasury secretary, said yesterday, AP-DJ adds.

The restructuring steps are aimed at cutting bureaucracy and improving customer service, Mr Bentsen said in a press release.

'In both cases, we looked at the environment we're operating in and we said it's time to change. What made sense a long time ago doesn't make sense now.'

Incorporating the Savings Bonds division into the Bureau of Public Debt will help improve the marketing strategy for bonds, he said.

A senior Russian air transport official yesterday urged the government to consolidate the country's civil aviation industry and reverse Aeroflot's break-up, writes Leyla Boulton in Moscow.

Mr Valery Kosyanenko, deputy chief of the transport ministry's aviation department, said that 160 airlines had emerged from Aeroflot, once the monopoly airline of the former Soviet Union, and that 161 new ones had been set up from scratch.

Almost every town with an airport in Russia has its own airline. Mr Kosyanenko suggested one solution would be to create holding companies consolidating several 'airlines' and airports.

Mr Antoni Asuncion, Spain's secretary of state for prisons, has been named to replace Mr Jose Luis Corcuera as interior minister, writes Tom Burns in Madrid.

Mr Corcuera resigned abruptly last week after the constitutional court revoked part of a security legislative package prepared by his ministry.

The supply of energy to industry and homes in Russia over the winter is at risk - under the twin pressures of cuts in the budget and threatened mineworkers strikes.

Mr Oleg Soskovets, first deputy prime minister and acting head of the government in the absence on holiday of Prime Minister Viktor Chernomyrdin, has warned of shortages by early next year unless billions of roubles are provided to energy producing industries. At a government meeting yesterday, Mr Soskovets lambasted the Ministry of Finance for 'behaving like an ostrich' in the provision of credits to the industry and said it had provided only half of a planned Rbs610bn to the energy sector.

Mr Soskovets said that Mr Boris Fyodorov, the finance minister, should be made personally responsible for the supply of finance to the energy sector. Temperatures plunging to -20 per cent below zero throughout Russia have hugely increased energy consumption, while supplies have been cut in some areas down to 30 per cent of normal levels, according to Mr Soskovets.

Mutual debts of enterprises in, or heavily dependent on, the energy sector are put at Rbs 8,000bn - a situation which is causing progressive paralysis, particularly in the coal sector.

The flashpoint is the Vorkuta coalfield, where miners have threatened an all-out strike from December 1 if they do not get back payments for the last three months. A report in the daily Izvestiya said Rbs100bn had been set aside for pay arrears - on the eve of a planned visit to Vorkuta tomorrow by Mr Yegor Gaidar, first deputy prime minister and leader of Russia's Choice political group.

The Fuel and Energy Ministry said yesterday 'an explosive socio-economic situation has developed in the coal regions' and said miners were due Rbs400bn in back pay.

The miners have been the main industrial support for President Boris Yeltsin and reformers in the government. Their 1991 strikes fatally weakened the tottering Soviet government, and strikes in 1989 signalled the first widescale dissatisfaction with the policies of Mr Mikhail Gorbachev, then Soviet president.

In an interview with Izvestiya, Mr Yuri Malyshev, head of the Rusugol coal enterprise, said a plan to shut 42 of Russia 236 pits which had run out of viable reserves would be put into effect between now and the end of the century.

Euro Disney, the troubled leisure group desperately trying to negotiate a financial rescue, lost a sixth of its stock market value yesterday.

In heavy trading, its shares closed FFr6.20 lower at FFr27.20 in Paris and fell 62p to 318p in London. The decline may complicate efforts by the company to restructure financially.

In Paris, the shares slid after heavy selling from convertible preference holders. More than 4.14m Euro Disney shares, or 2.4 per cent of its equity, had changed hands by the end of the day. The Paris stock market authorities were forced three times to suspend the shares when the price breached the official trading limit.

Ms Rebecca Winnington- Ingram, European leisure analyst at Morgan Stanley in London, said: 'It's pure panic. Investors are now very, very nervous about this company.'

Yesterday's decline followed steady selling since Euro Disney, which is burdened by heavy debt, disclosed an unexpectedly heavy net loss of FFr5.3bn (Dollars 900m) for the year to September 30.

The latest fall in the share price, which peaked at FFr160 in April 1992 and was FFr43.70 before the announcement of last year's loss, comes at a sensitive time.

Euro Disney, with Walt Disney, the US group that owns 49 per cent of its equity, began negotiations last week over the restructuring with the 60 international banks that own its FFr20.3bn net debt. Further share falls may limit the scope to raise capital through a rights issue. The Disney camp is believed to hope to reduce Euro Disney's net debt to FFr10bn.

Poisoned apple, Page 17

World stock markets, Page 32

President Boris Yeltsin of Russia has allowed the city authorities of Moscow to draft a decree on privatisation of property in the capital, according to Mr Yury Luzhkov, the city mayor.

If the decree is signed, the city would gain control of a process that has been largely controlled by Mr Anatoly Chubais, the deputy prime minister and chairman of the state property committee.

Volvo's struggle to win approval for the planned merger of its car and truck operations with France's Renault suffered a serious blow yesterday when the first institutional shareholder to declare a final position said it would vote against the deal.

Although the so-called Fifth Fund state pension fund holds only 1.3 per cent of Volvo's voting capital, its rejection indicated that an intensive effort mounted by Volvo to overcome objections by significant Swedish shareholders had failed to dispel widespread doubts about the merger proposal.

The outcome of a shareholder vote on December 7, already rescheduled from early this month, may now swing on a decision expected today from another state pension group, the Fourth Fund. It is Volvo's second largest shareholder after Renault, holding 7.5 per cent of the voting capital to the French group's 10 per cent.

The board of the Fourth Fund includes senior representatives from industry and the trade unions, including both supporters of Volvo and merger sceptics. If the Fourth Fund rejects the deal, the prospect of Volvo winning majority shareholder support will be sharply diminished.

Mr Bert Ekstrom, chief executive of the Fifth Fund, said the fund rejected the merger because of uncertainties over the values implied in the agreement, which proposes a 35 per cent share for Volvo in the merged company.

He said the fund, governed by trade union, local government and state industry representatives, was also sceptical about French commitments to privatise Renault, despite written assurances from Mr Edouard Balladur, the French prime minister, that his government intended to complete privatisation by the end of next year.

Volvo this week secured Mr Balladur's assurances, contained in a letter to Mr Carl Bildt, the Swedish prime minister, and a promise that a golden share the state intends to keep in the merged company will not be used to dilute Volvo's 35 per cent holding.

These two issues have been the focus of criticism by Volvo shareholder institutions. However shareholders have also expressed dissatisfaction with the lack of detail published on the valuation of the respective Volvo and Renault assets in the merged company.

In an interview with the FT on Tuesday, Mr Louis Schweitzer, the Renault chairman, warned that a rejection of the planned merger would damage existing co-operation between Volvo and Renault.

'The momentum would disappear' said Mr Schweitzer. He added that the disruption to the merger process in recent weeks had already slowed and destabilised efforts to build a joint management organisation.

Mr Schweitzer went on to stress the industrial logic of the proposed merger. The cost savings which would result through joint purchasing, research and development and economies of scale would strengthen the two companies' car and truck operations.

He also pointed out that European car markets showed signs of bottoming out, he forecast a modest recovery in demand from mid-1994. He said he was confident that Renault would remain profitable despite the protracted downturn in car and truck markets.

Renault chief firm, Page 18

Correction (published 26th November 1993) appended to this article.

Few Turkish industries have welcomed the government's commitment to Europe quite as readily as the banks. A new decree, passed with the effect of law in September, brought Turkey into line with its European competitors in a number of important areas and marked a further deepening of the financial sector.

The confidence is readily apparent. On the Istanbul stock exchange the banks listed are among the most profitable and heavily traded stocks. For the first time a Turkish bank has floated shares internationally, with Garanti Bankasi selling Dollars 103m worth of stock through an American Depositary Receipt in November.

With growing frequency, the private sector banks are able to tap international debt markets. A whole host of banks have successfully ventured into the markets including Korfez, Turkey's most profitable bank, which raised Dollars 25m in a one-year loan arranged by Bank of New York. In November Akbank, Turkey's largest family-owned bank, was due to conclude its first-ever foreign syndication - a Dollars 100m one-year borrowing. Mr Erol Sabanci, the bank's chief executive, said that at point 85 over London Inter Bank Offered Rate, the deal underscored Akbank's standing as the best rated bank in Turkey.

The Turkish banking industry is still dominated by the state with the five state banks accounting for close to half the total assets, which at the end of 1992 were around Dollars 67bn. The largest private sector banks are run by family holdings, including Sabanci's Akbank, Cukurova's Yapi Kredi, Pamukbank and Interbank or the Dogus Holding's Garanti.

But the new law should help shift the balance in favour of the private sector. For the state banks, like others, are being forced to improve their capital ratios. With the government reluctant to inject new capital into the state banks, the only way to meet the targets is to run down their equity participations and reduce their loan book.

Troubled banks can be forced into liquidation, where before they were absorbed by a state bank. 'It's a long overdue signal that depositors will have to take the risk of a bank into account,' says Mr Ibrahim Betil of Expresbank.

In the case of a failed state bank, the government will continue to step in. Last year, the government announced that Tobank, the teachers' bank, was to be merged with the Halk Bankasi and Denizcilik Bankasi, the maritime bank, was merged with Emlak, the state housing bank.

The wholesale privatisation of the big state banks, such as Ziraat and Emlak, may be some way off. Ziraat is more like an arm of the treasury, dispensing credits to farmers and using its extensive branch network to pay civil servants and other government employees in rural areas.

But on a smaller scale, the banking operations of Sumerbank, the textile manufacturing and general retailing outfit, have been offered for sale. Similar moves have been made to allow for the disposal of the banking side of Etibank, the minerals concern.

A more promising prospect is the government's planned sale of its 12 per cent stake in Turkiye Is Bankasi, the country's largest commercial bank.

The shake-up in the state sector is mirrored by a rapid restructuring among private banks. Banks are closing branches and laying off staff while enhancing electronic banking. In less than a decade, Turkey has moved from a relative lack of sophistication to become a modern industry. But for most Turks, the plastic card is not so much an instrument of credit as a way to obtain cash.

Most transactions are still done on a cash basis. The main thrust for introducing automatic teller machines (ATMs) was 'to keep the customers out of the bank,' says Mr Akin Ongor of Garanti. His bank is leading the way in computerisation, with all 201 Garanti branches now using real time clearing systems.

The development of electronic banking has also forced banks to improve their credit supervision. 'Today you can go to 10 different banks and get a card from each one and no one will know,' says Mr Ongor. The foreign card companies like Visa are said to be concerned by the growing number of defaults.

In parallel with these moves, many banks are boosting their consumer lending business, still a fairly small share of most banks' asset books. Garanti says consumer credit currently accounts for around 4 per cent of its total loans - corporate loans making up the lion's share. But as interest margins on corporate lending have narrowed, banks are turning to consumer loans.

Garanti says it intends to increase its operations. Consumer credit is particularly attractive for the banks with links with big corporations, which can then offer customers hire purchase financing. Koc, the largest holding company, is boosting its banking services, in part to take advantage of the booming car sales and sales of consumer durables, two sectors where it has a dominant position. Akbank is developing its consumer credit facilities to finance Toyota's joint venture with its parent, Sabanci Holding.

In 1992 the government liberalised the rules on the issue of asset-backed securities. The securitisation of various debt instruments such as car and housing loans has been a popular practice in recent months, providing banks with a cheaper source of funds. By shifting the risk of default to new investors, it also reduces the onerous capital adequacy requirements set under the new law.

But the broader economic impact is potentially more dangerous. 'The banks have now been given an incentive to lend to customers for consumption,' says a foreign economist.

In a related issue, in October a number of banks applied to the Capital Markets Board to be allowed to issue commercial paper. Again, like securitised loans, this is seen as a cheap funding for banks as it would not incur liquidity requirements set by the central bank.

However, under the current rules only investment banks, which are restricted from taking deposits, municipalities, corporations and state enterprises are allowed to issue commercial paper. No decision has been made to allow banks to issue commercial paper. Nonetheless, the issue has thrown into relief the tension between the need to deepen the financial markets and the perhaps more pressing concern of the banking authorities to keep a hold on money supply.

Currently for every 100 lira put on time deposit with a bank, on average 46 lira has to be held as reserve or liquidity requirements - in effect, it is a tax on the banking system.

Call deposits are a slightly cheaper way to raise funds. As a result, the intermediation costs - the spread between deposits and credits - keep interest rates high. Another result is that rates between different banks can vary as much as 15 per cent. 'Nowhere in the world are interest rates quite as free as in Turkey,' says Mr Erol Sabanci, disapprovingly.

Inflation continues to make it difficult to assess bank performance. IBCA, the London-based rating agency, estimates that most major banks in Turkey saw a negative return on equity in 1992.

Mrs Tansu Ciller, the prime minister, has pledged to reduce banks costs in a bid to bring down interest rates. However, there is little possibility of that while the government deficit continues to grow.

The sector has other more urgent problems. The banking authorities are watching closely the foreign exchange exposure of many private sector banks as they seek to fund their lira business by borrowing offshore. Given high real interest rates offered in lira deposits, the attractions of borrowing offshore are enormous. Garanti estimates that currently 27 per cent of its profits result from trading on its short positions.

Garanti was the most profitable of the large privately owned banks in 1992. The bank, however, remains cautious. 'We have a policy that the open position should not exceed the equity of the bank,' says Mr Aclan Acar, a director. 'That means the shareholders take the risk, not the depositors. We've suggested to the central bank that they should make this rule applicable to all banks.'

But the danger, particularly with the government indicating that it favours a more rapid depreciation of the lira, is that it could result in a massive one-way currency flow as banks seek to close on their foreign exchange positions.

CORRECTION

Equity capitalisation on the Istanbul Stock Exchange is currently estimated at just under Dollars 30bn. The figure given in an article in the Financial Times survey on Turkish finance and industry, published on November 25, was incorrect.

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ London Inner North ------------------------------------------------------------------------ 142 Tower Hamlets College 65 86% 87 8.3 46 1.7 197 Hammersmith & West London College 124 81% 109 9.5 19 4.7 201 Hackney Community College 47 81% 11 4 15 2.1 209 Kingsway College 506 80% 140 12.1 62 3.6 212 City of Westminster College 55 80% 68 7.3 35 2.7 253 Islington Federal College 345 75% 305 10.4 146 2.6 334 Kensington and Chelsea College 2 0% 1 8 7 3.7 401 St Charles Catholic Sixth Form College 174 12.5 41 3.4 429 The Working Men's College 12 2.3 ------------------------------------------------------------------------ London Outer North ------------------------------------------------------------------------

9 Havering 6th Form Col, Hornchurch 10 100% 375 13.1 21 2.5 31 Elm Park College, Stanmore 69 99% 159 9.8 81 1.7 33 Greenhill College, Harrow 33 97% 299 14.1 36 3.1 48 Leyton Sixth Form College 20 95% 225 9.1 37 3.8 95 Barking College, Romford 219 90% 58 8 27 1.9 105 Havering Col of F & HE, Hornchurch 389 89% 194 11.2 73 2.6 113 Weald College, Harrow 101 88% 417 12 152 2.4 126 Enfield College 66 88% 51 6.2 17 2.4 159 Uxbridge College, Uxbridge 100 84% 122 9.7 106 1.8 181 Newham Community Col, East Ham 34 82% 158 10.6 24 2.4 224 Redbridge College of FE, Romford 161 79% 71 7.9 36 1.6 232 West Thames College, Isleworth 170 78% 141 8.3 37 2.7 265 Hendon College, Colindale 63 73% 86 5.4 26 2.2 283 The College of North East London 46 70% 22 11 63 3.9 284 Barnet College, Barnet 235 70% 172 9.5 106 2.3 293 Southgate College 123 69% 200 8.2 38 2.4 299 Ealing Tertiary College 363 67% 71 6.7 32 3.1 300 Waltham Forest College, Walthamstow 78 67% 64 6.7 31 1.7 321 College of North West London 92 57% 50 5.6 63 1.3 337 Woodhouse College, Finchley 224 19.2 17 7.1 390 St Dominic's 6th Form Col, Harrow 201 13.3 13 3.7 415 G Monoux 6th Fm Col, Walthamstow 218 10.8 33 4.8 430 Newham Sixth Form College, Plaistow 8 8

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ London Inner South ------------------------------------------------------------------------ 11 St Francis Xavier Sixth Form College 19 100% 193 12.6 28 6 52 Christ King 6th Form Col, Lewisham 17 94% 116 11.4 66 2.3 99 Southwark College 174 90% 91 6.4 73 1.5 251 South Thames College 104 76% 159 7.9 103 2.8 305 Westminster College 160 65% 71 6.5 21 1.1 319 Lambeth College 74 58% 52 4.4 46 1.3 326 Lewisham College 56 54% 32 5.7 73 3.2 330 Woolwich College, Plumstead 42 48% 90 7.7 40 2.2 ------------------------------------------------------------------------ London Outer South ------------------------------------------------------------------------ 140 Orpington College of FE 28 86% 414 10.6 108 2.6 153 Bexley College 133 85% 66 8.1 64 2.5 204 Richmond Col, Twickenham 231 80% 768 13.4 116 3.5 226 Carshalton College 67 79% 18 6.3 7 1.1 241 Croydon College 332 77% 251 8.8 78 2.6 273 Merton College, Morden 214 71% 87 11.5 42 2.6 287 Bromley College of F and H Education 186 70% 324 Kingston Col, Kingston-upon-Thames 459 55% 413 12.5 63 2.5 380 John Ruskin College, South Croydon 272 13.8 29 2.5 408 Coulsdon College 191 11.7 34 3.5 419 Merton Sixth Form College, Morden 103 10.2 20 2.8

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ Northern A ------------------------------------------------------------------------ 70 Monkwearmouth College, Sunderland 77 92% 253 12 66 2.2 136 Gateshead College 450 87% 124 7.3 61 1.8 150 South Tyneside College, South Shields 202 85% 306 10.7 43 3.2 187 Newcastle College 385 82% 137 6.1 87 2.4 189 Northum'land Arts & Tech, Ashington 214 82% 37 5.9 33 1.8 208 Tynemouth College, North Shields 10 80% 290 12.5 46 2.3 247 Wearside College, Sunderland 82 76% 307 13.2 33 2.5 329 North Tyneside College, Wallsend 239 51% 96 8.9 51 1.6

------------------------------------------------------------------------ Northern B ------------------------------------------------------------------------ 22 Cleveland Col of FE, Redcar 26 100% 40 3.2 30 1.4 49 New College Durham 129 95% 70 7.7 108 3.3 56 Stockton and Billingham Col of FE 151 94% 30 3.9 32 1.4 57 Cleveland Col of Art & Des 280 94% 26 2.7 65 Peterlee College 81 93% 92 8.8 27 2.2 128 Kirby College of FE, Linthorpe 126 88% 39 4.7 50 1.5 235 Darlington College of Tech 230 78% 15 2.4 35 1 301 Bishop Auckland College 93 67% 3 3.3 15 2.3 306 Hartlepool College of FE, Hartlepool 176 65% 16 3.9 16 1.1 308 Derwentside College, Consett 216 64% 144 10.7 20 1.6 327 Longlands Col of FE, Middlesbrough 184 53% 12 4.8 37 3 355 Prior Pursglove College, Guisborough 228 15.2 14 2.6 359 QE 6th Form Col, Darlington 320 15 32 4.3 365 South Park 6th Form Col, Middlesboro 182 14.5 10 2.6 372 Bede College, Billingham 121 14.1 13 1.5 375 Sir W Turner 6th Form Col, Redcar 104 13.9 5 0.8 383 St Mary's RC College, Middlesbrough 202 13.7 36 2.7 387 Stockton 6th Form Col 275 13.5 13 3.8 410 Acklam Sixth Form College 185 11.6 67 2.1 412 Hartlepool 6th Form Col, Brinkburn 179 11.5 26 2.8 425 Marton 6th Form Col, Middlesbrough 60 7.9 25 1

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ North-west A ------------------------------------------------------------------------ 38 Carlisle College 127 96% 34 7.1 30 1.2 44 Cardinal Newman College, Preston 22 95% 301 16.9 3 5 51 Runshaw College, Leyland 289 94% 392 16.2 27 3.7 67 Burnley College 117 92% 84 13.1 30 3 127 Lancaster and Morecambe Col 164 88% 45 5.7 103 2.6 144 Skelmersdale College 49 86% 33 7.8 32 2.4 202 Kendal College 43 81% 3 2.7 203 Myerscough College, Preston 97 81% 219 Blackpool and Fylde Col, Bispham 224 79% 146 10.8 221 2.8 228 West Cumbria College, Workington 124 79% 10 4 18 1.9 229 Blackburn College 361 78% 233 12.1 66 2.6 238 Nelson and Colne College, Nelson 326 77% 270 15.2 34 5.2 279 Furness College, Barrow-in-Furness 103 71% 8 5 13 2

282 Preston College, Fulwood 376 70% 282 12.7 95 2.7 288 Cumbria Col of Art and Des, Carlisle 10 70% 307 Accrington and Rossendale College 399 64% 160 12.3 26 2.9 353 Barrow-in-Furness Sixth Form College 249 15.5 21 3.1 374 The Blackpool Sixth Form College 408 14 59 3.5 381 St Mary's College, Blackburn 231 13.8 34 2.6 431 Newton Rigg College, Penrith 3 2.7 ------------------------------------------------------------------------ North-west B ------------------------------------------------------------------------ 6 Aquinas College, Stockport 7 100% 303 14.1 23 4 100 Manchester Col of Arts and Tech 60 90% 38 4.9 52 1 112 St John Rigby RC 6th Form Col, Orrell 16 88% 283 13.5 30 3.7 164 Tameside Col of Tech, Ashton 190 84% 41 7.2 43 2.3 175 Salford College, Worsley 66 83% 5 5.6 18 1 176 North Trafford Col of FE, Stretford 109 83% 16 5 10 0.4 205 The Ridge College, Stockport 25 80% 343 13.4 23 1.5 213 Bolton College 370 80% 61 5.2 48 0.8 239 Wigan and Leigh College, Wigan 577 77% 556 11.2 124 2.4

242 Oldham College 266 77% 53 8.1 28 1.1 255 City College Manchester 95 75% 21 6.3 53 2.1 276 South Trafford Col, West Timperley 212 71% 191 8.5 99 2.4 292 Bury College 237 69% 473 12.5 121 1.9 344 Winstanley College, Billinge 462 16.6 19 3.8 357 Holy Cross College, Bury 306 15.1 5 3.2 384 Xaverian College, Manchester 434 13.7 8 5.3 388 Eccles College 231 13.5 11 3.1 391 North Bolton 6th Form Col 261 13.3 16 3 394 De La Salle College, Salford 114 13.2 30 3.3 395 Ashton-under-Lyne 6th Form Col 241 13.1 30 2.7 402 Hyde-Clarendon College, Hyde 346 12.4 18 2.1 406 South Bolton 6th Form Col, Bolton 113 11.8 10 4 407 Loreto College, Manchester 264 11.8 18 3.2 411 Hopwood Hall College, Middleton 280 11.6 62 2.2 413 Stockport College of F & HE 125 11.3 21 1.5 416 Shena Simon College, Manchester 208 10.6 41 2.2 421 North Area College, Heaton Moor 152 9.5 29 1.4 423 Pendleton College, Salford 199 9.4 32 2.1 432 Oldham Sixth Form College 6 3.5

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ North-west C ------------------------------------------------------------------------ 3 Carmel College, St Helens 16 100% 271 14.6 19 2.3 62 King George V College, Southport 15 93% 296 19.1 7 8.3 94 Hugh Baird College, Bootle 155 90% 206 8.8 33 1.5 124 City of Liverpool Comm Col 145 88% 199 6.5 204 1.8 165 Mid-Cheshire FE Col, Northwich 235 84% 15 4.8 17 1.8 177 St Helens College 208 83% 27 3.2 36 0.6 185 Knowsley Community College, Roby 78 82% 71 9.3 50 4 220 South Cheshire College, Crewe 224 79% 210 10.6 53 3.1 231 West Cheshire College, Chester 232 78% 167 8.4 91 2.8 233 Macclesfield FE Col 102 78% 58 8.2 41 1.2 310 Wirral Metro College, Birkenhead 225 64% 153 6.9 138 1.7

313 Halton College, Widnes 169 63% 34 4.8 32 1.7 316 Southport College 399 61% 94 6.7 73 2.9 325 Warrington Collegiate Institute 155 55% 30 5.5 18 2.8 336 Sir John Deane's College, Northwich 325 21 7 4.1 342 Widnes Sixth Form College 299 17.3 24 3.5 363 Priestley College, Warrington 242 14.6 13 5.2 376 Birkenhead 6th Form Col, Claughton 261 13.9 7 0.7 ------------------------------------------------------------------------ North & South Yorkshire & Humberside ------------------------------------------------------------------------ 2 Selby College 245 100% 143 17.3 9 2.7 16 Wyke Sixth Form College, Hull 17 100% 264 10.6 37 3.2 42 Beverley College of Further Education 28 96% 8 5.3 43 Rockingham FE, Col 76 96% 77 East Yorkshire Col of FE, Bridlington 36 92% 4 7 15 1.3 83 Rotherham Col of Arts and Tech 213 91% 61 8.1 44 2.6 129 Bishop Burton College, Beverley 24 88% 147 York Col of F & HE, Dringhouses 224 86% 15 5.6 43 2.6 155 Askham Bryan Col of Ag and Hort 33 85% 168 The Sheffield College 447 83% 640 11.7 242 3.4 182 Grimsby College 125 82% 47 10.6 44 2.7 191 Craven College, Skipton 62 82% 6 4.3 21 2.5

214 North Lindsey College, Scunthorpe 209 80% 9 4.7 64 3.2 234 Hull College 447 78% 94 7.2 102 1.8 236 Rother Valley College, Sheffield 91 78% 3 6.7 311 Barnsley College 322 63% 321 11.3 121 3.3 312 Doncaster College 206 63% 104 8.3 183 2.1 339 York Sixth Form College 352 18.2 14 4.6 360 Scarborough Sixth Form College 267 14.9 18 3.6 366 John Leggott College, Scunthorpe 397 14.5 56 4.4 367 Thomas Rotherham Col, Rotherham 261 14.5 10 2.6 397 Franklin Sixth Form College, Grimsby 241 13 31 5.1 403 Wilberforce College, Hull 210 12.3 11 2.9

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ West Yorkshire ------------------------------------------------------------------------ 1 Notre Dame Sixth Form College, Leeds 23 100% 197 17.8 15 4.7 426 Harrogate Col of Arts and Tech 68 6.7 93 1.6 427 Yorks Cst Col of F & HE, Scarborough 6 4 17 2.1 5 New College Pontefract 5 100% 223 14.3 130 4.8 15 City of Leeds College of Music 4 100% 4 11 12 4.7

19 Shipley College 80 100% 6 5.7 13 0.5 39 Bradford & Ilkley Comm Col, Bradford 277 96% 66 7.1 51 2.2 74 Huddersfield Technical College 323 92% 58 8.1 62 2.1 115 Park Lane College, Leeds 146 88% 136 9.9 76 3.4 158 Dewsbury College 175 84% 79 9.8 43 1.3 167 Wakefield College 388 83% 300 13.1 183 1.6 171 Calderdale College, Halifax 126 83% 21 9 42 2.5 178 Leeds College of Art and Design 224 83% 246 Thomas Danby College, Leeds 120 77% 295 Keighley College 61 69% 13 6.8 17 2.1 298 Airedale and Wharfedale Col, Leeds 405 67% 60 9.6 34 1.4 323 Leeds College of Building 123 56% 328 Joseph Priestley College, Morley 25 52% 4 10.8 8 2.6 331 Leeds College of Technology 108 39% 19 6.9 8 3.7

345 Huddersfield New College 313 16.5 20 3.7 348 Greenhead College, Huddersfield 334 16.3 24 5.2 ------------------------------------------------------------------------ East Midlands A ------------------------------------------------------------------------ 17 Broxtowe College Nottingham, Chilwell 176 100% 103 9.1 58 1.7 37 North Notts Col, Worksop 113 96% 43 7.8 36 2.2 53 South Notts Col, West Bridgford 111 94% 120 9.2 99 1.8 58 Basford Hall College, Nottingham 52 94% 4 0.5 102 West Notts College, Mansfield 212 90% 12 2.3 76 1.7 108 Clarendon College, Nottingham 160 89% 106 9 35 2.7 122 High Peak College, Buxton 161 88% 2 7 16 2 131 South-east Derbyshire Col, Ilkeston 121 87% 318 14.5 106 1.5 157 Mackworth College, Derby 113 84% 268 11.4 59 2.2 245 N Derbyshire Tertiary Col, Clowne 79 77% 73 6.4 24 1.1 260 Arnold and Carlton College, Mapperley 57 74% 32 6.8 53 2.6 277 Newark and Sherwood Col, Newark 118 71% 37 7.8 49 3.1 278 Chesterfield College 231 71% 133 6.8 108 2.8 309 Derby Tertiary College, Wilmorton 168 64% 230 8.5 80 3 317 People's Col of TerE, Nottingham 208 60% 87 6.7 58 1.7 351 Bilborough 6th Form Col, Nottingham 201 15.7 26 2.8 399 High Pavement 6th Form Col, Nott 330 12.8 16 4.1

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ East Midlands B ------------------------------------------------------------------------ 7 Rutland Sixth Form College, Oakham 9 100% 149 14 12 2 21 Wigston College of Further Education 26 100% 14 4.7 11 0.7 23 Brooksby College, Melton Mobray 30 100% 24 Lincs Col of Ag and Hort, Grantham 5 100% 34 Northampton College 182 97% 150 8 48 3.6 50 Hinckley College 22 95% 1 0 10 1 88 Lincs Col of Art and Des, Lincoln 124 90% 1 18 43 4.2 96 Coalville Technical College 49 90% 8 7.3 5 3.6 107 Loughborough College 180 89% 84 10.5 34 1.8 138 Stamford College 88 86% 125 13.2 52 1.9 183 Tresham Institute, Kettering 380 82% 139 9.9 44 3.8

192 Daventry Tertiary College 70 81% 146 12.9 43 2.5 221 Boston College 58 79% 159 9.9 23 2.4 225 North Lincolnshire College, Lincoln 279 79% 143 7.9 102 1.9 230 Melton Mowbray FE Corporation 64 78% 52 9 29 0.6 259 Grantham College 82 74% 75 9.7 58 2.1 261 Leicester South Fields College 50 74% 7 3.4 286 Charles Keene FE Col, Leicester 148 70% 80 6.3 54 2.7 373 Wyggeston and QEI Col, Leicester 360 14.1 13 2.4 418 Gateway Sixth Form College, Leicester 200 10.3 31 3.2 424 Wyggeston 6th Form Col, Leic 158 9.2 14 2.5 ------------------------------------------------------------------------ West Midlands A ------------------------------------------------------------------------ 13 Ludlow College 10 100% 148 12.2 40 4.6 18 Leek Col of FE and School of Art 47 100% 36 7.2 12 1 25 Walford Col of Ag, Shrewsbury 10 100% 68 North Shropshire Col, Oswestry 26 92% 98 12.5 30 2.6 78 Tamworth College, Upper Gungate 76 92% 9 5.1 36 1.1 101 Telford Col Arts & Tech, Wellington 81 90% 3 4.7 45 1.9

103 Cannock Chase Tech Col, Cannock 144 90% 5 2.8 118 Burton-upon-Trent Technical College 189 88% 111 7.6 64 3.2 146 Stoke-on-Trent College 322 86% 83 6 121 1.6 161 Stafford College 300 84% 206 9.1 115 1.7 244 Shrewsbury Col of Arts and Tech 314 77% 78 6.9 48 2.3 267 Newcastle-under-Lyme College 117 72% 209 11.1 82 3 338 Shrewsbury Sixth Form College 295 18.8 4 4.8 346 Stoke-on-T 6th Form Col, Fenton 622 16.5 35 3.1 377 New College Telford, Wellington 299 13.9 14 2.1

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ West Midlands B ------------------------------------------------------------------------ 26 Warks Ag, Hort and Eq Studies Col 5 100% 7 3.1 35 Evesham College 96 97% 27 4.3 7 3.4 71 Stratford-upon-Avon College 170 92% 85 11 49 4.2 91 Mid-Warks Col, Leamington Spa 261 90% 184 10.4 39 2.5 119 Herefordshire Col of Tech, Hereford 51 88% 50 7.6 17 2 154 North Warks Tech and Art, Nuneaton 306 85% 125 8.1 110 2.6 206 Herefordshire Art and Des, Hereford 49 80% 6 13.3 1 2

256 Herefordshire College of Ag, Hereford 71 75% 268 Kidderminster College 81 72% 50 9.8 35 3.6 269 North-east Worcs Col, Bromsgrove 203 72% 82 7.8 82 2.1 274 Worcester College of Technology 327 71% 144 11.5 43 1.5 297 East Warwickshire College, Rugby 90 69% 49 5.2 48 1.6 361 Worcester Sixth Form College 331 14.9 56 4.1 370 Hereford Sixth Form College 370 14.2 17 2.9 396 King Edward VI College, Nuneaton 281 13.1 18 6.6

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ West Midlands C ------------------------------------------------------------------------ 14 Rowley Regis College, Warley 4 100% 144 11.7 36 3.1 20 Bilston Community College 315 100% 20 5.6 17 2 41 South B'ham College, Birmingham 160 96% 32 5.1 52 1.4 59 B'ham Col of Food 153 94% 72 J Chamberlain 6th Form Col, Highgate 13 92% 68 9.8 42 4.4 75 Bournville Col of FE, Northfield 77 92% 97 7.8 49 2.2 82 Josiah Mason 6th Form Col, Erdington 23 91% 173 9.1 39 2.4 84 Henley College Coventry, Bell Green 160 91% 3 5.3 8 1.7

116 Halesowen College 191 88% 409 9.6 35 2.5 117 Stourbridge College 209 88% 47 7.7 17 2.4 121 Wulfrun College, Wolverhampton 352 88% 128 7.1 51 2.6 145 The Solihull College 312 86% 201 7.2 98 2.3 200 Handsworth College, Birmingham 68 81% 5 4.4 13 1 210 Coventry Technical College 146 80% 48 9.6 43 2.1 223 Dudley College of Technology 211 79% 148 9 49 2 252 Walsall Col of Arts and Tech 214 76% 42 7.1 48 2.1 264 North Birmingham College 83 73% 7 5.7 4 0 291 Sutton Coldfield FE Col 179 69% 256 12.6 50 2.8 294 East Birmingham College 36 69% 7 7.1 17 2.5 296 Tile Hill FE College, Coventry 133 69% 54 6.2 41 1.6 315 Sandwell F & HE Col, Wednesbury 247 61% 88 9.6 39 1.7 340 King Edward VI College Stourbridge 406 17.8 13 4.3 354 Solihull Sixth Form College 648 15.3 10 4.5 392 Cadbury 6th Form Col, Kings Norton 332 13.3 23 2.7 420 St Philip's RC 6th Form Col, B'ham 258 9.8 47 2.5 422 M Boulton Col of F & HE, B'ham 228 9.5 43 2 428 Hereward Col of FE, Coventry 2 3 3 1.3

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ Eastern A ------------------------------------------------------------------------ 73 Oaklands College, St Albans 277 92% 292 9.6 72 3.1 97 Aylesbury College 176 90% 70 7.1 51 1.9 109 North Hertfordshire College, Stevenage 170 89% 131 8.1 137 1.4 110 Bedford College of Higher Education 174 89% 74 7.2 68 1.6 111 Barnfield College, Luton 197 89% 41 3.8 56 1.6 143 Isle College, Wisbech 188 86% 88 7.9 24 2.1 149 Cambs Col of Ag & Hort, Milton 36 86% 174 Hertford Regional College, Ware 313 83% 80 6.1 99 1.6 184 Amersham and Wycombe Col 484 82% 196 9.7 111 2.5 227 Dunstable College 335 79% 38 5.3 41 1.1 249 Cambridge Regional College 416 76% 190 9.5 76 2.8 258 West Herts College, Watford 684 74% 160 9.8 180 2.4

262 Peterborough Regional College 176 73% 153 8.8 62 2.5 263 Huntingdonshire Reg Col, Huntingdon 48 73% 26 6.2 63 3.4 333 Milton Keynes College 205 32% 43 9 35 2.5 335 Hills Road 6th Form Col, Cambridge 357 21.4 9 6.6 389 Luton Sixth Form College 533 13.4 93 3.5 393 Long Road 6th Form Col, Cambridge 392 13.3 17 3.4 ------------------------------------------------------------------------ Eastern B ------------------------------------------------------------------------ 27 Norfolk Inst of Art and Des, Norwich 20 100% 40 West Suffolk Col, Bury St Edmunds 77 96% 14 5.9 65 2.5 66 Braintree College 178 93% 35 6.3 17 1.1 86 Thurrock College, Grays 229 91% 34 2.6 93 SE Essex Col of Arts & Tech, Southend 398 90% 110 9.8 54 1.9 120 Lowestoft College 116 88% 48 7.4 43 1.8 133 Norwich City Col of F & HE 289 87% 277 11.1 97 2 151 Colchester Institute 219 85% 175 10.3 84 2.5 169 Basildon College 169 83% 156 10.2 39 2.3 172 The Norfolk Col of Arts and Tech 265 83% 149 7.1 87 2.1 196 Epping Forest College, Loughton 182 81% 361 10.1 58 1.8 198 Chelmsford College 255 81% 196 9.3 62 2.7 250 Great Yarmouth College of FE 45 76% 110 9.3 31 2.5

271 Suffolk College, Ipswich 355 72% 135 6.7 70 2.1 281 SE Essex 6th Form Col, Benfleet 20 70% 544 13 40 4.6 289 Writtle Ag College, Chelmsford 67 70% 314 Harlow College 186 61% 233 10.2 69 3.1 332 Easton College, Norwich 6 33% 343 The Sixth Form College, Colchester 707 17.2 45 4.6 378 Palmers College, Grays 360 13.9 56 2.9 385 E Norfolk 6th Form Col, G Yarmouth 191 13.7 33 3.2 417 Paston 6th Form Col, North Walsham 165 10.4 18 1.6 433 Otley College of Ag and Hort, Ipswich 3 2.7

------------------------------------------------------------------------ A-levels: Vocational 2 or more A levels: fewer qualifications entered than 2 entered (BTec City Num- Aver- Num- Aver- & Guilds) ber age ber age Number en- pts en- pts Rank Name entered % success tered score tered score ------------------------------------------------------------------------ South-west A ------------------------------------------------------------------------ 32 Bridgwater College 141 98% 116 13.5 58 2.4 45 Strode College, Street 128 95% 154 14.4 11 5.5 46 Penwith College, Penzance 22 95% 227 12.4 41 4.1 60 Plymouth College of Art and Design 63 94% 5 3.6 89 North Devon College, Barnstaple 136 90% 265 13.7 13 2.2 104 B'mouth and Poole Art and Des Col 144 90% 132 Weymouth College 175 87% 290 12.3 103 2.1 137 Cannington College, Bridgwater 93 87%

152 B'mouth and Poole FE Col, Parkstone 301 85% 384 8.7 174 1.8 179 East Devon College, Tiverton 91 82% 97 13.3 19 3.2 194 Som'set Arts and Tech Coll, Taunton 278 81% 156 11.6 26 2.8 195 South Devon College, Torquay 126 81% 276 10.7 51 2.5 211 Cornwall College, Redruth 467 80% 71 9.5 35 3.1 215 Yeovil College 234 79% 294 14 49 3 237 Bicton Col of Agr, Budleigh Salterton 9 78% 280 St Austell College 402 70% 361 14.6 84 3.2 304 Exeter College 631 65% 660 12.4 76 3.2 318 Plymouth FE Col 961 58% 130 8.4 91 2.2 362 The Richard Huish Col, Taunton 278 14.8 58 2.3 434 Truro College 2 0 ------------------------------------------------------------------------ South-west B ------------------------------------------------------------------------

8 Cirencester College 17 100% 194 13.3 47 1.8 10 New College Swindon 6 100% 345 12.7 65 5 30 Filton College, Bristol 81 99% 253 13.1 46 2.8 69 Royal Forest of Dean College, Coleford 59 92% 136 12.5 56 2.1 98 Weston-Super-Mare College 126 90% 99 6.9 98 2 106 South Bristol College 74 89% 88 11 83 2.5 123 Soundwell College 69 88% 67 7 89 1 125 Trowbridge College 161 88% 43 6.4 36 3.2 141 Swindon College 188 86% 168 9.8 43 3.1 156 Hartpury College 135 85% 162 Salisbury College 182 84% 80 8.8 55 2.3 180 City of Bath College 261 82% 128 11.1 76 2.3 216 Brunel College of Arts and Technology, Bristol 146 79% 34 12.6 33 2.2 240 Stroud College of Further Education 214 77% 57 10.4 46 3 248 Gloucestershire College of Arts and Technology, Cheltenham 351 76% 215 10.6 78 2.3 257 Nursery Nurses' College of Further Education, Bristol 4 75% 272 Lackham College, Chippenham 29 72% 303 Chippenham College 124 66% 57 8.2 39 2.9 320 St Brendan's Sixth Form College, Brislington 14 57% 345 12.1 17 3 322 Norton Radstock College, Bath 9 56% 6 4.5 15 1.1 ------------------------------------------------------------------------ South-east A ------------------------------------------------------------------------

76 North Oxfordshire College and School of Art, Banbury 63 92% 72 7.1 59 2.5 79 Berkshire College of Art and Design, Maidenhead 37 92% 80 The Henley College, Henley-on-Thames 146 91% 389 12.7 81 2.4 114 Oxford College of Further Education 190 88% 147 10.6 116 2.8 130 Rycotewood College, Thame 40 88% 135 East Berkshire College, Langley 254 87% 424 9.6 253 1.9 160 Abingdon College 55 84% 62 9.7 59 2.7 170 Reading College of Technology 209 83% 138 9.7 40 2.1 270 Bracknell College 124 72% 91 7.1 44 1.2 302 Newbury College 445 66% 89 9.1 59 1.8 414 West Oxfordshire College, Witney 62 11.3 29 3 ------------------------------------------------------------------------ South-east B ------------------------------------------------------------------------ 29 Alton College 83 99% 339 17.2 47 5.5 36 Sparsholt College Hampshire, Winchester 30 97% 64 Basingstoke College of Technology 273 93% 90 9.6 70 2.7 81 Farnborough College of Technology 113 91% 104 9.4 33 2.2 87 Portsmouth College of Art Design and Further Education 45 91% 1 6

139 Totton College, Southampton 7 86% 242 12.2 30 3.2 186 Eastleigh College 228 82% 28 7.1 27 2.5 188 Highbury College of Technology, Portsmouth 128 82% 30 6.1 32 1.4 190 The Isle of Wight College, Newport 153 82% 19 5.2 53 2.6 193 South Downs College, Havant 198 81% 194 11.8 46 2.5 207 Cricklade College, Andover 46 80% 224 12.9 47 3.1 217 Brockenhurst College 135 79% 400 12.5 93 3.2 218 Itchen College, Bitterne 14 79% 233 12.3 39 3 266 St Vincent College, Gosport 79 72% 256 13.2 45 2.5 275 Southampton Technical College 305 71% 63 8.7 35 3 290 Fareham College 265 69% 311 13.1 58 2.7 341 Peter Symonds' College, Winchester 492 17.7 26 4.3 352 The Sixth Form College, Farnborough 433 15.6 28 4.5 356 Barton Peveril College, Eastleigh 543 15.2 43 3.3 368 Havant College 419 14.4 10 5 382 Queen Mary's College, Basingstoke 511 13.8 44 3.5 398 Portsmouth College 199 12.9 41 3.3 404 Taunton's College, Southampton 286 12.2 42 3.8 ------------------------------------------------------------------------ South-east C ------------------------------------------------------------------------

12 Woking College 12 100% 213 12.4 28 2.6 47 Brooklands College, Weybridge 202 95% 284 11.1 24 2.9 55 Crawley College 31 94% 31 5.1 32 3.5 61 Epsom School of Art and Design 223 94% 85 Northbrook College of Further & Higher Ed, Goring-by-Sea 251 91% 31 5 30 1.9 166 Chichester College of Arts, Science and Technology 275 83% 228 13.7 87 3 173 East Surrey College, Gatton Point 458 83% 61 6.7 26 3 243 North East Surrey College of Technology, Ewell 172 77% 170 7.9 56 1.5 254 Guildford College of Further and Higher Education 499 75% 225 10.3 55 2.6 347 Godalming College 421 16.4 33 4.3 349 Worthing Sixth Form College 339 16.3 53 3.6 358 The College of Richard Collyer in Horsham 301 15.1 22 4.2 369 Farnham College 213 14.4 37 4.9 371 Haywards Heath College 398 14.2 30 4.5 386 Esher College, Thames Ditton 336 13.7 22 2.8 400 Strode's College, Egham 185 12.7 91 3.4 405 Reigate College 309 12.1 23 3.4 409 Spelthorne College, Ashford 106 11.7 26 2.6 ------------------------------------------------------------------------ South-east D ------------------------------------------------------------------------

4 Bexhill College, Bexhill-on-Sea 9 100% 283 14.6 73 2.7 28 Hadlow College of Agriculture and Horticulture, Tonbridge 2 100% 54 Canterbury College 300 94% 98 9.2 67 2.8 63 Thanet College, Broadstairs 92 93% 132 10.1 42 3 90 Lewes Tertiary College 94 90% 289 10.9 64 2.3 92 South Kent College, Folkstone 201 90% 124 10 38 2.8 134 West Kent College, Tonbridge 598 87% 355 10.5 206 3.6 148 North West Kent College of Technology, Dartford 86 86% 25 5.1 11 3.1 163 Mid-Kent College of Higher and Further Education, Chatham 119 84% 260 8.6 51 2.3 199 Brighton College of Technology 94 81% 99 7.4 62 2.5 222 Eastbourne College of Arts and Technology 134 79% 60 9.4 54 2.4 285 Hastings College of Arts and Technology, St Leonards-on-Sea 113 70% 10 9.5 51 2.6 350 Varndean College, Brighton 254 16.2 36 2.9 364 Brighton Hove and Sussex Sixth Form College, Hove 342 14.6 31 4.6

379 Eastbourne Sixth Form College 199 13.9 14 5.3 ------------------------------------------------------------------------

As foreshadowed at the interim stage, Rodime, the Glasgow-based disk drive technology licensing company, fell into the red for the year to September 30. It blamed increased litigation spending and lower licensing income.

The pre-tax loss was Dollars 2.14m (Pounds 1.4m) against profits of Dollars 1.69m. Losses per share came out at 1.7 cents, against earnings of 0.8 cents.

The company is still in litigation over patent infringements with three US disk drive manufacturers - Seagate Technology, Maxtor and Quantum. During the year the company completed agreements with Samsung Electronics and Sony.

Mr Malcolm McIver, chairman, said that no significant agreements had been reached in the second half as other companies deferred or delayed negotiations until the outcome of the three cases was known.

Operating income fell from Dollars 8.69m to Dollars 4.18m.

Bank debts were cut over the year by Dollars 2.7m. The company has, however, negotiated with the Bank of Scotland an Dollars 8m increase in its Dollars 3m revolving credit facility.

Mr McIver said that would provide sufficient resources to complete its patent infringement strategy through litigation or negotiation.

The company produced the first 3.5 inch disk drive in the early 1980s. It has since ceased production and is concentrating on gaining income from licensing. During the year it completed the disposal of assets of its subsidiaries and the renegotiation of some obligations of its offshoots which Rodime had guaranteed.

Charles de Gaulle airport in Paris has its own way of adding to the disorientation of a traveller arriving in an unfamiliar city.

Getting to the city centre by rail involves a ride first on an airport bus to the nearby RER suburban railway station. Then follows a battle to figure out how the RER connects with the Metro underground system, for French railway maps lack the clean-lined simplicity of their UK counterparts.

Hence the attraction of the new Roissy Bus service from the airport to the Paris Opera in the centre of the city.

The advantage of this service, which leaves the airport every 15 minutes, is that you use only one mode of transport. At FFr30 each way, it also costs less than taking a taxi.

However, the experience of a recent one-day trip to Paris from London suggests that the bus is best avoided. The vagaries of the city's traffic make the service too unreliable for anyone with appointments to keep and flights to catch.

My journey from Charles de Gaulle began at 11.35am. Despite repeated warnings of imminent traffic snarl-ups on lighted signs above the motorway, the bus kept moving. The only incident was a near collision with a car - shrugged off by both parties without any swearing or hooting. We arrived at the Opera at 12.18 pm - total journey time 43 minutes.

The relatively painless ride resulted in a decision to take the bus back to the airport, leaving the Opera at 6pm. With a British Airways flight back to London at 7.30pm, it was cutting it a little fine, but I assumed there would be less traffic on the way back than there had been at mid-day on my way in.

This was a mistake. The traffic leaving the city was so heavy that I finally arrived at the airport at 7.15pm - tight for time and only just able to get on to the flight.

So it will be back to the railway in future. The same journey by RER and Metro costs FFr39.50 and should take about 40 minutes.

Understanding that system may requires a little concentration but it has the advantage of being reliable - provided no industrial action is taking place.

For most business travellers to New York, fighting the locals for pavement space is the only exercise they ever get.

In such a crowded, noisy place, who could imagine jogging, or even taking a leisurely walk? However, New York offers jogging and walking routes with ample breathing space.

When they want the solitude of woods and water, New York runners head for Central Park, the leafy, 843-acre urban sanctuary opened in 1876. The park's department says it has the city's lowest crime rate. But it recommends runners avoid the park at night and run with a partner if possible.

One of the most popular routes in the park is a 1.6-mile gravel track around the Reservoir, the largest body of water in Manhattan. The access point is at 90th St. and Fifth Ave. The reservoir offers mallard on the water and occasional appearances by such celebrity exercisers as Jacqueline Kennedy Onassis and Madonna.

For a longer course, there is Central Park's auto loop - six miles of hard-surface road closed to traffic on weekends. The auto loop bypasses great expanses of woods and lawns, including one near West 72nd St called Strawberry Fields, which is dedicated to the memory of John Lennon.

A run in Central Park takes you past many Victorian-era architectural gems. One is Belvedere Castle, built in 1872 of the same stone that is found thrusting dramatically out of much of the parks' landscape. With Norman, Gothic and Moorish features, it overlooks the Great Lawn's softball fields. Other popular access points to Central Park are at its south-east entry (Fifth Ave and 60th St) and south-west corner (Columbus circle).

In the thick of Broadway traffic, it might be hard to remember that New York is an island. But a refreshing jog along some of the city's waterfront promenades will quickly set you straight. Skirting the Hudson River, the one-and-a- half-mile-long Battery Park City Esplanade begins at the downtown intersections of Chambers and West Streets.

It continues south almost to Battery Park and the tip of lower Manhattan. The route takes you past the World Financial Center and the North Cove Yacht Harbor. The Hudson kicks up stiff breezes. These are cooling in summer but blood-chilling in winter.

On the east side of Manhattan, the East River Esplanade offers a three-mile course, from 63rd St, north to 125th St. On the left, cars whiz by on the FDR Drive. But there are more tranquil sights, such as Gracie Mansion in Carl Schurz Park. Built as a country manor house in 1779 by wealthy merchant Archibald Gracie, it is now the official home of the city's mayor.

Many New York hotels offer advice on the best running routes. The Ritz-Carlton, on Central Park South, distributes maps to its guests that detail three routes of varying length. The maps also list emergency telephone aid numbers.

For more information on running in New York, contact the New York Road Runners Club, at (212) 860-4455.

Airlines desperate for business passengers to fill their aircraft in the slack winter season are vying with each other to offer the most attractive deals.

Across Europe, airlines are wooing their most lucrative clients, the business executives, with special offers. German and UK residents, especially, are on the receiving end of the best prizes, ranging from price cuts to free flights and overnight stays in luxury hotels.

The airlines' main weapon is the 'frequent flyer' programme. When taking flights, members of programmes earn points which can be redeemed for items such as free tickets or upgrades to business class.

Anyone can join an airline's frequent-flyer programme and there is no reason why someone should not join several. In the UK, British Airways' 'Dream Ticket' promotion has the highest profile. But behind the hype this is simply a promise to double the number of points collected for a flight taken before the end of March. This means that one business-class return to New York would earn enough points for an economy return to Athens. In the summer, it would have taken two such flights. As always with UK residents flying with BA, the deal only applies for first, business and full-fare economy tickets.

Many business travellers buy discounted tickets: in this case, US carriers such as American Airlines and United Airlines offer a better deal. Their double-points offer, for UK residents only, applies for virtually any fare available. On short-haul flights, British Midland also gives awards to buyers of economy-class tickets.

For those living in Germany, this will seem tame stuff. BA and American Airlines will triple the points earned by German residents over the next few months. Cathay Pacific, the Hong Kong-based carrier, is offering enough points with one business-class return to the Far East between now and the end of December for a free business-class ticket within Europe on Austrian Airlines or Swissair.

The desperation to attract German passengers may be because of the depth of the country's recession. Mr Colin Rainbow, commercial director of Paris-based travel agency Wagon-Lits, says that for the first time airlines are selling seats at less than published prices in Germany.

Danish residents, too, can find discounted tickets: business-class fares on Scandinavian Airline System on some short-haul routes have been cut by 30 per cent. SAS is also offering business-class passengers starting from the UK a free overnight stay in a Scandinavian hotel, provided the trip is made before the end of March. Alitalia has a similar scheme for flights from Italy to London before December 31. Business-class passengers get a free night in a London hotel.

This is only a selection of the deals on offer. And the tide of special deals is unlikely to ebb until spring. There is still a recession in the airline industry and over-capacity is widespread. That combination in recent years has meant fringe benefits and cost savings improve through the season.

If - like a quarter of Europe's business air travellers according to a recent survey - your choice of carrier is determined by awards of frequent-flyer points, winter is a chance to push up your total quickly.

Alastair Dempster as chairman of TSB FUND MANAGERS (Channel Islands) on the resignation of Michael Ramsay.

CANADA is urging the US and Mexico to set up a high-profile mechanism to negotiate new anti-dumping and subsidy rules within a specific time frame under the North American Free Trade Agreement.

Mr Jean Chretien, Canada's prime minister, is expected to tell President Bill Clinton when the two men meet in Seattle today that Canada's implementation of Nafta on January 1 is conditional on the creation of working groups, or similar bodies, to deal expeditiously with these issues.

Mr Roy MacLaren, Canada's trade minister, yesterday indicated however, that the new Liberal government, which came to office last month, was unlikely to delay Nafta's implementation.

US anti-dumping and countervail actions have been at the heart of several acrimonious trade disputes with Canada over the past few years, including softwood lumber and pork. Most recently, Washington has threatened to act against alleged subsidies on Canadian durum wheat.

'At the very least, the government wants to ensure that the anti-dumping issue is front and centre,' a senior government official said yesterday.

Nafta already provides for a working party on trade and competition policy, and for further examination of subsidies.

Canada's concerns on subsidies would be substantially addressed by a successful conclusion of the Uruguay Round of multilateral trade negotiations. But the Uruguay Round would do little to reform anti-dumping rules.

Nafta's approval by the US House of Representatives had little impact on Canadian financial markets yesterday. Mr Michael Manford, chief economist at ScotiaMcLeod in Toronto, said that Nafta had been overshadowed by concerns about widening federal and provincial budget deficits.

Nafta is expected to have a far smaller impact on the Canadian economy than the four-year-old US-Canada free trade agreement. Canada's trade with Mexico totals about CDollars 3bn a year, a fraction of its trade with the US.

Mr Manford said that Nafta might be mildly damaging to Canadian business in the short term, as some labour-intensive sectors, such as textiles and shoe manufacturers, moved production facilities to Mexico. But these losses are expected to be offset later by rising exports to Mexico.

The industry is still under pressure as illustrated by the recent takeovers of Gucci, the Italian leather company, and Yves Saint-Laurent, the French fashion house. But the situation is improving as the global economy edges towards recovery. The surviving companies must adapt their marketing strategies to meet the new demands of the luxury market after the recession.

During the 1980s, the dominant theme in the luxury business was expansion, as new customers entered the traditional markets of Europe and North America and Japan emerged as a dynamic new market for expensive western goods. Whereas the industry's old customers had preferred to pay more for products which were distinctive - either because they were made in limited editions or designed to particular specifications - all that the nouveau consumers wanted were instantly recognisable status symbols.

The most successful luxury products were the obvious ones: Chanel suits with tell-tale double Cs on the gilded buttons and Louis Vuitton luggage emblazoned with LV initials.

The recession has weeded out some of the nouveau consumers and reshaped consumer taste after the ostentation of the 1980s. 'People show off less than they used to,' says Francoise Jollant-Kneebone, design director of Louis Vuitton, the French luggage house. 'They're still prepared to spend a lot of money on an expensive product, but only if they're certain that it is of really high quality and that it will last.'

The most successful companies of the early 1990s are those that have recognised these changes. Hermes of France has prospered by sticking to its specialist niche at the top of the market with its 135 scarves and 1,970 hand-made bags: as has Asprey, the British concern, that has turned its Bond Street store into the gift shop for the world's super-rich.

'This business is all about scale,' says Peter Wallis, director of SRU, the London-based management consultancy. 'It's perfectly possible for people to operate successfully in luxury goods today, but they have to accept that there are limitations to the size of the market.'

Hermes and Asprey have acknowledged the constraints. Hermes plans to continue to expand the international network of shops that fuelled its growth in the 1980s: but Jean-Louis Dumas, chairman, has said the pace of openings will be slower in the 1990s.

Naim Attallah, group chief executive of Asprey, is adamant that he will not expand the original Asprey company. 'It's a very special business,' he says. 'If we opened Aspreys all over the world, we'd risk ruining it.'

The luxury companies have had to adapt their product ranges to meet the new demands of the 1990s. The backlash against the 'throwaway' ethos of the 1980s means people are buying fewer expensive items, but are prepared to pay more for them if they are convinced they will last.

Jollant-Kneebone says fewer of Louis Vuitton's customers 'come back to buy a new bag every six months', but there has been a sharp increase in sales of customised luggage, which is often more expensive than standard lines.

In design terms this has triggered a shift towards classic styles which will not date. The focus of fashion has swung from the glitz of Chanel to the subtler looks of designers such as Jil Sander in Hamburg and Prada in Milan, which have both expanded despite the recession.

The change in taste is already reflected in luxury advertising. The glossy advertisements in Vogue and Vanity Fair now tend to dwell on exclusivity, craftsmanship and the long history of their companies, rather than the materialistic imagery of the 1980s.

Service is an increasingly important component of luxury marketing as consumers demand more reassurance about the quality and durability of the products they are buying. 'Our customers are more discerning,' says Attallah. 'We must make sure our staff are properly informed about everything in our range.'

Repairs and renovation are also expanding. Customers of Cutler & Gross, the London optician, can calm their ecological consciences by paying Pounds 35 to have their sunglasses reconditioned, rather than spending Pounds 70 on a new pair.

The financial strains on the luxury business are now easing as the US and UK come out of recession and the growth of the emerging Asian economies - South Korea, Taiwan and, most recently, China - compensates for the weakness of Japan. But no one expects the industry to return to the heady growth of the 1980s and the themes of exclusivity, high quality and sophisticated service are likely to dominate luxury marketing into the 1990s.

'A lot of people in the 1980s thought that this business was all about marketing in the conventional fast-moving -consumer-goods sense,' says Wallis of SRU. 'It might have been at the time but it certainly isn't now. It's about developing a brand with a clearly-defined market position.'

Paul Holt has been promoted to personnel and pr director of BICC CABLES. and

COMMERZBANK yesterday became the first German private sector bank to have its long-term credit rating downgraded, reflecting the impact of the European recession.

Moody's Investors Service blamed a deterioration in the bank's asset quality for its cut in debt ratings of the bank, one of the three big German 'Grossbanken'.

The downgrading prompted a sharp response from Commerzbank, which said its operating profits after provisions for bad and doubtful debt rose by a good 50 per cent in the first nine months of the year.

'Commerzbank today is a bank with strong earnings, a modern organisational structure, and internationally oriented,' it said.

It said the downgrading was temporary, stressing that its rating remained higher than for other private sector international banks and that its top Prime-1 rating for commercial paper remained unchanged.

Moody's reduced the long-term rating for the bank's senior debt to Aa2 from Aa1, saying that despite the bank's strong operating income Commerzbank's ability to 'cover high provisions with sustainable core earnings has deteriorated somewhat' and that its capitalisation was at the low end of its peer group. The senior debt rating of its Luxembourg subsidiary was lowered to Aa3 from Aa2. The downgrading affects some Dollars 3.9bn of long-term debt.

'We believe Commerzbank probably has been a little less conservative than its immediate peers and may be hit a little harder by the recession,' said Mr Gunther Stur, a senior analyst at Moody's in New York.

Commerzbank said that despite an increase in provisions to cover domestic bad and doubtful debts, the total outlay for provisions this year was likely to be lower than in previous years. This was because there were unlikely to be an increase loan loss reserves to cover country risks, the bank said.

------------------------------------------------------------------------ INVESTMENT TRUSTS ------------------------------------------------------------------------ UK General ------------------------------------------------------------------------ Disc't Mkt Share to Cap 1 2 5 10 price NAV (Pounds Yld yr yrs yrs yrs (p) (%) m) (5) ------------------------------------------------------------------------ Keystone 50p 1488 1377 2284 5661 544.0 9 77.2 3.4 Albany 20p 1383 1325 2097 5263 123.0 8 12.3 4.1 Fleming Claverhouse 25p 1240 1219 2053 6501 207.0 -1 110.3 3.2 Whitbread Invst Co 25p 1338 1272 2029 5894 680.0 - 429.1 3.0 Finsbury Trust 1809 1370 1424 3413 131.0 20 10.5 3.1 Govett Strategic 10p 1669 1393 1414 3169 269.0 9 264.2 3.1 CSC 25p 1417 1151 712 1441 99.0 - 1.6 5.1 ------------------------------------------------------------------------ SECTOR AVERAGE 1463 1333 1716 4477 - - 103.7 3.8

------------------------------------------------------------------------ UK Capital Growth ------------------------------------------------------------------------ Practical Inv Co 10p 1403 1268 2118 - 145.0 - 29.0 4.0 Ldn & St Lawrence Inv 5p 1468 1399 2060 5456 155.0 - 29.2 2.7 Fleming Enterprise 25p 1568 1278 1887 6356 195.0 5 78.0 3.0 New Guernsey Secs 25p 1467 1325 1429 - 110.0 - 2.2 - Multitrust 25p 1954 1865 1411 - 67.0 - 2.9 5.0 Berry Starquest 1 1604 1357 1367 - 193.0 12 10.0 1.4 Welsh Industrial 5p 1874 1576 1022 - 180.0 - 2.4 2.8 ------------------------------------------------------------------------

SECTOR AVERAGE 1601 1438 1613 5906 - - 22.0 3.1 ------------------------------------------------------------------------ UK Income Growth ------------------------------------------------------------------------ Equity Consort 1 1473 1508 2517 5544 660.0 - 14.3 4.7 Value & Income 10p 1780 1702 2486 4013 112.0 -3 47.5 4.0 TR City of London 25p 1386 1343 2454 8317 148.5 -5 295.7 4.0 Murray Income 25p 1429 1428 2364 6273 340.0 - 284.9 4.0 Equity Consort Dfd 50p 1251 1296 2314 4488 1065.0 - 23.1 4.7 Lowland Invst Co 25p 1429 1399 2270 7261 278.0 4 63.9 3.8 Merchants 25p 1404 1260 2243 5373 268.0 2 274.2 5.2 Investors Capital 25p 1344 1314 2139 4556 139.5 - 345.1 4.6 Dunedin Income Gth 25p 1285 1214 2095 4362 650.0 3 206.0 5.0 Temple Bar 25p 1397 1348 2042 6071 335.0 4 192.0 4.9 ------------------------------------------------------------------------ SECTOR AVERAGE 1422 1381 2292 5626 - - 158.5 4.6 ------------------------------------------------------------------------ Europe ------------------------------------------------------------------------ Second Market Inv Co 50p 1632 1877 3123 - 393.0 - 40.5 0.6 Fleming Continental Euro 1545 1351 2355 5272 306.0 3 199.8 1.1 For & Colonial Eurotrust 1343 1316 2016 5823 210.0 - 123.9 0.7 Continental Assets 75p 1361 1191 2001 - 185.0 - 40.1 1.6 Gartmore European 50p 1543 1554 1749 2090 125.0 2 21.3 1.1 Thornton Pan Eur 10p 1505 1247 1169 1543 35.0 8 5.2 3.6 ------------------------------------------------------------------------ SECTOR AVERAGE 1504 1368 2069 3682 - - 53.3 1.2 ------------------------------------------------------------------------ Disc't Mkt Share to Cap 1 2 5 10 price NAV (Pounds Yld yr yrs yrs yrs (p) (%) m) (5) ------------------------------------------------------------------------ International ------------------------------------------------------------------------ Bankers 25p 1636 1606 2814 7444 183.0 1 283.5 2.4 Law Debenture Corp 25p 1408 1471 2713 7516 668.0 - 151.6 3.4 Foreign & Colonial 25p 1454 1425 2528 6361 248.0 6 1303.2 1.7 Alliance 25p 1342 1331 2458 5310 1744.0 7 879.0 3.2 Second Alliance 25p 1336 1322 2424 5307 1530.0 9 293.8 3.2 Scottish Mortgage & Trust 1409 1414 2382 5283 211.0 11 761.1 2.4 British Investment 25p 1441 1439 2328 5815 192.0 - 599.0 2.9 Edinburgh Investment 25p 1362 1291 2238 4333 293.0 9 860.8 3.6 Mid Wynd 25p 1556 1403 2209 4361 344.0 13 17.3 2.2 Majedie 10p 1338 1391 2202 6108 193.0 13 101.3 3.1 ------------------------------------------------------------------------

SECTOR AVERAGE 1399 1358 2203 5230 - - 398.8 3.0 ------------------------------------------------------------------------ International Capital Growth ------------------------------------------------------------------------ English & Scottish Invstrs 1510 1536 2712 5330 109.0 5 175.2 2.0 Electric & General 5p 1534 1541 2636 5259 180.0 8 162.7 2.2

Monks 25p 1499 1369 2497 5157 482.0 9 374.0 1.7 Murray Smaller Mkts 25p 1622 1495 2488 7217 370.0 4 207.6 1.4 USDC 100p 1507 1471 2129 - 224.0 14 82.0 2.5 RIT Capital Partners 1 1486 1600 2122 - 149.0 - 268.8 1.0 Selective Assets 10p 1787 1576 2100 - 154.0 16 44.5 1.0 Baring Stratton 50p 1375 1294 2086 - 201.0 15 25.4 1.4 Dunedin Worldwide 25p 1512 1352 2073 3758 676.0 15 226.5 1.8 Anglo & Overseas 25p 1579 1474 2069 5151 398.0 14 454.5 2.2 ------------------------------------------------------------------------ SECTOR AVERAGE 1520 1459 2117 4629 - - 142.3 2.2 ------------------------------------------------------------------------ North America ------------------------------------------------------------------------ Fleming American 25p 1538 1523 2485 3439 288.0 9 190.7 0.3 American 25p 1521 1560 2280 3621 259.0 14 215.7 2.4 ------------------------------------------------------------------------ SECTOR AVERAGE 1575 1433 2383 3530 - - 103.2 1.0 ------------------------------------------------------------------------ Disc't Mkt Share to Cap 1 2 5 10 price NAV (Pounds Yld yr yrs yrs yrs (p) (%) m) (5) ------------------------------------------------------------------------ Japan ------------------------------------------------------------------------ Baillie Gifford Shin Nippon 1940 1184 2012 - 161.0 2 25.8 - Fleming Japanese 25p 1932 1385 1997 5345 239.0 4 275.6 0.2 GT Japan 25p 1843 1117 1714 4132 243.0 5 151.6 0.6 Baillie Gifford Japan 25p 1847 1239 1711 4518 746.0 3 82.1 - ------------------------------------------------------------------------ SECTOR AVERAGE 1867 1207 1859 4665 - - 89.8 0.4 ------------------------------------------------------------------------ Martin Currie Pacific 50p 1614 1386 2351 - 129.0 - 52.9 0.1 Govett Oriental 25p 2110 1801 2307 6484 312.0 10 560.7 0.4 Foreign & Colonial Pacific 1823 1498 2288 5988 291.0 6 309.9 0.9 Fleming Far Eastern 25p 1744 1476 1842 4697 318.0 11 480.8 0.4 Drayton Far Eastern 25p 1739 1250 1840 6477 124.5 13 143.9 0.6

------------------------------------------------------------------------ SECTOR AVERAGE 1789 1555 2126 5911 - - 269.9 1.0 ------------------------------------------------------------------------ Far East excluding Japan ------------------------------------------------------------------------ EFM Dragon 5p 1752 2020 3330 - 20.5 6 218.2 0.4 Pacific Assets 50p 1747 1898 2980 - 390.0 -3 77.2 0.4 TR Pacific 5p 1901 2139 2913 8927 163.0 - 109.2 0.3 ------------------------------------------------------------------------ SECTOR AVERAGE 1933 2045 3074 8927 - - 87.4 0.4 ------------------------------------------------------------------------ International Income ------------------------------------------------------------------------ Murray International 25p 1438 1478 2266 5505 328.0 2 394.3 4.5 Securities Trust of Scotland 1360 1282 2142 6475 87.5 2 280.3 4.6 British Assets 25p 1384 1310 1975 4411 105.5 3 405.1 5.1 ------------------------------------------------------------------------ SECTOR AVERAGE 1409 1374 2128 5464 - - 192.5 4.4 ------------------------------------------------------------------------ Disc't Mkt Share to Cap 1 2 5 10 price NAV (Pounds Yld yr yrs yrs yrs (p) (%) m) (5) ------------------------------------------------------------------------ Smaller Companies

------------------------------------------------------------------------ For & Colonial Sml Cos 1898 1754 2512 5648 164.0 - 146.3 1.4 Henderson Strata 25p 1709 1634 2273 - 246.0 2 41.1 0.7 Fleming Mercantile 25p 1332 1231 1804 4258 278.0 14 401.7 3.0 Saint Andrew 25p 1426 1240 1743 4421 274.0 10 94.3 3.4 Fleming Fledgling 25p 1583 1369 1730 3806 323.0 10 40.7 1.2 TR Smaller Companies 25p 1689 1327 1648 5170 186.0 2 331.5 2.6 London Atlantic 25p 1344 1251 1548 3931 88.0 12 40.2 4.4 North British Canadian 25p 1288 1222 1467 4579 116.0 13 31.3 3.7 Moorgate 25p 1329 1169 1432 6505 146.0 -1 41.3 3.6 Dundee & London 25p 1387 1157 1231 2779 285.0 2 47.9 3.9 ------------------------------------------------------------------------

SECTOR AVERAGE 1577 1339 1477 4024 - - 82.2 3.1 ------------------------------------------------------------------------ High Income ------------------------------------------------------------------------ English National Pref 1 1577 1487 1963 6154 348.0 4 6.1 5.8 English National Deferred 1766 1425 1941 4435 265.0 7 5.3 5.3 Shires 50p 1478 1276 1753 3318 277.0 1 70.4 7.6 ------------------------------------------------------------------------ SECTOR AVERAGE 1431 1290 1886 4636 - - 25.5 6.3 ------------------------------------------------------------------------

Tables show the value, as at October 1, of a Pounds 1,000 investment over different periods. Unit trusts are given on an offer-to-bid basis with net income reinvested. Investment trusts are on a mid-market basis with net income reinvested. The order in which trusts are listed is based on performance over five years, so that funds with less than five years' performance are omitted. Market statistics provided by HSW Ltd (0625 511311), using Financial Times data. Copyright Hardwick Stafford Wright Limited 1993

------------------------------------------------------------------------ UNIT TRUSTS ------------------------------------------------------------------------ UK General ------------------------------------------------------------------------ Dividends 1 year 2 yrs 5 yrs 10 yrs Yield Paid ------------------------------------------------------------------------ Schroder UK Equity Inc 1286 1297 1989 4734 2.5 2,8 AXA E&L General Inc 1218 1217 1929 3934 2.4 5,11 Hambros Model Portfolio 1278 1275 1909 - 2.1 4,10 London & Manchester General 1178 1190 1839 - 2.6 6,12 NFU Avon Equity 1199 1171 1796 - 3.0 2,8 Norwich UK Equity 1186 1203 1789 3621 3.0 4,10 Royal Life UK Index Tracking 1190 1189 1788 - 3.2 6,12 Five Arrows Major UK Cos 1103 1145 1786 - 2.4 1,7 Baring Portfolio Inc 1245 1279 1783 4000 3.2 4,10 Allied Dunbar Accumulator 1176 1186 1777 3734 2.9 - Swiss Life Equity Acc 1189 1176 1772 4200 2.1 - Eagle Star UK Balanced Inc 1181 1279 1761 - 2.4 1,7 Barclays Uni General 1226 1230 1761 5084 2.8 5,11 Allied Dunbar Balanced 1210 1175 1760 3992 2.4 1,7 AXA E&L UK Growth Inc 1182 1165 1758 3661 2.5 6,12 Lloyds Bank Balanced 1191 1173 1754 3818 2.6 6,12 Allied Dunbar Growth & Income 1213 1170 1742 3976 3.0 5,11 Schroder UK Index Acc Inst 1203 1186 1738 - 3.0 - Standard Life UK Large Co Inc 1140 1160 1733 - 3.6 5,11 Standard Life UK Equ Gen Inc 1133 1128 1725 4204 2.1 5,11 ------------------------------------------------------------------------ SECTOR AVERAGE 1226 1190 1594 4090 2.7 - ------------------------------------------------------------------------ UK Growth ------------------------------------------------------------------------ Schroder UK Enterprise Acc 1381 1438 2553 - 2.1 - Pembroke Accumulation 1407 1543 2276 - 3.6 - AIB Grofund Equity 1206 1302 2189 5361 1.1 6 Gartmore British Growth 1247 1286 2104 - 2.1 3,9 Standard Life UK Equ Gth Acc 1228 1238 1961 - 1.2 - Perpetual UK Growth 1362 1331 1952 - 2.7 - Capability Growth Inc 1191 1304 1941 5043 2.3 4,10 Mercury British Blue Chip Acc 1164 1184 1885 - 3.2 - PC Technical Analysis 1176 1281 1848 - 0.8 - Cannon Lincoln UK Capital Gth 1304 1222 1828 3972 1.8 5,11 Legal & General UK Recovery 1354 1351 1824 - 1.9 6,12 Abbey Assets & Earnings 1259 1270 1813 5272 2.1 6,12 Midland British Acc 1158 1150 1812 - 2.0 - Jupiter Merlin UK Growth 1380 1329 1803 - 1.9 2,8 LAS UK Equity Trust 1257 1243 1788 - 2.7 6,12 Fidelity UK Growth 1270 1343 1784 - - - TSB British Growth Acc 1192 1150 1782 - 1.9 - Smith & Williamson Growth 1211 1279 1782 - 1.4 3,9 Allied Dunbar UK Special Sits 1209 1218 1750 4302 2.0 4,10 Fleming BS Growth Acc 1163 1214 1732 - 2.9 - ------------------------------------------------------------------------ SECTOR AVERAGE 1269 1211 1508 3824 2.1 - ------------------------------------------------------------------------ Dividends 1 year 2 yrs 5 yrs 10 yrs Yield Paid ------------------------------------------------------------------------ UK Equity Income ------------------------------------------------------------------------ Newton Income 1286 1340 2189 - 3.5 2,5,8,11 Eagle Star UK High Incom Inc 1274 1267 1919 - 5.7 6,12 Jupiter Merlin Income 1424 1506 1840 - 4.6 2,8 Credit Suisse Income Inc 1284 1303 1830 5073 3.8 6,12

Lazard UK Income 1332 1263 1829 4754 3.8 3,6,9,12 Morgan Grenfell UK Equity Acc 1405 1379 1823 - 3.7 - Perpetual Income 1414 1331 1813 5207 3.0 5,11 CU PPT Equity Income Inc 1262 1203 1806 5281 5.3 3,9 Laurentian High Income 1256 1174 1804 - 3.7 2,8 James Capel Income 1286 1215 1789 6198 3.8 6,12 London & Manchester Income 1340 1233 1773 - 4.9 4,10 AXA E&L High Income Inc 1315 1234 1769 5697 3.6 6,12 Brown Shipley Income 1337 1395 1762 5125 3.7 6,12 Schroder Income Inc 1400 1325 1760 5135 3.9 4,10 GT Income 1569 1450 1741 4318 5.9 4,10 Capital House Inc & Growth 1143 1154 1739 - 4.3 5,11 Five Arrows UK Equity Income 1203 1213 1729 5271 3.9 6,12 Pearl Income 1279 1218 1708 5493 3.2 5,11 M&G Dividend 1418 1331 1698 5532 4.0 1,7 Allied Dunbar High Yield 1275 1196 1688 4237 3.5 6,12 ------------------------------------------------------------------------ SECTOR AVERAGE 1316 1213 1567 4855 4.1 - ------------------------------------------------------------------------ Dividends 1 year 2 yrs 5 yrs 10 yrs Yield Paid ------------------------------------------------------------------------ UK Balanced ------------------------------------------------------------------------ Perpetual High Income 1433 1431 2200 - 4.2 2,8 Sun Life Cap Protector Acc 1263 1299 1917 - 2.5 - Britannia High Yield Acc 1344 1303 1878 - 3.0 - N&P Higher Income 1611 1368 1866 3719 4.6 2,8 Baillie Gifford Managed Fund 1201 1230 1825 - 2.8 5,11 AXA E&L British F'damental Acc 1307 1260 1796 - 4.4 - Arkwright Income 1338 1266 1767 - 4.5 3,9 Confederation High Income 1288 1237 1669 - 5.0 5,11 Murray Johnstone Acumen 1263 1181 1663 - 2.3 - Lloyds Bank Extra Income 1253 1187 1614 4367 3.7 6,12 Canada Life Income Dis 1308 1195 1513 3412 4.3 6,12 Sun Life Managed Inc & Gr Inc 1248 1164 1502 - 2.8 6,12 Henderson Extra Income 1307 1222 1490 5076 5.3 2,5,8,11 Prolific Extra Income 1260 1238 1467 - 3.8 2,5,8,11 INVESCO Extra Income 1315 1159 1456 3279 5.0 3,9 Sun Life Managed High Yld Inc 1242 1178 1452 - 3.8 3,6,9,12 CU PPT High Yield 1295 1238 1451 4199 5.5 1,4,7,10 Kleinwort Benson Extra Inc Acc 1308 1180 1430 - 6.5 - Prudential High Income 1230 1170 1346 - 4.5 2,5,8,11 NM Extra Income 1184 1164 1343 - 5.5 Monthly ------------------------------------------------------------------------ SECTOR AVERAGE 1302 1239 1569 3900 4.6 - ------------------------------------------------------------------------ UK Smaller Companies ------------------------------------------------------------------------ Thornton UK Smaller Cos 1705 1569 2246 - 1.6 3 Royal Life UK Emerging Co's 1354 1466 1881 - 1.5 - Edinburgh UK Small Companies 1629 1571 1737 5562 1.1 6 CU Quilter Fund Inc 1194 1177 1625 3426 2.2 5,11 Smith & Williamson Small Secs 1387 1492 1553 - 0.6 5,11 Five Arrows Small UK Cos 1348 1375 1541 3340 1.5 4,10 Guinness Flight TB Emg Cos 1509 1431 1505 - 2.8 6,12 N&P Smaller Companies 1368 1312 1493 - 1.5 5,11 Lazard UK Small Co's Growth 1445 1411 1482 3956 1.8 3,9 M&G Smaller Companies 1502 1233 1462 3946 2.8 3,9 Britannia Smaller Co's Inc 1541 1329 1444 - 1.3 6,12 Credit Suisse Smaller Co's Inc 1470 1248 1440 3279 1.4 2,8 Prudential Smaller Companies 1332 1192 1424 - 2.1 6,12 Capital House Smaller Co's 1200 1057 1380 - 1.6 12 Govett UK Smaller Companies 1326 1173 1375 4831 1.3 4,10 Discretionary Disc Inc 1469 1338 1369 3501 2.8 6,12

Guinness Flight TB Sml Cos Inc 1602 1339 1339 - 3.1 2,8 Legal & General UK Small Cos 1318 1216 1338 - 1.3 2,8 Granville Smaller Companies 1527 1139 1334 - 1.4 3 Prosperity UK Smaller Co's 1434 1291 1329 - 1.6 4,10 ------------------------------------------------------------------------ SECTOR AVERAGE 1412 1267 1263 3386 1.8 - ------------------------------------------------------------------------ Dividends 1 year 2 yrs 5 yrs 10 yrs Yield Paid ------------------------------------------------------------------------ UK Gilt & Fixed Interest ------------------------------------------------------------------------ Murray Johnstone Acumen Res 1166 1254 1661 - 7.1 - Whittingdale Short Dated Gilt 1114 1235 1637 2655 - 5 Mercury Govt Securities 1116 1229 1618 2348 6.9 1,7 Barclays Uni Gilt & Fixed Int 1174 1288 1612 2298 8.0 1,4,7,10 Abtrust Fixed Interest 1630 1584 1595 2838 7.2 1,4,7,10 Kleinwort Benson Gilt Yld Acc 1120 1221 1579 2440 6.9 - Abbey Capital Reserve Acc 1061 1175 1577 - 5.2 - Abbey Gilts & Fixed Interest 1106 1219 1571 2252 5.6 1,4,7,10 GRE Gilt & Fixed Interest 1171 1247 1570 2253 4.6 3,9 ManuLife Gilt & Fixed Interest 1175 1286 1567 2442 6.8 4,10 INVESCO Mimstar Gilt & FI 1152 1271 1561 2279 7.5 6,12 AXA E&L Gilt & Fixed Int Inc 1121 1247 1553 2291 5.9 4,10 Burrage Short Dated Gilt 1078 1169 1547 - 5.0 4 Standard Life Gilt & Fixed Int 1150 1236 1542 - 5.8 5,11 Schroder Gilt Income Acc 1150 1228 1542 - 7.0 - Legal & General Gilt 1130 1233 1539 2459 5.2 6,12 M&G Gilt & Fixed Interest 1148 1237 1530 2202 6.9 3,6,9,12 Legal & General Fixed Interest 1196 1283 1528 - 5.5 2,5,8,11 TSB Premier Income 1188 1271 1519 2092 6.2 3,6,9,12 Fidelity Gilt & Fixed Interest 1163 1290 1514 2091 6.6 Monthly ------------------------------------------------------------------------ SECTOR AVERAGE 1160 1255 1493 2387 6.4 - ------------------------------------------------------------------------ Europe ------------------------------------------------------------------------ Morgan Grenfell Europe Growth 1439 1495 2685 - - - Fidelity European 1417 1431 2304 - - - Lazard European Growth 1288 1446 2281 - 0.5 5,11 Baring European Growth 1256 1405 2275 8200 1.5 6 Eagle Star European Acc 1312 1529 2242 - 0.5 - Henderson TR Eur Spec Sits 1366 1403 2197 - 0.8 - Prov Cap European Inc 1546 1522 2197 - 1.0 6 Perpetual European Growth 1320 1368 2166 - 1.0 - Scot Widows Europe Acc 1272 1292 2165 - 0.9 - Fidelity European Opps 1311 1372 2121 - - - Henderson European Income 1280 1343 2094 - 2.7 3,9 Fidelity European Income 1344 1408 2077 - 3.0 3,9 AEtna European Growth 1285 1361 2057 - 0.9 - Jupiter Merlin European 1287 1355 2051 - - 8 LAS European 1272 1426 2040 - 0.9 2,8 Britannia European Growth Acc 1277 1309 2037 - 0.8 - Lloyds Bank German Gth Acc 1299 1251 2035 - 0.0 - Friends Prov Euro Gth Acc 1262 1268 2033 - 0.6 - Baillie Gifford Europe 1222 1168 1982 - 0.9 12 Royal London European Growth 1253 1291 1981 - 0.8 4,10 ------------------------------------------------------------------------ SECTOR AVERAGE 1259 1265 1810 4573 1.0 - ------------------------------------------------------------------------ International Growth ------------------------------------------------------------------------ Dividends 1 year 2 yrs 5 yrs 10 yrs Yield Paid ------------------------------------------------------------------------

Prosperity Emerging Markets 1682 1912 3298 - 0.5 8 Framlington Health Fund 1234 1209 2984 - - 6,12 Perpetual Int'l Emerging Co's 1681 1713 2671 - 0.2 - Henderson TR Global Tech 1600 1581 2544 - 0.0 6,12 Prolific Technology 1563 1851 2543 2674 - 1,7 City of London Emerging Mkts 1998 2329 2403 - - - Scot Equitable Technology 1394 1373 2390 - 0.6 - Britannia Int'l Spec Opp's Acc 1598 1542 2338 - 1.1 7 Framlington Int'l Growth 1393 1334 2303 2379 - 6,12 GT World Wide Special Sits 1514 1439 2284 - 0.1 8 Bank of Ireland W'wide Opps 1328 1564 2271 - 0.5 5,11 Schroder O'seas Sm Co's Inst 1479 1476 2265 - 0.4 4,10 Martin Currie Int'l Growth 1462 1423 2201 4921 0.3 5,11 Scot Equitable W'wide Tact Prf 1499 1451 2142 - 1.0 - Perpetual Worldwide Recovery 1499 1481 2128 4036 0.5 - Cannon Lincoln Global 1418 1457 2101 - 0.4 4 Bank of Ireland Brit & O'seas 1244 1368 1974 3760 1.2 6,12 Scot Equitable International 1262 1303 1924 3009 1.6 5,11 Templeton Global Growth Acc 1372 1420 1918 - 1.9 - GT International 1550 1613 1915 4176 0.8 4 ------------------------------------------------------------------------ SECTOR AVERAGE 1354 1314 1674 2983 0.9 - ------------------------------------------------------------------------ International Equity Income ------------------------------------------------------------------------ Edinburgh International Income 1329 1417 2082 - 2.8 2,5,8,11 GT International Income 1338 1556 2016 - 4.5 1,7 M&G International Income Acc 1404 1470 1947 - 4.4 - F&C Hypo Overseas Income 1306 1393 1712 - 3.0 1,7 Kleinwort Benson Glob Inc Acc 1326 1325 1703 - 3.8 - INVESCO Global Income 1330 1381 1592 - 2.4 2,8 Sheppards Global Income 1324 1291 1579 - 2.7 4,10 Barclays Uni International Inc 1295 1356 1515 - 3.3 2,8 Brown Shipley Int'l Income 1276 1212 1356 - 4.4 2,8 Brewin Dolphin Int'l Inc & Gth 1303 1381 1151 3774 2.8 2,8 ------------------------------------------------------------------------ SECTOR AVERAGE 1343 1406 1665 3774 3.4 - ------------------------------------------------------------------------ Dividends 1 year 2 yrs 5 yrs 10 yrs Yield Paid ------------------------------------------------------------------------ International Fixed Income ------------------------------------------------------------------------ CU PPT Global Bond 1205 1345 1792 - 5.9 - Cannon Lincoln Intl Currency 1205 1333 1732 - 5.7 5,11 Abbey Worldwide Bond 1127 1321 1710 2931 3.6 3,6,9,12 City Financial Beckman Int'l 1234 1392 1703 2588 2.7 - Save & Prosper Int'l Bond 1195 1352 1701 2923 5.3 4,10 MGM International Bond 1185 1389 1661 - 5.3 6,12 INVESCO International Bond 1292 1385 1616 - 5.9 4,10 Sun Alliance Worldwide Bond 1203 1336 1603 - 5.2 5,11 Gartmore Global Bond 1189 1346 1601 2081 4.4 1,4,7,10 Legal & General Int'l Bond 1180 1348 1575 - 4.3 4,10 Fidelity International Bond 1165 1297 1569 - 5.4 2,5,8,11 Whittingdale US Govt Bond 1202 1265 1512 - - 12 Prov Cap Worldwide Bond Acc 1113 1257 1510 - 6.4 - Waverley Global Bond 1186 1238 1473 - 6.9 1,4,7,10 ------------------------------------------------------------------------ SECTOR AVERAGE 1193 1320 1626 2617 5.8 - ------------------------------------------------------------------------ North America ------------------------------------------------------------------------ F&C Hypo US Small Companies 1756 1957 4053 5897 0.1 11 Cannon Lincoln North American 1564 1632 3376 5155 - 5 GAM North America Inc 1501 1769 3014 - 0.5 2

Perpetual American Growth 1447 1611 3006 4392 0.0 - Hill Samuel US Smaller Co's 1530 1695 2974 - 2.7 7 Gartmore American Emerging 1836 1969 2898 - - 1 Baring American Smaller Co's 1482 1663 2832 - - - GT US & General 1590 1845 2828 2620 0.1 6 Abbey US Emerging Companies 1636 1722 2714 - - 11 Cler Med American Growth 1551 1702 2594 - - - Britannia American Growth Acc 1568 1847 2562 - - - Morgan Grenfell American Gth 1522 1685 2516 - - - M&G American Smaller Co's 1515 1554 2513 2698 - 3,9 ManuLife North American 1491 1620 2505 - 0.3 9 Save & Prosper Amer Sml Co's 1514 1715 2445 - - 3 Framlington American Sml Cos 1552 1495 2442 2385 - 10 Lloyds Bank N Am Sm Co Rec 1482 1472 2433 - 0.0 - CU PPT North American 1361 1423 2424 - 0.1 - Baillie Gifford America 1409 1503 2345 - - 10 GT American Special Situations 1284 1518 2319 1648 - 5 ------------------------------------------------------------------------ SECTOR AVERAGE 1375 1445 2036 2577 0.7 - ------------------------------------------------------------------------ Dividends 1 year 2 yrs 5 yrs 10 yrs Yield Paid ------------------------------------------------------------------------ Japan ------------------------------------------------------------------------ Dunedin Japan Smaller Cos 1842 1372 2660 - - 5 Schroder Japan Small Co's Acc 1820 1257 2657 - - - Perpetual Japanese Growth 1661 1397 2440 - 0.0 - NM Japan Smaller Companies 1776 1022 1933 - 0.0 - Fidelity Japan Smaller Co's 1780 1221 1858 - - - Stewart Ivory Japan 1630 1333 1854 5902 - 4 Edinburgh Smlr Japanese Cos 1702 1188 1854 - - 2 Kleinwort Benson Japan Special 1831 1395 1823 - - 5 INVESCO Japan Smaller Co's 1813 1299 1803 4235 - 11 Gartmore Japan 1749 1414 1765 4272 - 8 Provident Mutual Japan Growth 1826 1536 1704 - - - Schroder Tokyo Inc 1618 1339 1655 5864 - 4,10 Framlington Japan & General 1824 1290 1602 - - 4 Thornton Japan 1738 1331 1590 - - 5 Barclays Uni Japan Spec Sits 1712 1396 1585 - 0.2 - City Financial Japan 1621 1297 1581 - - 2 Kleinwort Benson Japan 1648 1248 1526 - - 6 James Capel Japan Growth 1682 1314 1522 6110 - 11 Baillie Gifford Japan Fund 1680 1259 1516 5451 - 3 Baillie Gifford Japan 1559 1234 1505 - - 11 ------------------------------------------------------------------------ SECTOR AVERAGE 1635 1265 1401 3976 0.4 - ------------------------------------------------------------------------ Far East including Japan ------------------------------------------------------------------------ Govett Pacific Strategy 1785 2110 2929 - 0.2 3 GAM Far East Inc 1422 1510 2514 - 0.5 2 Henderson Pacific Smaller Co's 1763 1618 2407 5265 0.2 5,11 Equitable Far Eastern 1606 1555 2327 - 1.4 8 Perpetual Far East Growth 1793 1824 2312 - 0.4 - M&G Far Eastern & General 1618 1721 2307 2843 0.4 4,10 Abtrust Pacific 1530 1691 2278 5032 0.4 5 NM Far Eastern Growth Acc 1597 1668 2042 - 0.0 - GT Far East and General 1532 1242 2015 3791 0.3 1 Sun Life Far East Growth Acc 1512 1520 1991 - - - Save & Prosper Eastern Disc 1510 1609 1941 - 0.4 7 Britannia Pacific Growth 1548 1417 1905 - 0.0 12 Thornton Oriental Income 1359 1370 1901 - 3.3 4,10 James Capel Far East Growth 1536 1423 1896 - 0.1 2 Govett Greater China 1514 1620 1890 - 1.2 2,8

Jupiter Merlin Far Eastern 1584 1711 1856 - - 8 Cannon Lincoln Far East 1499 1264 1788 5292 0.0 5 CU PPT Far East Growth 1581 1565 1780 - 0.3 5 TSB Pacific 1469 1569 1753 4538 - 8 Martin Currie Far East 1536 1491 1717 5775 0.1 7 ------------------------------------------------------------------------ SECTOR AVERAGE 1549 1494 1793 4315 0.5 - ------------------------------------------------------------------------ Dividends 1 year 2 yrs 5 yrs 10 yrs Yield Paid ------------------------------------------------------------------------ Far East excluding Japan ------------------------------------------------------------------------ Gartmore Hong Kong 1520 2249 4247 9568 2.1 4 Stewart Ivory New Pacific 1499 1904 3579 - 0.9 7 Abbey Asian Pacific 1678 2109 3558 - 0.3 - INVESCO Hong Kong & China 1534 2043 3550 6114 1.6 3 INVESCO S E Asia 1603 1803 3440 - 0.5 5 Prov Cap Hong Kong 1491 2078 3422 - 1.2 9 Gartmore Pacific Growth 1620 1933 3398 - 0.1 7 James Capel Hong Kong Gth 1578 2084 3174 - 0.6 4 INVESCO Singapore ASEAN 1816 1840 3096 - 0.2 9 NM Singapore & Malaysian 1977 2211 3042 2937 0.0 7 Save & Prosper SE Asia 1603 1907 3017 6761 0.1 6 Scot Equitable Far East 1553 1838 3000 - 0.8 - Fidelity South East Asia 1571 1981 2930 - - - James Capel Sing & Malay Gth 1811 2001 2923 - - 6 Abtrust Far East Emerging Econ 1501 1873 2892 - 0.6 8 Thornton Tiger 1446 1689 2617 - 1.1 5 Edinburgh Pacific 1519 1775 2610 - 0.4 11 Baring Eastern 1379 1539 2537 - 1.6 - Scot Mutual Far East Acc 1543 1710 2492 - 1.0 - Midland Mandarin 1535 1721 2341 - 0.8 6 ------------------------------------------------------------------------ SECTOR AVERAGE 1559 1843 2776 5025 0.7 - ------------------------------------------------------------------------

ST JAMES's Place Capital, Lord Rothschild's financial services group, reported a 17.2 per cent rise in net assets per share in the six months to September 30.

As announced in July, the company is distributing to shareholders its 37.4 per cent holding in RIT Capital Partners, the investment trust managed by J. Rothschild Capital Management. In addition, St James's Place is distributing Pounds 32.7m of cash; at September 30 values, shareholders should receive 48.7p per share in a combination of shares and cash.

St James's Place will be left with a range of financial services subsidiaries plus a portfolio of investments - J Rothschild Assurance (the life insurance group), Global Asset Management (29.7 per cent owned by Rothschild) and International Financial Markets Trading, both fund management groups, and J. Rothschild Wolfensohn, a 50:50 joint venture in boutique corporate finance with James Wolfensohn Inc.

However, these businesses make up only Pounds 38m of St James's Place's Pounds 211m of assets. The remainder is invested in international bonds and equities, with a particular emphasis on German zero coupon bonds.

Unrealised dealing gains of some Pounds 16.1m in the first half were a main reason for the rise in net assets to 126.2p a share, against 107.7p at the March 31 year-end. The directors announced last year that the company should be judged on a net asset, rather than a profit and loss basis.

However, pre-tax profits doubled from Pounds 7m to Pounds 14.1m, helped by the elimination of both investment dealing losses and start-up costs at J. Rothschild Assurance. Earnings per share improved to 5.9p (3p) and the interim dividend is maintained at 1.5p.

The company added: 'We continue to regard international equity markets with caution in view of the fragility of the apparent economic recovery in the US and the UK and the recessionary climate in Europe and Japan.'

RIT Capital Partners also announced its results yesterday, revealing that net asset value had risen by 12 per cent to 202.9p a share over the six months to September 30. Total net assets were Pounds 398m at the end of September.

Since March 31 RIT has sold more than three quarters of its interest in Newmont Mining, the gold mining group, realising about Pounds 114m. It has invested part of the proceeds in gold call options, a similar strategy to that followed by Sir James Goldsmith. As of September 30, RIT had a total portfolio of Pounds 468m of which Pounds 230m was in quoted equities, Pounds 61m in bonds, Pounds 91m in specialist funds, Pounds 63m in unquoted equities and Pounds 23m in property.

FOCA'S Moslem bazaar has been gutted and more than 16,000 Moslems have been killed or expelled. All but one of the nine mosques in the town situated in south-eastern Bosnia have been destroyed, although Mr Ljubo Todovic, the deputy mayor, insists the Moslems had already let them fall into disrepair.

Serbian authorities have nearly erased all traces of the centuries-old Moslem presence in the region. One of Foca's many refugees now living in Sarajevo, Suad, who fled his home town 18 months ago, no longer believes he, or any other Moslem, will return home.

'I have lost hope that I will ever go back. But I have also come to understand that a town without the people is no longer home,' he said.

'When I left, I saw the Serbian symbols and flags waving all over the region which had once belonged to all of us.'

Foca is one of a string of towns in eastern Bosnia taken by Serb forces in April 1992. Bosnian President Alija Izetbegovic discussed the return of Foca during discussions over the partition of Bosnia into three ethnic states.

He finally rejected the plan, however, on the grounds that it rewarded military aggression.

Mr Todovic dismisses out of hand the possibility that his town could ever be part of a Moslem state.

Escorting visiting reporters, he nervously allowed them to speak to passers-by. He nodded eagerly when one tired-looking man described life in Foca as 'excellent'.

Wounded on the front line, Mr Todovic no longer wears a uniform. He told a woman to 'shut up, no one asked you to speak', when she complained that the people had nothing to eat.

Isolated from the outside world, Serb soldiers control checkpoints tightly.

Although local factories are back in operation, life appears bleak. The town's 30,000 Serbs, a third of them refugees, have piled stacks of wood everywhere in preparation for winter.

People no longer flash the three-fingered Chetnik salute; instead they stick out their thumbs begging for a ride.

But there is little traffic. Cars have been mostly taken over by the military; besides, there is no petrol.

'We live like cattle,' said an elderly woman dressed in black, leaving the dismal vegetable market, hauling sacks of potatoes and cabbages. 'The refugees come from villages bringing their animals with them. They have nowhere else to go.'

But Mr Todovic believes the Serbs have won their war. He appears not to see the empty shops and the climate of fear instilled by his rulers.

THE CONFEDERATION of British Industry yesterday called for a white paper containing a clear definition of government industrial policy as it published its own document identifying areas in need of change.

Mr Howard Davies, CBI director-general, who last night outlined his peoposed reforms at a dinner of industrialists in Birmingham, said: 'We are critical of what the government is not doing.'

While expressing his satisfaction with what he believed was the improved performance of the Department of Trade and Industry, Mr Davies said that government industrial policy should be co-ordinated and made more coherent.

The CBI's call came against a background of government efforts to develop a new partnership with business.

Mr Davies was at pains to point out that he was not calling for an old industrial strategy of picking 'winners and losers'.

Instead, he said that he was calling for a middle approach between old-fashioned state intervention and a minimalist government role towards industry.

He argued that executives needed to hear what government industrial policy was in order to understand how it affected ministerial decisions towards public spending and taxation.

The CBI's new policy document contains strongly worded criticism of some aspects of government policy.

The document says that industrialists 'are not convinced that the current structure of decision-making in government is ideally suited to the creation of a coherent approach to competitiveness'.

While welcoming the DTI's more active role in representing business, it adds: 'The departments of education and employment are not well understood and the Treasury is seen to be too powerful for its own good.'

Industrialists remain convinced 'that the relationship between government and industry could be more focused'.

The paper concludes by calling on the government to take a more direct role in representing the interests of British industry in Continental and other markets.

As part of that strategy it says the promotion of the competitiveness of manufacturing industry is important because of its exposure to international competition.

At a fringe meeting at last week's Conservative party conference at Blackpool, Mr Richard Needham, trade minister, said it was neither politically feasible or advisable to publish a set of government objectives towards industry.

However, Mr Davies warned: 'There are many political drawbacks in not defining government policy towards industry.'

THE EUROPEAN Commission is to retreat from its recent policy decision to involve the legal processes of individual member states more in the enforcement of competition policy within the Community.

A Commission notice issued at the end of last year outlined Brussels' intention to leave straightforward competition cases to be dealt with at a national level, allowing the Commission and the European Court to concentrate on more complex issues.

But Mr Karel Van Miert, competition commissioner, is believed to feel that increasing reliance on national competition authorities and courts to enforce EC policy is impractical at this stage.

In spite of recent moves among member states to adopt competition rules based more closely on Articles 85 and 86 of the Rome treaty, few national authorities and courts have any experience of the issues involved in EC competition cases.

The change of tack on the division of power between Brussels and the member states is expected to be signalled by Mr Van Miert at the International Bar Association business law conference in New Orleans today.

He is thought to have been persuaded of the need for a rethink in particular by a British decision in April not to adopt a regime for tackling abuse of a dominant position based on Article 86.

Until there is a greater degree of harmonisation among the competition rules of the member states and until national courts have gained experience in enforcing them, Brussels is thought to believe greater emphasis on subsidiarity in this area is inappropriate.

The commissioner is also expected to tell more than 2,500 lawyers attending the conference from around the world of the need for greater flexibility in enforcing competition policy in a recessionary climate.

Mr Van Miert will reaffirm the Commission's intention to be tough on cartels, collusive behaviour and abuse of a dominant position, but underline the need to ensure that EC companies are not prevented by strict enforcement of competition rules from competing in global markets.

Speaking in Washington last week, he called for the international trade rules in the General Agreement on Tariff and Trade to be extended to cover restrictive practices. He is expected to tell his New Orleans audience how he sees Gatt's role in clearing away private barriers to trade.

Elsewhere at the conference delegates will address mounting concerns about increased opportunities for fraud arising from the paperless society, such as computer hacking and phantom withdrawals from hole-in-the-wall automatic cash-dispensing machines.

The conference will also tackle a number of moral and human rights issues.

The first note of the new pound 1 currency issued by the Treasury on October 23, 1914 goes on sale at Sotheby's today. Bearing the serial number A1 00001 and featuring the signature of John Bradbury, secretary to the Treasury, the note is estimated to be worth between Pounds 5,000 and Pounds 10,000. It is thought that it may have once been the personal property of David Lloyd George, then chancellor of the Exchequer.

'We all know why he pledged to renationalise the railways. You won't find him desagreeing with his sponsors, Jimmy Knapp and the railworkers' union.'

John MacGregor, transport secretary, on Labour's John Prescott.

The German parliament yesterday passed a law which will allow employers to cut salaries by 20 per cent on 10 national holidays in order to help pay for a new nursing insurance scheme, writes Ariane Genillard in Bonn.

The law aims to compensate employers who will be faced with additional insurance contributions - estimated at DM13bn (pounds 5.2bn) in the first year - to cover the costs of the new health scheme for the old and handicapped. It has yet to be passed by the opposition-controlled upper house.

THE EC and US this week began substantive negotiations on resolving their hitherto bitter differences on how to include audio-visual products, such as films, in the Uruguay Round world trade reform negotiations.

Sir Leon Brittan, EC chief trade negotiator, told the European Parliament yesterday that there were 'glimmerings of a solution to that problem' following his meeting in Washington on Monday with Mr Mickey Kantor, US trade representative. 'I found in the US for the first time, not a solution, but at least an understanding that culture is not the same as ordinary physical goods,' Sir Leon said.

France is at the forefront of EC member states insisting that if they are unable to protect their cinema industry because the Uruguay Round subjects it to Gatt rules, it will be killed off by the sheer volume of imports from Hollywood. The US film industry earned dollars 3.7bn in Europe in 1991, in comparison to EC cinema exports to the US of a mere dollars 250m.

Paris wants the audio-visual sector taken out of the trade negotiations altogether, while Sir Leon's strategy is to get the protection afforded by Gatt rules by including it, so long as its 'cultural specificity' is recognised.

In a series of sharp encounters, US negotiators have accused the EC of cloaking naked protectionism under bogus claims of the need to defend their cultures from US contamination.

An aide to Sir Leon said that after this week, 'in terms of the tone, there is less shouting and more talking'.

Sir Leon also said that he vigorously put to Mr Kantor 'every single one' of the French-demanded 'improvements' to the Blair House accord on farm trade reached last November in Washington. France's threat to veto Blair House unless it gets satisfaction remains the greatest impediment to concluding the Round by its deadline in 11 weeks.

Sir Leon said Mr Kantor was obviously not in a position to respond to demands put to him for the first time, and that he said 'he could give no reassurances whatsoever'. One senior Commission official said Brussels did not expect Washington to show its hand on more farm trade concessions until later, when it could see what was on the table in other sectors covered by the Round. Sir Leon meets Mr Kantor again on October 13.

BUSINESSES in Thailand yesterday established a new organisation to deal with the problems posed to employers and workers by the spread of the HIV virus which causes Acquired Immune Deficiency Syndrome (Aids).

Mr James Reinnoldt, regional managing director of Northwest Airlines of the US, and Mr Bill Black, general manager of Bangkok's Regent Hotel, founded the Thailand Business Coalition on Aids with the help of the Thai government and the World Health Organisation.

It is said to be the first such group on Aids to be established outside the US, although similar groups are beiing set up in Japan and the UK.

According to the Thai government, more than one in three deaths in the labour force will be caused by Aids by the year 2000.

The direct and indirect costs of the Aids pandemic by that time are expected to reach dollars 9bn in Thailand alone.

Companies are becoming increasingly concerned about the possibility of lost productivity, increased healthcare costs, a decline in tourism, and even the death of their employees and consumers.

'HIV/Aids is at the very centre of our concern,' Dr Jumroon Mikhanorn of the Thai Ministry of Public Health said at the launch of the coalition. 'In Thailand as many as 500,000 people may already be infected and the death toll from Aids doubles each year.'

The idea behind the new group is to educate workers to curb the spread of Aids, to explain to them that Aids cannot be spread by infected individuals in normal factory or office working conditions, and to end discrimination against HIV-positive employees by their employers.

At present it is common for Thai companies to screen workers for HIV and fire those who are found to have the virus.

The coalition of foreign and Thai businesses, which has produced a manual outlining policies for dealing with Aids in the workplace, hopes to recruit 250 companies within a year.

A coalition government which contained the Left Democratic Alliance (SLD) would not feel 'any dogmatic attachment' to the 5 per cent of GDP target for the budget deficit agreed with the IMF, Mr Alexander Kwasniewski, the post Communist party's leader, said yesterday. But the party, which won 20 per cent of the vote in the September 19 polls, would seek IMF agreement on key economic criteria.

Armed transport workers in Nicaragua yesterday ended a five-day strike after the government agreed to roll back new vehicle taxes and freeze petrol prices, Reuter reports from Managua. They lifted barricades and fired homemade mortars and bottle rockets in Managus, after the accord was signed early yesterday.

The Irish economy is forecast to grow by 2.25 per cent this year, according to the country's main independent economic research body, the Economic and Social Research Institute (ESRI).

The key to growth has been 'the growing market share of Irish exports, particularly in the UK and the continental EC countries, due both to the impact of high-technology industry and to the improved competitiveness of more traditional industries', the institute says in its quarterly bulletin published yesterday.

Total exports of goods and services are forecast to rise by 4.75 per cent in volume and 7 per cent in value this year, with the strongest growth expected in manufactured goods, especially in high-technology exports. Manufactured exports are expected to rise by 8.5 per cent in value to IPounds 12.5bn in 1993, and by a further 10.5 per cent to IPounds 13.8bn in 1994.

Agricultural stocks are expected to decline significantly this year and next as reforms in the EC's Common Agricultural Policy continue to take effect, reducing the quantities of produce sold into intervention and as existing intervention stocks are run down.

Non-agricultural stocks are increasing, however, 'as stock levels are deliberately raised in line with the expected acceleration in economic growth'.

A 2 per cent fall in the volume of fixed investment last year has tempered investment forecasts for 1993, with volume growth expected to be only 1.25 per cent, and private construction showing an overall contraction.

This is expected to reverse in 1994, however, with volume surging 4 per cent and value by 7 per cent to IPounds 5.2bn, stimulated by historically low real interest rates and high levels of public sector construction financed from increased levels of EC structural and cohesion funding.

Unemployment should stabilise around 300,000 at the end of this year, the institute says, but it warns that the effective collapse of the ERM and loss of currency stability will mean pay restraint will be important to maintain strong growth and improve job creation prospects.

'The ending of the currency stability which pertained from 1987 to mid 1992 has been a significant loss to the Irish economy, as it has removed predictability and increased perceived risk in both trade and investment decisions,' the ESRI notes.

The institute expects a further depreciation of sterling which will put pressure on Irish competitiveness and wage rates.

It therefore suggests that 'minimal basic pay increases, with past facto bonuses in the absence of currency shocks' could be the most appropriate incomes policy in the face of exchange rate uncertainty.

Judaism and Catholicism edged towards peaceful relations yesterday after 2,000 years of religious persecution and theological conflict. The move came at a meeting in Castel Gandolfo, Italy yesterday between Pope John Paul and Rabbi Yisrael Meir Lau, Israel's chief rabbi of the Ashkenazi (European) Jewish community. Rabbi Lau said after the meeting - the first between a chief rabbi and a Pope since the creation of the Jewish state in 1948 - that the pontiff had said Jews were his 'elder brethren' and that the 'time is approaching' for a papal visit to Jerusalem - holy to Jews, Christians and Moslems. Israeli and Vatican officials said they were close to reaching an agreement on establishing diplomatic relations.

Mr John Major, the UK prime minister, poured scorn in Tokyo on US attempts to force Japan to set specific trade targets in bilateral trade talks. At a news conference Mr Major said: 'If you're going to have a free-trading world, it has to operate on a multilateral basis'.

The prime minister said he believed trade problems between countries should be resolved in the Gatt forum and not on a bilateral basis, as pursued by the US government.

AFTER TWO years in the red, a strong recovery in the second half enabled CALA Group, the housebuilder, to report a pre-tax profit of Pounds 226,000 for the year to end-June.

Mr Geoffrey Ball, chairman, said the outcome - which compared with a deficit of Pounds 980,000 last time - had been struck after write-downs totalling Pounds 1.1m to reflect the fall in the value of housebuilding land and of the group's remaining property interests.

Turnover was up by Pounds 3m to Pounds 69.2m and after a tax credit of of Pounds 476,000, arising from the recovery of ACT written off last year, earnings per share worked through at 1.98p (3.44p losses). As forecast, there is a final dividend of 1.55p (1.15p) to maintain the total at 2.3p.

Net borrowings were reduced by Pounds 4.8m during the period and stood at Pounds 11.1m at the year end, said Mr Ball, while significant progress had been made in reducing overheads - down from Pounds 9.9m to Pounds 7.1m over the past three years.

The group's three housebuilding businesses sold a total of 676 units during the year at an average price of Pounds 122,000 - compared with 604 units at an average Pounds 114,000 last year.

However, the commercial property market had deteriorated further from its already depressed state, Mr Ball said, and the group's programme of disposals had been at a much slower pace than had been hoped.

In Zagreb the Croatian news agency said Croatian President Franjo Tudjman yesterday ordered a ceasefire in Croatia and told troops not to respond to Serb provocations.

Mr Tudjman told a meeting of Croatia's defence council that he wanted the ceasefire to be respected within the next 24 hours to enable a truce to be reached with Serbs, the president's office said.

Serbs and Croats fought a bloody war in 1991 after Croatia declared independence from Yugoslavia. A UN-brokered ceasefire agreement in 1992 failed to prevent sporadic fighting re-erupting last week.

CHRYSLER, the US carmaker, yesterday unveiled at the Frankfurt motor show a new range of small cars. Called the Neon, the range has set new standards in the US industry for efficiency in development and engineering.

The Neon was developed in 31 months, from design approval to first production, Mr Robert Lutz, Chrysler president, said yesterday. He said development time had been cut from the 40 to 48 months required by most carmakers in Europe and North America.

Chrysler, which has staged a drematic financial recovery in the past two years, has also cut significantly, to only dollars 1.3bn, the investment needed for the Neon project. Its development has included four-door and two-door body styles, a new engine and transmission, and investment in two production plants in Belvidere, Illinois, and Toluca, Mexico.

Production of the Neon range, which is set to transform Chrysler's presence in the US small car market, will begin in November. It will be launched in the US market in January, and in Europe in April.

Mr Lutz said the programme proved it was still possible to develop and produce a small car in the US, and without the support of a Japanese partner.

Chrysler returned to the European market in 1987 with the sale of vehicles exported from North America, following its ignominious withdrawal from manufacturing in Europe in 1978, when the group was on the brink of financial collapse.

Chrysler sales in Europe have risen 36.6 per cent, to 41,376, in the eight months. This almost equals the total for last year in spite of the steep 17 per cent decline in total west European new car sales.

Mr Robert Eaton, Chrysler chairman, forecast that sales in Europe would continue to grow at around 20 per cent a year in the medium term.

The Commision has rejected a complaint by Ladbroke, the British bookmaker, hotels and property group, against a preferential betting system linking the Belgian tote operators with their French counterparts. Ladbroke said it would raise the matter at the European Court of Justice.

IN Sweden, where recession is in its third year, total unemployment (including those on training schemes) has risen to 13 per cent, writes Christopher Brown-Humes in Stockholm.

One way in which Sweden has responded to the crisis is by announcing a SKr98bn (pounds 8bn) programme to develop the country's road and rail network over the next 10 years. This is in response to the unemployment crisis in the construction sector. Sweden has also developed several new types of job training schemes.

CHINA might be embracing market socialism with Chinese characteristics, but the rigours of the marketplace are not for the People's Daily, the Communist party newspaper.

Alarmed by a steep slide in the paper's circulation, the party has come up with a characteristically communist solution to the daily's woes.

Party officials throughout China have been urged in a directive to 'pay attention' to the paper's circulation.

The directive, published prominently on the daily's front-page, orders 'all party branches' throughout the country to subscribe. It requires that the newspaper be at the top of subscription lists for all government organisations, and instructs post offices to promote the paper.

Under the headline 'People's Daily circulation must go up', officials have been told that, 'to promote and circulate the People's Daily must be taken as a serious political task instead of regular commercial work.'

The party newspaper, which features a stodgy diet of political commentaries and uplifting news, has been facing ferocious competition from a flood of new publications, including brighter and breezier tabloids. Circulation has plummetted from a high a few years ago of about 6m copies to less than 3m today.

'People's Daily is the throat and tongue of the central committee and of people af all nationalities,' said the directive. 'It is one of the main channels that the cadres and broad masses learn about the spirit of the central committee and the State Council (cabinet). It is also an important window through which the outside world observes and understands China.

Nato officials yesterday attempted to maintain their pressure on the Bosnian Serbs by reiterating that the threat of air strikes in Bosnia remained a valid one, writes Gillian Tett.

Speaking in Brussels, officials said that they would expect the Serbs to show further 'change of attitude' across Bosnia, before the threat of air strikes receded.

The warning came as UN officials in Sarajevo indicated that they were increasingly concerned about the plight of 35,000 Moslems trapped in Mostar, Bosnia's second city, by Croat and Serb besiegers.

In an apparent reference to Mostar, Mr Mike McCurry, US state department spokesman, earlier warned that Washington would be watching to see whether food and water supplies reached 'not only Sarajevo, but other safe areas in the region', in judging whether to press ahead with air strikes.

TOURISTS visiting Greece may have to avoid phoning home today. Workers at OTE, the state-owned telecoms monopoly, will be picketing a crucial parliamentary vote on partially privatising the company, leaving international switchboards unmanned.

The quality of OTE's international service has deteriorated noticeably recently as the union stepped up its campaign against the proposed sale of 35 per cent of the company, together with management rights, to a foreign telecoms operator.

Although its one-vote majority in parliament is in danger, the government should still manage to push through enabling legislation permitting the sale.

If Mr Miltiades Evert, former industry minister and leader of the statist faction in the ruling conservative party, carries out his threat to vote against the bill, the government may enlist the support of two independent deputies from the ethnic Turkish minority in Thrace.

Given the scope for improvement in Greek telecommunications, it is hard to see why anyone should oppose the introduction of new management. The government says the foreign buyer would undertake to invest at least dollars 7bn (pounds 4.75bn) in the network over the next decade.

According to an EC-funded study carried out by consultants from Coopers and Lybrand, the international accountants, OTE's current policy of piecemeal replacement of switching and transmission equipment is 'gradually killing' the country's over-loaded telephone system.

With over 800,000 applications for telephone lines outstanding, one-quarter of them in Athens, the waiting period for a new connection can be as long as five years. In addition, the report described OTE's maintenance policy as 'reactive fire-fighting' using 'tricklefeed financing'. However, the socialist opposition's arguments that the foreign investor would set much higher tariffs, in addition to sharply reducing OTE's workforce of 28,000, have caught the popular mood.

As a result, the economy ministry has been forced to make substantive amendments to the legislation that telecoms analysts say could affect the level of bids for the strategic stake. Six international bidders, including France Telecom, Telefonica of Spain and NTT of Japan, have already been shortlisted. In order to meet this year's budget target for privatisation revenues, the government had hoped to raise over Dr250bn (pounds 706m) from the sale of the equity stake, together with the flotation of another 14 per cent of the company on the Athens Stock Exchange, planned for later this year.

Under the revised legislation, the state would appoint a majority of OTE's board of directors and would be able to influence procurement decisions. The law also sets out a restrictive policy on tariff structures, limiting yearly rises to one percentage point below the inflation rate.

MR Jan Eliasson, a senior United Nations relief official, complained yesterday that UN members were spending at least 10 times as much on their military operation in Somalia as they were on aid, Reuter reports from Geneva.

In a rare criticism of the UN operation by a high-ranking UN official, Mr Eliasson, warned that the original aim of sending troops to Somalia - to protect aid - risked being forgotten.

Mr Eliasson, UN undersecretary-general for humanitarian affairs, told officials in Geneva that donor nations had given less than 15 per cent of the dollars 166m (pounds 110m) needed for relief and rehabilitation in Somalia this year. 'As a comparison, approximately dollars 1.5bn will be spent on military operations in Somalia over a period of 12 months,' Mr Eliasson told the UN's economic and social council.

'In other words, due to the security needs, the international community is spending dollars 10 on military protection for every dollar of voluntary humanitarian assistance in Somalia, even if the 1993 relief and rehabilitation programmes were to be fully funded.

Mr Eliasson added: 'Unless sufficient funds are provided for rehabilitation activities, there is a risk that the military operation can be perceived as an end in itself, rather than as a means of ensuring security for rehabilitating the country's infrastructure and forging reconciliation.'

Mr Eliasson's criticism follows complaints by Italy, which fields the third-largest contingent in the UN, of a lack of consultation by the organisation with those countries providing troops.

Fugitive Somali warlord Mohamed Farah Aideed urged his followers to rise up against the multinational UN peacekeeping force in retaliation for US-led bombings of his strongholds. Shift to diplomacy, Page 6

China is considering new rules on foreign investment that could mean higher taxes for foreign-funded ventures but fewer restrictions on access to the domestic market, the official China Daily newspaper said.

In a classic final salary-defined benefit scheme, the employer underwrites the investment risk. But in a money purchase scheme, where the value of the final benefit depends on how markets behave, the individual bears the risk.

However, if there were a technique to limit the risks the individual has to bear, might money purchase schemes appear more attractive? Most techniques on the market involve the gradual shift out of high-yielding but risky equities into lower risk, lower yielding fixed-interest investments as an individual approaches retirement.

But investment managers, sensing the commercial opportunities to be exploited, have been hard at work looking for ways to offer money purchase schemes with the rewards of equity investment combined with some guarantee of the final level of benefit to be delivered.

Mercury Asset Management says it has found a way to address the problem with a new product designed for group money purchase schemes with a minimum of Pounds 500,000 to invest. MAM concedes that its guarantee is incapable of ensuring that individuals will earn a benefit which bears any relationship to salary. After all, even if a lump sum could be guaranteed, individuals will remain dependent on the vagaries of the annuities market for the kind of benefit stream they can purchase with their lump sum.

But what it will do, the firm says, is to offer some guarantees against stock market collapse. The guarantee consists of a promise that individuals will earn at least 90 per cent of the average daily market value of the units in the pool in each year they participate. When they retire, they surrender their units at the full value on that day. The guarantee means that if equity prices tumble one year, individuals do not have to surrender the gains they made in prior years.

Consulting actuaries who help companies choose pension fund investment managers are studying the product closely. Mr Martin Kemp, associate partner with consulting actuaries Bacon and Woodrow, said it bears some similarity to a product launched by several insurance companies in the 1970s but abandoned. 'We are looking at it to see if the guarantee offered is worth the price,' Mr Kemp said.

Mr Graham Dixon of MAM, who designed the product, said the reason it is now workable and affordable has to do with the advent of a sophisticated market in over-the-counter derivatives.

Individuals who select the guarantee fund purchase units in a pool. For every Pounds 100 invested, Pounds 99 goes into the pool while Pounds 1 will go into a special reserve fund. MAM has left itself an 'out' clause by retaining the ability both to raise the 0.9 per cent management fee charged on the pool and to increase the proportion of pension contribution which goes into the reserve.

What makes the product interesting is the way the reserve pool is invested. As pension contributions are made, managers need to calculate the liabilities - the benefits of those set to retire - for the next five years. Roughly 10 per cent of the reserve pool will be used to buy over-the-counter put options on the FTSE which are 10 per cent 'out of the money'. There is an element of risk because the guarantee the investor receives is against the broader market rather than against the top 100 stocks.

Mr Dixon concedes that the reserve fund could be vulnerable if the entire market fell precipitously but the top 100 stocks outperformed the broad market. However, in pre-market research going back to 1919 this situation never arose.

Another 80 per cent will be invested in the equity pool itself, so the returns to the reserve will mimic the sums it is guaranteeing. A further 10 per cent will be used to purchase options to cover the 'out of the money' portion of the initial put options.

Mr Dixon calculates that the cost to MAM of providing the protection is roughly 3 per cent to 4 per cent of the total invested, although he is more vague about the cost to the individual.

The cost will reflect, to some extent, the amount of income effectively surrendered by agreeing to accept only 90 per cent of the average market value of equities in any given year.

MONEY market pressure switched from the French franc to the Danish crown yesterday, leaving Paris wary, and Copenhagen a little excited, writes Our Markets Staff.

PARIS offered conflicting views. Some observers believed that if the krone were forced out of the ERM, the assault on the franc would be renewed with added vigour. Others said that the franc will resist all attempts by speculators to break the ERM, given the publicised support of the German and other European monetary authorities.

The CAC-40 index ended 11.85 higher at 1,974.93, a week's gain of 0.5 per cent, in turnover estimated at FFr2.5bn.

A strong rise was noted in Matra-Hachette, up FFr6.40 or 5 per cent at FFr133.4, partly on rumours that the group had won a defence contract.

Elsewhere Michelin gained FFr5.10 to FFr173 and Peugeot by FFr10 to FFr630.

COPENHAGEN climbed higher on speculation about a possible devaluation of the krone as the currency came under attack from speculators in the money markets.

The KFX index closed up 0.55 at 90.62 in turnover of DKr430m.

Den Danske Bank closed up DKr6 at DKr327 while Unidanmark climbed DKr4 to DKr184.

As options and futures contracts expired on the Deutsche Terminborse, FRANKFURT expected selling from the DTB in an attempt to push the DAX index down to 1,800. Instead, it got late buying from the same source, said Mr Jurgen Rossa at B Metzler, and the DAX closed 5.80 higher at 1,813.46.

Turnover eased from DM8.4bn to DM7.7bn. There were contrasts in carmakers where worries over the future of the Volkswagen director, Mr Iganacio Lopez, sent the shares down DM5.20 to DM360.50 as Daimler rose DM5 to DM677.50.

DB Research yesterday reconfirmed the buy recommendation it made for Daimler in mid June. That got into the post-bourse where Daimler was bid up to DM693.50, more than DM100 ahead of its price on June 14. The Ibis-indicated DAX responded with a rise to 1,829.43 in the afternoon.

AMSTERDAM rose on the expiry of options, the CBS Tendency index closing up 1.0 at 118.0, but off the day's high of 118.6. The index has gained 1 per cent on the week.

Nedlloyd ended at a 12-month high on speculation that a US group was seeking a merger with the shipping division. The shares put on Fl 1.50 to Fl 38.10.

KLM closed off 10 cents at Fl 33.30 after earlier seeing Fl 34.20 as it said that it would match the fares of a US competitor on transatlantic routes.

Hoogovens rose Fl 1.30 to Fl 41.10 after Thursday's news that the city of Amsterdam had sold its 5 per cent stake.

MILAN was pleased at the performance of the enlarged screen trading system which came into operation yesterday. Most of the major stocks are now available on the telematic, which accounts for some 80 per cent of total market capitalisation.

The Comit index finished 1.84 higher at 556.41, a rise of 2 per cent on the week, in good volume.

Telecommunications issues fell back after Thursday's news of delays in the privatisation programme: Stet slipped L149 to L3,776 and Sip lost L74 to L2,736.

However, losses in this sector were the exception with the other blue chips picking up gains across the board. Fiat put on L134 to L6,604 and Pirelli L80 to L1,589. Generali continued its rally and broke the L40,000 level with a rise of L258 to L40,008.

Benetton, another popular stock at the moment, ended L302 higher at L20,562.

ZURICH saw most interest in special situations as the SMI index eased 2.7 to 2,396.4, 0.3 per cent down on the week after Wednesday's 1993 closing high of 2,419.0. SMH, the watchmaker, fell SFr4 to SFr234 after SFr222, down SFr31 on the week after a Goldman Sachs downgrade on Thursday.

Meanwhile, Saurer, the textile machinery and technology group, recovered another SFr50 to SFr2,150 as Mr Vittorio Ghidella, who resigned as board chairman on Thursday, handed himself over to Italian authorities, as the group appointed the former Volkswagen chief, Mr Carl Hahn, to replace him and as it forecast higher earnings for 1993.

STOCKHOLM closed higher for the ninth straight session on gains in selected blue chips and in the forestry sector. This helped offset a decline in Ericsson, which has led the market's rally this week, as its B shares lost SKr3 to SKr380.

The Affarsvarlden general index rose 3.1 to 1148.0, up 3 per cent on the week. Turnover was SKr869m.

OSLO rose to a new 22-month high, led by strength in shipping stocks. The All-share index rose 3.13 to 521.72 and the shipping index 15.82 to 571.99.

Bergesen put on NKr5.50 to NKr152. Hafslund Nycomed went against the trend, losing NKr5.50 to NKr120 following downgrades of pharmaceutical shares in the US on Thursday.

ISTANBUL closed the week on a positive note although some sporadic profit-taking was noted throughout the day. The composite index gained 173.6 to 10,617, for a rise of 3.3 per cent on the week.

----------------------------------------------------------------------- FT-SE Actuaries Share Indices ----------------------------------------------------------------------- July 16 THE EUROPEAN SERIES Hourly changes Open 10.30 11.00 12.00 ----------------------------------------------------------------------- FT-SE Eurotrack 100 1229.71 1228.95 1228.95 1229.22 FT-SE Eurotrack 200 1275.43 1276.15 1275.67 1275.84 ----------------------------------------------------------------------- Hourly changes 13.00 14.00 15.00 Close ----------------------------------------------------------------------- FT-SE Eurotrack 100 1230.13 1231.13 1232.52 1234.37 FT-SE Eurotrack 200 1276.72 1278.74 1279.94 1281.68 ----------------------------------------------------------------------- Jul 15 Jul 14 Jul 13 Jul 12 Jul 9 ----------------------------------------------------------------------- FT-SE Eurotrack 100 1229.70 1237.14 1235.91 1232.90 1230.56 FT-SE Eurotrack 200 1278.79 1283.38 1279.32 1274.63 1274.12 ----------------------------------------------------------------------- Base value 1000 (26/10/90) High/day: 100 - 1234.69 ; 200 - 1282.16 Low/day: 100 - 1228.39 200 - 1274.62 . -----------------------------------------------------------------------

Spring Ram made a pre-tax profit of Pounds 26m last year. The incorrect reference yesterday to a loss was due to an editing error.

Correction (published 16th July 1993) appended to this article.

THE FUTURE of Mr Bill Rooney as chairman and chief executive of Spring Ram, the bathrooms and kitchens group, was still unclear last night. The shares closed 4p lower at 51p.

After three profit warnings within eight months, Mr Rooney is under pressure from institutional shareholders to resign. This move is led by the Prudential Corporation, which speaks for 35 per cent of the group's equity.

After a meeting yesterday, the company said: 'The board of Spring Ram, which remains united in its support for Mr Bill Rooney, recognises and accepts the need for immediate and major changes in the structure, style and management of the company for the 1990s. Today's meeting has been adjourned to enable the board to seek further advice on the implementation of these changes.'

Neither Mr Rooney or any of the other directors would expand on the statement, which raises several questions. It is not clear how compatible 'major changes' are with continuing support for Mr Rooney, a co-founder of the company and still its dominating force.

Mr Rooney has said he would be prepared to give up the role of chairman or chief executive, but not both. Mr Rooney and his family trusts have a 16 per cent stake in the company.

Pre-tax profits in the first half of the current year were forecast to be well below the comparable period, contrary to earlier expectations. In March the company disclosed a pre-tax loss of Pounds 26m - a third less than expected.

CORRECTION

Spring Ram made a pre-tax profit of Pounds 26m last year. The incorrect reference yesterday to a loss was due to an editing error.

IN A little-noticed move, the Italian Treasury has decided to carry out a thorough review of the operations of Sace, the state-run export insurance agency with total exposure of L52,266bn (Pounds 22.25bn).

The outcome is likely to have a profound impact on the way Italian exports are given cover. In future Sace - or its replacement - will operate on much tighter guidelines with more overtly financial criteria and less subject to the strong-arm of the politicians.

Sace has operated with a great degree of discretion and has been deeply beholden to political masters. This has been exposed in recent months by its involvement in the corruption scandals that have led in turn to a complete overhaul of the agency's board.

Mr Roberto Ruberti, head of Sace, is still in jail after being arrested on March 11 on charges of corruption. Two other senior Sace executives were arrested, along with three other figures linked to the export credit business. Mr Ruberti, a former member of the Bank of Italy, is alleged to have received payment in return for providing Sace cover for overseas Italian contracting operations.

These developments prompted the Treasury to move in and take a closer look at Sace, while also guaranteeing the normality of the agency's operations. Rome magistrates are understood to be examining a series of suspect insurance deals, especially in the Caribbean, between 1983-88. Some Dollars 300m-Dollars 400m (Pounds 200m-Pounds 270m) is involved.

Until the magistrates have clarified matters, the Treasury cannot approve formal settlement of the suspect operations. As a result the Treasury is expected to establish an escrow account to assure creditors they will be paid.

Even without the damage caused by being caught up in the corruption scandals, Sace was in need of a reappraisal. Questions have been building up for years about how far the Treasury should be funding indemnity payments and over the slim size of premiums. There have also been demands for a better definition of the types of country risk available for Sace cover, as well as new guidelines on the agency's role in backing overseas aid projects. The latter area is where some of the worst abuses are believed to have occurred.

The Treasury has handed out over L3,360bn in the past two years to assist Sace pay-out indemnity claims and L1,400bn more is likely this year. The level of indemnities is believed to have peaked in 1992, the large recent amounts reflecting problems dating back to 1983-90. These losses relate primarily to the Latin American debt crisis, exposure in Egypt and problems arising from political change in east Europe - notably the former Soviet Union, ex-Yugoslavia and Poland.

The need for such Treasury support stems more from low premiums than from the income received from credits recovered. Since Sace was established in 1977 premiums have slipped from covering over 80 per cent of indemnities to under 10 per cent. The ratio of recoveries to indemnities is over 60 per cent.

Since 1990 tighter methods of control have been in operation; but only now are the authorities recognising that Sace has conducted insurance cover on far too discretionary a basis. Thus one of the main tasks of the commission will be to provide a set of ground rules for transparent operations judging risk both by country and by business sector.

A more sensitive issue concerns future Sace policy towards covering investments regarded as strategic in risk countries. This is especially important for Italy, which depends almost wholly on energy imports whose cost has to be offset by an aggressive export policy. Successive governments have thus encouraged big trade and project finance deals with the energy suppliers. The most notable examples are trade and investment deals to offset the cost of Algerian and Soviet gas.

Between them, Algeria and the former Soviet states account for L15,000bn (split in roughly equal parts) of Sace's cover - nearly 30 per cent of all long-term commitments. Much of the L7,000bn Sace cover for Algeria embraces trade and investment related to building a second under-the-Mediterranean gas pipeline. Nevertheless, at present these countries would not necessarily come within the ambit of stricter criteria for Sace coverage - either in terms of political risk or because of non-payment of debts.

The Treasury commission will therefore have to decide whether such strategic investments are determined by reasons of state or by purely commercial considerations. If the former, then cover will have to be arranged in a different way - for instance, guaranteed direct by the Treasury or backed by special collateral.

A pointer is the current negotiations between ENI, the state oil concern, and Gazprom for a Dollars 1.8bn contract to modernise and upgrade the Russian federation's gas pipe network. Here the Italians want a commodity collateral in gas or oil. Only when the collateral has been finalised will the Sace cover of Dollars 1.6bn be forthcoming.

PDV SA of Venezuela was wrongly referred to as the state oil company of Colombia on page XV of FT Exporter (June 29). The Colombian national company is Ecopetrol.

PORTALS has been producing banknote paper since 1712 when Henri de Portal, a French refugee, set up a paper mill in Hampshire. Twelve years later the company was supplying the Bank of England with its banknote paper, a contract which it still holds today.

After the first world war the Bank of England allowed Portals to manufacture paper for other banking and trade authorities and the group won its first foreign government contract in 1921.

This century the demand for security paper has been fuelled by monetary inflation, the emergence of post-colonial independent nations and most recently the break-up of the Soviet bloc.

Security papermaking, augmented more recently by other specialist papermaking activities such as teabag manufacturing, has proved an appropriately mature niche business, delivering a steady performance. Last year the division generated just over half of Portals' Pounds 194m turnover and 70 per cent of profits.

But since 1988, when Portals acquired the Paragon electrical engineering group and a new chief executive, Mr Michael Morley along with it, the management has looked increasingly to the emerging protection and control division to provide future growth.

This relatively new division groups together a handful of environmental services, engineering and computer technology businesses. It has grown quickly over the past five years although its profit contribution has lagged, mainly because of of Airol-Flaregas, the lossmaking manufacturer of low-emission burners for the petrochemical industry which was finally sold in January.

That sale should enable Mr John Cope, a main-board director since September, to pursue the goal of turning the division, and the Portals Computer Technology businesses in particular, into Portals' 'engine for growth'.

Servelec, a small company based south of Sheffield, symbolises this aspiration. The company which employs 220 people, three-quarters of them engineers, provides its customers with highly sophisticated software products and fully integrated systems built around a core software package called 'Scope', which runs on desktop computers and workstations.

Servelec's products 'enable its customers to better control and manage their businesses', says Mr Cope, one of the company's founder shareholders.

That means not only providing them with the information tools to improve cost effectiveness and efficiency, but also enabling companies to meet the growing burden of legislative, environmental and safety requirements.

Servelec, which posted pre-tax profits of Pounds 1.96m (Pounds 1.56m) on turnover of Pounds 12.9m (Pounds 12.2m) last year, began in the late 1970s designing and building process control systems for British Steel - an industrial heritage which Mr Cope believes gives the small company a distinct advantage over some of its larger rivals which include Logica and EDS Scion.

Since then it has substantially broadened its customer base to include many blue chip customers in the water, oil and gas, and food industries as well as those in more traditional industrial sectors.

Building integrated systems around standard computer hardware platforms, together with specialised microprocessor-based equipment supplied by two smaller sister companies - Seprol and Technolog - Servelec has been particularly successful winning customers for its telemetry systems in the water industry.

All of the regional water authorities already have computer-based telemetry systems, which enable managers and supervisors to monitor and control remote sites like pumping stations or water treatment plants. However, the need to upgrade and refurbish these systems provides a continuing source of business.

More importantly in terms of growth, Servelec won a Pounds 2.8m contract last year from Anglia National Rivers Authority for a regional telemetry system which is integrated with a flood forecasting system. Other river authorities are expected to follow suit and some analysts, including Mr David McCrossan of Kleinwort Benson research, have estimated that this market alone could be worth between Pounds 50m and Pounds 100m over the next 10 years.

However Servelec's information gathering, control and analysis systems potentially have many other applications.

Under one new contract worth Pounds 3m the company is building a 'supervisory control and data acquisition' system for the BBC which is designed to monitor automatically almost 400 transmitter sites throughout the UK.

The system contains predictive facilities to enable the BBC to anticipate technical, security and other problems at transmitter sites and take precautionary action.

Under another large contract Servelec is designing a replacement control and monitoring system which will cover all the main utility services - including the runway lights - at Heathrow airport.

Both Mr Cope and Mr Alan Gilby, Servelec's managing director, believe there is a substantial pent-up demand for systems which combine the features of traditional process control with management information systems. These can then be integrated with other computer-based systems like financial accounting and database systems to provide managers with a more comprehensive view of their business.

But by designing the system from bottom-up, rather than from top-down, Mr Cope insists Servelec can provide more effective products than many of its competitors.

However, he accepts that if Servelec has a weakness it is 'in terms of our marketing skills.' This, he says, is now being corrected.

Driven by recession-resistant factors like environmental and safety concerns, as well as the desire for greater efficiency, Mr Cope believes Servelec and Portals Computer Technology can deliver the kind of accelerated growth Portals is seeking to offset its maturing papermaking business.

Controversy has raged over the British practice of giving many company directors three-year rolling service contracts since the UK's largest pension fund declared war on them a month ago. But few people have stopped to question the difference between rolling contracts and three-year, fixed-term ones.

It is not always as great as it seems.

Alastair Ross Goobey, chief executive of Postel, who is leading the campaign, says that 'a fixed (and renewable) contract of up to three years gives us no qualms'.

Why not, when quite a number of three-year 'fixed' contracts are actually renewed every year?

This makes them, in effect, rolling contracts of between two and three years, depending how much time has elapsed.

The practice of such annual renewals is well-known to the highly-respected Monks Partnership, which specialises in boardroom pay.

In a study undertaken a year ago, two-thirds of the chairmen and chief executives of a sizeable sample of large companies said they were on notice periods of exactly three years. Less than a fifth were on between one year and three, 7 per cent were on less than a year, and almost a tenth were on three years plus.

There has been little change since 1992, says Monks, although a few companies have cut notice periods from three years to two. Most of the 36-month notice periods are of the truly rolling variety, but some seem to be 'fixed', the firm adds.

With the emergence of this further quirk in British executive feather-bedding, one can only admire last week's action of one large company, GEC, in replacing three-year rolling contracts by a three-year fixed term for new appointees; thereafter, they now get only a one-year rolling contract.

Other companies should follow suit.

Field Group, the packaging company, made a very impressive market debut. The shares were offered for sale at 250p a share and more than seven times oversubscribed.

The stock began trading at 276p, with buyers moving in and pushing the volume up to 13m. It was the market's third most heavily traded stock yesterday. The shares ended the day at 279p.

Field's warm reception had been expected. According to one trader, a premium of 10 per cent on the offer price had been anticipated, while it closed just short of a 12 per cent premium. 'There is a healthy demand for well-managed companies such as this,' said the trader.

The company is the leader in the paper/packaging market and was part of a Reedpack management buy-out in 1988 and underwent a second MBO two years ago from SCA. The company intends to complete a Pounds 6m acquisition soon.

Policy Portfolio, a marketmaker in second-hand endowment policies, joined the market with a placing of 3.6m shares at 130p. It began trading at 143p and ended the day 3 down at 140p.

Sun Alliance was the best performer in the composite insurance sector, with the market increasingly suspicious that Transatlantic, the insurance group owned jointly by Liberty Life, of South Africa, and UAP, of France, may have been quietly adding to its 3.01 per cent stake in the UK group. The shares moved up 7 to 360p.

Transatlantic revealed what is described as a 'strategic' stake in Sun early last month, triggering a rush of specula-tive buying in Sun shares, although some analysts dismissed talk of imminent bid moves as premature.

Dealers said there had been persistent support for the stock yesterday, with turnover reaching 1.9m shares, the highest single day's activity since the middle of June.

Any increase of a percentage point or more above the 3 per cent level has to be notified to the Stock Exchange.

Big exceptional provisions, largely against a US subsidiary, took the shine off Dixons' results and the shares fell 15 to 195p in exceptionally heavy turnover of 10m, the second largest in three years.

The restructuring charges set against Silo confirmed the worst fears of many in the market. 'Dixons should cut and run on Silo,' said one disgruntled analyst. While the UK business was holding up well, stores specialists said Dixons' determination to put the business to rights will probably continue to overhang the shares for several months.

Strong two-way business in Forte was prompted by a downgrade and reinforced negative stance from NatWest Securities. The broker cited discounts being offered by the hotel group in its business class hotels as evidence that discounting was more widespread than was previously thought.

The shares, which have enjoyed a good run in recent weeks, initially dropped on the news, but recovered as investors continued to believe the recovery story. The stock closed unchanged at 226p after a hefty turnover of 11m shares.

A 'take profits' recommendation issued by Kleinwort Benson Securities on the insurance broking leaders upset companies such as Sedgwick and Willis Corroon.

Ms Julianne Jessup, Kleinwort's analyst, highlighted the strong outperformance of the stocks over the past three months and recommended a switch into the smaller broking issues. Willis lost 7 at 217p and Sedgwick 4 at 196p.

International trading group Lonrho, which earlier this week appointed James Capel as its joint broker with Strauss Turnbull, added 3 1/2 at 129 1/2 p on talk of an imminent disposal.

Inchcape shed 12 1/2 to 545p, with Robert Fleming said to have turned cautious on the stock. Further reflection on the recent restructuring plans benefited Rothmans International, sending the stock forward 15 to 669p.

Sellers of Chubb Security, notably of a line of 6m at 300p, brought volume to 11m as the shares dipped 3 to 310p.

Shares in British Aerospace recovered from an early retreat after the release of a government study supporting its proposed regional jets joint venture in Taiwan.

The stock declined last week on fears that the deal signed early this year may have to be aborted due to a lack of funding. One analyst said: 'This will be good news if it means the joint venture can now go ahead, otherwise the regional jets division faces closure.'

Sentiment yesterday was also boosted by talk that Airbus Industrie, in which BAe has a 20 per cent stake, was about to win a lucrative order for 44 Airbus aircraft. BAe shares closed 7 up at 399p after trade of 2m.

The big sell note from Carr Kitcat & Aitken on Rolls-Royce continued to exact a heavy toll on the stock and the shares relinquished 3 to 138p as volume rose to 3.8m.

British Steel was the subject of a tax-related 'bed and breakfast' deal which brought total turnover in the stock to 29m shares, including a block of around 9m. The shares hardened 2 1/2 to 91p, with a leading US securities house said to have recommended the stock.

Fears that the Vickers subsidiary Rolls-Royce Motor Cars will not break even this year as expected, due to poor car sales, brought an early slide in the shares. At the day's worst, Vickers was down 9 at 140p, before bargain hunters helped to trim the decline. The shares were finally 4 off at 145p.

A squeeze in VSEL following an agency cross of around 100,000 shares at 845p left the stock 20 stronger at 830p.

Bank of Ireland weakened 9 to 241p after announcing a one-for-six rights issue that is intended to raise IPounds 100m. The bank said it would use the funds to strengthen its capital base.

Other statistics, Page 35

DAEWOO Electronics, South Korea's third-largest consumer electronics manufacturer, yesterday reported a 25 per cent rise in net profits, to Won14bn (Dollars 17.5m) during the first half of 1993, on the back of brisk domestic sales, writes John Burton in Seoul.

Sales grew 15 per cent to Won997bn, including a 17 per cent rise in domestic sales to Won425bn. In the Korean market, sales of microwave ovens were up 58 per cent; washing machines 28 per cent; and televisions 17 per cent.

Exports, which rose 13 per cent to Won572bn, were bolstered by the Korean won's depreciation against the Japanese yen. Microwave ovens, washing machines and refrigerators all posted growth above 30 per cent in foreign markets.

Daewoo also announced it had acquired for Dollars 1.4m an audio production facility in the Chinese province of Shandong which it had leased since last August. The facility has capacity to produce 50,000 sets of cassette stereos, CD players and headphones annually.

The company plans to transfer the production of cheap audio products from South Korea to the Shandong plant to take advantage of low labour costs.

MOODY'S Investors Service, the US credit ratings agency, has placed the long-term debt ratings of two leading Japanese heavy electronics makers under review for possible downgrading.

Moody's said it was reviewing the Aa3 ratings of Toshiba and its subsidiaries, Toshiba America and Toshiba International Finance. Also under review are Mitsubishi Electric, and offshoots Mitsubishi Electric Finance UK and Mitsubishi Electric Finance America.

Japanese electronics makers have been hurt by the prolonged weakness of consumer demand and sluggish capital spending by companies. Depreciation costs from heavy capital expenditure during the late 1980s are also squeezing the industry's profits.

Responding to the announcement, Toshiba said it expected improved earnings for the year to next March. It based its hopes on a recovery in the US computer industry, and the Japanese government's emergency economic package.

The agency said it would focus on both Mitsubishi and Toshiba's ability to improve profit margins and cash flow of weak sectors, as well as debt reduction and efforts to cope with the strengthening yen.

CANADA'S financial services deregulation, coupled with the long recession and rising competition, have forced the big Desjardins credit union movement to consolidate with the publicly-held Laurentian Group.

Together, the newly-formed group will have corporate assets of around CDollars 20bn (USDollars 15.6bn) and a further CDollars 50bn under administration through its subsidiaries. It will rank as Canada's fifth or sixth biggest financial services conglomerate, including units in banking, trust services, life insurance and mortgages.

Desjardins will have majority control of the new Desjardins Laurentian Financial Corp, taking in the financial services units of both groups.

However, Laurentian General, a property and casualty insurer, is excepted from the deal. Laurentian Group's 50 per cent holding in this unit is being sold to its partner, La Victoire of France, for an undisclosed sum. The French company paid about CDollars 50m for its 50 per cent share in 1990.

Both Mr Claude Beland, head of Desjardins, and Mr Jacques Droin, chairman of Laurentian, said the consolidation had been dictated by the heightened competition resulting from globalisation of financial markets.

Laurentian had been seeking a strategic partner for more than a year, partly to inject new capital in its life and general insurance unit. It negotiated with several Canadian institutions. Desjardins operates 1,500 banking units, mainly in Quebec, while Laurentian Bank operates in both Quebec and Ontario.

The two main life insurance subsidiaries of Desjardins and Laurentian will be merged, although this arrangement excludes Imperial Life in Toronto.

Laurentian Group minority shareholders will receive a combination of cash and common shares of Desjardins Laurentian Financial.

MOLSON, the diversified Canadian brewing group, said beer profits this year would be hit by the slow economic recovery in North America and price wars. The group's special chemicals, retailing and entertainment operations, however, should do better.

'Our first quarter ended June 30 will equal or better the year earlier level, when profits were CDollars 38.4m (USDollars 29.9m), or 66 cents a share, on sales of CDollars 799m,' Mr Marshall Cohen, president, told the annual meeting.

For the full fiscal year, Molson should improve on its fiscal 1993 performance, he added, when final net profit was CDollars 164.7m, or Dollars 2.76 a share, on revenues of CDollars 3.08bn.

Molson, Canada's biggest brewer, last year abandoned efforts to develop a US market on its own and concluded a CDollars 350m deal with Miller, the brewing arm of Philip Morris of the US.

Miller bought the US marketing and distribution rights for the Molson brand, aiming for a US market share of 2.5 per cent in five years, up from the current 1 per cent.

Molson Breweries is 40 per cent owned by Molson, 40 per cent by Foster's of Australia, and 20 per cent by Miller. Mr Cohen said it would take between five and seven years for the full benefit of the Miller deal to offset Molson's smaller share in its international brewing business.

He said that Diversey, Molson's international cleaning chemicals subsidiary, had overcome problems with integrating Du Bois Chemicals in the US.

However, European, Asian and Latin American operations were doing well and Diversey overall now contributed more revenue than the brewing business.

'Diversey can be Molson's most profitable business and yet develop strong competitive positions in all its markets,' Mr Cohen said. 'We see an improvement in the US operations in the second half this year.'

Molson is speeding up its five-year programme to build 28 large hardware stores in Canadian cities after two pilot units had exceeded expectations.

Older hardware stores are being rationalised and overall retail results are improving.

Molson also owns the Montreal Canadians ice hockey team which won the 1993 National League Stanley Cup, and the sports and entertainment outlook is favourable.

Mr Cohen said the group's new strategy and improving performance should be reflected in Molson's share price.

Fleming International High Income Investment Trust ended the year to May 31 with net asset value at 42.3p, against 33p at the end of May 1992.

The final dividend of 2.5675p maintains the total at 3.5675p on earnings of 3.99p (3.53p). Available revenue increased to Pounds 4.45m (Pounds 3.94m).

RAGLAN PROPERTY Trust, the property investor and developer, is proposing to consolidate its share capital in line with intentions expressed at the time of the capital restructuring announced in March.

As then indicated, the aim is to reduce the spread between the bid and offer price as a proportion of the share price.

The proposed consolidation is on the basis of 1-for-25 existing 1p shares.

A consequence will be that shareholders with fewer than 25 shares in the company will cease to be shareholders. As these represent only 0.01 per cent of the company's capital but a significant proportion of the number of shareholders, Raglan expects to make net savings in ongoing administration costs.

There will be a a scrip issue of warrants to subscribe for new shares on the basis of one warrant for every 10 new shares held. They will enable the holder to subscribe for new shares at 30p per share at any time up to December 31 1995. It is expected that trading in the new shares and warrants will begin on August 2.

Following the warrants issue and assuming full exercise, Landswell Holdings, Century City International, Mr Keith Holman and Mr Alan Fosler, deemed to be acting in concert, will hold about 11.1m new shares, representing 33.6 per cent of the enlarged issued capital.

An extraordinary meeting on April 15 agreed to waive any requirement that any member of the concert party should make a general offer to shareholders.

CRESTACARE is raising Pounds 33.3m through a placing to finance acquisitions in its core nursing homes business. The group, where Mr Andrew Taee was appointed chief executive in March, also announced yesterday the sale of some of its non-core properties and the appointment of a new chairman.

Mr Brian O'Connor is retiring as chairman, having, Mr Taee said, been the architect of CrestaCare's new strategy. Mr Graeme Hart, deputy chairman, is stepping up.

The placing and two acquisitions announced yesterday, totalling Pounds 15.1m, are subject to approval at a special meeting of shareholders on July 30. The placing is at 40p and the shares rose 2p to close at 45p yesterday.

Mr Taee said further acquisitions were under negotiation but that shareholders would not be asked to put up more new equity.

CrestaCare said that since the introduction of the Care in the Community Act in April it had held occupancy rates above 90 per cent. Downward pressure on fee rates was offset by an increasing proportion of privately funded residents.

Yesterday's acquisitions are of two businesses, each operating four nursing homes. Together they have 515 beds and made an operating profit of Pounds 2.57m in the year to end-March. CrestaCare is paying Pounds 14.1m in cash and the balance through the issue of 2.375m shares.

The vendors in both cases will continue to develop new homes for CrestaCare to its specifications. It will only take these homes on to its balance sheet when they are fully built and reach a certain occupancy level.

As well as the shares issued to the vendors, the placing involves 83.23m shares, with investors able to clawback shares on a 1-for-1 basis. It will raise Pounds 31.6m net of expenses.

Directors are taking up their entitlement under the placing. As well as doubling his stake of 333,000 shares, Mr Hart is acting as a placee for a further 2m shares.

Of the placing proceeds, Pounds 7m will go to buying four homes which CrestaCare currently leases. Three are leased from Grosvenor House Group in which Mr Taee has a 10 per cent stake. Mr Taee said that after the placing net debt would be about Pounds 8m.

In its last accounts CrestaCare had properties for sale with written down values of Pounds 9.4m. All but Pounds 2.8m of these have been sold, although there has been a Pounds 1m loss on the sales.

THE REPUTATION of the US as the graveyard for UK retailers' ambitions looks set to continue after Dixons' announcement yesterday of increasing losses and higher-than-expected closure provisions at Silo, its US offshoot.

When Dixons acquired Philadelphia-based Silo in 1987 for Dollars 320m (then about Pounds 200m) it was one of four rapidly-growing 'power retailers', specialist superstore chains which were making substantial inroads into a Dollars 40bn electrical goods market long dominated by independent traders and department stores.

However, the US then went into recession and Silo, which had over-expanded, found itself unable to compete with powerful rivals such as Circuit City and Best Buy.

Silo's losses increased this year from Pounds 16.9m to Pounds 22.4m, and Dixons' group pre-tax profits were further depressed by Pounds 36.2m of exceptional costs for closing 56 Silo stores.

One analyst, otherwise positive about Dixons' prospects, recently parodied the poet Sir John Betjeman, urging 'Come friendly bombs and fall on Silo.'

Dixons has been struggling hard to inject its own skills in buying, systems, management and customer service into the chain, but has little to show for its efforts.

It did, however, claim many markets showed an improvement in sales last year, with the overall results being dragged down by falls in sales in its largest markets, especially California.

In the past year it has taken more aggressive steps. In February, it replaced Mr Robert Sirkis, Silo's American president, with Mr Peter Morris, previously Dixons' group property director.

That move came only weeks after Dixons announced the closure of 45 stores - nearly a fifth of the total - in Illinois, Tennessee, Indiana, Kansas, Missouri, Kentucky and Oklahoma. They accounted for 37 per cent of Silo's markets but only 11 per cent of sales.

It has since closed a further five stores, and 11 more will go in the coming year.

The recovery plan now has three main elements. One is revamping existing stores, doubling the space given to the computer/home office departments. In-store product service departments are being added to many stores, as are car radio and alarm fitting bays.

The second element is closing many of the smaller, poorly-located stores, and replacing them with new superstores, of between 20,000 and 30,000 sq ft, parallelling what Dixons is doing successfully with its Currys chain in the UK.

That would mean the chain gradually shrinking from its current 185 stores.

Thirdly, Silo is experimenting with new formats to form the basis of that superstore expansion.

Four stores in Rochester, New York State, have been refurbished and renamed YES - Your Electronics Store.

As the name suggests, the stores concentrate heavily on electronics, and white goods have been dropped. New brands have been added to Silo's usual range to add 'authority'.

Silo is experimenting with a second store revamp formula in Chicago, although the name has not been changed, and white goods are retained.

Dixons said it wants to give the reforms at least until early next year before assessing their success. But analysts remain sceptical about Dixons' chances, especially with competition increasing in its biggest California and Chicago markets.

Mr John Clare, managing director, said underlying improvements so far have convinced Dixons that it can turn Silo around 'over time'.

'But we well understand that we cannot continue as a company to see a situation where Silo makes significant losses year after year.'

Mr Nick Bubb, retail analyst at Morgan Stanley, estimates the cost of closing Silo at a prohibitive Pounds 150m. But if there are no signs of improvement before the half-year results in January, he suggests 'major surgery' may be necessary.

Dixons, he said, may eventually have no alternative but to make a 'slow, miserable retreat'.

See Lex

SLEEPY KIDS' rights issue was taken up in respect of 2.65m shares, or 35.4 per cent.

ALCO STANDARD Corporation has received acceptances in regard to the offer from Alco Office Products (UK) for Erskine House Group of not less than nine-tenths of the value of the latter's shares. The offers remain open until August 19 and outstanding shares are to be acquired compulsorily.

The Second HGSC Index Investment Trust raised Pounds 25.1m in a placing and open offer. Some 20.1m shares were the subject of a prior undertaking to subscribe.

Dealings are expected to start today.

Maxwell Communication Corporation administration and Chapter 11 process has advanced with the overwhelming approval by creditors of the Scheme of Arrangement in the UK and the Plan of Reorganization in the US.

Both scheme and plan now need court approval in both countries.

MAXWELL pension funds are unlikely to receive full restitution of the assets stolen by Robert Maxwell, MPs were told yesterday by Mr Andrew Large, chairman of the Securities and Investments Board.

He told the Commons social security committee that full restitution for Maxwell pensioners was a worthy goal, but one that would be very difficult to achieve.

'We don't know whether total restitution is needed for pensioners to enjoy the benefits to which they are entitled,' said Mr Large. He added that SIB - the organisation which oversees regulatory bodies for the financial services industry - was doing everything it could to maximise restitution.

Asked whether he thought - with only Pounds 100m of the Pounds 440m stolen from the fund still untraced or in disputed ownership - the time had come for financial institutions to get together to reach a settlement, Mr Large said he thought that would be 'extremely difficult'.

Reporting to MPs on the structure of self-regulatory organisations, Mr Large said there was a strong case for having three bodies - with the Investment Management Regulatory Organisation (Imro), watchdog for the fund management industry, retaining its independence.

He said SIB would publish the criteria it intended to use in exercising its power to ban individuals from the financial services industry under Section 59 of the Financial Services Act 'within the next month or so'. It was a draconian power that needed to be used fairly but firmly.

A review of Imro's admission procedures had been undertaken, with monitoring arrangements scrutinised.

Resources allocated to monitoring had been increased, with the number of staff raised from about 35 to 50.

THE fate of Greece's privatisation programme will be sealed in the coming weeks. Success or failure largely rests on the strategic sale and subsequent partial flotation of OTE, the state-owned telecommunications corporation.

'It is crucial,' says Mr Stefanos Manos, the minister of national economy and driving force behind the government's sell-off of public enterprises. He remains confident that the equity sale will be a success and, perhaps as important, that it will be on schedule.

The timetable is very tight. An election is due before April next year, possibly earlier. The Socialist opposition, widely tipped to win, has vehemently opposed New Democracy's privatisation programme and has pledged to halt and even reverse the sell-offs.

The government has taken steps to maintain the support of pro-privatisation MPs during the summer session of parliament to push through enabling legislation for the privatisation programme as well as the charter and licence for OTE. The sale of a 35 per cent strategic stake in the company is expected by early September with an initial public offering (IPO) in November.

France Telecom, GTE of the US, NTT, Stet, Korea Telecom and Telefonica have been shortlisted to bid for the strategic stake prior to the equity offering of 14 per cent, valued at around Dr90bn, the largest so far in Greece. The flotation structure is 5 per cent to domestic investors, 5 per cent as an international tranche and the remaining 4 per cent will be offered at a discount to OTE's 27,000 employees and 13,000 pensioners.

International advisers and analysts swell the ranks of the already well-staffed government offices. Credit Suisse First Boston and J. Henry Schroder Wagg have been appointed joint international lead managers while the international accountancy firm Arthur Andersen is winding up a complete audit of OTE. At the Athens Stock Exchange, Coopers and Lybrand are checking the trading system as concern has been voiced over whether the market can absorb such a large issue.

There is considerable bustle, tinged with urgency, as the preparations continue apace. The prospectus is expected to be in draft form by August, radio advertising is underway and a television campaign will start this month.

Analysts view the OTE strategic sale and IPO as not only vital to Greece's international credibility but also a potential turning point for the entire privatisation programme. The government is fighting for the hearts and minds of a population long accustomed to the state provision of jobs in public sector corporations.

Patronage appointments and the use of the public sector as a cushion against unemployment are viewed as a duty of the state and the monopolistic utility corporations as state assets. This attitude extends to suppliers and contractors who enjoy cosy relationships with public sector managers, to trade unions worried about job losses and to senior politicians concerned about the political cost of privatisation.

The unwieldy nature of the public sector and opposition from within the ranks of the government have not helped the privatisation process. Its presentation and image have also been tarnished by allegations that some smaller companies were sold on favourable terms to businessmen and by the somewhat patchy success of some larger sell-offs such as shipyards.

The process of unbundling state involvement in all aspects of the economy began in 1990 when more than 60 per cent of Greece's GNP was generated by the public sector. The government created the Industrial Reorganisation Organisation (IRO) to liquidate or sell some 60 enterprises, many of these moribund, on its books. Many were liquidated through accelerated procedures and of the 27 companies in operation, the IRO now has three remaining - the Kerafina ceramics company, Athens Paper Mill and Larco, the nickel mining company. The Dollars 200m subsidy to maintain IRO companies has been eliminated and proceeds from the liquidations are keeping the IRO running.

Privatisation sales in 1991 and 1992 amounted to almost Dr200bn, of which Dr124bn came from the sale of the Aget Heracles cement company to Calcestruzzi, a subsidiary of Italy's Ferruzzi group. The sale has been clouded by allegations that Calcestruzzi officials were involved in the payment of kickbacks to Italian politicians.

Contractual difficulties have also contributed to slippages in the privatisation timetable. The sale of a minority interest and management rights in Greece's two largest oil refineries, Hellenic Aspropyrgos Refinery (ELDA) and Hellenic Fuel and Mineral Oil (EKO), were delayed over the appointment of international advisers. The offering memorandum is now expected in October and lists of potential investors are being drawn up for one or both partial buy-outs, expected to raise up to Dollars 1bn.

A continuing stand-off between the government and managers at the state-owned Public Power Corporation (Deh) illustrates the depth of opposition over private sector involvement in utilities and the managements' ability to obstruct tender procedures. Deh maintains it can produce power more cheaply than private operators and wants to maintain control of its own development programmes whereas the government insists that Deh's debts are too high to finance new power stations. Asking the Deh management to co-operate with a private partner under build-operate transfer (BOT) financing is 'akin to asking a man to chop off his own hand,' commented one analyst. 'Of course, they declined.'

The retendering process for the 600MW Lavrion gas-fired power station is due to start in mid-summer as part of the recent spurt in the privatisation programme. The partial sale of 20 per cent of the Hellenic Sugar Industry, also slowed by management and union sabotage, is expected to be completed by early summer.

A important sale of assests belonging to the state tourism association (EOT) is also on the busy agenda for the summer parliament. Mr Athanassios Zambaras, special adviser to the privatisation team, expects considerable foreign interest, especially in packages combining the sale of a hotel with a marina or casino.

About 50 hotels, most of them small, will be sold while marinas are to be offered on long-term leases or as sites to private operators. In addition, a new regulatory framework is being established for nine casinos in prime tourist sites. More than 150 indications of interest have been received for the first round of selection this month and the casino licences are due to be awarded by early November. Licence revenues are estimated at Dr22bn.

Privatisation plans for Olympic Airways remain on the distant horizon because of huge cumulative debts and non-performing loans estimated at more than Dr200bn. A new chairman has been brought in from the US and auditors are working on the balance sheet as part of the fix first, sell later approach to the airline. Olympic, which posted an operational loss of Dr13.2bn in 1992, requires either a debt write-off or substantial financial restructuring, possibly both, before it can contemplate seeking a strategic partner.

A somewhat overdue drive towards greater transparency in the privatisation process may have come too late to overcome deep-seated prejudices and opposition. More important, the potential benefits will not be immediately obvious to the majority of voters before the election.

THE US government's chief economic forecasting gauge slipped in May, the commerce department said yesterday, suggesting economic growth will be tepid until the end of the year, Reuter reports from Washington.

The Index of Leading Indecators, which is supposed to forecast economic trends six to nine months ahead, fell 0.3 per cent after a revised 0.2 per cent April rise. The department previously reported the April increase as 0.1 per cent.

The May drop was in line with economists' forecasts.

The index - which measures a basket of economic indicators ranging from state unemployment benefits to building permits - has moved in a see-saw pattern since the end of last year.

Six of the 11 components that make up the index fell last month, led by declines in consumer expectations and manufacturers' order backlogs for durable goods.

The commerce department reported that new single-family home sales fell 21 per cent to a seasonally-adjusted annual rate of 571,000 units after rising in April by a revised rate of 723,000 units.

The sharp drop in May is being discounted by most analysts as a reversal to the substantial increase in April.

Mr Steve Wood, global trading money market economist at Bank of America in San Francisco viewed the decline as an offset to the enormous surge in April, which was 'partially weather-related.'

During the past six months, it has fallen three times and risen three times, mirroring the economy's bumpy performance.

Lower factory orders for consumer goods, higher claims for unemployment benefits, lower prices for sensitive materials and fewer reports of slower deliveries of manufactured goods also contributed to the overall drop in the index.

Taken together, the index portrays a cautious consumer and foreshadows weaker manufacturing activity.

The government reported last week that the economy slowed to a crawl in the first quarter, with gross domestic product expanding only 0.7 per cent after a 4.7 per cent burst in the final three months of 1992.

Economists said the economy perked up in the second quarter but that growth was moderate at best.

They said fears of higher taxes under the Clinton administration have made businesses reluctant to hire many new workers and consumers are unwilling to open their wallets.

Only four of the components showed strength. They were growth in the nation's money supply, higher business equipment orders, a rise in building permits and stronger stock prices.

The department said its index of coincident indicators, which measures current economic activity, rose 0.4 per cent in May after falling a revised 0.3 per cent in April. The April decline previously was reported as 0.4 per cent.

The lagging index, which measures past economic activity, rose 0.1 per cent in May after rising a revised 0.4 per cent in April. The April rise previously was reported as 0.1 per cent.

An Iraqi official said yesterday the only way to deter more US attacks on Iraq was to strike at the interests of Washington and its allies in the Gulf, Reuter adds from Baghdad.

Mr Nouri al-Marsoumi, senior under-secretary in the information ministry, said in an article about the US cruise missile attack on the Iraqi intelligence headquarters on Sunday that if it went unpunished, Washington would be more likely to make further attacks.

Dofasco, the Canadian steel group, has launched its third voluntary early retirement programme and a complementary pre-retirement programme, Reuter reports from Toronto.

These two initiatives, for which about 1,400 of Dofasco's 8,200 employees are eligible, will be funded largely from surplus in the company's pension plan.

Correction (published 14th July 1993) appended to this article.

LATIN AMERICA is dominated by three main economies, those of Brazil, Argentina and Mexico, for each of which the US is the main foreign trading partner, with Germany the principal European supplier of goods.

The region contains six other substantial and growing economies - Chile, Colombia, Peru, Bolivia, Ecuador and Venezuela - of varying economic performance and potential.

Most of South America's economies are capable of lurching from relative prosperity and stability one year to economic crisis the next, but of the three main economies Mexico and Argentina perhaps offer the greatest potential for exporters with an eye for sales growth over the next 18 months.

Brazil has to tackle domestic problems, the resolution of which hinges on a successful conclusion to the protracted Brady plan debt negotiations. As a result, it could be some time before it offers good prospects of sales growth to exporters.

Mexico is the largest importer of the three, with total imports in 1993 expected to exceed Dollars 58bn (Pounds 37.6bn). Semi-manufactures, chemicals and medicinal intermediate products may amount to Dollars 33bn, with capital equipment imports forecast to reach Dollars 13bn, and consumer durables Dollars 8bn. Around 80 per cent of these products are sourced from the US, and the North American Free Trade Association (Nafta) accord should cement this dominant position. Payment delays average two to three months.

Mexico has a soaring current account deficit which will reach Dollars 29bn in 1993 and is forecast to swell to Dollars 35bn in 1994. The trade liberalisation measures of the 1990s and the structural reforms, including privatisation, have been responsible in part for this. However, because capital investment inflows have been so strong - around Dollars 15bn is forecast for 1993 - total debt servicing of around Dollars 11bn in 1993 should be comfortably manageable. The peso has remained strong because of high domestic interest rates, currently 14 per cent, and this, in turn, has encouraged companies to finance capital expenditure with equity, rather than bank loans. Germany, with 5.7 per cent of Mexico's imports, and France, with 2.5 per cent, are the country's main EC trading partners.

Argentina, with a GDP of Dollars 283bn, growing at 6 per cent a year, and a low inflation rate by historical standards, of 12.5 per cent, is enjoying increasing economic success. The main doubt is the large current account deficit, the growth of which is being exacerbated by the government's determination to fix the peso at par with the US dollar. This affects labour costs which will have to fall to relieve pressure on the country's competitiveness.

Imports, at Dollars 14.5bn in 1992, are growing at more than 20 per cent a year, although the sharp cut in the expansion of M1 money supply so far in 1993 (13 per cent in 1993 from 49 per cent in 1992) should force households to adjust their expenditure to a dwindling supply of domestic credit. Of the Dollars 17.8bn of imports expected in 1993, around Dollars 6.4bn will be manufactured product imports. However, payment delays are tending to worsen - currently up to four months in 1993 from three months in 1992.

Export credit agencies continue to offer a fairly generous volume of cover. Germany's Hermes, for instance, is believed to have more than Dollars 180m of short term cover, and the US Export-Import Bank (EximBank) has underwritten around Dollars 70m of short term commitments.

This month, the UK Trade Secretary, Michael Heseltine, announced in Buenos Aires the resumption of ECGD medium term cover for Argentina, commenting that the move had been made possible now that Argentina had negotiated its official and commercial bank debts, and was 'a recognition of the country's success in implementing its economic reform programme'.

Elsewhere in the region, the other key economies in terms of GDP and population size are Colombia (population 36m; GDP Dollars 50bn); Chile (population 14m; GDP Dollars 40bn); Peru (population 22m; GDP Dollars 47bn); Venezuela (population 20m; GDP Dollars 64bn); Ecuador (population 11m; GDP Dollars 14bn) and Bolivia (population 7.5m; GDP Dollars 6.75bn). Exporters and trade financiers are currently likely to find Bolivia, Ecuador and Venezuela less satisfactory markets than Chile, Peru and Colombia.

Bolivia is facing a high trade deficit, lengthening payment delays - from three months last year to current levels of around five months - and a worsening relationship with the IMF as its structural adjustment programme falters in the shadow of the forthcoming elections.

Ecuador is contending with high inflation, high currency risk, low foreign exchange reserves, worsening exchange transfer delays, increasing political unrest, and high foreign debt: its debt to GDP ratio is now over 100 per cent.

Venezuela is struggling to handle a big public sector deficit, a high current account deficit, a debt to GDP ratio of 58 per cent, and an over-reliance on petroleum product exports.

Chile, meanwhile, has introduced structural reforms necessary to reduce its debt and improve its internal domestic finances. Inward investment has boomed as the Government has embarked on a determined privatisation programme, and mineral and food exports were growing rapidly until falls in world prices began to dent prospects of further growth in 1993.

Nevertheless, import volumes are set to maintain their growth. Imports now total Dollars 11bn, of which capital equipment comprises Dollars 2.6bn and energy products a further Dollars 1.3bn. Germany is the EC's main exporter providing 6.5 per cent of all imports. While the current account is in deficit to the equivalent of 4 per cent of GDP (Dollars 1.6bn), this is readily financeable, and, with Dollars 12bn of projects under active development, export credit insurance is widely available among most of the main credit insurers.

Colombia, with imports running at Dollars 7.5bn per annum (of which intermediate goods comprise Dollars 3.5bn and capital equipment Dollars 1.7bn) is a sound market into which EC exporters are selling vigorously at the present time. With high foreign exchange reserves (Dollars 7.3bn), import cover at eight months and transfer delays at less than two months, it is now producing few problems for credit insurers.

However, potential problems loom. Inflation is stubbornly high at 25 per cent, and next year's presidential election, already vigorously contested in the media, is creating political uncertainty. In turn, the latter is delaying decisions on Colombia's two main domestic policy issues - how to diversify the economy away from its reliance on oil, and how to improve the productivity of Colombia's ailing State Oil Company, PDVSA, where privatisation proposals are on hold.

Peru may be a more attractive target for exporters from the EC. Following the recent election of President Fujimori, it is set for a period of stability and growth. With a population of 22m and a GDP of Dollars 46bn, now growing at 3.1 per cent a year, it offers useful prospects, particularly for exporters associated with the power, construction and the fishing industries. These are the expected growth sectors as privatisation plans release pent-up demand.

Although Peru does have a high foreign currency debt - its debt to GDP ratio is on the high side at 47.8 per cent - servicing at 2.4 per cent of GDP is not a daunting problem in the light of the capital repatriation taking place, following the election. Foreign investment is likely to be attracted by plans not only to privatise the two electricity utilities, but also the mining conglomerate Centromin, and the telecoms authority EntelPeru.

Many bankers feel that Peru is well placed to settle its Dollars 7.5bn Paris Club rescheduling this year, and could then draw down its recently approved IMF extended fund facility as well as Dollars 1bn of World Bank loans. A Brady Plan restructuring is expected to be negotiated towards the end of 1993. EC export credit agencies are reassessing their country limit availabilities for Peru, following the improvement in the country's economic prospects.

James Fairrie is a trade finance specialist

CORRECTION

PDV SA of Venezuela was wrongly referred to as the state oil company of Colombia on page XV of FT Exporter (June 29). The Colombian national company is Ecopetrol.

EUROTUNNEL may need to raise additional funds 'of under or around Pounds 1bn' to pay for the Channel tunnel with an equity issue a possibility in the first half of next year, shareholders were told yesterday.

It had not been expected that the company would consider making a share issue so close to opening of the tunnel.

The figure of Pounds 1bn was also marginally higher than some analysts had expected, although the group insisted that its funding expectations had not changed and that any numbers at this stage were only an estimate.

The group has previously raised Pounds 8.9bn, of which Pounds 1.6bn is equity.

Mr Graham Corbett, chief financial officer, told the annual meeting in London that Eurotunnel's current facilities were likely to last 'to around the middle of 1994 plus or minus a couple of months.'

He said that banks in discussions with Eurotunnel had agreed that the opportunity should be seized if conditions in the first half of next year were 'suitable for an early equity raising by way of a rights issue or similar route.'

It had been accepted that it would be preferable if future funding involved a '50:50 split between equity or equity type funding and additional debt.'

Any equity issue would be timed to be at or near the opening of the tunnel for services. Contractors building in the tunnel have told Eurotunnel that the project was unlikely to open before next summer unless an agreement could be reached over their claims for additional payments.

Eurotunnel's bankers, which so far have agreed to lend the project Pounds 7.3bn, however, are working on the basis that a phased opening would take place with the first services for heavy goods vehicles starting in February and services for cars and coaches starting in April next year.

Mr Corbett said that the loss of potential revenue caused by delays, rather than any further increase in construction costs, was causing the strain on future funding needs. The cost of building the project, including lost revenue since 1987, has risen from Pounds 4.8bn to approaching Pounds 10bn.

He estimated that additional finance required by the group 'should be under or around Pounds 1bn of which more or less Pounds 600m will be needed during 1994 and 1995 with the balance to be in place by the beginning of 1996.'

Up to Pounds 200m of this might come from a free issue of warrants, on the basis of one warrant for every share held.

These would allow shareholders to buy one new share for FFr28.25 or 335p for every ten warrants acquired. These could be exercised in October 1995 or in June next year if funds were required earlier.

Sir Alastair Morton, Eurotunnel's chief executive, told shareholders that it would cost the group 15 times more if it accepted the contractors demands than the revenue it would lose through late opening.

Mr Padraig Flynn, the European Community's social affairs commissioner, and Mr John Smith, the Labour leader, will be the two main guest speakers at this year's TUC Congress from September 6 to 10 in Brighton.

The Italian government said yesterday it had received assurances that tighter controls would be placed on the Pakistani peacekeepers in Somalia, Reuter adds.

Mr Fabio Fabbri, defence minister, who was in Mogadishu yesterday, 'has received precise assurances on the use of Pakistini forces in a role and with equipment more in keeping with the demands of the situation,' Mr Beniamino Andreatta, foreign minister, told parliament.

Asil Nadir, the bankrupt former chairman of the Polly Peck Empire, denied a report that he had 'salted away' Pounds 1bn to his safe haven in Northern Cyprus. Realised assets of Polly Peck reported at Pounds 93m, Page 12

MORE THAN a dozen Lloyd's of London syndicates are to postpone part or all of their calls for cash, thereby softening the impact of record losses on the Names who provide the insurance market's capital.

The market expects to report next week losses of up to Pounds 2.8bn for 1990, its latest underwriting year.

Syndicates delaying calls for cash from Names include Cater Allen 190, Barder & Marsh 62, Janson Green 79, Bankside 197, Methuen 483, BPC 920, and Davies 1021. Sturge Holdings, the market's biggest agency, said last weekend that a number of syndicates it managed would take similar action.

Mr Julian Crispin, chairman of Sedgwick Underwriting Agents, one of the largest members' agents at Lloyd's, said: 'Some Names will be able to defer all cash calls for 12 months. It is a very satisfactory development.'

The change is possible because although syndicates must make a full provision against potential claims, payment is sometimes not made for many years. Sturge said it had negotiated an arrangement with its bankers whereby they would provide a contingency line of credit if payment became due earlier than expected.

Meanwhile, it has emerged that five agents may not be prepared to continue managing syndicates into 1994, three of them as a result of disagreements over elements of the Lloyd's business plan introduced in April.

Charman Underwriting Agency, Knightstone Holdings, Christofferson Heath, Atrium Underwriting, and Hardy all gave notice to members' agents before the end of last month.

Several of the agencies are opposed to the imposition of an across-the-board maximum agency fee of 0.5 per cent.

Mr Roger Heath, chairman of Christofferson Heath, which manages two of the market's largest motor syndicates, said his agency faced a sharp fall in income as a result of the changes to the fee structure.

The agency charges Names a fee of 1.75 per cent to help it meet higher expenses associated with motor underwriting.

An emergency aid programme for areas of Wales devastated by two days of torrential rain was announced by the Welsh Office. Hundreds of families at Llandudno were last night still unable to return to their flooded homes. Weather reports, Page 16

Women soldiers will patrol streets in Northern Ireland from October in armoured personnel carriers. Mayhew seeks to restart NI talks, Page 6

Correction (published 14th August 1993) appended to this article.

WHAT DO you expect from a gardening book? Inspiration? Practical advice and a faultless index? The widest possible selection of plants?

Obviously, the answer must vary depending on the sort of gardener you are. But I suspect that no gardener ever actually reads a gardening book, at least to begin with. Browsing is what it is about, whether to dream away the long winter evenings or decide which runner bean to plant in the spring. Whether the problem is what to put into terracotta pots or how to design a new water garden, a single book will rarely do.

Considerations of this sort, at least, must move publishers. Why else, in a single spring, would you find several more volumes on gardening in containers to add to those already on the market? Maybe container gardening has become more fashionable but this spring also sees a number of new or reprinted books on gardening in the shade and in dry or damp soils, subjects which have been with us for a very long while.

The most ambitious of these new reference books bears the imprint of the Royal Horticultural Society. Four titles open what the publishers, Conran Octopus, bill as a 'new library . . . combining expert advice, inspirational photographs and practical information . . . for the new and experienced gardener.' Slimmish volumes of about 130 pages each, the four books cover shady, flower, glasshouse and container gardening, written respectively by Jane Taylor, Helen Dillon, John Watkins and Thomasina Tarling. Each costs Pounds 15.99. Twelve books are promised altogether, with cottage, alpine and landscape gardening expected next year.

The format of these new volumes is easy to follow with good pictures and coloured drawings, a good index and in each a succinct list of 'key plants' and key points to note for each of the seasons. Do not expect particularly good writing or necessarily happy editing. (One chapter is headed 'Containers for Situations'). But the series should prove a useful addition to any library shelf.

Plants For Dry Gardens, by Jane Taylor (Francis Lincoln, Pounds 18.99) nicely complements her volume in the RHS series. Jane Taylor appears again in a different series with a volume on Climbers and Wallplants for Year Round Colour, alongside Peter McHoy's Containers and Baskets (Ward Lock Pounds 14.99). I find these volumes less well produced and more pedestrian than the RHS series but not so poor as the (admittedly, at Pounds 4.99, much cheaper) Letts Guide To Garden Design. These hardback volumes (covering containers again as well as Walls and Screens, The Small Garden and The Herb and Kitchen Garden) are quite glossily produced. But for me they commit the unforgiveable crime of failing to identify gardens singled out for praise: each one of the four volumes carries a - different - photograph of Sybil Spencer's herb garden at York Gate, near Leeds in Yorkshire, without once identifying it.

From publisher J M Dent comes the classic Perennial Garden Plants by Graham Stuart Thomas, first published in 1976 and Alan Mitchell's Gardeners Book of Trees - the latter not for newcomers since there are very few photographs. Roy Lancaster's Trees For Your Garden might be better there, though more expensive at Pounds 16.99 (publisher Aidan Ellis).

For my money however, it is still very hard to beat Hillier's Manual of Trees and Shrubs - both the longer and the 'picture' version, which started life as a nurseryman's catalogue.

And so on to more elaborate reference books. One splendid and lavishly illustrated volume to appear this spring is Headline's Illustrated Encyclopaedia of Roses, edited by Mary Moody with Peter Harkness as consultant and rather competitively priced at Pounds 19.99. This shows however why gardeners so frequently need several volumes on a chosen subject.

My 'bible' for roses is again a nurseryman's catalogue: and I happen to know that David Austin's is the correct listing of Blush Noisette, for he and not the encyclopedia mentions one of that climbing rose's chief asset, its wonderful clove-like scent. There are several other examples where the two diverge, not to the new book's credit.

And so to a couple of books which purport to be rather more complete gardening guides in that both aim to take the gardener through design, planning and planting of a range of different gardens, from cottage to classic, and kitchen to container.

Initially, I was not sure what to make of Nigel Colborne's Short Cuts To Great Gardens, (Conran Octopus Pounds 16.99). Like the 'crusty professionals' he quotes, after only ten years of strictly amateur gardening I tend to believe also that there are no real short cuts. But never mind. The idea that there might be is a challenge in itself and as befits a well-known television gardener and RHS show judge, his advice is sensible and easy to follow. This would certainly be a book to have if you were starting from scratch.

However, I am less keen on the rather pretentiously named Garden Source Book (Pounds 25 from Mitchell Beazley) which I find less imaginative (and considerably less tasteful) than another 'bible' of mine, John Brooke's infinitely adaptable The Small Garden, originally published by Cavendish House in 1977.

CORRECTION

Letts' Guide to Garden Design: In Bridget Bloom's June 5 review of four books in the series of Letts' Guide to Garden Design, she castigated the publishers for failing to identify photographs of gardens singled out for praise. The publishers have asked us to say that the photographs in the books are identified in the acknowledgements section at the beginning of each book, and we apologise for this oversight.

NEC, the Japanese electronics group battered by the sharp fall in corporate and consumer demand in Japan, reports its first group loss in nearly two decades.

The downturn in the domestic computer market, stagnant sales of semiconductors, high depreciation costs, and severe difficulties in its home electronics business resulted in a Y37.7bn (Dollars 342.72m) consolidated loss for NEC.

The loss came as sales fell 7 per cent to Y3,514bn. At the net after-tax level, NEC consolidated losses totalled Y45.1bn.

Parent company results were better, largely because the results of its troubled home electronics business are excluded. A substantial proportion of semiconductor business is also excluded.

Pre-tax profits for the parent company were down 77.3 per cent to Y18.1bn, on sales that declined 6 per cent to Y2,869bn.

NEC, which is the largest manufacturer of personal computers (PCs) in Japan, came under severe pressure last year as corporate investment in the country was stagnant and computer sales suffered under fierce competition from foreign companies.

NEC was hit by a sharp fall in PC demand late in the year, following the introduction of lower-priced US PCs into Japan. PCs account for nearly 30 per cent of NEC's computer sales: their sales fell about 7 per cent.

Electronic devices, such as semiconductors, were also down about 7 per cent, while telecommunications sales dropped 5 per cent.

However, the company expects PC sales volumes to rise 10 per cent this year, to 1.4m units. At the same time, the Japanese semiconductor market is forecast to rise 3 per cent, compared with a 10 per cent fall last year.

The company has taken cost-cutting measures, including a reduction in capital investment from Y190bn in fiscal 1992 to Y140bn this year. It expects results to recover substantially in 1993-94.

Forecasts are for a 6 per cent rise in parent sales, to Y3,030bn, with pre-tax profits emerging at Y50bn. Consolidated sales of Y3,700bn are expected with net profits of Y10bn.

At Mitsubishi Electric, the decline in the semiconductor market and weak demand for consumer electronic products is blamed for a 5 per cent fall in parent sales, to Y2,494bn. Pre-tax profits were 47 per cent down to Y32.3bn.

Mitsubishi expects non-consolidated sales in the current year to improve to Y2,510bn, and pre-tax profits to increase to Y35bn.

THE Japanese cabinet yesterday approved a Y2,188bn (Pounds 12.9bn) plan to finance the central government's portion of the Y13,200bn emergency pump priming package announced last month to revive the depressed Japanese economy.

Most of the remainder of the package will be financed by a Y5,000bn expansion in funds from the Fiscal Investment and Loan Programme, Japan's shadow budget which is funded by savings deposited in the postal savings system. The FILP funds will finance an expansion in housing loans and small business funds.

About Y3,500bn is expected to be financed by Japan's 3,300 local government bodies from local taxes, regional bonds and their own resources.

Ministry of Finance officials were unable to explain in detail how the remainder of the package would be financed but they indicated it would be a mixture of postal savings funds, local spending and central government grants.

The financing of Japanese government fiscal programmes has recently come in for intense scrutiny from the US, which is pressing Japan to stimulate its economy to help reduce its trade surplus.

US officials argue that pump priming measures funded by the FILP system are less effective in stimulating the economy, because the funds are being diverted from other investments. The Japanese government insists the FILP system is a legitimate tool of its fiscal policy.

The central government contribution to the package will be financed by an increase in government borrowing through a special Y2,246bn issue of so-called construction bonds which are used to finance public investment.

In addition the government will draw Y200bn from its reserves and make Y62.5bn by selling coins to commemorate the June 9 marriage of Crown Prince Naruhito and former diplomat Miss Masako Owada.

The additional bonds means the Japanese government will this year issue bonds worth Y10,380bn. This means about 13.9 per cent of central government spending will be financed by borrowing, compared with 13.3 per cent last year.

The central government's dependence upon borrowing for its spending reached a peak of 34.7 per cent in the 1978 fiscal year, when the economy was recovering from recession.

The Finance Ministry, which opposes any further increase in borrowing, reiterated its commitment to reduce borrowing to 5 per cent of the central government budget in the medium term.

Losses at Select Appointments (Holdings), the USM-quoted employment agency group, fell to Pounds 2.53m for the 12 months to December 31.

That compared with a loss, on an FRS 3 basis, of Pounds 1.8m for the previous nine month period.

Turnover from continuing operations amounted to Pounds 21.7m (Pounds 14.2m), of which Pounds 15.6m (Pounds 10.4m) was attributable to the UK and Pounds 6.15m (Pounds 3.82m) to Australasia.

There was a loss of Pounds 1.47m at the operating level, against Pounds 809,000. UK operations recorded a deficit of Pounds 1.48m (Pounds 700,000), while Australasia produced profits of Pounds 16,000 (losses of Pounds 109,000); interest payable amounted to Pounds 913,000 (Pounds 585,000) and exceptional losses Pounds 153,000 (Pounds 407,000).

Losses per share, on the enlarged capital following a refinancing in October 1991, amounted to 1.06p (26p).

Mr Anthony Martin, chairman, said that during the first quarter Select had seen a continued improvement in temporary business, but the permanent recruitment market remained depressed. Nonetheless, he said results for the first quarter were ahead of the comparable period of last year.

Tiphook was clearly trying to contain scepticism about the company's trading prospects with its profits warning. But the wholesale dumping of bad news has done little to reassure the market - as yesterday's 22 per cent fall in the share price demonstrates. While the sale of 9,500 trailers reduces the fleet during the continental recession, the management has simultaneously committed itself to a Pounds 378m order for 11,000 trailers over the next five years. It will be vindicated if markets turn up in 1980s-style. If not, Tiphook is avoiding pain today by buying more expensive pain tomorrow. With its largest competitor TIP Europe being acquired by General Electric Capital Corporation, it will face opposition from a company backed by a deep-pocketed parent.

Tiphook has high operational and financial gearing, while its interest cover is likely to fall to 1.6 times by the year end. Most of its banking covenants become operable at a cover of 1.25 times, but there are a few set at 1.5 times. The company can repay its more stringent borrowings from other cash reserves if necessary, and is increasing the proportion of unsecured loans in its debt portfolio. Yet gearing of over 300 per cent with such low cover does increase the financial risks. Investors might be more reassured if the mangement's sunny disposition had not proved over-optimistic in the past. By the conventional yardsticks of multiple and yield, the shares are cheap. With the market nervous about trading prospects, they are likely to remain so.

THE Russian central bank has given in to government pressure at last and raised interest rates on credits to the government and commercial banks.

The central bank, which has been accused by Mr Boris Fyodorov, deputy premier, of not doing its job properly, may also be about to agree to other government demands. Mr Sergei Glaziev, foreign economic relations minister, said the bank was working on plans to allow all foreign non-residents to set up rouble accounts in Russia. This would help foreigners purchase Russian goods for export.

After almost a year at the same level, the refinancing rate has been increased from 80 per cent to 100 per cent a year.

With inflation at 20 per cent a month, Russia has a long way to go before achieving positive interest rates. But the almost symbolic increase marks a first response to Mr Fyodorov's demands for the central bank to co-operate with his attempts to fight inflation.

The bank has argued that the government has failed to curb budget spending and institute an industrial policy for the selective distribution of credits.

The government, which has been paying 10 per cent for credits from the central bank, has also agreed to pay the new higher rate, which will mean a further big increase in its budget deficit.

GPA Group, the world's largest aircraft leasing group, is behind schedule in its attempts to raise dollars 200m of new equity required as part of its financial restructuring.

Nomura International, the Japanese investment bank which is leading the attempt to raise the equity, has told GPA that no more than dollars 100m will come from GPA's existing shareholders.

One of the group's main bankers said yesterday that the search for new investors was taking longer than hoped. He said banks were insisting that GPA find such investors by mid-April.

GPA's attempt to reschedule payments on dollars 5.5bn of debts is conditional on the equity being raised.

'We need indications by the middle of April that new strategic investors will buy the shares,' a banker said.

None of GPA's four biggest shareholders, which together control 35 per cent of the equity, have made a firm committment to buy the shares.

Mr Maurice Foley, GPA's deputy chairman, said: 'The process of raising equity is not complete.' However, he said a number of discussions were underway with investors, 'but we have taken a trappist vow not to talk about them.'

The employment ministry yesterday announced that unmployment broke through the psychologically important 3m barrier last month, with the number of people out of work rising by 31,400 to 3.02m, Alice Rawsthorn writes from Paris.

This means that 10.6 per cent of the working population are now jobless and that the level of unemployment has risen by 5.4 per cent, of 154,500 people, in the past year. Unemployment was one of the main reasons behind the rout of the socialists.

CANAL-PLUS, the French media group, last year hit the first hurdle in its record of rapid growth with net profits stabilising at FFr1.1bn (dollars 199m), only slightly above 1991's FFr1.01bn.

The group, which has been diversifying to reduce its reliance on its successful pay-TV channel, was affected last year by the problems of its film production subsidiary and by the cost of launching Canal Horizon, a pay-TV station in Africa. It also had to write down its investment in Carolco, the troubled US film company.

Mr Claud Ravilly, finance director, described 1992 as 'a bit of an accident, but nothing serious as we still increased profits'. Canal-Plus said it was on course in 1993 for a return to double digit growth in both sales and profits.

The group saw sales rise to FFr7.94bn in 1992 from FFr6.99bn in 1991, but operating profits fell to FFr1.69bn from FFr1.91bn.

NORWAY'S central bank yesterday issued an upbeat outlook for the economy, which has already developed favourably this year.

The bank's quarterly economic review published yesterday said: 'The main driving force in 1993 is expected to be an increase in demand both in the household and business sectors.' It said policy measures adopted last December, which include a lowering of payroll taxes and increased value added tax, together with currency depreciation are expected to increase industry's competitiveness.

The minority Labour government increased VAT from 20 to 22 per cent and, following the unlinking of the krone from the Ecu last December, the Norwegian currency has weakened by 3 per cent. Since the start of the year, foreign currency inflow has been around NKr35bn (Dollars 5.1bn). 'This means that two-thirds of the outflow of reserves has been recovered,' the report said.

Money market rates have fallen nearly four percentage points since late December.

Mitsubishi Electric of Japan and Digital Equipment, the second largest computer manufacturer in the US, are poised to agree to jointly develop and manufacture semiconductors, writes Michiyo Nakamoto in Tokyo. This move promises to accelerate the cross-border integration of the world semiconductor industry.

The deal will focus initially on the Alpha chip microprocessor developed by DEC, which Mitsubishi will manufacture mainly in Japan. In future, the two companies could jointly develop and manufacture new generations of semiconductors.

After pressure from the Roman Catholic church, a strict anti-abortion law will today replace Poland's liberal legislation.

MILLIONS of commuters in cities in the eastern US will be struggling to get to work this morning in the wake of a winter storm that left a trail of devastation along the Atlantic coast from Florida in the south to Maine in the north over the weekend.

The storm, which was labelled the worst of the century, left more than 40 people dead, caused widespread flooding in Florida and along the New Jersey and New York coastline, and left millions of homeowners without electricity after high winds had brought down power lines.

Although all the airports in the region had reopened by yesterday afternoon, delays were still expected today because of the backlog of flights left over from Saturday morning.

Airports in Atlanta, Washington DC, New York, Boston and other cities were closed because of heavy snow and strong winds, trapping thousands of travellers.

A state of emergency was declared by governors in 12 states, and President Bill Clinton, who monitored the storm's course from the White House, authorised federal emergency aid to parts of Florida, where tornadoes killed 18 people and destroyed scores of buildings.

In many areas the National Guard was brought in to help rescue people, reopen roads and evacuate vulnerable seaside communities.

Heavy snow brought life throughout the east to a grinding halt. Cities as far south as Birmingham, Alabama (where snow is so rare that the city has no snow ploughs), were hit by snowfalls of more than a foot, while further north as much as 20 inches of snow blanketed Boston.

Blizzards also trapped thousands of motorists on roads in the south of the country.

The severity of the storm was magnified by heavy winds, which in some areas reached up to 100 miles an hour, causing floods in coastal regions and creating huge drifts of snow inland. In Manhattan the high winds blew out windows in some midtown skyscrapers, sending showers of glass on to streets that were mostly deserted. Many of the city's bridges were closed because of the wind.

Meteorologists said the storm's strength derived from the merging of an extremely low pressure system which originated in the Gulf of Mexico with a blast of cold arctic air from the north.

They ranked it as the biggest storm in 100 years because it affected so much of the country. On Saturday morning the storm wreaked havoc all the way from central Florida in the south to the northernmost state of Maine.

TIME PRODUCTS, the UK watch and jewellery distributor, has paid Dollars 17m (Pounds 11.9m) for the business of Judith Leiber, an American who designs luxury handbags for the international jet-set.

Hollywood stars are among customers prepared to pay several thousand dollars for a handbag made by Mrs Leiber, 72, who started her business 30 years ago in New York.

A designer bag presented to Mrs Barbara Bush was valued at Dollars 1,245. It showed a likeness of Millie, the presidential couple's pet dog.

Mrs Leiber will continue to run her company, which distributes only through exclusive department stores and jewellers. Time Products has distributed her handbags in the UK since 1991.

The UK company said the handbags had not been actively marketed outside North America, and there was therefore potential for developing the brand worldwide. There was scope for applying the name to merchandise other than handbags, putting a broader range of products through the same tightly-targeted distribution network.

Time Products also announced that it had paid Pounds 2m for a 5 per cent stake in Audemars Piguet, the Swiss watchmaker which specialises in highly technical and luxurious timepieces.

Mr Marcus Marguiles, chairman of Time Products, said: 'Judith Leiber is one of the most highly-prized brands in North America and we are delighted to have secured it, while our relationship with Audemars Piguet will be strengthened by our investment.'

The Leiber business made pre-tax profits of Dollars 1m, after directors' remunerations, on sales of Dollars 15m in the year to December 31. It had net assets at that date of Dollars 5.1m.

Even after completing these acquisitions, Time Products has net cash of more than Pounds 10m.

Mr Andrew Perloff, the rebel shareholder in Etonbrook, has requisitioned an extraordinary general meeting of the property development company, in another attempt to join the board and remove all of its existing directors.

Mr Perloff and his three companies own 29.9 per cent of Etonbrook. He has failed once before to win a seat on the board but thwarted a proposed capital restructuring at an EGM in September.

In January the former BES company blamed a drop in its interim pre-tax profits from Pounds 300,000 to Pounds 74,000 on costs incurred in fighting a tender offer from Mr Perloff.

THOMAS Cook, the travel agency and financial services group, was last night considering the final details of a tender offer for shares in Owners Abroad, the tour company fighting a hostile bid from rival Airtours.

Representatives of Owners Abroad were meeting Thomas Cook and its advisers to decide pricing and size of tender, accord- ing to sources close to the companies.

Any cash tender could put a substantial obstacle in the way of Airtours' all share and partial cash alternative offers as the bid enters its last full week.

A tender offer, which could be as early as today or tomorrow and would have to be made this week, is likely to be made dependent on shareholders rejecting Airtours offer. At Friday night's close, the bid values Owners Abroad at Pounds 290m, or 144p per share, through the paper offer.

The tender offer would need the approval of Westdeutsche Landesbank, the German state bank that controls Thomas Cook, and LTU, the German travel agency.

Thomas Cook has repeatedly reaffirmed its belief in the commercial tie-up with Owners Abroad announced last year.

Once Airtours had launched its bid, Owners shareholders were almost unanimous in describing as inadequate the equity swap which underpinned the commercial transaction with Thomas Cook.

If Thomas Cook does make a tender offer, Owners Abroad's largest shareholder, Mercury Asset Management, may take centre stage. Last week MAM increased its stake in Owners Abroad to 14.07 per cent, from 13.4 per cent, but gave no indication whether it would accept or reject the offers.

Reacting to the possibility of a tender offer, Mr David Crossland, Airtours chairman, said Thomas Cook should bid for all the stock.

'LTU and Thomas Cook have tried to get into Owners Abroad on the cheap once before,' he said. 'Shareholders will recognise this for what it is - a wrecking move supported by a desperate board.'

In judging where, or whether, to pitch a tender offer, Thomas Cook would have to consider that if the offer were too high, allocation of shares would be scaled down.

They would also be aware that some institutions are unlikely to be happy being left with shares that no longer attracted a bid premium.

Taylor Woodrow appears to have completed its senior management reshuffle with the promotion of 46-year-old Brian Abrahams, currently responsible for group trading activities and managing director of Greenham Trading, onto the board. In turn, George Borwell, 66, chairman of Greenham Trading, will retire from the board at the May agm.

When Colin Parsons took over as chairman of the big UK construction company a year ago, he admitted that even he, as an operating director, sometimes had difficulty in understanding the structure of the board, which at the time was top-heavy and generally opaque. Since then, six directors have left, and four new ones, including Abrahams, have been appointed.

A Taylor Woodrow man from the age of 16, when he joined as a junior in the buying office, Abrahams has concentrated on the sales and marketing side. As Borwell's protege, he pushed forward with the expansion of Greenham Trading, which has a product range from contractors' tools to leisurewear and which is one of the few businesses within the group that has continued to improve its performance through the recession. Borwell, one of the doyens of Greenham Trading, may be asked by the subsidiary board to become its non-executive chairman. Taylor Woodrow reports its full year results on March 30.

Peter Johnson, who is responsible for FISONS' pharmaceutical division's R&D, and Michael Redmond, formerly md of pharmaceutical marketing operations and now md of the pharmaceutical division, have been appointed to the board.

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Peter Spinney has been appointed director of personnel at BRITISH GAS's UK Gas Business.

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John Nicolson, previously marketing director of Birds Eye Wall's, part of Unilever, has been appointed group executive director - marketing of COURAGE; his responsibilities will include such brands as Foster's, John Smith's, Kronenbourg, Miller, Pilsner and Beamish.

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David Spencer is promoted to corporate director of human resources at SMITHS INDUSTRIES on the retirement in May of Gil Jones.

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Rainer Hermann, previously md of Kablo Bratislava, part of Siemens, has been appointed md of the Berlin-based KWO Group, which BICC Cables bought last year.

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John Lloyd, finance and corporate development director, is to be appointed group md of PORTALS GROUP as from the agm in May. Michael Morley, who is recovering from a recent illness, is taking early retirement as chief executive but will remain deputy chairman.

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Brian Stacey, commercial director of AVON RUBBER, is retiring at the end of this month. John Harper then becomes chairman of Avon Inflatables, Steve Willcox chairman of Avon S&H and Avon-Clevite; Chris Martin chairman of the Wiltshire Manpower Group.

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Geoff Hunter has been promoted to finance director and company secretary of PECHINEY Packaging Food & General Line.

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Claire Harbour has been appointed general manager of LOUIS VUITTON UK; she moves from the Swire Group in the Far East.

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Mike Todman, formerly finance director with Wang Laboratories, has been appointed finance director of WHIRLPOOL UK.

A Pounds 5m contract to install 12 400kW wind turbines at the new Kirkby Moor wind farm in Cumbria has been won by TAYLOR WOODROW CONSTRUCTION NORTHERN.

With a total capacity of 4.8MW, the wind farm at Kirkby-in-Furness will supply electricity for the equivalent of 4,500 homes.

The wind farm project, a joint venture between National Power, South Wales Electricity and Taylor Woodrow Construction Holdings, removes the need to emit 12,000 tonnes of carbon dioxide a year in burning fossil fuels.

The turnkey construction contract for the Kirkby Moor wind farm company includes civil works and installation of electrical equipment.

MR ROBIN Cook, Labour's trade and industry spokesman, intends to ask in parliament this week whether Crescent Petroleum, a private oil company based in Abu Dhabi, has been breaching government sanctions against Iraq, Robert Taylor writes.

The Office of Foreign Assets Control in Washington and a number of US senate committees are investigating the activities of Crescent Petroleum in the United States. Mr Cook wants to know whether Mr Michael Heseltine's department is inquiring into the company's affairs in Britain.

The owner of Crescent Petroleum, Mr Hamid Jaffar, has a brother, Mr Jaffar Jaffar, who was the head of Iraq's nuclear weapons programme and a deputy minister in the Iraqi defence ministry. Before Iraq's invasion of Gulf Kuwait in 1990 Crescent Petroleum was planning a downstream petroleum venture with the Iraqi government.

DAIMLER-BENZ, the German automotive, aerospace and engineering group, is considering opening a bus assembly factory near Shanghai in China and setting up a local joint venture to manufacture rolling stock for underground railway networks.

The opportunities opened up during a recent tour of the Far East, when executives examined a possible site for the bus works close to the Yangtse river.

'It was the most exciting trip I have undertaken in all my years at Daimler,' one participant said.

The visit reflected growing interest among German companies in the region - China in particular - and widespread determination that Japanese industry should not be allowed to over-run the market unopposed.

It also demonstrated Daimler-Benz's new strategy of exploring every possibility to extend manufacturing outside Germany and develop new markets. This policy is being driven partly by the need to overcome the exchange rate disadvantages inherent in exporting from Germany.

For example, the group board will decide this year whether to manufacture its planned Mercedes-Benz leisure vehicle in the US. According to Mr Edzard Reuter, chairman, there is a 'fair chance' that a new plant will be given the go-ahead.

Meanwhile, the company will soon start assembling a small number of cars in Mexico, and has recently signed a joint venture to make cars in Korea.

In a separate development, Siemens, Germany's largest electrical group, has taken a 49 per cent stake in a telephone distribution and service joint venture with TN Inc of Bangkok. The new company, TN Communications Systems, aims to win a 25 per cent market share.

Siemens also recently founded a joint venture in Shanghai to make and distribute telephone switchboards. South-East Asian telecommunications markets are growing by more than 10 per cent a year compared with the world average of 3 to 4 per cent.

German exports to China grew last year by a record 40 per cent to more than DM5.5bn (Pounds 2.33bn), while the country's leading exporters said their shipments to Malaysia, Indonesia and Singapore rose by more than 10 per cent.

According to the Hamburg-based East Asia Association, the improvement in these markets more than offset a 10 per cent fall in exports to Japan last year.

Interview with Daimler-Benz chairman, Page 30

An Israel-bound Sabena aircraft was diverted to Belgrade after the Belgian airline received a hijack warning. The airliner flew to Tel Aviv after being searched.

TWO OF the most famous of all Victorian images, Florence Nightingale standing among the Crimean war wounded at Scutari, and Queen Victoria visiting them in hospital in London, painted as a pair by Jerry Barrett, sold at Christie's in London yesterday.

The dealer Hazlett Gooden & Fox acquired them on behalf of the National Portrait Gallery, which already owns sketches of the paintings. Florence Nightingale went for Pounds 188,500, at the top of its estimate, and Queen Victoria beat her forecast at Pounds 199,500.

What is odd about the paintings is that they have not been seen in public since they were exhibited at Agnews in 1859 and were bought there by a forefather of yesterday's seller for Pounds 870.

Their fame is totally dependent on the subsequent engravings, which entered millions of Victorian homes.

Also surprising is that little is known about Barrett. His artistic reputation survives on just these two paintings which were commissioned by Agnews who paid for the artist to visit the Crimea. It proved an excellent investment.

This has been a good week for Christie's which on Wednesday sold the celebrated miniature by Nicholas Hilliard of 'A man clasping a hand from a cloud' for Pounds 177,500, way ahead of the Pounds 50,000 estimate.

The owner, the late Shakespearean scholar, Leslie Hotson, was convinced that the sitter was Shakespeare himself, but the expert on Elizabethan portraiture, Sir Roy Strong, has decided it is Lord Thomas Howard, later 1st Earl of Suffolk.

Yesterday Christie's announced that it has concluded a private treaty sale with the National Gallery of Scotland which transfers a drawing by Raphael, 'The Madonna of the Fish', into its safe keeping.

The National Heritage Memorial Fund and the National Arts Collection Fund helped the Museum pay for the drawing by respectively giving Pounds 100,000 and Pounds 50,000.

Slowly the salerooms are stirring back to life: the main auction rooms at Sotheby's and Christie's have been deathly quiet since mid-December.

But Sotheby's too this week announced a major lot for disposal, one of the most celebrated, and last, watercolours by Thomas Girtin. 'St Vincent's Rocks, Clifton' was painted in 1802, the year of his death.

It comes on to the market on April 1 and should make at least Pounds 80,000, helped by the renewed interest in British watercolours fostered by the two important exhibitions currently taking place at the Royal Academy and the British Museum.

The Original Print Fair closed at the Royal Academy last Sunday and was a great success.

It was always likely that prints, relatively cheap to buy but the work of great artists, would help lead the art world out of recession.

There were 12 per cent more visitors than last year and all the 28 dealers made sales, often to overseas buyers. But, as a sign of the times, it was prints under Pounds 10,000 which changed hands most rapidly.

WITH-PROFITS pay-outs were cut again this week as four more life companies announced bonuses for the year, writes John Authers. Ten-year pay-outs were cut substantially, while 25-year maturity values - the term most often used for endowment mortgages - were less affected, reflecting the higher proportionate impact which the last few years of mediocre investment performance have had on shorter term policies.

Pay-outs include two elements added on to a guaranteed 'sum assured' - reversionary bonuses, added each year, and terminal bonuses, added only when the policy matures. Reversionary bonuses tend to reflect anticipated future returns and have largely withstood cuts thus far, but the pattern for terminal bonuses is more mixed.

AXA Equity & Law, which announced a cut in reversionary bonuses in January, has now altered terminal bonuses. Depending on when the policy was started, some terminal bonuses have decreased slightly and others have increased. Assuming monthly premiums of Pounds 30 were paid on an endowment policy started by a 29-year-old man, ten-year pay-outs are cut by 7.3 per cent from Pounds 7,263 to Pounds 6,732, while 25-year maturities fall by 2.6 per cent from Pounds 62,426 to Pounds 60,777.

Eagle Star Life made greater cuts, of 12.7 per cent from Pounds 6,896 to Pounds 6,019 for ten-year pay-outs, and of 2.7 per cent from Pounds 61,910 to Pounds 60,188 for 25-year pay-outs. Not all these cuts were because of bonus reductions. In 1983, Eagle Star raised the premiums needed to cover the guaranteed sum assured, which accounts for part of the ten-year pay-out adjustment. Equitable Life cut ten-year endowment pay-outs by 7.6 per cent from Pounds 7,811 to Pounds 7,217, and 25-year pay-outs from Pounds 53,444 to Pounds 53,067. Sun Life cut ten-year pay-outs by 8 per cent from Pounds 7,029 to Pounds 6,467; 25-year pay-outs remained unchanged at Pounds 47,575.

A reassessment of Barclays' shock move to halve the final dividend after absorbing its first ever preliminary loss, a move which triggered a plunge in the bank's shares, led to a gradual rehabilitation of the stock price.

Despite a general wave of downward adjustments of current year estimates - BZW lowered their current year expectation from Pounds 375m to Pounds 300m, County moved down from Pounds 525m to Pounds 500m and Nikko reduced to Pounds 415m - the market responded to a flurry of short covering and buying on recovery hopes.

The rally in Barclays drove the shares up 16 to 408p with turnover in the stock totalling a hefty 16m shares. NatWest, whose tier one capital ratio of 5.2 per cent was highlighted by analysts who pointed to the more secure 5.5 per cent provided by Barclays, suffered at the expense of Barclays shares, closing 7 off at 437p.

Other banks shares mirrored the overall strength of the market with Standard Chartered extending its recent outstanding market performance and closing a further 6 up at 708p in front of Wednesday's preliminary results which are now expected to come in above market expectations.

TSB attracted a fresh wave of takeover speculation which saw the shares race up 8 to a new all-time peak of 183p.

Union Discount shares plunged 19 to 84p after takeover talks between the discount house and an unnamed party were terminated. But the group said it had received an offer for Winterflood Securities, its successful specialist marketmaking subsidiary run by Mr Brian Winterflood.

The revelation of a strong profits increase by Barclays' securities arm, BZW, plus the recent excellent figures announced by Kleinwort Benson, saw a surge of interest in the merchant banks. Hambros jumped 10 to 328p, SG Warburg put on 3 to 634p and Kleinwort Benson settled 4 up at 393p.

Food retailers shrugged off recent worries of an imposition of VAT in the UK budget later this month. J Sainsbury gained 11 to 534p and Tesco firmed 4 to 249p. Argyll Group added 13 to 381p, boosted by a recommendation from BZW. Mr Bill Currie at the securities house said: 'Trading is good especially in the new stores and there are significant productivity benefits to come over the next few years.'

NatWest Securities was the day's main buyer of Kingfisher and the shares moved 13 ahead to 542p. The house said Thursday's falls had been overdone. Vague talk that Argos was planning to dispose of its home furnishings division was heard though it was quickly dismissed by analysts. The shares were however strong and closed 10 better at 290p, with BZw said to be positive on the stock.

Shares in Airtours gained 13 to 327 1/2 p, with dealers predicting success in its bid for rival Owners Abroad, 6 better at 144p.

The latest sharp rise in oil prices - Brent crude jumped around 50 cents to Dollars 19.70 a barrel - kept the oil sector on the move. The exploration and production stocks were strongly supported, reflecting the recent push to the sub-sector given by SG Warburg and the hike in oil prices. Enterprise closed 10 up at 488p. Hopes of imminent asset disposals continued to drive Lasmo, 3 firmer at 185p. Aran's strong acreage position west of the Shetlands oil discovery made by BP and Shell triggered keen interest in Aran shares which rose 2 to 27 1/2 p.

A combination of factors sent British Aerospace into retreat. Profit-taking, combined with concerns that the company will have to repay around Pounds 60m it received from the UK government in 'sweeteners', and lower than expected sales from its Rover cars subsidiary, left the shares 7 lighter at 276p. TI Group closed 10 up at 305p in heavy trading of 9.1m shares. Worries about the poor outlook for the automotive sector in Germany weakened Laird Group, and the shares eased 6 to 269p. A rise in UK new car registrations for February boosted motor dealers. Thomas Cowie, which reported figures this week, jumped 10 to 216p.

Whispers that Tadpole Technology will soon announce a significant deal sent the shares sharply ahead, jumping 27 to 324p.

WINTERFLOOD Securities, the specialist smaller company marketmaker, is likely to be sold to the the merchant banking group Close Brothers for about Pounds 15m.

News of the sale emerged yesterday as Union Discount, the troubled discount house group which owns Winterflood, announced that talks over a possible disposal of the entire group had been abandoned.

The sale of the Union group, the oldest specialist money market operator in London, is understood to have foundered over the inability to agree a price for its troubled leasing business.

The potential buyer, thought to have been rival discount house group Cater Allen, is believed to have argued that the leasing portfolio could contain further losses in the future.

Union, on the other hand, claimed that leasing had become a more profitable business in the wake of the recent fall in UK interest rates.

The sale of the Winterflood business to Close Brothers would help to bolster Union's balance sheet and boost its prospects as an independent company. Union's independence was thrown in doubt last year after it was forced to increase provisions against its leasing business, pushing its share price down from a high of 500p in 1990 to around 50p.

Union's 1992 results, expected to be announced as early as next week, are expected to show that its core short-term money market business has improved as interest rates have fallen, in line with other discount houses.

Mr Brian Winterflood, who founded the marketmaking company in 1988 to concentrate on USM and Third Market stocks, refused to comment on the identity of the potential purchaser yesterday. He said, though, his company would be 'very happy' with the new parent.

'We will not change from what we are presently doing,' he said. It is not expected that there will be any redundancies.

Mr Winterflood said his company had seen an increase in turnover in trade in smaller companies' shares, particularly in the last three months. In the six months to June 30, Union Discount's equity and gilt edged marketmaking - which includes Winterfloods and Aitken Campbell & Co - contributed profits of Pounds 2.7m.

Mr Rod Kent, managing director of Close Brothers, could not be contacted for comment yesterday.

Schroder has exceeded expectations in raising Pounds 100m for its new split capital investment trust, called the Split Fund.

However, the demand was so unbalanced in favour of the income shares, which yield 8 per cent tax-free if held in a Personal Equity Plan, that applications for those shares have had to be scaled back.

Meanwhile, BZW and Schroders have been forced to buy around Pounds 27m of the other two classes of shares, capital and zero dividend, in order to create the right structure.

Between them, the two groups will own around 68 per cent of the zero dividend shares and 35 per cent of the capital shares. Mr John Govett, chairman of the Split Fund, said the shares were good investments.

In all 56.8m income shares, 37.7m zero dividend shares and 5.7m capital shares have been allocated. Those who applied for under Pounds 25,000 of income shares will receive all their allocation; applications above that level will receive between 50 and 85 per cent.

A GROWING row in the Republic of Ireland over the sale of the government's remaining 30.4 per cent stake in Greencore, the sugar and foods company, now looks increasingly likely to have a significant bearing on whether GPA, the world's largest aircraft leasing company, succeeds in a debt restructuring package with its banks to whom it owes Dollars 5.5bn (Pounds 3.87bn).

With encouragement from the Greencore board, the US food conglomerate ADM, last month made a IPounds 66m offer, equivalent to IPounds 2.60 per share, for the government's Greencore stake. But under political pressure, the government this week decided to open up the sale to other offers with the express intention of trying to find an Irish buyer.

Mr Gerry Murphy, the Greencore chief executive, says that he does not believe such a move is in the best interests of the company and that the board 'will do everything in its power to ensure that our ability to pursue our stated strategy is at least safeguarded and hopefully enhanced, by the ultimate ownership of the government's stake'.

Without naming ADM, Mr Murphy said that the board had found a 'long-term partner with similar and complementary long-term . . . (which) apart from supporting the group with capital for development, would bring unparalleled access to world class technology in our core business, global market intelligence and distribution capability'.

He said the move had 'the full support of the board following months of preparatory work' and added that 'the board does not believe that any potential Irish investor could bring the same benefits to the group in our drive to become a more significant and more successful Irish-based international food company'. Mr Joe Walsh, the agriculture minister, confirmed this week that the offer had come from ADM.

It is likely that the Greencore board will now seek institutional shareholder support to block any government sale of which it does not approve, under the company's articles of association. Any shareholder taking more than a 15 per cent stake in the company requires shareholder approval.

The problem for the government is that the sale of IPounds 150m of government assets is a key factor in this year's Budget arithmetic, and upon it hinges the government's ability to rescue Aer Lingus, the state-run airline which is in the process of sorting out its own major financial difficulties.

Aer Lingus is a major shareholder in GPA and along with GPA's other shareholders is being called upon to subscribe to a new USDollars 200m preference share issue by the aircraft leasing group.

The issue is seen as the company's last chance to avoid the banks taking over effective control. Aer Lingus, however, is unlikely to be in a position to subscribe to the issue without government finance.

BURTONS catering factory, based in Ipswich, Suffolk, for nearly 170 years, is to close with the loss of 139 jobs.

JAPANESE companies are scaling back recruitment in an attempt to cut costs and adjust to leaner times.

Japan Air Lines yesterday said it would defer hiring 375 stewardesses for five months. Seibu Department Store, a leading retailer, plans to halve its recruiting next year from about 439 in fiscal 1993. Toyota, the leading car maker, has for the first time in five years stopped hiring full- time production workers outside the usual recruiting period.

There is growing public and government concern about the cancellations and their effect on society. The Ministry of Labour said this week it would propose amending part of the Employment Security Law to require companies planning to cancel promised employment to graduates to notify public job security agencies and school authorities. The companies themselves would be publicly identified.

Fourteen companies have so far cancelled the hiring of 211 graduates who had been told that they would be hired from April. Japanese law has no provision for punishing violators of the gentleman's agreement known as naitei, by which graduates are promised employment at companies and are themselves more or less committed to that promise.

The ministry hopes to introduce its new measure by the end of the month after receiving a report from its advisory council. Japanese companies are reluctant to make employees redundant, as such moves are frowned upon by society, and cancelling recruitment plans is one of the few options available to them to cut employment costs.

However, the government has become concerned about the social impact of such moves, and the ministry has publicly asked corporations not to cut their workforces drastically in an attempt to cut costs.

JAL said that it had decided to postpone hiring the stewardesses because the number of flights it will have during the period will be less than planned as a result its restructuring programme.

By September, the airline says, it should be able to hire new recruits as other stewardesses retire.

ALCATEL-ALSTHOM, the French telecommunications group, would be interested in investing in France Telecom, the state-controlled telecommunications company, if it is privatised.

Mr Pierre Suard, chairman of Alcatel, yesterday said that, although such an investment was 'out of the question' at present, his company would 'consider it very seriously' should France Telecom move into the public sector.

France's conservative coalition, the firm favourite to oust the ruling Socialists in the parliamentary elections at the end of this month, is committed to a comprehensive privatisation programme.

Alcatel is the world's largest supplier of telecommunications equipment. Mr Suard said there would be an industrial logic for the group to diversify into telecommunications operations. 'It's an Anglo-Saxon logic,' he said. 'AT&T (the large US telecommunications group) was built on such a base, but until now European companies have adopted a different approach.'

Mr Suard confirmed that Alcatel's net profits had bucked the gloomy trend in French industry by rising 12 per cent to FFr6.92bn (Dollars 1.24bn) last year, from FFr6.18bn in 1991. The final figures for 1992 will be published early next month.

Alcatel has already confirmed that its sales rose by 1 per cent, from FFr160.08bn in 1991 to FFr161.65bn in 1992. This reflects a static performance for its core communication systems business, but growth in other areas of activity, notably services and transport.

The group received orders worth FFr166bn in 1992, only slightly higher than the FFr165.3bn of the previous year.

Alcatel last month announced that its Spanish and Norwegian subsidiaries had won Dollars 400m of communications equipment contracts in China. However, on Wednesday, the order was frozen by the Chinese authorities as part of their protest against the recent sale of French jet fighters to Taiwan.

AXEL SPRINGER Verlag, the German media group, and Poligrafici Editoriale, the listed Italian newspaper concern controlled by the members of the Monti family, have wound up their four-year attempt to create a closer alliance.

Springer has sold the 10 per cent stake it took in Poligrafici Editoriale in June 1989, when the Italian company spent L160bn (Dollars 107m) to buy a similar sized stake in its German counterpart. Separately, Poligrafici said it had sold its 10 per cent stake in Springer for DM220m (Dollars 132.5m).

However, plans for closer co-operation, including an Italian language equivalent of Springer's best-selling Bild Zeitung, never materialised.

Last year, Springer said it wanted to sell its Italian stake, but the transaction has only took place this week.

The 10 per cent holding, worth L61.4bn, has been bought by Mediobanca, the Milan-based merchant bank, at a price of L4,650 a share. That is appreciably below the L5,505 at which Poligrafici shares were fixed on Tuesday, when the deal took place.

The price represents a substantial loss, particularly in D-Mark terms, for Springer, which bought its stake for about L70.6bn. According to Springer, the sale followed its decision to concentrate on its traditional key markets.

However, relations between the two companies have steadily deteriorated, with the Italians complaining of insufficient involvement in decision making at the German group. Last summer, Springer asked for the return of its shares held by the Italians.

Brokers believe the Poligrafici shares bought by Mediobanca are unlikely to be a long-term investment.

However, there remains considerable uncertainty as to where they may end up.

Banco Di Napoli, the large Italian bank which floated 20 per cent of its ordinary shares in late 1991, has taken majority control of Isveimer, the Naples-based public sector lending institution.

The acquisition, for a price which has not been revealed, marks a further step in the gradual rationalisation of the Italian banking system and erosion of divisions between different types of financial institutions.

Banco di Napoli owned over 45 per cent of Isveimer. The acquisition of a further 6.1 per cent, lifting Banco di Napoli's stake to just over 51 per cent, had taken place last year. This was formalised this week.

Isveimer, which is likely to keep its independence in the short term, administers about L25,000bn (Dollars 16.8bn) in loans. Its other main shareholder is Agensud, a state-owned body being closed down, whose stake in Isveimer will be transferred to the Treasury.

SSAB, the Swedish steel group which was privatised last year, slumped to a SKr165m (Dollars 21m) pre-tax loss in 1992 after a sharp drop in domestic demand and intense competition in the west European market.

The steep fall in prices towards the end of the year meant the deficit was deeper than the group had expected last October.

However, it suggested enhanced competitiveness, following the devaluation of the krona, and a promised round of price rises in Europe would provide the foundation for a return to profit in 1993. The 1992 result contrasts with a SKr218m profit in 1991 and follows a drop in operating revenue to SKr11.87bn from SKr13.76bn. The loss per share was SKr2.90 and the dividend was cut by SKr1 to SKr5 per share.

Cash flow was a negative SKr124m. Lower demand and higher imports from eastern Europe combined to put pressure on prices in the European market while the threat of punitive import duties curtailed exports to the US.

In Sweden, recession meant trading and processing revenues in the group's home market fell 20 per cent. SSAB said the trend of steel prices in western Europe would be the key influence on its result this year.

Although the year had started badly, with prices down 10 per cent on their 1992 average, the group noted that many European producers were planning to raise prices from the second quarter.

The group also believes it will benefit from its efforts to align capacity with domestic demand and from improved margins following the depreciation of the krona.

It also expects lower energy taxes and reduced employer's social security contributions to have a favourable impact.

LEADING US retailers blamed the severe winter weather, which affected many parts of the country last month, for a slowdown in sales growth during February.

Most of the major retail chains posted increases in 'same-store sales' during the trading period, but the scale of the improvements was sharply diminished from the strong advances seen in previous months.

Some comparisons were also affected by the fact that 1992 was a Leap Year, and hence February's trading last year included an extra day.

"Sales of consumer products and home electronics were strong throughout the month with winter storms adversely affecting sales, particularly in apparel lines, after the holiday weekend,' said Mr Joseph Antonini, chairman of K mart. He also noted that temperatures had been 'unseasonably mild' in February 1992.

At Sears, Roebuck, Mr Arthur Martinez, head of the merchandise division, said underlying sales trends remained 'encouraging'.

Sears saw a 2.2 per cent advance in domestic same-store sales during the four weeks to February 27, while K mart posted a 1.1 per cent improvement for the four weeks to February 24.

Wal-Mart, the largest US retailer in sales terms, saw a 6 per cent rise in same-store sales if February 29, 1992, was excluded from the comparison. With that day's trading same-store sales for the month were flat.

Among the department store chains, Federated Department Stores - which takes in Bloomingdale's, Abraham & Straus and The Bon Marche - posted a 1.4 per cent increase in same-store sales for the four weeks ended February 27; J. C. Penney managed a 4.7 per cent advance from its core department stores over the same period; and May Department Stores a 2.7 per cent improvement.

Woolworth saw domestic same-store sales actually fall by 3.4 per cent.

NATIONAL & Provincial, Britain's eighth biggest building society, saw pre-tax profits drop 22 per cent to Pounds 80.2m in 1992, after making bad debt provisions of Pounds 108.7m.

Specific provisions on residential property rose to Pounds 88.2m (Pounds 23m) and the society also increased its general provisions to Pounds 10.8m (Pounds 1.7m). Total provisions were more than double 1991's Pounds 52.1m.

Operating profits rose by 22 per cent to Pounds 188.9m (Pounds 155m), thanks to an increase in net interest income to Pounds 252.4m (Pounds 213.3m).

N&P's solvency ratio increased to 12.7 per cent from 11.1 per cent.

NATIONAL & Provincial, Britain's eighth biggest building society, saw pre-tax profits drop 22 per cent to Pounds 80.2m in 1992, after making bad debt provisions of Pounds 108.7m.

Specific provisions on residential property rose to Pounds 88.2m (Pounds 23m) and the society also increased its general provisions to Pounds 10.8m (Pounds 1.7m). Total provisions were more than double 1991's Pounds 52.1m.

Operating profits rose by 22 per cent to Pounds 188.9m (Pounds 155m), thanks to an increase in net interest income to Pounds 252.4m (Pounds 213.3m). N&P's solvency ratio increased to 12.7 per cent from 11.1 per cent.

The society has made a commitment to keep depositors informed about savings rates, following a wave of publicity that investors with other societies had languished in obsolete accounts. While the society said it had attracted over 400,000 new savings customers in 1992, Mr Alistair Lyons, finance director, estimated the commitment had cost the society Pounds 20m during the year.

Colin Davenport, md of Davenham, a buy-out from Burns-Anderson Group, has been appointed chairman of the MANCHESTER MERCHANT AND INTERNATIONAL BANKERS' ASSOCIATION.

George Gonszor, a director of Hill Samuel Bank, has been elected chairman of the ASSOCIATION OF INTERNATIONAL SAVINGS BANKS.

CABINET ministers yesterday approved a limited package of constitutional reforms for Scotland but are likely to face a barrage of opposition next Tuesday when the details are announced.

Mr Ian Lang, the Scottish secretary, faces protest for not giving locally elected representatives more say in Scottish government.

There is also concern among opposition MPs over the proposed moving of civil service jobs from London to Scotland.

One option the prime minister and his colleagues were discussing was that the Scottish Grand Committee - comprising all 72 Scottish MPs - may be given a wider remit than its at present role, which is entirely subservient to government policy.

Yesterday's discussion was the culmination of a promise given by the prime minister during last year's general election in the face of the Scottish National party's demand for total separation and Labour's plans for new regional assemblies, including a powerful Scottish parliament.

Mr Major agreed to look at various options. But he has made clear he is an unflinching supporter of the union between Scotland and the rest of the United Kingdom and would not contemplate any action that put it at risk.

The Labour party yesterday ordered a shake-up of its operations in the political heartland of party leader Mr John Smith.

A Labour inquiry into the running of local parties in the Monklands area of Lanarkshire said the district council had left itself 'open to criticism' by the way staff were appointed.

Mr Smith is MP for Monklands East and Mr Tom Clarke, the shadow Scottish secretary, represents Monklands West.

The inquiry team has also rewritten the standing orders of the local parties in what appears to be a dismantling of an old-style political machine.

However the inquiry report - ordered by Labour's Scottish executive last September - was muted in its criticism and insisted the changes were simply an updating of antiquated local procedures.

The report said that 'those who suggest that improper actions have taken place should put those charges in the hands of the appropriate authorities or desist from making the allegations'.

BOEING, the world's largest manufacturer of commercial jets, has reduced by 5 per cent its long-term forecast for new aircraft deliveries in its latest market outlook.

But despite the industry's turmoil, Boeing expects world air travel and demand for new airliners to recover and show substantial growth by the end of the decade.

In its annual study of the airliner market published today, Boeing forecasts new aircraft deliveries totalling more than 1,200 jets valued at Dollars 815bn over the next 18 years. This is 5 per cent less than the Dollars 857bn of new deliveries over the same period the Seattle-based company had forecast last year.

The study shows that while aircraft deliveries totalling 789 jets worth Dollars 44.3bn remained at near-record levels last year, the combination of over-capacity, slow traffic growth and airline losses and financing difficulties led to a 6.6 per cent drop in new orders compared with 1991. Boeing said airlines ordered 482 aircraft worth Dollars 29.9bn last year compared with Dollars 32bn worth of orders in 1991 and as much as Dollars 71bn worth in 1990.

All three big manufacturers - Boeing, McDonnell Douglas and Airbus - also had cancellations and deferrals from financially strapped customers. This has led to sharp cuts in production and employment. Boeing is cutting output by 35 per cent and plans to shed 28,000 jobs over the next 18 months. After declining in 1991, air travel grew by 6.9 per cent last year. However, Mr Richard Albrecht, a Boeing executive vice-president, said much of this growth was the result of uneconomic air fares that produced continuing losses for many airlines.

The recovery of the commercial aircraft business will hinge on a general improvement in the world economy and a return to profitable airline operations. Although airlines lost more than Dollars 10bn during the last three years, Boeing expects that larger airlines will now evolve as integration and consolidation continues. These larger airlines will have better control of their operations and, while the future airline market will still be competitive, Boeing believes it will be more stable.

Air travel is expected to grow at an annual average rate of 5.4 per cent between now and 2010, according to Boeing. This growth will be led by the Asia-Pacific markets which are expected to account for over 40 per cent of growth over the next 18 years.

Of the 12,000 or more new aircraft to be delivered between now and 2010, about 30 per cent will be needed to replace older and noisier jets.

However, the rate of replacement of older jets has been slower than expected. Only 155 aircraft were retired last year, but Boeing says more than 750 were parked in the Arizona and California deserts at the end of last year. Boeing expects many of these parked aircraft will never return to service.

The average aircraft size is also expected to continue to grow over the next 18 years from an average of 176 seats in 1980 to 193 seats in 1992 and to 227 seats in 2010.

Boeing said its market share had not deteriorated in spite of changing competition. The Seattle group took 57 per cent of orders last year while Airbus won 29 per cent and McDonnell Douglas 11 per cent with other smaller manufacturers accounting for the remaining 3 per cent.

Boeing's forecasts are roughly in line with those recently made by its two competitors.

Airbus is estimating demand for 13,500 aircraft over the next 20 years while McDonnell Douglas has forecast a total requirement for 14,000 new jets during the same period.

GERMANY'S largest steelmaker, Thyssen Stahl, yesterday announced plans to cut 4,500 jobs in four steel plants, in a rationalisation of its output of girders, bars and semi-finished products.

The news was announced as 20,000 workers in the rival Krupp-Hoesch group staged a 24-hour strike to protest at the likely closure of two plants making special steels, and an entire integrated steelworks.

Blaming a substantial overcapacity in the European steel industry for all so-called long products, Thyssen announced it was abandoning production of beams and girders at its Bruckhausen plant, closing a combined steel rod and steel wire production line at Krefeld, and shutting down output of special steel products at the Witten plant.

A total of 4,500 jobs would go, out of 7,000 redundancies which the company is planning in coming months.

Thyssen has pressed ahead with the plan, in spite of parallel talks with Krupp-Hoesch and Saarstahl over greater specialisation in the overall production of long products, such as girders, reinforcing steel and wire rods, where European overcapacity is greatest.

Earlier, Krupp-Hoesch announced the probable closure of its long products plants at Siegen and Hagen, with the loss of 4,000 jobs. The company is also deciding whether to close an integrated steelworks either at Duisburg-Rheinhausen, or at Dortmund.

Mr Gerhard Cromme, the chief executive of the Krupp-Hoesch group, was booed by striking workers yesterday when he said redundancies were inevitable.

However Mr Jurgen Harnisch, head of Krupp Stahl, said on Wednesday it might be possible to save 1,500 of the jobs at Siegen and Hagen by setting up an independent special steels company: all the products at the plants are high-value special steels.

All the plants affected by the Thyssen and Krupp closures are in the heart of Germany's Ruhrgebiet industrial area, where labour militancy is now running high.

The German steel industry federation estimates that 35,000 to 40,000 jobs will be lost in the rationalisation process, 10,000 of them in east Germany.

The cuts are going ahead in advance of any final agreement in Brussels on a steel industry rationalisation plan, which would require capacity cuts across the Community.

WILHELM WILHELMSEN, the Norwegian shipowner, reported a decline in 1992 pre-tax profits, before extraordinary items, to NKr166m (Dollars 23.81m) from NKr205m in 1991, due to the weak international shipping industry.

'It is gratifying to be able to report this after a difficult year for international shipping,' Wilhelmsen said, adding that steady progress had been made in most of the group's shipping activities.

The shipowner has proposed lifting its 1992 dividend payment to NKr1.30 a share from NKr1 a year earlier.

Wilhelmsen's shares closed NKr3 up to NKr78 yesterday on the Oslo bourse, on the news the dividend payment would be increased.

Wilhelmsen said that primary operating profit - the difference between revenue and operating expenses - rose to NKr606m in 1992 from NKr584m a year earlier. Ordinary operating profit dipped to NKr221m from NKr240m.

ESAB, the world's leading welding equipment producer, said 1992 profits rose to SKr160m (Dollars 20m) from SKr9m the previous year, despite a worsening of conditions in the group's key European market.

The group benefited from a SKr99m gain from the sale of its welding robot operations, which helped to offset the impact of SKr28m in foreign exchange losses and a SKr71m provision for further restructuring this year.

Sales fell to SKr6.44bn from SKr6.58bn, while the order intake was virtually unchanged at SKr6.37bn. The dividend was maintained at SKr3.25 per share.

The group said demand for welding and cutting products fell in all European markets, with a sharp downturn in Germany, its most important market.

Conditions are expected to remain weak in Europe this year, although a gradual upturn is predicted in the US and south-east Asia.

THREE COMPANIES asked the Copenhagen stock exchange to suspend their share quotations yesterday on fears that they have been defrauded by all or part of their share capital by a Swedish portfolio management company.

The companies are furniture manufacturer Friis Mobler and two small investment companies, Euro-Invest and DGK-Invest. The three companies said thay had been unable to trace shares which were supposed to be in deposit with foreign securities dealers. Friis Mobler said that DKr30m (Dollars 4.76m) out of its total share capital of DKr100m is missing, while DGK Invest and Euro-Invest said that their entire share capital is missing.

ZIL, the Russian industrial conglomerate indelibly associated with the black limousines which were the preserve of top communists in the former Soviet Union, is to be privatised.

The government said yesterday that R1bn of nominal share capital - 1m shares with a face value of R1,000 - will be offered for sale at 100 auction centres across Russia.

Although Zil limousines are still used to whisk president Boris Yeltsin and his bodyguards at high speeds through the Moscow traffic, demand has fallen now that the new commercial elite prefer Mercedes and stretch Volvos. Zil also produces heavy trucks of an outmoded design and refrigerators.

The cars are handmade at a rate of two or three a year, but the mode of production guaranteed that each was unique so that parts were not interchangeable. A company official declined to reveal the price.

The cars are still popular with well-heeled tourists. They are also bought by smart young Russian bankers to conduct them from work to marble-floored dachas. The armour plating and curtained seclusion of the passenger saloons, which shielded the communist elite from terrorists and stares of the curious, now serve the same function for the new commercial princes.

Western consulting companies which have looked at the enterprise have concluded that any effort to transform the company into a successful and profitable enterprise will be a mammoth task. It has between between 110,000 and 130,000 workers in 17 sites across Russia.

The biggest site is an ecological inferno located in a bend of the Moscow river in the southern district of the capital. Requests to visit the plant were yesterday brusquely refused on the grounds that the plant had commercial secrets to protect.

The spread of Zil's sites, the wastefulness of its production methods and the archaic nature of its designs lend a certain Stalinist splendour to the company, but make it a nightmare for rationalisation and privatisation. Perhaps in recognition of the difficulty of bringing Zil to the market, a government official said foreign investment would be unlikely until 'a later stage', when the various parts of the company had been broken up.

The shares offered represent 35 per cent of the share value of the company, with 40 per cent going to the workforce and management either free or on preferential terms and a further 25 per cent held in state hands for later sale.

The enterprise is the first to be offered on an all-Russian basis, and represents both an attempt to prove that organisations of this size can be successfully sold off and a test of the nationwide system for offering shares.

CS FIRST Boston, the New York-based investment banking group, has announced changes to the management of its global bond business which include the appointment of a new head of fixed-income sales and trading.

Mr Robert Diamond, formerly chairman and chief executive of CSFB's Pacific subsidiary in Tokyo, will return to New York to run the bank's entire fixed-income sales and trading operation, including its Far East business.

He is replacing Mr Thomas Sexton, who has resigned from his post for 'personal reasons'.

At the same time, Mr Robert Baylis, a vice-chairman of the firm, will move to Hong Kong where he will take over Mr Diamond's old position as head of the Pacific operating unit.

CSFB said the moves were designed to improve the co-ordination of its global bond operations.

Mr John Hennessey, the firm's chief executive, said the moves meant CSFB now 'have two of our most senior managers tying together all of our fixed income businesses on a worldwide basis.'

The changes at the top of CSFB come at a difficult time for First Boston, the firm's big US subsidiary, which has been hit by some notable staff defections.

Last week, for example, the head of fixed-income research left CSFB to join a fund management group, and several other executives in investment banking and capital markets also moved to other firms.

WOOLWORTH, the general merchandise and specialty store retailer, yesterday reported after-tax profits of Dollars 280m in the 53 weeks to January 30 - a considerable improvement on the previous year's Dollars 166m loss. Sales in the full year and the final quarter were flat.

The 1992-3 profits total was free of any one-off accounting-related or restructuring charges and came after net profits of Dollars 165m in the final three months.

The 1991-2 figure included an after-tax restructuring charge of Dollars 250m - to cover an accelerated store redeployment programme - and an accounting-related charge of Dollars 113m. The restructuring charge was taken in the fourth quarter of 1991-2, when the net loss totalled Dollars 128m. Woolworth said sales in 1992-3 reached Dollars 9.96bn, virtually unchanged. The fourth-quarter sales figure was Dollars 3.13bn.

The full-year and final-quarter revenues from the specialty stores increased slightly, while general merchandise revenues showed a small decline. Woolworth noted that sales figures had been depressed by the store closure programme, al-though it said this had a positive effect on operating profits.

In terms of 1992-3 operating results, the specialty stores made a profit of Dollars 418m, against Dollars 312m in the previous 52-week period. The general merchandise operations recorded a profit of Dollars 156m, compared with Dollars 131m.

Tiffany, the upmarket US jewellery retailer, continued to suffer from the decline in luxury goods spending and a decline in sales to Japan during the fourth quarter.

It posted final-quarter profits of Dollars 8.66m after tax, down from Dollars 12.1m in the same period of 1991-2, taking the total for the year to end-January to Dollars 15.7m, compared with Dollars 25.5m last time.

General Cinema, the investment company whose interests range from publishing to a majority stake in the Neiman Marcus retail business, announced an after-tax profit of Dollars 31.8m in the three months to end-January.

This compared with Dollars 407.2m profits figure last time which was scored after a Dollars 39.2m accounting charge and a Dollars 419.6m extraordinary gain. Operating profits increased from Dollars 43m to Dollars 45.6m.

GENERAL MOTORS' efforts to cut its labour force received a boost yesterday when the United Auto Workers' union announced that some 16,500 workers had signed up for a special early retirement programme - far more than originally expected.

The company, which is trying to reduce its workforce as part of a plan to return its loss-making North American operations to profit, announced the early retirement programme last December. The deadline for acceptance was March 1.

The union originally estimated that some 7,000 workers might accept the offer.

ORKLA, the Norwegian group with interests ranging from paper to food and drinks, saw 1992 pre-tax profits almost halve after a write-down on the group's shareholdings and heavy securities losses. The profit plunged to NKr315m (Dollars 45.19m) from NKr608m a year earlier.

Orkla was forced to write down by NKr656m its shareholdings in Elkem, the troubled Norwegian light metals producer, and Uni Storebrand, Norway's biggest insurer. Orkla has a 30 per cent stake in Elkem and had 4 per cent of Uni's shares before the insurer collapsed last autumn.

It also suffered securities losses of NKr381m in 1992, against gains of NKr262m in 1991.

However, operations performed strongly with sales increasing by 4 per cent to NKr16.8bn last year from NKr16.1bn a year earlier.

Group operating profit increased by 37 per cent to NKr1.2bn in 1992 from NKr870m in 1991.

The board proposed leaving the dividend payment unchanged at NKr3.75. Orkla's A shares rose NKr3 to close at NKr190.50 on the Oslo bourse as its B shares advanced NKr4 to NKr191.

Allied Irish Banks' profits in the Republic of Ireland, reported in Wednesday's FT, should have read IPounds 76.7m (Pounds 78.2m) and not IPounds 72.7m. On an annualised basis this gives a 15.7 per cent downturn compared to 1991-92, not 20 per cent.

RELIEF WAS the dominant emotion yesterday at Terry's Chocolate Works in York, after staff heard that the company had been sold to Kraft General Foods International for Pounds 220m.

'The general reaction is, thank God it's all over,' said Mr Vic Botterill, chief shop steward at the factory for the General Municipal Boilermakers Union, which represents the plant's 800 blue collar employees and up to 200 casual workers.

Mr Botterill said the sale to KGFI, part of Philip Morris, the large US tobacco and foods group, could allow the Chocolate Works, source of chocolate oranges and the All Gold and Moonlight ranges to gain some more lines.

He said the employees were glad that Terry's had not been sold to Cadbury Schweppes or Nestle, because of their competing product ranges. There had been fears, he said, that such a deal could have resulted in product ranges being moved from Terry's York plant.

'We have the facilities here, we have the potential: it's a big world out there,' said Mr Botterill.

There was some sadness, he added, that United Biscuits had sold. 'Everybody slags off employers but they've put in a lot of investment.'

Terry's was founded in 1767 by two citrus peel importers, who opened a shop making and selling sweets in Bootham, York. In 1823 they were joined by an apothecary, Mr Joseph Terry. Subsequent expansion led the company to its present imposing five-storey building, often glimpsed on television broadcasts of horse racing from York.

Despite its strong tourist image, York has traditionally had an important manufacturing base, founded on the twin pillars of the railways and confectionery.

Terry's, with just over 1,000 employees, is the second biggest confectioner. Nestle employs 4,500 in the city and Cravens about 600.

AIRTOURS, the holiday tour operator, yesterday questioned the benefits that rival Owners Abroad says it would achieve from a proposed tie-up with Thomas Cook, the travel agency and financial services group.

Mr David Crossland, Airtours chairman, said there was a great difference between identifying costs savings from his proposed takeover of Owners Abroad, and projecting increased sales.

Airtours also said that according to latest statistics from Stats MR, the market research organisation, Owners Abroad's winter business was down at the end of January. This meant that Owners Abroad would be making higher winter losses from leased aircraft capacity that is surplus to needs.

Mr Howard Klein, Owners Abroad chairman, said estimates of benefits from the tie-up with Thomas Cook and its sister LTU, the German holiday company, had been approved by its auditors and advisers. These would be at least Pounds 9m in 1994 and at least Pounds 11m the following year.

He said Airtours still had not specified how it would arrive at savings from a merged Airtours and Owners Abroad that Mr Crossland says would be 'significantly' above the benefits from the Thomas Cook tie-up.

ZIL, the Russian industrial conglomerate indelibly associated with the black limousines of the former Soviet Union's top communists (pictured above, transporting president Mikhail Gorbachev in 1991 on his last visit to the UK), is to be sold off.

The government said yesterday that R1bn of nominal share capital - 1m shares with a face value of R1,000 - will be offered for sale at 100 auction centres across Russia.

Although Zil limousines are still used to whisk president Boris Yeltsin and his bodyguards at high speeds through the Moscow traffic, demand has fallen now that the new commercial elite prefer Mercedes and stretch Volvos. Zil also produces heavy trucks of an outmoded design and refrigerators.

The cars are handmade at a rate of two or three a year, but the mode of production guaranteed that parts were not interchangeable. A company official declined to reveal the price.

The cars are still popular with well-heeled tourists. They are also bought by smart young Russian bankers to conduct them from work to marble-floored dachas. The armour plating and curtained seclusion of the passenger saloons, which shielded the communist elite from terrorists and stares of the curious, now serve the same function for the new commercial princes.

Western consulting companies which have studied the enterprise concluded that the task of transforming the company into a successful and profitable enterprise will be huge. It has between between 110,000 and 130,000 workers in 17 sites across Russia.

The widely spread sites, wasteful production methods and archaic designs lend a Stalinist splendour, but make Zil a nightmare for rationalisation and privatisation.

The shares offered represent 35 per cent of the share value of the company, with 40 per cent going to the workforce and management free or on preferential terms and a further 25 per cent held by the state for sale later.

Editorial Comment, Page 19

Graham Pimlott, chairman of the corporate finance division of BZW, at TESCO.

In some early editions of yesterday's paper, a photograph of Yukio Aida, chairman of Nomura Securities, was substituted for that of Mike Knowles, the chairman of M W Marshall. We apologise for this error.

NATIONWIDE, Britain's second-biggest building society, said yesterday that there were grounds for cautious optimism that the housing market was on the move in spite of reporting another fall in prices.

The society said that house prices on average had fallen 1.4 per cent in February compared with the previous month. This had offset a rise of 1.2 per cent in January.

Mr Tim Melville-Ross, chief executive, said price changes tended to lag sales activity. He added: 'In fact there have been increased levels of activity from house buyers.'

MR Donald Richards, the head of Donnar Services, a marketing company, was yesterday charged at London's Bow Street magistrates court with three offences of corruption involving the awarding of contracts by NEI Thompson Kennicott, a subsidiary of Northern Engineering.

He was remanded on bail until April 15.

THE two former pension fund trustees of the Universal Computers Group, now in receivership, invested more than half the scheme's assets in a company which paid them nearly Pounds 90,000 in fees and dividends and granted them interest-free loans with no set repayment date.

UCG is the parent company of Ferrari Holdings, the Stock Exchange listed computer services company which went into receivership in July 1990. The two trustees, Mr Raymond Frederick Lewis and Mr Robert Woodland, were directors of UCG. Neither of the two men was authorised to conduct investment business in the UK.

The company which received the largest single investment is an investment company, Giltpeak plc, in which the pension scheme invested Pounds 512,000 of its Pounds 562,000 capital. The company was incorporated on July 27 1990 and did not begin trading until nearly six months later.

Giltpeak, whose address is the same as the home address of Mr Woodland, also paid Pounds 22,855 to Mr Woodland's wife for furniture, fixtures and fittings, say the audited accounts for the year ended December 31 1991, the only year for which accounts are available.

The accounts show that at year-end Mr Woodland and Mr Lewis had outstanding loans of Pounds 14,404 and Pounds 15,936, which had peaked during the year at Pounds 32,004 and Pounds 61,806 respectively. The accounts say the loans pay no interest and have no set repayment date.

The accounts also show that the company had total turnover for the year of Pounds 223,722 and profits of Pounds 41,363, of which Pounds 40,000 were spent on dividends on common shares.

Although the pension scheme provided almost all the financing for Giltpeak, it has no voting shares. Instead, it holds preference shares which pay interest at 10 per cent per year and are redeemable in three tranches beginning with a Pounds 170,000 payment at the end of this month.

According to the pension scheme's current trustees, GM Benefit Consultants, appointed by the High Court in December 1992, the two men dismissed the former trustee, actuarial consultants Noble Lowndes, a month before the company went into receivership in July 1990. They then removed the scheme's professional fund managers, London and Manchester (Managed Funds) Ltd, and directed the scheme's investments into companies in which one or both men were directors.

Mr Ray Coles, partner at GMBC, the current trustees, said that the pension scheme has been receiving dividends on its Giltpeak preference shares.

FIAT, the flag bearer of Italian industry, has begun a delicate damage limitation exercise to offset the impact on the group of the continued imprisonment of Mr Francesco Paolo Mattioli, its chief financial officer.

Mr Mattioli has been held in a Milan jail since February 22 when he was arrested with Mr Antonio Mosconi, chief executive of Toro, Fiat's insurance arm, for alleged illicit funding of political parties. They are being detained in connection with their previous roles on the board of Cogefar-Impresit, the Turin-based group's construction company.

Last May Mr Enzo Papi, then Cogefar-Impresit's managing director, was imprisoned for 55 days by Milan magistrates and only released after confessing to the payment of a L1.8bn (Pounds 785,000) bribe for a Milan metro contract. Mr Papi, who resigned from Cogefar-Impresit, has been questioned again in recent days.

Fiat management on Tuesday declared the group's full solidarity for the two imprisoned executives and called for their fate to be clarified as quickly as possible. It said it was concerned that 'this judicial affair, because of the resort to preventive detention and uncontrolled dissemination of restricted information before any sentence, affects the reputation of these people and the image of the company at a moment when it is directing all its energies to provide jobs and be competitive'.

Whatever the outcome of the arrests, Fiat has been bruised at a crucial time. Mr Guiseppe Turani, Italy's best known writer on corporate affairs, commented after the arrests: 'Fiat has been hit by Milan magistrates at perhaps the most delicate moment in its history, or at least during that period which began almost 30 years ago when the 'Avvocato' (Giovanni Agnelli) became president.'

The Fiat group, with its core business in the automotive sector, is confronted by three vital challenges: to produce successful new models; to forge new international alliances; and to produce an effective management structure to cope with the departure next year of Mr Agnelli.

The challenges have already increased because of the downturn in Fiat's main markets and Mr Agnelli's forecasts of a bleak 1993. On top of this, the group can scarcely afford damage to its reputation or instability in Italy, which accounts for 44 per cent of car sales, nor lose the services of Mr Mattioli.

Mr Mattioli, aged 52, has been with Fiat since 1975 and has worked closely with Mr Cesare Romiti, the group's chief executive. Last November he was promoted in a management shake-up designed to prepare the way for the departure of Mr Agnelli who has said he intends to step down in June next year. He is to be succeeded by his brother Mr Umberto Agnelli.

The management structure was slimmed down and split in effect into two broad sectors - industry and industrial development under Mr Giorgio Garuzzo and financial control and resource management under Mr Mattioli.

Mr Garuzzo and Mr Mattioli reported to Mr Romiti who has also hinted he will step down at about the same time as Mr Agnelli. In Turin Mr Garuzzo and Mr Mattioli were both tipped as possible successors to Mr Romiti.

In any event Mr Mattioli has had the task of managing resources against declining profits (forecast for 1992 at half the L1,609bn of 1991) and the need to find resources to fund investment of L47,000bn during the rest of the decade.

The prospect of Fiat raising cash by selling some of its non-core activities such as Rinascente, the stores group, or even Toro insurance and the Cogefar-Impresit, has helped push Fiat shares up steeply since the beginning of the year.

Also fuelling the rise have been rumours of talks about a new alliance on the car side. Last week Mr Agnelli specifically ruled out the Japanese but was silent about the possibility of a European partner.

The Milan bourse rumour mill says the price is being talked up to make Fiat shares more attractive for an alliance.

A tie-up with Renault is mentioned. Renault has denied this as it already has its hands full with Volvo, and Fiat says an alliance now when it is investing so heavily in new models makes no sense.

But the shares are still rising - despite the impact of the arrests. This suggests foreign institutional buying of the shares in the belief Fiat will benefit from devaluation and from its new models due when, as it is hoped, the market picks up next year.

Fiat will need luck and good management.

The Italian business community is watching closely how long Mr Mattioli is kept in jail and whether he can emerge unscathed.

As Mr Agnelli put it last week: 'Being caught up with the magistrature is always worrying.

'It's a bit like being on the operating table - one hopes it will all go well but there is always a risk.'

DISCUSSIONS between KLM, Swissair and Austrian Airlines are not expected to result in a merger, Mr Harald Norvik, SAS chairman, expects.

Speaking at an industry forum in Bergen, Norway, he stressed that the airlines were looking to co-operate more closely rather than combine.

There had been speculation that the four airlines might eventually merge following last Friday's announcement that they were launching detailed talks on the feasibility of setting up a 'global airline system'.

Mr Norvik said: 'The talks are aiming to establish if the conditions exist for discussions on closer co-operation, and I don't think that a collaboration would lead to a merger. The issue is what degree of co-operation and co-ordination would be appropriate.' He said SAS was not holding talks with any other airlines.

SAS, Swissair and Austrian Airlines already co-operate through a loose grouping known as the European Quality Alliance, which involves joint marketing activities and co-ordination of timetables.

It first became clear that KLM was interested in partnership talks with the EQA airlines in late January.

Last Friday, the four groups said they were setting up joint working groups to explore opportunities more closely.

ABBEY NATIONAL yesterday disclosed that it had lost a total of Pounds 226m on estate agency since it acquired its business in 1987.

The company now intends to sell the Cornerstone residential estate agency, which has 355 branches.

The loss comprises Pounds 88m in total operating losses over five years, and Pounds 126m in goodwill written off to reserves as well as a further Pounds 12m in restructuring costs in 1992.

Sir Christopher Tugendhat, Abbey chairman, said that the company had bought the estate agency chain to protect its share of the mortgage lending market. But its agents referred no more business proportionately than intermediaries.

'The essential reason for buying it was to defend our flank. Since then, we have discovered that it does not have that strategic advantage,' said Sir Christopher.

The goodwill write-off, which was taken as an exceptional item because Abbey is now complying with the FRS 3 reporting standard, leaves only Pounds 15m of goodwill in reserves. Some Pounds 141m of goodwill was taken into reserves on acquisition.

Abbey's decision to dispose of its estate agency business, which made a trading loss of Pounds 20m (Pounds 19m) in 1992, contrasts with building societies which are holding on to lossmaking chains in the hope that they will return to profit.

The Cornerstone residential estate agency business, which achieved a small increase in the number of houses sold, closed a further 59 branches as part of rationalisation, compared with 16 branch closures in 1991.

Sir Christopher said it was 'always difficult to see the best of times or the worst of times to sell something'. But Abbey believed it was sensible to sell now amid signs of the housing market 'coming out of the doldrums'.

Abbey currently gains Pounds 500m a year of mortgage business through the Cornerstone chain.

However, Sir Christopher said that Abbey had found it was getting a similar flow of business through other estate agents that it did not own.

A large number of building societies - as Abbey was in 1987 - started to acquire estate agency chains as a defensive measure because they believed that their share of mortgage lending was threatened by new lenders.

Mr Peter Birch, Abbey chief executive, said that this fear proved to be illusory. 'If we went back to that time, we would probably do the same thing again. I hope that we would not do, but I think we probably would,' he said.

Woolwich Building Society disclosed last week that its Woolwich Property Services estate agency business, which has 257 offices and is the seventh largest corporate estate agent in Britain, incurred a trading loss of Pounds 11m during 1992.

If Abbey is unable to dispose of the chain as a whole, it will sell branches in regional blocks.

It believes it will be able to achieve a higher price than the Pounds 15m of goodwill remaining its its reserves after the write-off.

Abbey's move is one of the largest attempted disposals of a corporate chain since Prudential disposed of or closed more than 500 of its branches during 1990.

Abbey is advised on the sale by Kleinwort Benson.

See Lex

NOREX, the financial services group, made a Pounds 28.7m profit on the sale of loan notes in Global Marine, the American oil rig company.

This boosted pre-tax profit from Pounds 2.26m to Pounds 28.1m for the six months to December 31 on turnover of Pounds 4.18m (Pounds 4.67m).

Three years ago Norex America and its partners bought about Dollars 240m (Pounds 169m) of Global Marine's debt, becoming the main creditors after the rig builder emerged from Chapter 11.

Norex America, in which the UK group has a 48 per cent stake, took Dollars 134m on to its own books, buying it at a 32 per cent discount to face value.

Global Marine has bought back the outstanding debt at 96 per cent of face value. Norex America received Dollars 99m gross, of which Dollars 29m was used to repay bank loans.

In the interim up to Dollars 8m a year has been earned on the difference between interest received on the loan notes and interest paid on the associated debt.

Mr Kristian Siem, the Norwegian entrepreneur who is managing director of Norex and chairman of Norex America, said cash from the sale of a cruise business had been invested in the Global Marine loan notes.

'It so happened it was easier and cheaper to acquire the debt than to buy companies directly. The debt was never converted to equity and we are delighted with the dividends and the profit.'

Norex America would look for further opportunities on the marine side, concentrating more on the financial angles than on actual operation. 'There is a role to play when banks are not lending and we are in a capital intensive business,' Mr Siem said.

Results of Norex, announced yesterday, showed an operating profit of Pounds 855,000 (Pounds 4.84m). Insurance broking was ahead of expectations and losses were cut in the executive travel agency.

After a minority charge of Pounds 17.7m, attributable profit stood at Pounds 10.4m. Earnings per share were 112.51p (4.95p) and again no interim dividend is declared.

Norex is 42 per cent owned by a Bermuda-based trust with members of Mr Siem's family as its beneficiaries.

CARPETRIGHT of London, Sir Phil Harris's carpet retail chain, has appointed advisers and non-executive directors ahead of its flotation, planned for the summer. Details of the float are yet to be finalised but the group is expected to be valued at between Pounds 50m and Pounds 100m.

Carpetright made a pre-tax profit in the year to April 1992 of Pounds 2.8m, up from Pounds 351,000 the year before. Its interim profits jumped from Pounds 1.1m to Pounds 3.4m, and analysts are expecting profits for the current year to top Pounds 7m.

Sir Phil, who headed the Harris Queensway carpet and furniture group until it was taken over for Pounds 450m in 1988, said that there would be 115 Carpetright stores and another 22 would open in the next year. He said the chain could expand from cash flow.

MFI Furniture Group holds 22 per cent of the ordinary shares. It has yet to decide whether to sell them at the time of the float. There are also Pounds 9m worth of preference shares in issue which could be redeemed from the proceeds of the float.

The non-executives appointed yesterday are Sir Harry Djanogly, a non-executive director of Coats Viyella and Singer and Friedlander, and Mr Gerald Dennis, chairman of Alexandra Workwear and Domino Printing Sciences.

Sir Harry chaired Nottingham Manufacturing, the textile group which was bought by Coats, and Mr Dennis was deputy chairman of BAT Industries.

Sponsors to the float are County NatWest and the brokers are SG Warburg Securities.

See Observer

The High Income Trust, which will invest in convertible securities, is being launched by Grahams Rintoul, the fund management group.

The trust will aim for an 8.5 per cent yield, payable quarterly, and will have a six year life. Two classes of shares will be offered, ordinary income and zeros.

The High Income Trust, an investment trust which will invest in convertible securities, is being launched by Grahams Rintoul, the London-based fund management group.

The trust will aim for an 8.5 per cent yield, payable quarterly, and will have a six year life.

Two classes of shares will be offered, ordinary income and zeros.

The trust's board will include Prof Tim Congdon, one of the 'seven wise men' who advise the government on economic issues.

Grahams Rintoul also manages an eponymous investment trust and the North American Gas trust.

THE SHARE price of Raine Industries fell by more than a tenth yesterday despite the announcement by the UK housebuilder of a 14 per cent rise in pre-tax profits to Pounds 2.8m during the six months to end-December.

A rise in group borrowings and concern over an uncovered interim dividend, which was maintained at 2p, sent Raine's share price tumbling by 12p to 101p, reducing its stock market value by Pounds 22.5m.

Pre-tax profits would have fallen below last year's interim level of Pounds 2.4m if provisions for the six months to end-December 1991 of Pounds 3.4m, to cover losses on Raine's 2.8 per cent strategic stake in rival housebuilder YJ Lovell, had not been restated above the line.

The company revealed that since January 1 there had been a substantial improvement in agreed sales and inquiries from would-be purchasers.

However, Mr Peter Parkin, chairman, said the improvement had come too late to benefit the current financial year.

He blamed wild fluctuations in currency and interest rates last autumn, which had hit housebuyers' confidence, and restricted sales during the run-up to Christmas.

As a result, operating profits had fallen by 11.6 per cent during a first half which had included the first full six months of sales from Walter Lawrence.

Earnings, after taking account of the 1991 restated provision, rose from 0.27p to 0.83p.

In order to pay the maintained dividend the company will need to transfer Pounds 2.19m from reserves.

Borrowings had risen since the end of June by Pounds 17m to Pounds 57m, equivalent to 47 per cent of shareholders' funds.

Mr Parkin expected borrowings to get back to about Pounds 40m by the end of June.

He added that the political and economic upheaval caused by sterling's withdrawal from the ERM had caused tremendous damage to the confidence of house buyers.

First half sales of 654 were about 180 less than the group had expected.

House prices and margins had remained under severe pressure, particularly in the south-east.

However, Mr Parkin said that more recently there had been signs that prices had begun to stabilise, reflecting an increase in demand.

The group's housing operation in California had continued to perform poorly and incurred a first half loss.

UK contracting was also a difficult market with margins and orders under severe pressure.

COMMENT

Raine's share price last night was only slightly ahead of the 95p rights issues price in March last year when it acquired Walter Lawrence. The company, however, appears willing to raid reserves to maintain the final dividend provided the housing market does not dive again. It will need pre-tax profits of at least Pounds 17m in 1993-94 to provide sufficient earnings to maintain the dividend again. In the current financial year pre-tax profits are likely to be about Pounds 11m compared with a restated Pounds 10m for 1991-92. Borrowings, however, will be lower by June. The group's land costs, one of the lowest in the sector, will stand it in good stead as the housing market picks up. A prospective p/e approaching 30 for the current financial year suggests the shares are not going anywhere in the short term.

Correction (published 4th March 1993) appended to this article.

A STRONG performance by First Maryland Bancorp, its US subsidiary, largely helped Allied Irish Banks, Ireland's largest clearing bank, achieve better than expected pre-tax profits of IPounds 171.6m (Pounds 177m) for the nine months ended December 31 1992.

The result was produced despite deteriorating trading conditions in Ireland. Mr Gerry Scanlan, group chief executive, said: 'Excellent results in the US and significant improvement in Britain compensated for the lack of growth in Ireland, which reflected the uncertain market conditions for our customers'.

The group has changed its year-end reporting date from March 31 to December 31 this year consolidating the different reporting dates of the group's various subsidiaries, making comparison difficult with the 1992 results to March 31 1992, when pre-tax profits of IPounds 185.8m were reported.

However, due to improved tax management, the post-tax profits of IPounds 107.6m for the nine months compare favourably with IPounds 104.7m for the previous 12-month period.

Profits growth of 23 per cent was reported at First Maryland which contributed 43 per cent of total group profits for the nine months period.

Losses in the UK division were down to IPounds 25.6m for the nine months, compared with IPounds 47m for the previous full year, while the Ireland division, which includes results from its TSB subsidiary in Northern Ireland, reported IPounds 129.5m in pre-tax profits for the nine month period compared with IPounds 172.6m for 1992.

Profits in the Republic, however, were significantly down (by some 20 per cent on an annualised basis) to IPounds 72.7m from IPounds 121.4m between the two reporting periods.

Loan loss provisions were IPounds 143.3m for the nine months (IPounds 178.3m) and the the group's Tier 1 capital adequacy ratio has again improved, from 6.6 per cent to 7.2 per cent.

A final dividend of 4.2p is recommended, giving a total of 8p for the period. On an annualised basis this equals 8.7p, an increase of 5.5 per cent over 1991-92.

Market analysts anticipate pre-tax profits in the region of IPounds 220m and earnings per share of 21p for 1993.

COMMENT

AIB executives remain upbeat about performance in the group's core Irish market for the year ahead. But the sharp downturn in the last quarter of 1992, triggered by the sterling crisis, high interest rates and a loss of business confidence, will only be partially offset by the punt's devaluation at the beginning of this year. Continuing high interest rates, weak sterling, and ERM instability give little cause for corporate optimism. Growing loan loss provisions and tighter profit margins would seem a more likely scenario for 1993. Thus the group's 'engine for growth' appears to have chugged off to the other side of the Atlantic, where First Maryland has built up a good head of steam ready to take advantage of the Clinton economic recovery.

CORRECTION

Allied Irish Banks' profits in the Republic of Ireland, reported in Wednesday's FT, should have read IPounds 76.7m (Pounds 78.2m) and not IPounds 72.7m. On an annualised basis this gives a 15.7 per cent downturn compared to 1991-92, not 20 per cent.

Mike Knowles (right), who started his City career as a foreign exchange dealer with the Bank of Tokyo nearly 30 years ago, has come out of semi-retirement to take on the chairmanship of M W Marshall, one of the world's biggest foreign exchange brokers.

Knowles, 50, has been assoc-iated with Marshalls since 1965 but retired shortly after the Pounds 175m management buy-out from British & Commonwealth in February 1989. Although he is no longer involved in the day-to-day management of Marshalls, he has remained a director of Marshalls Finance, the holding company for the management buy-out.

He says that he was invited to return full-time to Marshalls after it was decided to split Chris Kelson's role as chairman and chief executive. Knowles says that the buy-out has gone 'very well' and the decision to split Kelson's dual function was merely a reflection of current trends in corp-orate governance.

Kelson remains chief executive and Tony Porter, head of Marshall's European division, has been appointed managing director.

Stelios Papadopoulos, head of health care/life sciences investment banking group at PaineWebber in New York, and Louis Lavigne, chief financial officer at Genentech in San Francisco, at XENOVA GROUP.

John Kail, md of Templeman Corporate Services, at FREDERICK COOPER. He continues as company secretary, a role he has fulfilled in a non-executive capacity since 1986.

John Adcock, former deputy senior UK partner of KPMG Peat Marwick, and Jack Mawdsley, a former director of Tarmac, at ALBRIGHTON. Peter Woodman, who had combined the role of chairman and chief executive, remains chief executive with Albrighton non-executive director Humphrey Wood becoming non-executive chairman.

David Roberts-Jones has resigned as non-executive director from ALLIANCE RESOURCES, the US-based oil and gas company which has been in administrative receivership since October. Roberts-Jones was the last director remaining from the original board which floated Alliance in 1991. John O'Brien, managing director of Manx Petroleum - which put Alliance into receivership - is chairman of Alliance. An attempt by fellow directors to unseat O'Brien failed last year.

John Townsend, formerly managing partner of Johnson Capital Management, has been appointed international marketing director of GARTMORE.

NISSAN, the Japanese motor manufacturer, was yesterday ordered to pay Pounds 6m to Nissan UK, its former British importer, for not honouring an agreement to provide marketing support for sales of its range of Bluebird cars.

The Pounds 6m payment had been negotiated by Mr Octav Botnar, chairman of Nissan UK, as an incentive for taking 12,700 of the cars in the six months before they went out of production in 1990, the vice-chancellor, Sir Donald Nicholls, said in the High Court.

Nissan had denied such an agreement had ever been reached. However, Sir Donald ruled that an agreement had existed and that Nissan UK had fulfilled its side of it.

Mr Botnar was not in court. He has remained in Switzerland following a warrant for his arrest in connection with an alleged tax fraud.

NISSAN, the Japanese motor manufacturer, was yesterday ordered to pay Pounds 6m to Nissan UK, its former British importer, for not honouring an agreement to provide marketing support for sales of its range of Bluebird cars.

The Pounds 6m payment had been negotiated by Mr Octav Botnar, the chairman of Nissan UK, as an incentive for taking 12,700 of the cars in the six months before they went out of production in 1990, the vice-chancellor, Sir Donald Nicholls, said in the High Court.

Nissan had denied such an agreement had ever been reached. However, Sir Donald ruled that an agreement had existed and that Nissan UK had fulfilled its side of it.

Mr Botnar was not in court. He has remained in Switzerland following the issue of a warrant for his arrest in connection with alleged tax fraud involving his company.

NBC News yesterday said its president, Mr Michael Gartner, would resign, in an attempt to limit damage to the news division of the television network from the rigging of a broadcast test of a General Motors truck last year, Karen Zagor writes.

An NBC programme aired pictures of a blazing GM truck without saying it had attached small incendiary devices to the truck to make it burst into flames. It later apologised to GM.

NISSAN, the Japanese car maker, is to start exporting vehicles from its Spanish plant in Barcelona to Japan next year with planned volumes of up to 12,000 a year.

Shipping four-wheel-drive (4WD) leisure/utility vehicles from Spain will be the second export programme from Europe to Asia for Nissan, which already exports up to 10,000 cars a year to Japan and Taiwan from its UK car plant in Sunderland.

Nissan said it planned to export 10,000 units of its new Spanish-built Terrano II four-wheel-drive vehicle to Japan in 1994, rising to 12,000 a year.

Nissan Motor Iberica, its majority-owned Spanish subsidiary, said yesterday that it had plunged into a loss of Pta14.37bn (Pounds 85.53m) last year in the midst of its ambitious expansion programme.

Mr Juan Echevarria, Nissan Motor Iberica executive chairman, warned that the company did not expect to return to profit before 1995.

Continuing losses and rising indebtedness, combined with the company's commitment to a heavy capital expenditure programme, are expected to force a capital restructuring.

Nissan Motor Iberica has spent more than Pta100bn on capital spending and product development in the past two years, however, to try to transform itself into a maker of vehicles for the European passenger car market based on its Serena people carrier and the Terrano II.

It said yesterday it still planned to increase total vehicle production to 135,000 in 1995 from 79,450 last year. Output of the Serena is planned to rise to 20,000 this year from 8,700 in 1992, and output of the Terrano II is expected to increase from 35,700 this year to more than 64,000 in 1994 including the exports to Japan.

Some 22,000 Terrano IIs will be supplied to Ford, the US vehicle maker, which will market the vehicle under the name Ford Maverick through its own European dealer network.

NBC News yesterday announced the resignation of its president, Mr Michael Gartner, in an attempt to limit damage to the news division of America's third-ranking television network from the rigging of a broadcast test of a General Motors truck last year.

Mr Gartner, president of the division since 1988, said he told NBC late last year of his plans to leave in August. He said he had hastened his departure announcement because of recent controversies.

In November, NBC's Dateline current affairs programme aired pictures of a blazing GM truck without telling its 11m viewers that it had attached small incendiary devices to the truck to make it burst into flames during a collision.

In February, NBC issued an on-air apology to GM, America's biggest carmaker, after it launched a suit for defamation against the network. GM is struggling against bad publicity over the safety of its C/K pick-up trucks built between 1973 and 1987, which have been the subject of lawsuits and government investigations.

An internal investigation of the GM affair is expected to be completed this week. Mr Don Browne, NBC News executive vice-president, will assume Mr Gartner's responsibilities while the network searches for a successor.

This is not the only search going on at NBC. The network's parent, General Electric, is believed to be interested in selling NBC if it can get the right price.

THE cold war might be over but the arms race continues. For the past two days Mr Alexander Rutskoi, vice-president of Russia, has been acting as an arms salesman in Malaysia.

The Malaysian air force wants a new generation of fighter aircraft. After considering French and Anglo-German-Italian fighters, the choice has come down to the Russian Mig 29, the General Dynamics F-16 or the McDonnell Douglas F/A-18. The value of the initial fighter contract is estimated at anywhere between Dollars 700m (Pounds 493m) and Dollars 1bn.

This increasingly hard-nosed battle between Russia and the US comes at a time of growing defence spending in many Asian countries. Nervousness has set in following the closure of US bases in the Philippines. There is concern that conflicts might arise over ownership of the Spratlys - a group of islands in the South China Sea claimed by China, Vietnam, Taiwan, Malaysia, the Philippines and Brunei.

The increasing power of China's armed forces is worrying many in the region. China purchased nearly Dollars 2bn worth of arms from Russia last year, including advanced Su-27 fighters, and is considering buying a Russian aircraft carrier.

Yesterday, in a meeting with Dr Mahathir Mohamad, the Malaysian prime minister, Mr Rutskoi is believed to have offered to set up various spare parts and technical facilities in Malaysia for the Mig. Malaysia's defence spending is rising by more than 20 per cent this year.

'It is in our interests to see that there will be no vacuum in the region, as it may result in a new area of conflict,' says Mr Najib Abdul Razak, Malaysia's defence minister.

Last month Malaysia signed a memorandum of understanding with India on defence co-operation. India, which already builds and operates the Mig 29, may help Malaysia establish its new fighter force. McDonnell Douglas and General Dynamics have countered by offering what are said to be considerably reduced sale prices for their fighters. A US delegation was here last month in an effort to thwart the Russian bid.

Initially the Malaysian air force is expected to buy between 16 and 20 fighters, with options on 40 more. Russia is also believed to be offering to sell Malaysia a number of its large Mig 35 helicopter gunships and a variety of other weaponry.

The Russians say the Migs can be delivered within six months. US manufacturers are likely to take considerably longer. Russia is also reported to be willing to accept some form of barter payment from Malaysia for a portion of the sale - possibly palm oil.

Military analysts say that by buying the Migs Malaysia would upset a growing trend towards air force co-operation inside the Association of South East Asian Nations (Asean). Other Asean air forces have western equipment. If Malaysia does buy Migs it will be the first big arms sale by Russia in the Asean region.

Indonesia, the Philippines and Burma are all at present being courted by Russia's arms dealers. Earlier this year Indonesia announced plans to buy 39 vessels belonging to the former East German navy, all made in what was the Soviet Union.

YUKONG, South Korea's largest oil refining and petrochemical group, has reported a 19.5 per cent rise in net profits to Won29.3bn (Dollars 37m) for 1992 on sales 17.4 per cent ahead at Won4,721bn.

The sales increase reflected the country's rapid growth in oil consumption.

Earnings improved due to the favourable revision of government-set foreign exchange rates and base prices applied to crude oil imports.

Yukong also benefited from lower interest rates. The company has heavy financial expenses following the construction of eight new petrochemical plants in 1991.

Ssangyong Oil Refining reported net earnings up 114 per cent to Won87.3bn, while sales rose by 12.4 per cent to Won2,043bn.

The rise in earnings reflected the same financial factors in Yukong's profit increase.

THE Johannesburg Stock exchange (JSE) plans to open its Traded Options Market (TOM) to foreigners and non-residents. Exchange control regulation currently bar preclude them from the equity options market.

By using TOM, foreigners will be allowed to buy and sell call and put options on some of the main blue chip shares on the JSE as well as the all-share index and the all gold index. This list will expand as and when demand requires it.

Announcing the change, Mr Roy Andersen, JSE executive president, said foreign investors would earn interest on cash margins remittable at the more advantageous commercial rand rate of exchange. He said brokers would be able to service a wider client base. He hoped the hedging and arbitrage opportunities available would stimulate liquidity in the underlying cash market.

Foreign clients will trade as ordinary clients of brokers, and may use their financial rand or blocked rand balances for TOM trading.

ROYAL Bank of Canada, the largest of Canada's big six chartered banks, yesterday reported little-changed net profits for the first quarter.

The bank, which is negotiating the acquisition of the trust operations of Royal Trustco, recorded net profit for the quarter of CDollars 254m (USDollars 211m), or 71 cents a share, in the first quarter of fiscal 1993.

This compares with CDollars 256m, or 73 cents, a year earlier. There were more shares outstanding in the latest period.

Lower non-interest expense and larger payments received on Brazilian loans were offset by higher domestic loan loss provisions and lower fee income.

Loan loss provisions totalled CDollars 295m, increased significantly to cover problems in the corporate sector. A year earlier, the provision was CDollars 185m. The bank now estimates provisions for fiscal 1993 at CDollars 820m, up CDollars 120m on the estimate at October 31 last.

Return on average assets was 0.73 per cent, against 0.76 per cent, and on equity 14.8 per cent against 14.5 per cent.

Total assets at January 31 were CDollars 137bn, up 2 per cent from a year earlier. If the Royal Trustco acquisition is consummated, the deal would bring the bank's total assets to nearly CDollars 200bn.

The Toronto commercial property market deteriorated further in the latest quarter, but retail banking, investment banking, treasury and investment management performed as planned.

BANKS will refinance about Dollars 326m of term debt of Camdev, the former Campeau Corporation property group.

The banks have agreed to roll-over existing loans to Camdev for up to four years, secured by Camdev stock in a profitable US regional grocery chain and office properties in Ottawa and London, Ontario.

BANK of Nova Scotia reported first-quarter net profit of CDollars 165m, or 70 cents a share, down about 5 per cent from CDollars 174m, or 76 cents, a year earlier.

Return on assets was 0.65 per cent against 0.77 per cent and on equity 14.6 per cent against 16.9 per cent. Total assets at January 31 were CDollars 98bn, up nearly 5 per cent.

K MART, the US retail group which operates around 2,400 discount stores as well as several chains of specialist stores, yesterday reported a 9.5 per cent increase in after-tax profits for the year to January 27.

However same-store sales growth for the group overall was a modest 2.6 per cent.

The company made after-tax profits of Dollars 941m in the 52-week period, up from Dollars 859m in the previous year.

After-tax profits in the fourth, and most important, quarter rose by 11.7 per cent, to Dollars 535m. Earnings per share increased more modestly. Due to an issue of equity-based securities in 1991, the figure for the last quarter increased to Dollars 1.15 from Dollars 1.06, while for the year it was up by 2 per cent at Dollars 2.06.

Total sales in the final quarter increased from Dollars 10.6bn to Dollars 11.5bn. For the year, there was a 9.1 per cent increase to Dollars 37.7bn.

K mart said that its gross margin for the year had slipped to 24.5 per cent of sales, compared with 25 per cent. This reflected 'increased clearance markdowns of spring and summer merchandise lines, especially apparel'.

K mart also noted that there was a greater sales contribution from its PACE warehouse club chain, where margins are particularly low.

However, K mart added that the margin pressure had been greatest early in the year and that there had been an 'excellent sell-through' of seasonal merchandise during the Christmas season.

In the main general merchandise division, comparable store sales rose by a modest 1.5 per cent, although operating profits increased by 11.9 per cent to Dollars 1.56bn.

The specialty retail chains overall saw a 5.7 per cent rise in same-store sales, with operating profits rising 10.7 per cent to Dollars 1.81bn.

The one problem area was PACE, which saw operating profits fall from Dollars 39m to Dollars 3m. K mart said the profits erosion stemmed from poor performance of new outlets opened in 1991 and 1992, but that it expected an improvement this year.

HEWLETT-Packard, the US computers and electronics manufacturer, is to move worldwide responsibility for the development and manufacture of large-scale printers and plotters to Barcelona, Spain, from San Diego, California.

The move is part of an expansion programme and there will not be any job losses in San Diego.

The company said it would invest more than Pta1.8bn (Dollars 15.3m) over the next two years to build a new 8,000 square metre plant at its Barcelona site.

The 300 - strong workforce is expected to double by the end of 1994.

Industry consultants estimate that the the value of plotters manufactured in Spain will be Dollars 300m a year by 1994.

Research and development, marketing and manufacturing will all be moved to Spain from the US.

Hewlett-Packard is a leading manufacturer of large - scale plotters and printers, which are used to create arch-itectural and engineering drawings.

The company also said it intended to concentrate the manufacture of inkjet printers, where it is market leader, for the European market in Barcelona within two years.

HP will continue to make inkjet printers in Vancouver, Washington, and Singapore.

Hewlett-Packard has been manufacturing plotters in Barcelona since 1985.

A spokesman said the company had been encouraged to develop further in the region by the quality of components from local suppliers, by the local workforce and by financial incentives.

The company has two other sites which manufacture products for a global market: Andover, Massachusetts, produces medical systems; and South Queensferry, Scotland, makes telecommunications instrumentation.

SPAIN'S Banco Central Hispanoamericano has joined the push by Spanish banks into Portugal through a share swap with with Banco Comercial Portugues.

Under the agreement announced yesterday, BCH has taken 10 per cent of BCP which, in turn, has taken 2 per cent of BCH and 50 per cent of Banco Banif Gestion Privada, a BCH 'boutique' bank that caters for wealthy clients.

The operation is thought to be the biggest share exchange between Spanish and Portuguese institutions. BCH bought 9.14m shares in BCP at Esc2,500 each while BCP acquired 3.4m BCN shares at Monday's closing price in Madrid of Pta3,300.

It also marks the boldest advance made by a Portuguese bank into Spanish territory. Mr Jorge Jardim Goncalves, BCP chairman, is likely to be given a seat on the BCH board next month.

BCH, Spain's biggest bank in terms of assets, and BCP said they were looking forward to 'long term co-operation' and that they 'share a similar philosophy of performance both in the Portuguese and Spanish markets.'

It is not clear whether BCH plans to use its BCP stake merely as a source of dividends or whether it will try to operate in some way in Portugal through the BCP association. BCH has just reported a dramatic 22 per cent fall in net profits last year, to Pta52.6bn.

MORGAN Stanley, the Wall Street securities house, announced yesterday that Mr Robert Greenhill will step down as the firm's president this summer to concentrate on his work as an adviser on client transactions.

Mr John Mack, head of Morgan Stanley's operating committee which oversees the day-to-day running of the firm, will become the new president on June 10, when the company holds its annual meeting. Mr Greenhill will remain on the board of directors.

Mr Richard Fisher, Morgan Stanley chairman, said the changes at the top would not affect the firm's business strategy or management style.

Along with Mr Fisher, Mr Greenhill and Mr Mack have held the reins at Morgan Stanley for several years, guiding the firm through its evolution into a global investment banking and securities trading powerhouse.

In recent years, however, Mr Greenhill's role as president, with its management and administrative responsibilities, has clashed with his work as a deal-maker and adviser to Morgan Stanley's biggest clients, which kept him away from the firm's New York head office for long stretches of time.

In the past year alone, Mr Greenhill has taken the lead role in advising General Motors on its several billion-dollar stock issues; worked with RJR Nabisco on its plan to sell shares in its worldwide food business (a plan that was formally unveiled yesterday); and advised International Business Machines, the troubled computer company, on its massive restructuring.

Mr Greenhill said that after stepping down as president he would devote most of his attention to working with these and other clients.

He will not, however, necessarily be working full-time at Morgan Stanley. Mr Greenhill said some of his time will be spent on personal interests.

BRITISH Petroleum has agreed to sell its 49 per cent interest in the Olympic Dam mining project in South Australia to Western Mining Corporation, the Australian resource group, for USDollars 240m. The agreement follows Western Mining's decision to exercise its pre-emptive option to acquire the stake.

WMC, which owns 51 per cent of Olympic Dam, had until tomorrow to decide whether to match a similar offer from Minorco, the overseas investment arm of the Anglo-American Corporation-De Beers group of South Africa.

The deal to sell the mining project, which includes 450m tonnes of copper, uranium, gold and silver deposits, will take BP out of minerals mining altogether. But BP still has a 50 per cent stake in an Indonesian coal mine which it will retain.

WMC said its total outlay would be Dollars 430m after paying Dollars 190m to BP to buy out loans worth Dollars 273m. It said debt would increase by only Dollars 157m because most of the cost would be financed from existing resources.

The deal ends an joint venture arrangement which required BP to finance an increase in annual production from 66,000 tonnes of copper to 150,000 tonnes and 1,400 tonnes of uranium oxide to 4,000 tonnes.

WMC said it was reconsidering existing plans for a modest expansion to 84,000 tonnes of copper and 1,500 tonnes of uranium oxide over the next three years at a cost of ADollars 75m (USDollars 51.00)

But the full expansion programme, which is expected to cost between ADollars 500m and ADollars 750m, was unlikely to proceed until later in the decade unless there was a substantial improvement in uranium prices.

WMC said it was 'well placed' to finance the acquisition and future expansion in addition to a commitment announced last week to invest ADollars 440m in the development of the Mount Keith nickel deposit in Western Australia.

The group said it expected net debt to increase from zero to about ADollars 600m by 1993-94, equivalent to 20 per cent of equity. 'No equity issue is contemplated or will be required,' the board said.

WMC shares fell 5 cents to ADollars 4.71 on the Australian Stock Exchange as investors considered the impact of the deal on the group's ability to finance its future commitments.

ROYAL OAK Mines, the Vancouver-based gold producer that specialises in restoring high-cost mines to profitability, has signed an agreement to buy the mothballed Colomac property in Canada's Northwest Territories.

The seller is Neptune Resources, which will receive 3.5m Royal Oak shares, worth CDollars 10.2m (Pounds 5.7m), as well as a royalty over five years, payable if the gold price achieves an annual average of more than Dollars 400 a troy ounce. The deal is expected to be finalised on March 25.

Neptune closed Colomac in mid-1991 after the mine had been in operation for only a year. At the time, it estimated that a gold price of about Dollars 425 an ounce was required to keep the operation profitable.

Royal Oak said that it hoped to cut cash production costs to less than Dollars 300 an ounce, partly by running Colomac in tandem with its Giant mine in Yellowknife.

Unionised workers at the Giant mine have staged a bitter and often violent strike for the past nine months, but Royal Oak has kept it operating with outside workers. The company is insisting, among other things, that wages be linked to the gold price.

Royal Oak plans a feasibility study at Colomac this summer with a view to reopening the mine in 1994.

SAFREN, the South African shipping, leisure and freight handling group, recorded an 18 per cent drop in attributable earnings for the six months to the end of December as deteriorating trading conditions affected all its divisions.

Turnover rose marginally to R2.37bn (Dollars 764m) from R2.31bn during the same period in 1991, but operating profit was 1 per cent lower at R334.6m compared with R337.8m. A sharp rise, however, in net interest paid - to R24.2m from R1m - and a decline in the share of associated companies' profits, which fell to R36.7m from R63.4m, caused attributable earnings to fall to R109.4m from R133.3m.

The interim dividend is being maintained at 65 cents per share despite earnings per share falling by 18.6 per cent to 202 cents from 248 cents.

Increased competition and the recession, both in South Africa and abroad, caused Safmarine, the shipping and transport subsidiary, to experience declining cargo volumes and reduced freight rates in its liner and bulk trades.

Increased depreciation and interest arising from large investments in new ships and containers also affected profit adversely. Safair, the freight carrier, suffered from the resurgence of hostilities in Angola, while Flitestar, the domestic airline, incurred substantial losses owing to overcapacity and predatory pricing on domestic routes.

Profits at Kersaf, the leisure and entertainment arm, were lower due to difficult trading conditions, aggravated by construction work at its main resorts and competition from unregulated casinos. Rennies, the freight handling group, benefited from its participation in a drought relief scheme in the region and lifted profits.

Safmarine, Rennies and Kersaf respectively contributed 22 per cent, 21 per cent and 56 per cent to Safren's attributable profit.

NEC, the Japanese electronics group, revised downwards its results forecast for the year to March and expects to see a Y40bn (Dollars 344m) pre-tax loss for the group on a consolidated basis.

The revision comes after NEC announced in October a pre-tax profits forecast of Y10bn. It reflects an unexpectedly depressed market for electronic products worldwide in the first three months of this year, the company said.

NEC now forecasts consolidated sales of Y3,620bn, compared with a previous forecast of Y3,780bn. A pre-tax loss of Y40bn compares with a profit of Y51.4bn in the year to March 1992. For the parent company, NEC expects a 5 per cent drop in sales to Y2,900bn and a pre-tax profit of Y18bn, which represents a 77 per cent decline from the previous Y40bn.

The company blamed the unexpectedly severe slowdown in domestic demand, particularly for electronic devices, for the revision of its results forecast. When NEC made its profits forecast in October, it had been expecting a customary seasonal rush of orders in the January to March period from corporations buying to use up their procurement budget. This year, however, that buying spree failed to materialise.

NEC has, like many Japanese semiconductor companies, been hurt by a severely depressed market for memory chips and by weak prices, which lasted until the fourth quarter of last year. In 1992, NEC lost its position as the world's largest semiconductor manufacturer to Intel of the US, according to Dataquest the market research group.

In its computer business, the company faces growing competition from US manufacturers in its home market where it has a 53 per cent market share.

For the fiscal year beginning in April, however, NEC expects overall revenues to increase by 4 to 5 per cent as the Japanese government's economic stimulus package and the recovery in the US market help to lift trading activity.

DOW CHEMICAL of the US has announced it plans to eliminate about 6 per cent of the jobs at its corporate headquarters, AP-DJ reports from Midland, Michigan.

Between 225 and 275 jobs will be cut. The group posted a Dollars 489m loss for 1992, blaming a world chemical glut and special charges relating to retiree healthcare benefits.

DOW CHEMICAL of the US is planning to eliminate about 6 per cent of the jobs at its corporate headquarters, the company announced yesterday, AP-DJ reports from Midland, Michigan.

The group posted a Dollars 489m loss for 1992, blaming a glut on the world chemical market and special charges relating to retiree healthcare benefits and income tax.

Dow said the costs of the workforce cuts were covered by a Dollars 430m charge the chemical company took against its fourth-quarter 1992 earnings.

Dow then said the charge would cover asset write-offs and write-downs, plant shutdowns, divestitures and consolidations.

Between 225 and 275 jobs would be cut at the Michigan office, which employs about 4,000 people, said Mr Enrique Sosa, president of Dow Chemical's North American operations.

The company said the cuts resulted from a combination of factors including slumps in the aerospace, automotive and construction industries, coupled with increased global competition in a shrinking and depressed worldwide chemical market.

KLOCKNER-WERKE, the German steel and engineering group, yesterday revealed its plan to restructure its steel operations and write off more than 50 per cent of their outstanding debts.

It is the largest German company to sue for protection from its creditors under the composition procedure since AEG, the electrical equipment manufacturer, more than 10 years ago.

It is also the first leading steelmaker to be forced to seek protection in the latest European steel crisis. The plan, an essential step in the company's bid to negotiate a debt-relief scheme with leading creditors, was presented to the local court in Duisburg, where Klockner-Werke is based.

It proposes writing off DM1.4bn (Dollars 848m) of the DM2.7bn owed by the company's steel subsidiaries, Klockner Stahl and Klockner Edelstahl. The rest of the group is not affected by the process.

Creditors with their loans secured by property or other assets would receive 60 per cent payment, and other creditors, 40 per cent, the company suggests. The restructuring involves the closure of one blast furnace at the Bremer Hutte steel plant in Bremen, reducing raw steel capacity by some 700,000 tonnes, and shedding up to 1,400 jobs.

The company is also negotiating with a group of investors, led by Mr Jurgen Grossmann, the former chief executive of Klockner Edelstahl, to sell its plant at Georgsmarienhutte. A decision on that proposal is expected in the next two weeks, according to a company spokesman, although it depends on the success of the composition proceedings.

The legal move by Klockner-Werke, one step short of formal bankruptcy proceedings, was announced in December. The Duisburg judge will seek expert opinion on the plan from the composition administrator, and from the Duisburg chamber of commerce and industry. The judge and administrator will decide whether to summon a creditors' meeting, which must approve the plan with an 80 per cent vote if it is to succeed.

Deutsche Bank is the com-pany's principal creditor, followed by WestLB, the state bank in North Rhine-Westphalia. Both are believed to support the move. The full meeting of creditors is not likely to be called before May.

AHLSTROM, the Finnish forestry and machinery group, saw pre-tax losses fall to FM36m (Dollars 6m) last year from FM191m in 1991, writes Christopher Brown-Humes.

The improvement came as sales grew 22.5 per cent to FM10.15bn from FM8.28bn and the operating margin rose to FM1.02bn from FM606m.

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THE Julius Baer Swiss private banking group is looking for double-digit profit growth again in 1993, Mr Hans Baer, the chief executive, said yesterday, writes Ian Rodger in Zurich.

The group's net profit jumped 15 per cent last year to SFr68m (Dollars 44.56m), driven mainly by a 27 per cent rise in commissions from asset and portfolio management.

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FOLKETRYGDFONDET, Norway's national insurance scheme fund, one of the biggest institutional investors in the domestic securities market, yesterday reported an increase in unrealised losses on its share portfolio to NKr588m (Dollars 83.97m) from NKr158m in 1991, writes Karen Fossli in Oslo.

Total assets at the end of last year rose to NKr66.75bn from NKr60.66bn in the same period a year earlier. The fund was also allowed to invest up to NKr5bn in state bonds and commercial paper.

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Z-LANDERBANK Bank Austria, Austria's largest bank, has denied charges in two magazines that it laundered money for two east Berlin firms, Novum and Transcarbon, between 1989 and last year, writes Ian Rodger.

'It is absolutely untrue that we have had anything to do with laundering,' Mr Rene Alfons Haiden, chief executive, said. The bank said investigations so far showed that the bank had respected all laws and regulations.

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KLOECKNER-Humboldt-Deutz, the German machinery and engineering group, will offer new shares to existing shareholders at a price of DM80 through the one-for-two issue announced late last month, AP-DJ reports from Cologne.

Inoco, the USM-quoted property investor, reduced losses from Pounds 6.82m to Pounds 4.31m pre-tax over the 12 months to December 31.

The outcome was struck after a profit on the sale of investments of Pounds 111,000 (losses of Pounds 3.1m) now treated as an exceptional rather than extraordinary item.

Losses of Pounds 2.46m on sale of fixed assets, Pounds 96,000 on sale of trading stocks and a provision of Pounds 1.6m against carrying value of trading stocks were also taken above the line.

Losses per share were 2.06p against a restated 3.29p.

Mr Marcus Evans has resigned as joint managing director of Castle Mill International and sold his holding of 1.2m shares in the handbag and fashion wear manufacturer.

The stake was sold to Mr Brian Rousell, who now holds 23.03 per cent of Castle Mill.

Subject to certain conditions Mr Evans will repurchase Silver Collins Exhibitions, the exhibition promoter which is 75 per cent owned by Castle Mill, for Pounds 1.

SHARES IN Beauford, the manufacturer of material handling equipment and machine tools, halved to 7p yesterday after the announcement of a capital reorganisation.

The company is proposing to split its 10p ordinary shares into one 1p ordinary and nine 1p deferred shares. The 7p convertible preference shares will be converted into four ordinary and six deferred shares and all arrears of the preference dividend will be eliminated.

The deferred are considered valueless and application to cancel them will be made as soon as possible.

The plans would leave preference holders with 86.9 per cent of the new capital as against 44.2 per cent under the existing conversion rights.

Beauford warned that without the restructuring there would be limited scope for future development.

The company reported losses in 1991 and the first half of 1992. In September 1992, after the sale of its interest in EW Bliss, borrowings were Pounds 13.3m against net assets of Pounds 7.3m. By the end of the year borrowings had fallen to Pounds 11.7m but the company expected to have to make substantial write-downs in the value of its assets and make provisions for restructuring costs in the accounts for the year.

Gearing is considered too high and a debt reduction plan in conjunction with the company's banks is being pursued.

It has not paid preference dividends since July 1991, leaving arrears at January 1 of Pounds 1.9m, or ordinary dividends since November 1991.

Taking into account the trading and financial position the board thinks that there is no prospect of paying the arrears or resuming dividend payments of the preferential shares in the foreseeable future.

In addition, the ability to redeem the preference shares by July 1 2003 would require an extraordinary and sustained improvement in the trading performance throughout the period to redemption.

QUALITY SOFTWARE Prod-ucts, a small computer software company based in Gateshead, plans to seek a stock exchange listing later this month.

It wants to raise between Pounds 5m and Pounds 10m to fund expansion.

Formed in 1981, the company is a leading UK accounting software supplier.

Mr Alan Mordain, chairman, said the listing would enable Quality Software to develop a new product line - Universal Olas - and engage in joint products 'with a large number of companies which have expressed interest.'

Pre-tax profits for 1992 were expected to be Pounds 1.8m (Pounds 1.5m in 1991), before Pounds 600,000 of exceptional costs, on turnover of Pounds 13.1m (Pounds 11.1m).

The company is expected to be valued at about Pounds 25m.

It currently has some 130 customers, mostly large.

HOLLIDAY Chemical Holdings is to raise about Pounds 70m through the largest flotation yet this year, valuing the synthetic dyestuffs and speciality chemicals company at about Pounds 150m.

Mr Michael Peagram, founder, chairman and largest single shareholder, said the company decided to increase by Pounds 5m to Pounds 35m the amount it will raise to reduce debt.

This followed some concerns in the City that the company would be saddling itself with a balance sheet that was unnecessarily highly geared.

Raising this amount of capital would lead to gearing of about 34 per cent, on a pro-forma basis at the end of 1992, and interest nine times covered by operating profits.

Holliday is coming to the market through a firm placing of 75 per cent of the shares; the balance will be available through public offer.

The issue will be priced on March 25; applications will be accepted until April 1 and dealing will begin on April 14.

The venture capitalists who backed the original buy-out of Holliday from Holliday Dyes and Chemicals in 1987, will be selling about half of their overall shareholding.

Holliday's earnings per share have increased from 4.4p in 1988 to 9.7p last year. Sales last year rose by Pounds 26.2m to Pounds 97m and operating profit by Pounds 5m to Pounds 14m.

Mr Peagram said he was comfortable with the higher level of gearing - he had been used to running a company financed largely by venture capital when interest cover was as low as three times.

The balance of comment from the City had, however, been 'why not raise Pounds 5m more' to reduce pro-forma gearing from about 46 per cent, the company said.

Mr Peagram said the group was intent on growing organically but that in the medium term there would be further cash calls to fund acquisitions.

Alan Wheatley, chairman of 3i Group, at LEGAL & GENERAL.

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Sir Derek Hornby (right), chairman of the British Overseas Trade Board, the Institute of Management, CECIOS, and Astra Training Services, as chairman of VIDEO ARTS.

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Sir Brian Goswell, senior partner of Healey & Baker, at BRENT WALKER, the first to be appointed since Sir Keith Bright became chairman.

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James White, chairman of Ashley Group and former chairman and ceo of Bunzl, at BOWATER Inc to fill the unexpired term of the late Earl of Carrick.

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William Colacicchi, a partner in Willcox Lane Clutterbuck, at THOMAS WALKER.

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Stanley Bard at WEST TRUST.

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Mitchell Barry, chairman and chief executive of Allied Foods, and Fergal O'Dwyer, a director of DCC Corporate Finance, at WARDELL ROBERTS.

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Geoffrey Turley has retired from BAGGERIDGE BRICK.

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Peter Jamieson, a director of Robert Fleming Holdings, and Bernard Solomons, chairman of Allied Provincial, at SCOTTISH AMICABLE.

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Andrew Douglas at QUADRANT GROUP having stepped down as chief executive and is succeeded by David Coghlan.

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Hamish Grossart at RADIO CLYDE HOLDINGS; Alick MacMillan has retired.

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Francis Hayes has resigned from AB ELECTRONIC PRODUCTS GROUP following its acquisition by TT Group.

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Lionel Wernick and Joe Wernick as joint chairmen at The WERNICK GROUP OF COMPANIES.

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Nicholas Chamberlen, chairman of Clive Discount and of the Lombard Association, as a trustee director of the IMPERIAL PENSION FUND.

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Bill Slater, chairman of the Mersey Docks and Harbour Company, as chairman of BIFANET, the electronic trading network established by the British International Freight Association.

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Jamie Borwick, a director of Adam and Harvey Group, at RANELAGH.

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Robert Fee at MAGNOLIA GROUP.

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Charles Lenox-Conyngham, former chairman and chief executive of Sealink, as chairman at HARTONS GROUP; he succeeds John Abell who has resigned.

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Phillip Sober, former senior partner of Stoy Haward, at CAPITAL & COUNTIES.

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John Robins, group financial director of Willis Corroon Group, at CHURCH & CO.

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Nigel Robson, a non-executive director of FLEMING EMERGING MARKETS Investment Trust, died on February 25.

FORD has cut its dealers' official profit margin, which is usually 16 per cent to 17 per cent, to 10 per cent on its Mondeo cars, which are due to go on sale on March 25.

The move helps Ford to claim that the Mondeo's retail prices, announced yesterday, will be up to several hundred pounds lower than those of Sierra models which the Mondeo will replace.

The new car is not quite the bargain Ford is seeking to make it, however, because the Sierra's retail prices include a margin of 16 per cent to 17 per cent for the dealer.

In addition, prices of the Sierra, which is imported from Ford's German and Belgium plants, rose in January by an average of 7.5 per cent.

Ford, which increased prices of UK-built models by an average of 4.5 per cent at the time, said the Sierra rise was necessary to compensate for sterling's devaluation. It rejected speculation that such a rise would help to make the Mondeo - Ford's first 'world car' - appear less expensive.

The company had little choice about cutting dealers' margins on the new car because all its main rivals have already done so.

Such a move has allowed all these manufacturers to cut 'official' retail prices.

However, this has little, if any, effect on the amount customers actually pay for their cars. This is because the severely depressed new car market is so competitive that dealers had been 'giving away' much of their 16 per cent to 17 per cent margins anyway. The cut to an official 10 per cent margin merely gives the dealers less room to manoeuvre.

JOHN Brown, part of the Trafalgar House construction, property, hotels and shipping group, has won a Dollars 60m (Pounds 42m) contract to build an acetic acid production plant at Wujing near Shanghai. The contract has been awarded by China National Technical Import and Export Corporation for Shanghai Chemical Industries.

Acetic acid is an intermediate chemical in the production of a range of items, including paints and plastics. The process equipment for the plant will be bought in Britain, says John Brown, responsible for engineering and procurement for the plant, which is expected to start production in 1996.

THE US could impose definitive anti-dumping duties on imports of certain steel products as early as mid-June, according to US trade sources.

The sources warned it would be very difficult for the 19 countries involved - which include Japan, Canada, and seven EC members - to derail the process set in motion under President George Bush's administration.

They also said legal and public scrutiny of the anti-dumping procedure would restrict President Bill Clinton's ability to amend the decision.

The dumping action follows EC dumping duties imposed on eastern European steel exporters. They coincide with clashes over trade in cars and semiconductors, EC subsidies for Airbus and barriers to US bidders for EC government contracts.

Exporters have also become worried at the proliferation of dumping actions as an instrument of first choice for recession-hit domestic industries.

One way of avoiding definitive dumping duties would be for Gatt members to forge a multilateral steel agreement, phasing out steel tariffs in return for elimination of most subsidies. The US government could then ask the US industry to drop its complaint against foreign producers.

It is also possible that US steel importers - which have already protested that the actions will raise steel prices - will press for compromises. Their lobbying power is expected to strengthen as shortages of various steel products become acute in late April or early May.

When Mr Ron Brown, the US commerce secretary, announced provisional anti-dumping duties on certain products in January, he tried to defuse criticism by making clear that the move was not a 'policy statement' but part of 'mandated procedure.'

Since then 12 of the 84 original cases have been dropped, following examination by the US International Trade Commission. The US Commerce Department is expected to announce the level of definitive duties just before the ITC's public hearing on the case, which should take place on April 19 or 20. The ITC will vote on duties in late May, the sources said, and should submit its decision for formal approval around June 3.

AIRTOURS IS today expected to increase the terms of its hostile all-share bid for rival holiday group, Owners Abroad, to 135p a share, 20p higher than the market price at Friday's close. The new bid will value Owners Abroad at about Pounds 270m, up from Pounds 225m.

The new terms are likely to involve Airtours raising its three-for-eight share offer to 15 of its own shares for 24 Owners Abroad shares. Airtours is not, however, expected to increase the partial cash alternative unless the Owners Abroad board recommends the bid.

Mr Howard Klein, Owners Abroad chairman, and Mr David Crossland, Airtours chairman, met last Wednesday - as did their advisers on Friday - but failed to agree terms for a recommended bid.

Airtours is understood to believe its target is holding out for too high a price. Owners Abroad's advisers say its rival has failed to appreciate the value of the proposed tie-up with Thomas Cook, the travel agents and financial services company controlled by the German state bank, Westdeutsche Landesbank.

On Friday Owners Abroad posted its last defence document to shareholders. This followed the decision by Mr Michael Heseltine, the trade and industry secretary, not to refer Airtours' bid to the Monopolies and Mergers Commission. Airtours must post its last document including any substantial new information to Owners Abroad shareholders by this Friday.

There are echoes of the 1980s about GEC. Recovery, when it arrives, will once again challenge GEC's cash holdings, while the company faces new management issues. Lord Weinstock has devolved responsibility for many of the best hopes to joint ventures. Running the defence operations is the management of long-term decline. Striking out in a radically new strategic direction hardly fits with the company's careful culture.

That caution has done the company no harm with the market recently, despite the fall in interest rates. In part that is because some of the company's cash is held in French francs within GEC-Alsthom, and so has been insulated from the fall in UK rates. But the yield premium on the shares has also fallen as fund managers have revalued the company's financial strength and ability to grow its dividends ahead of the market average. GEC now yields only slightly more than the FT-A All-Share index but is still generating cash and has a dividend cover of 1.9 times.

Operations, however, look less rosy. Defence is fighting for profits in a declining market. The gradual run-down of the BT System X business also puts the telecoms operations on the defensive. Only the GEC-Alsthom power systems and transport joint venture offers the prospect of significant growth, but that division contributed only 22 per cent of last year's profits. Perhaps the company is holding its cash to force good terms from the government for GEC investment in public projects, but that may come to nothing. And however good the dividend record in the 1980s, Lord Weinstock's reluctance to spend may be extended to shareholders if he believes lower dividend cover would cramp his room for manoeuvre.

IT would go to the head of a lesser mortal. But it is to be hoped that Mr Lloyd Bentsen has been close enough to power for long enough to cope with the plaudits heaped on him and the new US administration in the course of Saturday's Group of Seven meeting.

After years in which the US has often appeared like a demanding cuckoo in the nest of international economic co-operation, Mr Bentsen could do no wrong. Arriving in London with the US deficit-reduction package in his briefcase and President Bill Clinton's support for the Uruguay Round trade negotiations in everyone's mind, the courtly 72-year-old Texan was given star treatment by his peers.

The other G7 partners were unanimous in complimenting the US measures. 'It's a more serious attempt than anyone might have expected,' said one fellow finance minister of the deficit-cutting plan. 'I never thought they would do so much.' Mr Bentsen himself acknowledged that his warm reception owed as much to the Clinton package as any contribution he made in the talks.

But Mr Theo Waigel, the German finance minister, had a cautionary tale just in case the reflected glory was going to Mr Bentsen's head. He recalled that Robert Anderson, a US Treasury secretary in the 1950s, always used to say that a finance minister who was popular had failed in his job.

No problem there, countered Mr Bentsen; any Texan who raised energy taxes was sure of unpopularity.

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The blunt refusal of Mr Yoshiro Hayashi, the Japanese finance minister, to consider any further fiscal stimulus to revive the Japanese economy was about the nearest the meeting came to sparking a quarrel among the G7.

Some observers speculated that the Japanese stand may have reflected continued annoyance about Mr Bentsen's out-of-turn remarks that had prompted a sharp rise in the yen's value against the dollar in the preceding week. Others thought Mr Hayashi's refusal to budge could reflect internal political tensions in Japan's Liberal Democratic party.

But some grumpiness would have been understandable, given the Japanese delegation's punishing travel plans. They arrived in London on Saturday morning after flying overnight from Tokyo, only to depart again almost immediately after the meeting. The reason? Not so much workaholism as the difficulties of getting the existing fiscal 1993 budget through parliament.

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Conspicuous by his absence at the end of the meeting was Mr Horst Kohler, the German Finance Ministry state secretary and chief G7 fixer. He left the meeting early to get back to Bonn for his 50th birthday celebrations.

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In keeping with the subdued mood of the meeting was the Denbies special reserve wine selected for Saturday's lunch of the main participants.

Although the Riesling/Muller-Thurgau produced by Britain's biggest vineyard is described by wine buffs as 'piquant' and 'exceptional', retailing at Pounds 7.85 a bottle it is some way from being among the world's finest. Mr Lamont seems to have got to hear about the wine after Surrey-based Denbies presented a case to Mr John Major a year or so ago. Perhaps Threshers should start promoting it.

MR JOHN SMITH, the Labour leader, will today call for an end to the traditional Budget 'purdah' arrangements, as part of a move to bring greater openness to the government's economic decision-making.

He will also urge that freedom of information measures should apply not just to the public sector but also in terms of consumers' rights to information about the products they buy and the companies which make them.

In a speech to Charter 88, the constitutional reform movement, Mr Smith will extend the idea of a 'new deal' for the citizen beyond the customary ground of a ministry of justice, a bill of rights and wider eligibility for legal aid. The speech is intended to reinforce Labour's position as a modernising party with broad appeal to the centre-left.

THE PLAYER ran a few paces along the gravel and flicked his boule through the air in a fierce arc. The steel ball glinted in mid-flight before plummeting on to a nest of boules, one of which cannoned into the board at the edge of the playing area. The player smiled and applause broke out among the several thousand spectators.

Under the floodlights, half a dozen matches were taking place. The competitors, many dressed in matching shell-suits, either catapulted their deliveries or knelt to roll the boule with a care bordering on tenderness. They seemed oblivious to the rain cascading into the marquee, or the gale buffeting the flaps.

Taking refuge from the downpour, we had gate-crashed the national French four-a-side boules championships in Aix-les-Bains, taking place by the side of the beautiful Lac du Bourget. The surrounding village of tents, selling the local Savoy wines, food, or beer and pastis to quench the thirst of the fans, was a quagmire. Overnight, the temperature had dropped from 31``C to 13`C.

The day before, we had taken a pleasure boat across Lac du Bourget - France's largest lake - to the Abbaye Royale at Hautecombe, which has a magnificent position on a small headland jutting into the water. The abbey, part of which dates from the 12th century, is the burial place of the counts of the duchy of Savoy. The duchy was part of the kingdom of Sardinia for a time but was incorporated into France in 1860.

We sailed from the Grand Port at Aix-les-Bains, where an elegant arch of plane trees on the waterfront esplanade gave shelter from the sun. Swans, coots and mallards fought over the crusty pickings of baguettes thrown from the shore by picnickers. We disembarked by a stone boathouse, centuries old. Until recently, the abbey - restored in the 19th century - was run by the Benedictines; now, a Christian charismatic community has taken it over. In its cool and quiet, we were given hand-held radio sets which, like an unseen guide, directed us past murals and white statues.

There is a cafe in the garden next to the abbey, overlooking the lake towards Aix-les-Bains. A woman from the community brought our drinks and stayed talking for a while. 'The climate is changing,' she told us. 'Certain kinds of flowers have stopped growing.' We were relieved to hear that she also was waiting for what she called the 'fraicheur' (coolness) to arrive. And, the following day, arrive it did.

Deluges apart, Lac du Bourget and the surrounding flat-topped mountains have much to offer. There are plenty of water sports and rock-climbing: on a walk through the forest past the foot of the sheer cliffs we passed groups of climbers, including a family where the father was coaxing his young son up the rock face. And there is hang-gliding. We saw gliders almost motionless, thousands of feet up in the hot sky, buoyed by the lake thermals.

Although there is little snow in winter - there is a micro-climate by the lake which makes bananas grow - resorts such as Grenoble and Albertville are not far. We found good walks, often with exhilarating views, around the lake although some required us to tramp along roads. The paths weaved through thick woods of pine, oak and beech, meadows, and villages with small-holdings growing grapes, pumpkins, corn, aubergines, walnuts and fruit. Not so exhilarating were the loud and unfriendly German Shepherds that guarded almost every house and farm.

The dry grass of the meadows was dotted with delicate alpine flowers. It also seethed and rustled with cicadas, small lizards and much else besides, including a snake with bilious green spots.

A swim in the lake was a good way to cool off at the end of a hot day's hiking. There is an entry fee for the beach in Aix-les-Bains, at the Petit Port. But at Chatillon, at the quiet northern end of the lake close to the picturesque Savieres canal that links up with the river Rhone, the beach was free and the water warm, if rather slimy underfoot.

The chief claim to fame of Aix-les-Bains is its thermal baths, fed by hot springs. The earliest baths date from Roman times but the modern ones are situated at the top of the town in a vast building, drearily imposing and reminiscent of the Great Hall of the People in Beijing.

In the footsteps of Bonaparte and Queen Victoria, not to mention Verlaine and the 50,000 French who take the waters annually on their national health service, I decided to try the thermal plunge. My wife abstained. The smell of sulphur grew stronger and stronger in the wide, marbled corridors and stairways where the curistes - the receptionist referred tartly to me, a once-off user, as a touriste - rested on sun-loungers. Afterwards, I felt both refreshed and enervated. The whiff of sulphur remained on my skin for the rest of the day.

Before leaving, we heard that the Aix-les-Bains team had won the boules championship. Perhaps the water had something to do with it.

IF YOU ARE not domiciled in the UK, you will not pay tax on any income or property which you earn or own outside the country. But if you buy a house or property in Britain, you could become liable to UK tax on the money needed for the purchase; on any profit made when you sell it; or if you die while owning it.

There are, however, legitimate ways of avoiding these levies.

If you need to bring in money to buy a house, the best way is to do this before you become UK-resident; then, no tax is due. But if you cannot, there are ways of converting a fund mixed with untaxed income and gains into one that is non-taxable. Examples include setting up a back-to-back loan, making a gift offshore, or creating an offshore trust.

If you have brought in substantial sums of money from a mixed fund, you could be liable to tax already - although it could be difficult to work out how much. In my experience, however, the Inland Revenue is fair in such circumstances and often willing to negotiate if you co-operate.

Once you have decided how to buy your house, you should consider whether you will have to pay capital gains tax if you profit from selling it. If you plan to live there, it could be exempt from tax as your main or only residence. But if you have another residence, anywhere else in the world, you should ask the Revenue to treat your new house as your tax-exempt residence. This request should be made within two years of buying the property; after that, the Revenue could decide not to accept your choice.

If the exemption is not available, you might consider buying the property through a non-UK trust. CGT is not charged on gains made by an offshore trust set up by a non-UK domiciled settlor.

The next thing to consider is inheritance tax. If you are going to buy the house in your own name, or in the name of an offshore trust, then inheritance tax at a maximum rate of 40 per cent will be payable when you die unless you leave the property to your spouse.

If you decide not to do this, or are concerned that you and your spouse could die together, you can take out term insurance, especially if your stay in the UK is unlikely to be long - say, five years at the most.

If this solution fails to suit, you can avoid IHT simply by owning the house through an offshore company. You will then effectively have swapped a UK chargeable asset (your house) for a non-UK, non-chargeable asset (shares) in the offshore company.

In theory, this solution is simple but, in practice, there are disadvantages. You must not, for example, be seen to be managing or controlling the company from Britain. If you do, you will make it UK-resident and defeat the purpose.

Another pitfall is an income tax charge under the benefit-in-kind legislation. The Revenue has said it will levy tax if you live in a property owned by an offshore company if you are either a director (either in name or in effect) or own it. Tax charged is particularly onerous and is based on the cost of the house (if over Pounds 75,000) and the rate of interest at the time.

Many tax experts believe the Revenue is wrong to levy this charge; but while the threat is there it should, where possible, be avoided. This usually can be achieved by not being a director of the company and transferring your shares in the company to an offshore trust.

Again, care must be taken over the trust to which you transfer your shares. If you use an existing trust containing accumulated income, you might find yourself being taxed on that income because of the benefit to you of the UK accommodation.

If you want to let the house, the rental income will be taxable since it arises in the UK. This can be avoided by taking out a loan from a UK bank (or an offshore branch of a UK bank - but not a building society) to buy the property.

The interest can then be set off against the rent and the money which, otherwise, you would have used to buy the property can be deposited offshore, generating an income which will be tax-free because it is outside the UK.

There are many ways of avoiding tax, even on UK-situated assets, if you are not domiciled in Britain. But make certain you are not - otherwise you could face a larger tax bill than if you had done nothing at all.

Caroline Garnham is a tax and trusts specialist at City solicitor Simmons & Simmons.

CHELTENHAM & Gloucester and Nationwide building societies are cutting investment rates from Monday. They are also offering mortgage rates of 4 per cent. At C&G, cuts are between 0.8 and 0.61 of a percentage point on gross rates. The flat rate on the London Share account is dropping from 7 per cent gross to 6.25; the London Deposit account's top tier of Pounds 25,000 and over will pay 7.2 instead of 8. The Flexi-Tessa rate is 6.85, down from 7.5, but the new Best 90 account is unaffected. It is paying 7.55 on the bottom tier of Pounds 10,000 and up to 8.55 on balances of Pounds 100,000.

Nationwide's top tier of CashBuilder (Pounds 25,000 and above) will pay 5.6 per cent gross instead of 6.2. Rates on CapitalBuilder are now 6.3 on the top tier of Pounds 50,000 and above. There are also interest rate and overdraft reductions on Flexaccount, the interest-bearing current account.

*****

FIRST-time buyers at C&G are being offered a mortgage of 4 per cent fixed (8.1 apr) until February 28 next year. The mortgage then reverts to C&G's standard variable rate, now 7.99. It is available on interest-only and repayment mortgages for a minimum deposit of 10 per cent.

The maximum loan is Pounds 70,000 and application fee is Pounds 50. If you redeem in the first three years, the mortgage will be treated as though you had taken out the loan at the standard rate.

Nationwide is selling off up to 1,500 of its repossessed properties for a similarly reduced rate. Buyers will be offered a fixed rate of 4.25 per cent for two years (7.8 apr) and a free valuation. You have to put down a 10 per cent deposit and take out the society's payment cover policy for the fixed-rate period. The arrangement fee is Pounds 50. There are no early redemption penalties.

*****

SCOTTISH Amicable reduced payouts on 10-year with-profits policies by more than 15 per cent this week, from Pounds 7,331 to Pounds 6,174 (based on a male, aged 29 at outset, paying Pounds 30 per month in premiums). Roy Nicholson, managing director, said cuts were caused by the group's investment focus on small company shares, which had suffered in the recession. However, this factor had little effect on longer-term policies; accordingly, 25-year policies are being reduced by just 4.7 per cent, from Pounds 62,543 to Pounds 59,602. The payouts represent annual returns of 10.4 per cent for the 10-year policies and 13 per cent for 25 years.

*****

It was another good week for small company shares. The County Small Companies Index rose 0.3 per cent from 1051.95 to 1055.57 in the week to February 25 while the Hoare Govett index (capital gains version) increased 0.2 per cent from 1346.28 to 1349.05 over the same period.

FOUR European airlines - KLM, Swissair, Scandinavian Air System and Austrian Airlines - said yesterday they were ready to launch detailed talks on the feasibility of setting up a 'global airline system'.

The airlines, which disclosed in late January they were considering opening formal talks, said they planned to examine how a possible partnership could be structured and how long it might take to get off the ground.

They declined to give details or to say whether an equity link was likely, but indicated that all options remained open. Joint working groups have been set up to explore opportunities in more detail.

'A combined effort is essential to compete profitably with the current and anticipated heavy pressure on the European airline business from strong intercontinental airlines,' the four companies said in a joint statement.

The partnership would be based on several European hubs, enabling traffic to be funnelled in and out of the airlines' home countries. The airlines said their ambition was to offer a global route network for passengers and cargo traffic.

The move forward into official negotiations comes exactly a year after the breakdown of merger talks between KLM and British Airlines, which has gone on to take a 25 per cent stake in Qantas of Australia and to pursue a minority shareholding in USAir, the sixth-largest US carrier.

Since the collapse of the BA talks, KLM - which owns a minority stake in Northwest of the US - has been searching for ways to boost its global and its European presence.

Swissair, SAS and Austrian Airlines are already partners in a loose grouping called the European Quality Alliance, which involves joint marketing activities and flight time-tables.

McDERMOTT, the US owner of the Ardersier offshore fabrication yard near Inverness, one of northern Scotland's biggest employers, is to make most of its remaining 500 workers redundant, Andrew Taylor writes.

The yard, which employed 3,500 workers 18 months ago, will run out of work on Monday when it is due to complete a contract for part of a North Sea production platform.

McDermott says that Ardersier will then move to 'little more than care and maintenance'. The yard is expected to employ only about 75 people by the beginning of April. More than half of the jobs are to go next week.

The redundancies are the latest in a series in yards in Scotland and north-east England. This month the Offshore Manufacturers' and Constructors' Association estimated that the number of workers employed by offshore fabricators, including sub-contractors, had halved to 10,000 since September.

Manufacturers are forecasting a further 3,000 job losses in the next few months as investment in North Sea exploration continues to dwindle.

McDermott insisted it was maintaining its commitment to the yard in which it invested Pounds 25m in 1986.

THE Russian government is demanding a new, 10 per cent tax on all exports in an effort to raise funds to pay off the Dollars 80bn debt it inherited from the former Soviet Union.

The demand is a measure of the desperate straits in which the government finds itself - faced with massive tax evasion and a rapid fall in income as production and living standards continue to plummet.

Internal government estimates show that over the past year, a gap of between Dollars 10bn and Dollars 15bn opened up between the volume of goods exported and what the government should have received in existing export taxes from their sale. At the same time, the precipitous fall of the rouble against hard currencies has meant that the government must now again subsidise imports, to the tune of half of the credit created each month.

Mr Vasily Barchuk, proposing the new tax in the parliament yesterday, also said that the budget deficit would rise to at least 8 per cent of gross domestic product in this year, up from a previous estimate of 5.15 per cent.

However, the real budget deficit, according to conventional accounting standards, is reckoned to be running at around 20 per cent - without counting the again-soaring inter-enterprise debt, now standing at Rs4bn.

Russian exporters, already faced with a variety of export taxes depending on the commodity exported and also requiring to pay a 20 per cent value added tax and profit taxes, are among the most heavily taxed traders in the world. Non-payment of taxes through moving hard currency accounts offshore is a national habit, however - thus compounding the government's problems in raising hard currency.

DEN DANSKE BANK reported a loss of DKr1.7bn (Dollars 274m) in 1992, against a profit of DKr1.22bn in the previous 12 months, but the board expects an improvement this year. Profits on core operations rose from DKr334m to DKr702m.

The bank displayed its confidence in the future by proposing to maintain unchanged the dividend of DKr12 a share. Continued high provisions and a large loss on the valuation of the securities portfolio pulled down the 1992 performance.

Loss provisions increased from DKr2.88bn to DKr2.94bn, but were considerably lower in both years that in 1990, when they peaked at DKr 4.25bn. The value of the group's shares and bonds portfolio fell by DKr1.03bn.

The downturn in the economy of the Faeroe Islands contributed to the group's loss. Foroya Bank, in which Danske owns 81 per cent, made a loss of DKr395m and had to be recapitalised by Danske.

The bank's equity capital and reserves declined from DKr20.7bn to DKr18.3bn, but total capitalisation, including tier 2 capital, was virtually unchanged at DKr27.6bn.

As the balance sheet was reduced to DKr336.7bn from DKr363.4bn, the capital adequacy ratio increased from 10.2 to 11.0 per cent.

An independent report has criticised Norwegian authorities for failing to stop Norway's biggest insurance firm, UNI Storebrand, from launching a disastrous raid on Swedish rival Forsakrings Skandia.

A commission led by former supreme court judge Erling Sandene said the Finance Ministry and the Banking, Insurance and Securities Commission should have blocked UNI purchases of Skandia shares - which later crashed in value.

JC PENNEY, one of the largest department store and catalogue retailers in the US, registered a sharp improvement in final-quarter results for 1992-93, with the after-tax profits reaching Dollars 375m.

The figure, for the three months to end-January, was scored on sales of Dollars 6.08bn, up from Dollars 5.37bn in the previous year. In the final quarter of 1991-92, the Texas-based retailer recorded after-tax profits of Dollars 37m, but this lowly figure came after net restructuring charges of Dollars 264m.

The results take Penney's full-year profits to Dollars 777m after tax, and sales to Dollars 18bn. In the previous year, there was a net profit of Dollars 80m after restructuring and accounting-related charges of Dollars 448m.

J. C. Penney's shares rose strongly on the quarter's figures, adding Dollars 2 3/8 at Dollars 78 1/4 .

The company said the improvements last year had been spread across all of its main merchandise divisions - including womens and menswear, childrenswear, home furnishings, and catalogue. It also said early spring merchandise sales in the current year boded well.

BELL ATLANTIC, one of the seven 'Baby Bell' local US telephone companies, said yesterday it would seek the support of the Justice Department in a campaign to be allowed to poke a toe into the long-distance communications market so as to deliver video programmes to customers.

The Baby Bells were spun off from long-distance carrier AT&T in 1984 under a court-ordered anti-trust settlement which also forbade them to enter the long-distance market.

Bell Atlantic is the first to make a filing of this kind to enter the long-distance market. Its move forms part of a battle between the US cable television and local telephone industries over which will provide information services and entertainment to the home in the 21st century.

Bell Atlantic has developed several initiatives to deliver video to the home, but it said it needed relief from the ban on long distance operations to deploy these services in a cost-effective manner.

It explained that it planned to use multi-million dollar digital servers for storing and forwarding video programming, and it would be most effective if these could be used beyond the major urban areas where it is allowed to carry calls.

The views of the Clinton administration's Justice Department on the issue are unknown. But even if it backs Bell Atlantic, the company's request would still require the approval of Judge Harold Greene, the man who oversaw the break-up of AT&T. He has generally opposed relaxing restrictions on the Baby Bells.

LAWSON MARDON, the Can-adian-based international packaging group, staged a turnround in 1992. The group registered a net profit of CDollars 17.4m (USDollars 13.8m), or 58 cents a share, against a loss of CDollars 10.8m, or 38 cents, including restructuring charges, in 1991.

Revenues rose 7.3 per cent to CDollars 1.3bn, despite the North American and European recessions.

Last autumn, Lawson raised CDollars 105m in new equity. About two-thirds of its sales are made in Britain, but late last year it bought Spain's largest packaging company from Cragnotti & Partners, the Italian investment group that holds 48 per cent of Lawson. Other acquisitions are planned in Europe and North America.

Mr Andrea Mattiussi, president, said the results proved that the restructuring last year was a success and the group could face continuing pressure on margins with confidence.

'The Spanish acquisition was a key part of our plan to consolidate Lawson's position in southern Europe, complementing the northern Europe operations and serving as a base for future growth.'

Domtar, the Quebec-based pulp and paper and building materials group, has raised CDollars 150m by the sale of 8 per cent convertible unsecured debentures to a group of investment dealers headed by Burns Fry. The funds will be used to repay maturing debentures and for capital spending.

Two Quebec government agencies, the Caisse Depot and Societe Generale de Financement have bought CDollars 66m of the issue.

The government indirectly owns 44 per cent of Domtar.

THE EQUITABLE, the large and troubled US insurance group in which France's Axa holds a 49 per cent stake, yesterday reported an after-tax loss of Dollars 28.9m in the final three months of 1992.

This was a sharp reduction on the Dollars 246.9m deficit registered in the same period of 1991.

The Equitable, which recently completed a lengthy 'demutualisation' process which turned it into a shareholder-owned company, said that, if results were confined to 'continuing operations', the 1991 final quarter deficit stood at Dollars 161.3m, with the 1992 figure remaining at Dollars 28.9m.

The fourth-quarter results mean that The Equitable is posting a Dollars 128.6m deficit for the year after tax, compared with a Dollars 898m loss in 1991.

However, both these figures are muddied by special items; the 1992 figure comes after a Dollars 101.3m extraordinary charge to cover demutualisation expenses, and the 1991 result comes after a Dollars 28.3m extraordinary item and a Dollars 561.9m loss from discontinued operations. The insurer said the loss from continuing operations, and before extraordinary charges, improved from a Dollars 307.8m deficit in 1991, to a Dollars 32.2m loss last year.

Within the core insurance division, The Equitable reported an annual after-tax loss of Dollars 7.5m, compared with a Dollars 44.8m deficit in 1991. The 1992 figure excludes a loss on investment transactions of Dollars 22.7m, and Dollars 15.6m of restructuring charges. However, the company's continuing investment services operations - which include the Donaldson, Lufkin & Jenrette brokerage business and the Alliance Capital fund management arm - turned in after-tax profits of Dollars 192.5m, up from Dollars 111.6m.

INCHCAPE, the motor and business services group, yesterday lost another link with its colonial past as Inchcape Berhad, its 63 per cent owned Singapore-based subsidiary, sold its timber offshoot to local investors for Pounds 24m.

The move completes Inchcape's withdrawal from resources operations.

In 1991 it sold its tea investments and is now almost exclusively focused on its core motor, marketing and services businesses, apart from the odd country club and time share operation, acquired in March 1992 when it bought TKM, funded by a Pounds 376m rights issue.

Inchcape Timber Group has operations in Malaysia, Indonesia, Papua New Guinea, Singapore and Hong Kong and is involved in the extraction of tropical hardwood and softwood logs, and the processing and trading of timber products.

Inchcape's interest in timber stretches back to the 1860s.

The company incurred a pre-tax loss of SDollars 200,000 (Pounds 83,875) for the 1992 year on turnover of SDollars 198.1m.

Inchcape said that the sale would result in an extraordinary profit of Pounds 3.5m, less expenses.

The sale is conditional on regulatory approval.

ITG's trading profit had declined in the last three financial years following the expiry of its main logging concession, the difficult operating environment at the new logging concession in Papua New Guinea between 1990 and 1992, and recessionary conditions in the main timber markets, Inchcape said.

Mr Charles Mackay, chief executive, said: 'The deal is a good one for Inchcape in both strategic and financial terms. At the same time, it will ensure a good future for the partners, management and employees in the timber business.'

TOTTENHAM Hotspur, the north London football club, made the bulk of its first-half profits from selling players.

The pre-tax figure multiplied fourfold to Pounds 3.28m (Pounds 810,000) in the six months to November 30. More than half the Pounds 15.1m (Pounds 9.22m) sales came from the disposal of players, including Pounds 5.5m for Paul Gascoigne.

The share price, which had shot up from 90p to 113p this week, shed 12p to close at 101p as profits were taken.

With Mr Alan Sugar, chairman, owning 48 per cent, and Mr Terry Venables, chief executive, 22 per cent, not much of the stock trades freely.

Turnover other than player sales fell to Pounds 6.9m (Pounds 7.36m). Mr Sugar said there had been fewer home fixtures in the first half and average attendance was down because of the recession. The newly formed Premier League had enhanced television and sponsorship income.

Tottenham cut its bank overdraft to Pounds 2.41m, compared with Pounds 4.29m in May. Its debts peaked at about Pounds 15m in 1991, before a rescue rights issue underwritten by Mr Sugar.

To comply with the Taylor report requirement for all-seater stadiums, Tottenham is about to spend Pounds 2m on its North Stand. Second half prospects have been improved by Spurs winning through to the quarter finals of the FA Cup.

Earnings per share rose to 19.2p (8p).

THE TELEGRAPH newspaper group, which floated last July, yesterday announced record pre-tax profits of Pounds 44.3m for 1992, an increase of 9 per cent despite the impact of the continuing recession on newspaper advertising revenues.

Mr Conrad Black, chairman of the Telegraph, which publishes both the Daily Telegraph and the Sunday Telegraph, admitted that the company had been apprehensive about 1992 because the recession showed so few signs of improvement.

However, group turnover rose by 8.3 per cent to Pounds 237.2m and operating profit increased by 14.7 per cent to Pounds 37.5m. The proposed final dividend is 6.5p, higher than indicated at flotation, and makes a total of 11p for the year, a 22 per cent increase. This excludes the special dividend of 10p paid before the company came to market.

Earnings per share have dropped by 6.3 per cent to 23.8p because of a doubling of tax charges mainly because tax losses flowing from restructuring charges have been used up.

Costs were contained during the year and advertising revenue rose by 4 per cent, but the percentage of revenue from circulation rose to 46 per cent of the total compared with 33 per cent in 1989.

There was also Pounds 5.9m income from associated companies, 90 per cent of it from a 15 per cent stake in the John Fairfax group in Australia.

'Our policy has been fairly aggressive on price increases,' Mr Joe Cooke, Telegraph managing director, said yesterday.

The money is then invested in promotion to try to improve the proportion of 15 to 34 year olds reading the paper.

A weekly 20-page Business News section will appear for the first time this Saturday. The new sector is designed to strengthen the Saturday paper and try to lure away some Sunday Times advertising.

The Telegraph will call an extraordinary meeting towards the end of next month to vote on the plan to buy a stake in Southam, the Canadian newspaper group.

Hollinger, which owns 68 per cent of the Telegraph, has bought 22.6 per cent of Southam and proposes to sell half to the Telegraph. The Audit Committee of the Telegraph, which includes directors such as Lord Hartwell, Lord Swaythling and Lord Rawlinson, will decide whether to recommend the purchase to the board.

COMMENT

The Telegraph's performance is a real achievement in the depths of a recession, although papers such as the Daily Telegraph do engender considerable loyalty. If there is an significant upturn, particularly in classified advertising, a high proportion of the revenue will flow to the bottom line, helped by the tight cost controls. Pre-tax profits could be as high as Pounds 52m to Pounds 54m this year, giving earnings of about 27p for an unchallenging p/e of 13. Further ahead, the Southam deal, followed perhaps by US acquisitions, offer the prospect of enhanced growth.

SIAM Cement, the largest cement producer in Thailand, yesterday disclosed that its audited net profit in 1992 was substantially lower than the unaudited profit figure announced last month.

The audited, unconsolidated figures showed net profit of Bt3.56bn (Dollars 142m), more than Bt400m below the previously announced sum of Bt3.98bn, and also below the Bt3.89bn made in 1991.

The discrepancy is largely due to higher operating expenses. According to Siam Cement's audited statement, operating costs were Bt5.38bn in 1992, higher than the unaudited figure of Bt4.96bn.

A Siam Cement official told Reuters that the revision of costs was partly related to investment in its new Khao Wong plant, one of the world's largest cement factories; it cost nearly Bt10bn and has a capacity of 3.6m tonnes a year.

Investors were disappointed with Siam Cement's 1992 performance even before yesterday's announcement. Yesterday, the shares closed unchanged at Bt488 in a rising market.

The cement shortages which characterised the Thai construction boom of the late 1980s have given way to overcapacity in the industry, with newcomer TPI Polene investing heavily in new plant.

Demand for cement in Thailand is now estimated to be growing at a modest 4 to 5 per cent a year, after 18 per cent only a year ago, but is likely to be boosted by numerous projects to improve transport and other infrastructure, including the construction of a new Bangkok airport, in the years ahead.

Siam Cement's unconsolidated sales in 1992 slipped to Bt33.35bn from Bt33.80bn in 1991.

The company also declared an unchanged final dividend yesterday of Bt9 a share, making a maintained total of Bt18 for the year.

THOMAS Cook, the travel and financial services company controlled by Westdeutsche Landesbank, yesterday reaffirmed its commitment to a proposed tie-up with Owners Abroad, writes Richard Gourlay. 'We are fully committed to the alliance,' it said. It was the best deal for Owners' shareholders and for LTU, the German travel company also part of WestLB's travel interests. This proposed alliance would allow Owners Abroad to market its holidays through Thomas Cook travel agencies and would lead to savings for the two companies of at least Pounds 15m during two years.

ON THE surface everything seemed calm yesterday at Nissan's Zama plant near Tokyo. On the production line workers diligently assembled car parts to the rhythm of nearby robots and the strains of Beethoven's Fur Elise ringing from loudspeakers. But one phrase kept tripping off the tongues of Nissan workers; bikkuri shimashita, we are shocked.

A day after Nissan announced its plans to close Zama in 1995, workers were still trying

to come to terms with being caught up in the most radical restructuring undertaken in the Japanese car industry.

To older Nissan workers the Zama closure represents the end of an era. Japan's industrial success was built on plants such as Zama.

It was one of the company's main plants in the 1970s when Japanese cars were flooding out into export markets around the world. At its peak in 1976 it produced 956,000 cars and pick-up trucks.

In two years' time most of Zama's production will be transferred to an ultra-modern plant on the southern island of Kyushu, which Nissan hopes will be the centrepiece of its future.

Workers will be transferred from the grey, rusting Zama plant to Kyushu and Murayama in Tokyo

Nissan plans to transfer 2,500 of its workforce of 4,000 to the two plants in summer of next year in a desperate move to stem losses.

'It's really sad,' said Ms Saiko Tsushima, a 24-year-old guide who has shown visitors around the Zama plant for six years. Japanese companies take pride in giving employees security. But now Ms Tsushima admits: 'I don't know what's going to happen.'

When the plant was built Zama was largely surrounded by fields. Now the factory lies in the middle of a dormitory town, with thousands of white-collar commuters travelling daily to Tokyo an hour away.

The growing popularity of Zama as a residential area seems to have given Nissan all the more reason to let go of the site. Although some of the company's research and development laboratories and a small-scale factory will remain in Zama, most of the 853,000-sq metre site is scheduled to be sold.

Nissan has promised job security to all plant workers. But most are facing a transfer similar to a move from Essex to the highlands of Scotland.

The shock is being felt in the local community. 'Nissan's plant has been the symbol of Zama since it was built,' said Mr Kunihiko Kawasaki, a local businessman. Indeed, the Zama plant has been the pride of the community. Mrs Thatcher, Prince Charles and Princess Diana, and Mr Deng Xiaoping, the Chinese leader, have all been shown the plant as a model of efficiency.

Zama city officials are worried about the expected decline in corporate tax revenues. For the year which ended March last year, Nissan paid Y350m (Pounds 2m) corporate taxes, some 20 per cent of Zama's corporate tax income.

Local businesses are also deeply concerned, especially small, local parts makers who are at the furthest reaches of Nissan's vast supply chain.

Nissan said it would start transferring its Zama workers in summer next year. Mr Sotarou Mori, the general manager, sighs over the prospect of talks with plant workers who face uprooting their families to keep their jobs.

But it is not the first time Mr Mori has done this kind of thing. It was depressing, he reflected, that some of the management methods he last used while on overseas postings for Nissan were finally coming to Japan.

WHEN Hyundai recently selected its corporate slogan for 1993, it went for 'The releap year'. The phrase signifies that South Korea's largest conglomerate is hoping to make a fresh start after a year of turmoil.

The group's problems were caused by the political activities of Mr Chung Ju-yung, the Hyundai founder. His unprecedented attempt to involve business directly in politics by standing as a presidential candidate displeased the government, which applied sanctions against Hyundai.

But Mr Chung's defeat in the December elections, and his withdrawal from politics, has relieved the pressure on Hyundai. 'We hope that relations between Hyundai and the government will be normalised this year,' said Mr Park Il-kwon, Hyundai's spokesman.

Hyundai executives are now assessing the damage inflicted on the group last year. Penalties included credit squeezes and tax penalties imposed by the government.

Group sales among its 41 subsidiaries totalled Won42,000bn (Dollars 52.7bn), slightly below the 1992 goal of Won44,000bn, but a 16 per cent rise from turnover of Won36,000bn in 1991. Hyundai has set a sales target of Won50,000bn for 1993.

Estimated earnings declined for at least half of Hyundai's 16 listed companies. But this reflected mainly sluggish growth in the domestic economy and weaker demand abroad - factors that also affected other Korean conglomerates.

Although Hyundai officials last year claimed that credit sanctions were hampering investment in such key industrial sectors as motor vehicles and semiconductors, they now admit they exaggerated the problem to persuade the government to be lenient.

'What last year's events revealed was the strength of the group. It had the resources to survive,' said Mr John Wadle, an analyst with Barclay de Zoete Wedd in Seoul.

Other observers believe that Mr Chung created as much trouble for Hyundai as the government. 'Many of Hyundai's problems were its own fault. They had their eye off the ball,' explained one analyst.

Mr Chung recruited Hyundai executives to work full-time for his political party, which caused the disruption of business operations.

The problem was exacerbated during the waning days of the presidential campaign when Hyundai employees were asked to canvass for Mr Chung. This caused sales to drop for Hyundai companies in December. The Bank of Korea blamed the sluggish activity at Hyundai for a fall in the nation's exports that month.

For example, the domestic market share of Hyundai Motor, the country's biggest vehicle manufacturer, fell to 38.6 per cent in December, as car dealers campaigned for Mr Chung. Its market share rebounded to 54 per cent in January.

Earnings for Hyundai Motor, the biggest industrial subsidiary in the group with sales of Won6,080bn, consequently fell to Won40bn for the year, against Won54bn in 1991, instead of rising as had been predicted.

The operating profit for Hyundai Motor Service, the auto sales organisation, was also halved.

The question surrounding Hyundai is how soon business activity will return to normal. Although Hyundai managers involved in Mr Chung's campaign returned to the group after the election, some are in hiding for alleged election law violations.

They include Mr Choi Soo-il, the president of Hyundai Heavy Industries, the group's shipbuilding subsidiary, the most profitable unit with estimated earnings of Won260bn in 1992 on sales of Won2,500bn. His absence coincides with declining orders for the company.

'The fate of these executives will having a lingering effect on Hyundai,' explained Mr Stephen Marvin, research director for Jardine Fleming in Seoul.

'Hyundai is an autocratic organisation, and any paralysis at the top affects overall management. When the generals are gone, the foot soldiers don't know what to do because mid-level management is weak.'

Hyundai officials admit that Mr Chung's defeat, the arrest of executives and other adverse publicity about Hyundai has caused morale problems among the group's 170,000 workers.

But they hope that spirits will rise soon as the departure of Mr Chung from politics leads to an expected easing of official pressure on Hyundai.

The new government of President Kim Young-Sam wants to revive the flagging economy. Further attacks on Hyundai would harm that effort since the group plays a central role in the Korean economy.

Indeed, the government continued to provide business to Hyundai during its clash with Mr Chung last year.

Hyundai Engineering and Construction, the group's flagship company, won the tender for the first phase of a project to build a new international airport in the Seoul area. The construction company, the largest in Korea, is expected to report a 14 per cent rise in sales to Won3,200bn for 1992, while net profits will be around Won25bn.

The possibility that the 77-year-old Mr Chung will play a less active role in Hyundai management, together with his recent sale of shareholdings in the group to pay for election expenses, might mollify the government.

AMERICAN Telephone & Telegraph is to buy 14.5m shares in McCaw Cellular Communications as part of a previous agreement that will ultimately give AT&T one-third of McCaw's shares, AP-DJ reports from New York.

AT&T will buy the newly-issued Class A shares of McCaw for Dollars 27.625 each, for a total of about Dollars 400m. The purchase provides an up-front cash infusion for debt-heavy McCaw.

The investment is being made under a previous commitment exercisable by McCaw while the two companies work toward a definitive agreement for AT&T's stake in McCaw.

Yesterday's purchase also gives AT&T the right to name one director on McCaw's board. The purchase is separate from the broad strategic alliance the two companies announced last November.

At the time, AT&T said it would buy a total of 47.6m shares at an average price of Dollars 42 a share, for a total of about Dollars 2bn. AT&T also plans to purchase British Telecom's stake in McCaw for about Dollars 1.8bn, bringing its total investment in McCaw to Dollars 3.8bn for the one-third stake.

AT&T and McCaw said the larger transaction was still being negotiated, and there were no assurances that a final agreement will be reached.

Coca-Cola, the US soft drinks group, and Coca-Cola Enterprises have begun talks on opportunities for the latter to become a bottler in international markets.

Coca-Cola Enterprises distributes about 53 per cent of Coca-Cola's US bottle and can volume and is 44 per cent owned by Coca-Cola.

Coca-Cola was not immediately available for comment. Coca-Cola Enterprises, which handles the domestic bottling market, said that it was excited at the growth potential in the international market-place.

Coca-Cola Enterprises said the chairman, Mr Donald Keough, would retire on April 20, one day after the company's annual meeting.

Mr M. Douglas Ivester, senior vice-president of Coca-Cola, has been nominated for election through the proxy process to Coca-Cola Enterprises' board.

MORGAN Stanley, the New York investment bank, yesterday reported a 7 per cent increase in net income for both the fourth quarter and 1992 as a whole.

Net income in the fourth quarter to January 31 totalled Dollars 141.8m, or Dollars 1.68 a share, on revenues of Dollars 695.6m, compared with Dollars 132.3m, or Dollars 1.61 a share, in the quarter to the end of December 1991, when revenues totalled Dollars 716.6m.

At a pre-tax level, income dipped from Dollars 206m to Dollars 194.8m, but the net figure was helped by a sharply lower provision for tax (Dollars 52.9m, against Dollars 73.6m), due mainly to lower derivatives revenues from Tokyo.

Investment banking revenues dipped from Dollars 252.3m in the 1991 quarter to Dollars 227.9m, while trading revenues dropped from Dollars 246.3m to Dollars 155.9m.

Revenues from investments rose from Dollars 14.3m to Dollars 33.7m, and commissions were up from Dollars 73.9m to Dollars 81.7m. Interest and dividends rose from Dollars 1.15bn to Dollars 1.24bn, while interest expense was up from Dollars 1.07bn to Dollars 1.1bn.

Expenses excluding interest were held to Dollars 500.8m, down from Dollars 510.6m.

For the full year, Morgan Stanley reported net income of Dollars 510.5m, or Dollars 5.90 a share, compared with Dollars 475.1m, or Dollars 5.93 a share, in 1991. Net revenues were Dollars 3.02bn, as against Dollars 2.86bn.

Mr Richard Fisher, the chairman, and Mr Robert Greenhill, president, said investment banking revenues continued to improve during 1992, with increased debt and equity underwriting volumes offsetting weakness in financial advisory services.

Secondary revenues - trading, commissions and net interest - declined 7 per cent, with record results in foreign exchange offset by declines in equity derivatives and commodities.

WAL-MART Stores, the Arkansas-based discount retailer which grew from one five-and-dime store to become the nation's largest store chain, yesterday announced that sales in the year to end-January jumped by 26 per cent, to Dollars 55.5bn.

Pre-tax profits rose at a roughly similar rate - up by 24 per cent from Dollars 2.55bn to Dollars 3.17bn.

At the after-tax level, the 1992-3 figure was Dollars 1.99bn, compared with Dollars 1.61bn in the previous year, and earnings per share (after a stock split) rose from 70 cents to 87 cents.

Wal-Mart's annual results came after a strong final quarter, during which sales increased from Dollars 13.6bn to Dollars 17.1bn, and pre-tax profits rose from Dollars 956.2m to Dollars 1.19bn.

After-tax profits were Dollars 749.6m, against Dollars 602.4m in the same period of the previous year.

Wal-Mart's strong sales and profits increase partly reflect the rapid expansion of the store chain - which now encompasses 1,880 discount stores and 256 Sam's Clubs.

A year earlier, there were 1,720 Wal-Mart Stores and 208 wholesale clubs. However, Mr David Glass, Wal-Mart's chief executive, also noted that 'same-store' sales growth - the increase in sales from stores which have been open for more than a year - also ran at a rate of 11 per cent for the year overall.

Meanwhile, May Department Stores, one of the nation's largest department store groups and also the owner of the Payless ShoeSource chain, reported final-quarter profits of Dollars 513m before tax, up from Dollars 406m in the same period of 1991-2.

May's sales in the three months to January 30 rose from Dollars 3.08bn to Dollars 3.39bn, while after-tax profits increased from Dollars 266m to Dollars 319m.

The fourth-quarter results left May posting net profits of 603m for the year, compared with Dollars 515m.

Annual sales were up from Dollars 8.15bn to Dollars 8.68bn. The St Louis-based company said that it was pleased with the results, given what it described as the 'difficult economy'.

NISSAN HAS been shifting the bullet around its mouth since last summer. Yesterday it finally bit it.

Early in the morning an emergency meeting of its directors agreed a radical restructuring plan to stem the car manufacturer's mounting losses. By the afternoon the details were echoing from factory public address systems as managers outlined the plan to the company's 53,000-strong workforce.

As one executive put it: 'This re-structuring is deeper and more comprehensive than any previous measures we have taken. We have cut costs before; this time we are trying to change the company's structure.'

The plan involves the closure in 1995 of the 29-year-old Zama vehicle assembly plant near Tokyo, a 9.4 per cent reduction in the workforce by March 1996, and a sharp cut in the variety of models Nissan will make and the components it uses.

The financial imperatives have become inescapable. Nissan said it expected to make a pre-tax loss of Y29bn (Pounds 170m) in the year to the end of March, almost double its November estimate of Y15bn. The previous year it made a Y87bn pre-tax profit.

The reasons for an operating loss which is expected to reach Y39bn are not hard to find. Sales will fall from 1,318,000 units last year to 1,180,000. At the same time Nissan's costs are rising, largely to pay for its heavy investment in the late 1980s. Depreciation will rise from Y96.9bn in the 1990 financial year to Y160bn in 1994.

Nissan hopes the restructuring plan will return it to profit next year, allow it to resume cash dividends in the following one, and secure a 'reasonable level of profit' in 1996.

But the plan to save Y200bn a year by the spring of 1996 is not just a response to the sharp fall in demand from the boom years of the late 1980s. It is designed to cope with very slow growth in the 1990s. 'Nissan is committed to slim down its operational structure so that it will be able to secure a reasonable level of profits even under no growth in production volumes,' the plan says.

The ageing Zama production plant, which is in an expensive area close to Tokyo and employs about 4,000 workers, will be closed in the spring of 1995. Production of the Sunny model will be shifted to Kyushu, where the world's newest car plant opened last year at a cost of Y100bn.

The Kyushu plant has been producing at an annual rate of only 423,000 cars, well below its 600,000 capacity. The transfer from Zama will take it to full capacity.

The other car made at Zama, the low-volume Presea, will be transferred to the Maruyama plant which is making about 325,000 cars a year compared with a capacity of 480,000.

Zama's workers will be transferred to other jobs. But the Nissan workforce will be reduced by 5,000 to 48,000 by March 1996 mainly through restricting recruitment and natural wastage. More than 3,000 people leave Nissan's employment each year.

Most significantly, 80 per cent of the reduction will be in white collar jobs, the first time restructuring has touched the highly protected salaried workers. About 32,000 of Nissan's workforce are office and administrative staff.

During the recession of the mid-1980s Nissan reduced its workforce by 6,000, but mainly by not renewing contracts for temporary workers. Now full-time jobs will be cut.

The number of model variations which Nissan offers will be cut by 35 per cent in 1996, compared with June 1992, while the variety of parts will be reduced by 40 per cent. This should produce almost half the overall cost savings.

A string of smaller changes, including giving manufacturing staff much more influence over how cars are designed to make sure they can be made efficiently, are the main ingredients of a plan to increase factory floor productivity by 10 per cent a year.

Nissan said its international operations would be fully involved in the cost-reduction programme, which would include moves fully to integrate international research, development and design.

THE JAPANESE government and three of the country's top companies yesterday separately took steps to respond to the most deep-seated economic crisis the country has faced since the second world war.

Nissan, one of the world's top five vehicle makers, and NTT, the telecommunications group, said they would shed 35,000 jobs between them over the next three years.

The job cuts came at the same time as news that the board of Matsushita, the world's largest electronics group which faces a steep fall in profits, had forced the resignation of its president. The move shook Japan's traditionally conservative business community where corporate changes tend to be orderly.

The corporate shake-ups coincided with a decision by Mr Kiichi Miyazawa, the prime minister, and other top policymakers in the ruling Liberal Democratic party to draw up further measures to stimulate the economy.

These are likely to include bringing forward public works spending and tax incentives for housing and capital investment, once the budget for 1993 passes through parliament next month.

The move confirms that the government believes the economy is still deteriorating despite the Y10,700bn (Pounds 62.8bn) emergency package announced last summer. The economic downturn has spread to embrace finance and industry in every region.

Gross national product grew at only 1.1 per cent in the third quarter of last year, over the same period in 1991. Machine tool orders last year fell by 37.8 per cent and industrial production generally, fell by 6.1 per cent. Bank lending grew by just 2 per cent in January, the same rate as in the previous two months.

The gathering sense of gloom was reinforced by Mr Yasushi Mieno, the governor of the Bank of Japan, who repeated his call to Japan's banks to speed up moves to write off their mounting bad debts. Mr Mieno, in a speech to business leaders in Tokyo, confirmed that Japan's banks face their worst crisis since the second world war. He urged them to rapidly strengthen their balance sheets by writing off bad debts and raising new equity to make sure they could create the credit to finance economic recovery.

The restructuring plans unveiled by Japan's corporate sector yesterday included:

NTT, the world's largest telecommunications group will shed 30,000 of its workforce of more than 200,000 over the next three years and cut by a third its 1,300 retail outlets. NTT reported a 22 per cent fall in pre-tax profits in the half year to September.

Nissan plans to close a production plant near Tokyo by the spring of 1995 and reduce its workforce of 53,000 by 5,000 by 1996 as part of a plan to save Y200bn. Nissan said it would make a pre-tax loss of Y29bn in the year to the end of March.

Matsushita may introduce similar changes after its board yesterday suddenly removed its president Mr Akio Tanii. He will be replaced by Mr Yoichi Morishita, the vice-president. The company reported a 63 per cent fall in pre-tax income for the nine months to the end of December.

The government's index of leading indicators for December published yesterday suggested little hope of an early upturn. It stood at 27 per cent, the ninth consecutive month below the 50 per cent threshold which signals that the economy will expand.

DOWNTURN IN JAPAN

Page 3

Japan holds its breath

Bank write-off urged

Matsushita chief quits

Currencies Page 31

World stocks Page 37

THE BRITTANY fishing ports were quiet last night after a day of violent clashes between police and fishermen who were protesting against the increase in imports of cheap fish into France.

The French government, anxious to prevent further violence in the approach to next month's parliamentary elections, stepped up its lobbying efforts to persuade the European Commission to impose minimum prices on some types of fish.

The Brittany ports, the heart of the French fishing trade, have been paralysed for the past two days by the fishermen's dispute. The protests reached a climax in the early hours of yesterday morning when 800 fishermen, mainly from Brittany and the neighbouring region of Vendee, stormed the large wholesale fish market at Rungis, Paris.

In London yesterday, Mr John Major, the prime minister, promised to leave France in no doubt that those who carried out attacks, like those on a British consignment of fish in Brittany on Monday, should be brought to book. Protests had already been lodged with the French authorities concerning last weekend's incidents at Roscoff, he said.

France would be told it was expected to act where necessary to 'safeguard free trade, to pay compensation when losses have occurred and to bring the perpetrators to book.'

Mr Major's response followed demands by Conservative members of Parliament yesterday that he raise the issue with the French government and ensure compensation was paid to 'all in Britain who have lost cash.'

In Paris, Mr Charles Josselin, maritime affairs minister, said on radio that, after talks with Mr Jacques Delors, president of the EC, he was confident that the Commission on Friday would confirm plans to introduce minimum prices for fish imports. The pricing scheme is expected to involve penalty taxes on anyone breaching the new rules.

In yesterday's violence in France, stalls were smashed, computers wrecked and lorries vandalised. Cargoes of imported fish were flung on to the floor and left to rot as fishermen rampaged around the market. The protesters staged an angry assault on the squads of CRS riot police who rushed to the scene, pelting them with fish and makeshift missiles.

Despite the government's pleas for calm, a group of militant fishermen at South Finistere vowed to continue their action today. Between 400 and 500 fishermen from the port plan to take to the seas this afternoon to stop cargoes of imported fish from coming into France.

GOODYEAR Tire & Rubber, the US manufacturer, is to buy the common shares of Goodyear Canada it does not already own for CDollars 65 (USDollars 52) per share, Reuter reports from Toronto.

Goodyear Canada said there were about 288,000 common shares in public hands and the total purchase price would be about CDollars 18.72m. On completion of the deal, Goodyear Canada will become a wholly-owned unit of Goodyear Tire.

If approved, the deal will let shareholders realise a 38 per cent premium over the last sale price on the Toronto Stock Exchange of CDollars 47 per share, the company added.

A special committee of independent Goodyear Canada directors will consider the proposal and report to the board.

The transaction is subject to the approval of the committee, as well as shareholders of Goodyear Canada, including those other than Goodyear Tire, at a meeting due to be held in May.

The deal is also subject to regulatory approval.

AMERITECH, the Chicago-based 'Baby Bell' telephone company, yesterday announced a sweeping internal reorganisation and unveiled a radical plan for introducing competition into the US local telecommunications market.

Its initiative is an important contribution to the growing US debate over the future of the nation's local telecommunications industry in general, and the seven regional 'Baby Bell' companies in particular.

The local telecommunications market remains monopolistic, divided up between the 'Baby Bells' and independent service companies, such as GTE. However, these monopolies are coming under increasing threat, due to regulatory and technological change, and the regional companies have been looking for new strategies to respond to the competition posed by wholesale telecommunications companies, cellular companies and cable television businesses with telephone ambitions.

Ameritech's plan for local competition is believed to be the first such proposal by a 'Baby Bell' company, although New York's independent Rochester Telephone also unveiled a ground-breaking scheme this month.

The move by Ameritech, which provides telecommunications services to 12m customers in the mid-west, has two distinct parts. First, it intends to create 12 new market-focused business units, each bearing the holding company's name, rather than organising itself around Bell operating companies in each of the states where it operates.

Eleven of the units will be organised around a specific type of service to the customer - for example, small business services or pay phone services. The 12th will run the telecommunications network.

Mr William Weiss, Ameritech's chairman, said it was 'dramatically simplifying' the way customers dealt with the company by putting its marketing initiatives and services under a single brand name. He also stressed the restructuring was not a 'resizing process' - a euphemism for job cuts.

The second part of the initiative is more dramatic in scope, but less likely to materialise in the near term, as it would entail wholesale changes to the US telecommunications industry framework, involving a multiplicity of federal and local regulatory agencies.

Ameritech says it will file next month with the Federal Communications Commission, the government agency which regulates the communications industry, a plan to open up its local telephone network to competition by separating its transport services from switching services, which direct telephone calls.

It says this would provide US consumers with the same kind of options in picking local telephone services which they have today in choosing their long-distance service carrier. The long-distance market has been fully competitive since the 1984 anti-trust break-up of American Telephone & Telegraph, which left the rump AT&T in the long-distance market and created the seven 'Baby Bell' local monopolies. Other service providers in the mid-west would be able to buy components of Ameritech's network to repackage with their own services for resale.

However, in return for this, Ameritech said it would be seeking some drastic changes in its operating environment, including the ability to provide long-distance services.

At present, all the 'Baby Bells' are prohibited from entering the long-distance market, under the terms of the 1984 anti-trust settlement, though all are demanding to be allowed into this field as their monopolies erode.

Ameritech wants the current regulation of its earnings by state commissions to be replaced by a regime of price regulation, and it is asking for flexibility in the pricing of new and competitive services.

SHARES OF Dean Witter, Discover were priced at Dollars 27 yesterday, netting its parent, Sears, Roebuck about Dollars 800m.

The initial public offering of Sears' brokerage and credit card units is the first of a series of planned spin-offs for the Chicago-based retailing giant. Dean Witter, Discover shares will begin trading publicly today.

Dean Witter, Discover sold 29.5m shares, or about 20 per cent of its stock in the initial offering, with about 15 per cent of those shares reserved for purchase by employees.

The remainder of the firm will be spun off to Sears shareholders by the end of this year. Sears will receive a Dollars 560m special dividend from Dean Witter, Discover when the spin-off is completed.

The price of the offering was up substantially from the Dollars 20 to Dollars 22 per share projected in the preliminary prospectus was released in December.

The favourable reception to the offering boosted Sears stock on Friday by Dollars 2.75 per share to Dollars 54 - its highest level in 12 months. In New York yesterday, Sears shares closed Dollars 3/8 higher at Dollars 53 7/8 .

The Dean Witter, Discover sale is part of Sears' strategy to return to its core business of retailing. Sears also plans to sell portions of its Allstate insurance and Coldwell Banker property businesses.

Analysts said that Dean Witter is the most attractive of Sears' planned offerings, with solid earnings and steady cash flow from its large mutual fund and managed money operations.

Dean Witter, Discover had 1992 earnings of Dollars 439.1m, including a one-time gain of Dollars 32.1m, up from Dollars 344.6m in 1991.

Profits were distributed nearly evenly between credit card and securities broking operations. Despite the Dean Witter profits, Sears Roebuck lost a record Dollars 3.9bn in 1992.

Mr Terry Brennan, Coca-Cola Beverages vice-president and chief financial officer, said he expected the company to post a loss in the fourth quarter which was likely exceed forecasts of around CDollars 0.25 per share, Reuter reports from Toronto.

Coca-Cola Beverages, Canada's largest bottler of soft drink products, is due to report earnings tomorrow.

WESTERN MINING Corp (WMC), the Australian resources group, has agreed to buy a 50 per cent share in the Mount Keith nickel deposit in Western Australia from Outokumpu, the Finnish metals group.

The deal will give WMC 100 per cent ownership of Mount Keith, which is expected to start producing about 28,000 tonnes a year of nickel concentrate in early 1995. However, the group will have to fund development costs estimated at ADollars 450m (USDollars 306m). WMC said it had signed an agreement giving Outokumpu the right to buy 50 per cent of Mount Keith production for 10 years.

Analysts said the deal suggested that WMC would not exercise its right to purchase a 49 per cent share in the Olympic Dam copper/gold/silver/uranium mine in South Australia from BP, its joint venture partner. BP said in November that it would sell the stake for USDollars 456m to Minorco, the overseas investment arm of the Anglo American Corporation-De Beers group of South Africa, unless WMC exercised its right to buy the stake at the same price. Acquisition of the BP shares would make WMC solely responsible for funding proposed expansion costing around ADollars 1bn at Olympic Dam.

The group is also committed to investing ADollars 105m at its Kambalda nickel operations in Western Australia provided the state government moves to allow continuous mining.

WMC acquired its half-share in Mount Keith in 1991 following a bitterly-contested joint takeover with the Normandy Poseidon group of Australian Consolidated Minerals (AMC). AMC's defence against the bid centred on an attempt to tie up control of Mount Keith by selling a half-share to Outokumpu. But the move backfired when Outokumpu agreed to develop the mine jointly with WMC.

EUROTHERM, the control equipment group, has admitted to an inconsistency between its 1990 and 1991 accounts following discussions with the Financial Reporting Review Panel, the UK accounting watchdog.

In a note to its latest accounts circulated yesterday, the company has restated restructuring provisions which it treated as extraordinary charges in 1990 but partly wrote-back as exceptional profits in 1991.

The 1991 accounts were not qualified by Arthur Andersen, the company's auditor.

The restated figures treat the provision as an exceptional item, which has the effect of reducing 1990 earnings per share from 19.6p to 12.3p. It makes no difference to the 1991 and 1992 results.

In an announcement yesterday coinciding with publication of the accounts, the Review Panel said it welcomed the company's restatement and it had concluded its examination of the accounts.

Mr Sydney Treadgold, secretary to the Review Panel, said: 'We feel that honour has been satisfied.' He said that in general such treatments 'were not right in terms of correctness and consistency.'

But Mr Robert Biddle, Eurotherm's finance director, called the Review Panel 'a kangaroo court' which had made the assumption that the company was 'guilty until proven innocent.' He said: 'I'm just amazed. I would have thought the panel had bigger fish to fry.'

He said that restating items in prior years was 'comparing apples with oranges' and argued that the company had tried to comply as quickly as possible with the new accounting standards.

He said the differing treatment was the result of the company adopting by the 1991 accounts the second pronouncement from the urgent issues task force of the Accounting Standards Board, which requires fundamental restructurings to be treated as exceptional items.

Mr Treadgold said: 'The panel makes every effort to explain its procedures and gives companies every opportunity to explain its accounting treatment. It is anxious to come to a voluntary agreement whenever possible.'

Eurotherm made a Pounds 2.3m extraordinary charge for a fundamental restructuring of its manufacturing activities in the year to October 31 1990, which had no effect on pre-tax profits.

In the following year, however, it wrote back as an exceptional gain Pounds 513,000 for which it had over-provided in 1990, which increased pre-tax profits by 8 per cent to Pounds 7.2m.

AMBERLEY GROUP, the USM-quoted building services company, is poised for expansion following the conditional sale of most of his holding by Mr Dennis Buckley, chairman, and his departure from the board.

Hemery Nominees is buying 965,400 shares (14.99 per cent) at 27p leaving Mr Buckley with a 2.98 per cent holding. The shares gained 3p to close at 23p.

Mr Brian Meddings, who was with BTP and Mr Robert Healey, who was with Hawley, are joining the board in an executive capacity. It is not yet known who will replace Mr Buckley as chairman.

Mr Philip Kanas, a non-executive director of Amberley, said it was proposed to double or triple in size through acquisitions paid for by paper. The areas for growth would probably be away from the present building preservation services but still within building services.

Amberley fell into Pounds 79,000 losses (Pounds 75,000 profits) on turnover of Pounds 1.62m (Pounds 1.59m) in the six months to September 30.

DESPITE 'sustained recessionary pressure' on trading conditions and margins, FII Group, the footwear and scientific equipment company, lifted interim profits from Pounds 3.2m to Pounds 3.48m pre-tax.

Mr Monty Sumray, chairman, said the group's priority was to 'stem margin erosion'.

Measures could involve site changes and some redundancies, exceptional costs of which would occur in the second half. Lower interest rates 'will exacerbate margin pressure and reduce investment income,' he said.

The footwear division turned in unchanged profits before interest of Pounds 2.9m on turnover of Pounds 35.4m (Pounds 34.6m). The maintained result masked increased costs of imported materials and components and resistence to higher selling prices, Mr Sumray said.

The scientific and technical side returned a profit of Pounds 200,000 on turnover of Pounds 6m (Pounds 5.6m). Exports rose 43 per cent to Pounds 3m (Pounds 2.1m).

Earnings per share emerged at 15.8p (15.7p); the interim dividend is raised from 5.5p to 6p.

MR OCTAV BOTNAR, chairman of Nissan UK, the former importer of Nissan cars, yesterday began a High Court action to recover Pounds 6m from the Japanese carmaker.

Nissan UK claims that the Japanese company has defaulted on an agreement to pay for sales and marketing support in connection with sales of its Bluebird range. Nissan denies such an agreement ever existed. The case is expected to last almost two weeks.

Mr Botnar lives in Switzerland and has refused to return to Britain since police issued a warrant for his arrest concerning the tax affairs of Nissan UK. The trial of Mr Michael Hunt, a Nissan UK director charged with defrauding the Inland Revenue, will start next month.

Channel 4 and International Management Group have bid to host the World Chess Championships between Gary Kasparov and UK challenger Nigel Short.

PROFESSOR Stephen Littlechild, the electricity regulator, will today rebut criticism of his support for a 'dash for gas' policy in a further setback to the coal lobby.

His second and final report on the controversial issue will be seen as in effect quashing the argument that the growth of cheap gas-fired power stations should be reined back to help boost demand for coal and save a substantial number of the 31 pits threatened with closure.

Prof Littlechild's counterblast follows sustained criticism from the electricity generators and British Coal that his initial report on the subject, issued last December, was deeply flawed.

Although the government was already sceptical that it could stem the dash for gas, Prof Littlechild's conclusions make it even less likely that it will use legislation to prevent more gas-fired power stations being built.

The growth in gas-fired power is largely responsible for a sharp fall in the demand for coal.

Prof Littlechild's review comes as the government struggles to complete a politically sensitive review into the future of coal prompted by uproar over the decision on October 13 to close 31 pits. A white paper, originally promised this month, is unlikely before the second week in March.

Some electricity market analysts believe that unless the government tackles either gas or nuclear power, it may not be able to save enough pits to satisfy Tory backbenchers.

Prof Littlechild's report concentrates on whether 11 of the 12 regional electricity companies (Recs), which distribute power in England and Wales, made the best decision on behalf of consumers when they signed long-term contracts to buy gas from stations in which they have a stake.

Prof Littlechild serves notice on National Power and PowerGen, the two largest electricity generators in England and Wales, that he wants to study their coal contracts. This follows allegations, denied by the companies, that they are failing to pass coal price cuts fully on to customers.

Prof Littlechild says he wants to address concern that electricity provided by coal-fired plants may be overpriced.

He asks for further details about the generators' costs and says: 'I shall be examining the costs and margins of their licensed business generally . . . I shall monitor the situation particularly carefully.'

However Prof Littlechild says in his report that the Recs have used stakes in the stations to 'provide protection against the market power of the generators, rather than to profit from higher prices in contracts'.

He says his information suggests that, in signing the gas contracts, none of the Recs violated licence requirements to pur-chase electricity economically.

Prof Littlechild also clears the companies to sign five-year contracts with the generators to buy coal. He says he will not apply yardstick controls - affecting the ability of the Recs to pass through costs to the consumer - to the coal contracts.

In response to allegations that he was using unrealistically high coal prices in his December analysis, Prof Littlechild says: 'I have re-run the main scenario using lower prices implied by British Coal. Changing the coal price assumption does not affect the conclusions.'

AS PART of its cost-cutting drive, General Motors, the largest car manufacturer in the US, is offering salaried employees paid leave of between six and 15 months if they agree to leave the company once the leave is completed.

GM hopes that the plan, combined with natural attrition, will reduce its white-collar workforce by 8,000, or 10 per cent, before the end of the year. Only salaried employees who have been with the car maker for more than a year are eligible for the plan.

The company has already had success with its early retirement programmes for white-collar workers over 50 years old, which have helped reduce the salaried workforce from 91,000 to 76,000.

Overall, GM is trying to cut 74,000 white and blue-collar jobs.

Toyota, Japan's leading car maker is considering manufacturing pick-up trucks in the US after the collapse of talks with General Motors over a joint venture, writes Charles Leadbeater in Tokyo.

Toyota said it would start looking at whether to set up its own production facilities in the US after GM rejected proposals for a joint venture to make the Toyota T100 truck. 'Partnership with GM was one of our choices,' it said.

Toyota started exporting its T100 truck to the US last autumn, but sales have been restricted by the 25 per cent tariff charged on imports. This led Toyota to consider manufacturing the truck in the US.

NET PROFITS at RWE, one of Germany's largest industrial groups, slipped fractionally during the six months to December, the first half of the Essen-based group's current financial year.

Excluding minority interests, net profits fell to DM395m (Dollars 241m) from DM398m a year earlier, while turnover rose by 2.5 per cent to DM26.7bn from DM26bn.

RWE is planning to hold its long-awaited rights issue next month. Last year it won approval for shareholders to increase its share capital by as many as 6.2m new shares. Analysts expect the company to raise between DM1.6bn and DM1.7bn from the issue.

The group said that despite the downturn in the German economy, it was confident that in the year to the end of June it would be able at least to hold sales and profits at the same level as in 1991-1992.

Energy, construction and related businesses continued to do well, RWE said. Combined with cost-cutting and other rationalisation measures in other sectors such as printing equipment and oil, the group is hopeful that it will be able to maintain its dividend at the same level as last year - DM12 per share. This will be payable on the new shares issued in next month's rights issue.

In energy production, turnover in the first half of the year was stable at DM9.2bn, while in oil and chemicals turnover dropped 7 per cent to DM10.3bn.

RWE was at the centre of controversy in December when shareholders voted to retain an antiquated voting rights structure giving local authorities in the Ruhr area 60 per cent of the votes although they own only 30 per cent of the shares.

Calpers, the large US investor, said at the meeting that it was naive of RWE to retain voting rights restrictions while expecting to enjoy continued access to international markets. Although the vast majority of independent shareholders voted to remove the special voting rights, the local authorities blocked the initiative.