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WHAT THE OTHER PAPERS SAY THIS MORNING

FINANCIAL TIMES

HEDGE FUNDS HIT BY MAY VOLATILITY
Some of the world’s biggest hedge funds have suffered significant losses this month after high levels of volatility across markets and the shortlived stock market plunge in New York combined to wipe billions from portfolios. Losses in the first week of May alone erased all gains made so far this year for some managers, according to investors who spoke to the Financial Times. Large losses in a single week are not unusual for hedge funds, which typically aim to outperform markets and cut volatility, but those this month have come as a stark reminder to many of the continuing uncertainty over the economic recovery.

LEHMAN TO SPIN OUT EUROPEAN MEZZANINE UNIT
Lehman Brothers will today sell one of the last parts of its disbanded investment management empire as the bankrupt US lender announces that its European mezzanine business is spinning out as an independent group called Neovara. The group will advise on realising the €800m (£681m) Lehman Brothers European mezzanine fund.

LLOYDS TO SELL OFF MOTORWAY SERVICES
A £240m portfolio of UK motorway service stations is being lined up for sale to a private equity group in the latest workout of assets backed by distressed debt from Lloyds Banking Group. Swayfields, which operates roadside areas and motorway service stations across the UK, went into administration this year after struggling to service its debt. The majority of this was lent by Lloyds. PwC, which was appointed to advise on the administration, has entered into negotiations with M3 Capital Partners for the assets backed by the Lloyds debt.

THE TIMES

ECONOMIC RECOVERY MAY MISS UNEMPLOYED
Fears that economic recovery will fail to stem a tide of rising unemployment are likely to be stoked today by revelations that businesses are reluctant or unable to recruit new staff. The Institute of Chartered Accountants for England and Wales says in a report that although businesses’ confidence stabilised in the second quarter, they plan to increase their workforces by only 1.1 per cent in the coming year.

CARMAKERS ACCELERATE BUT HAVE LONG WAY TO CATCH UP
Britain’s carmakers are accelerating out of the slump in the motor industry and will be producing nearly 50 per cent more vehicles a year within five years. By 2014 Britain’s carmakers still will not match the number made in 2008.

The Daily Telegraph

LORD MYNERS CALLS FOR “ONE LAST PUSH” AT EU HEDGE FUND TALKS
Former City Minister Lord Myners has called on George Osborne, the new Chancellor, to make “one last push” to get a final concession from fellow European finance ministers on a new directive for the private equity and hedge fund industry. Speaking to The Daily Telegraph ahead of Tuesday’s Ecofin meeting when the directive will be finalised, Lord Myners said the new Government should push to ensure the new regulations do not limit investor choice.

BITTER VAT BLOW FOR BEER DRINKERS
An increase in VAT to 20 per cent would cost UK beer drinkers £300m a year, the British Beer and Pub Association (BBPA) has warned. The associations believes that the increased cost of a pint could have a damaging impact on trade.

WALL STREET JOURNAL

UNION'S GIVEBACK ISN'T YET HELPING GM
Three years after General Motors won wage and benefit concessions from its union, the company has yet to realize savings from a key provision that cuts pay by more than half for new US hires. GM’s deal with the United Auto Workers cuts the combined wage-and-benefit cost for a newly hired factory worker to $25.65 an hour, compared with about $60 an hour for current workers. By comparison, the nonunion workers at Toyota’s US plants cost the company approximately $48 an hour in wages and benefits, Toyota says.

REEBOK REDEEMS ADIDAS WITH “SCULPTING SNEAKER”
Adidas says its $3.8bn acquisition of Reebok in 2006 is shaping up into a success, in large part because of a walking shoe.