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Bank of England policy makers voted unanimously to cut the benchmark interest rate to 2 percent this month and refrained from a bigger reduction on concern it may prompt about an “excessive” drop in the pound.

The Monetary Policy Committee, led by Governor Mervyn King, voted 9-0 to bring the rate to the lowest since 1951, minutes of the Dec. 4 decision published in London today show. While the economic outlook had worsened, a cut of more than one point may push the currency down too far and “undermine confidence in the economy more widely,” the minutes said.

The pound dropped to a record low against the euro after data showed unemployment rose in November at the fastest pace since 1991. King has signaled that the bank will cut the interest rate further if needed and the U.S. Federal Reserve yesterday lowered its rate close to zero.

“Given the significant probability of undershooting the inflation target in the medium term, a cut of at least 100 basis points was needed,” the minutes said. A larger reduction “might be justified by the scale of the downside risks to inflation.”

The number of people receiving jobless benefits rose 75,700 to 1.07 million, the highest level since July 2000, the Office for National Statistics said today in London. Economists had expected a gain of 44,000, according to the median of 27 forecasts in a Bloomberg News survey.

Prime Minister Gordon Brown today pledged 158 million pounds ($245 million) to help people who recently lost their jobs and said the U.K. government will do everything it can to help soften the blow of the recession.

Rate Forecast

The main U.K. lending rate has dropped 3 percentage points since October. The rate will drop another half-point to 1.5 percent at the next decision on Jan. 8, the median of 23 economists’ predictions in a Bloomberg News survey shows.

“It’s pretty clear that the MPC thinks that the general stance of policy remains out of kilter with prospects for the economy,” said Philip Shaw, chief economist at Investec Securities in London. “Rates will fall below 1 percent in the spring. The momentum of sterling means it’s vulnerable.”

The pound dropped to 91 pence per euro for the first time today, and has fallen more than 24 percent this year. The depreciation “should act to support net export growth,” policy makers said in the minutes payday loans for bad credit.

“Financial markets had priced in a cut of 100 basis points,” the minutes said. “There was a risk that going further could cause an excessive fall in the exchange rate.”

Fed Decision

The Fed lowered its rate to 0.25 percent from 1 percent yesterday and said it will use “all available tools” to generate a resumption in growth. European Central Bank President Jean-Claude Trichet signaled that further interest-rate reductions may be limited after a cut to 2.5 percent on Dec. 4.

“The monetary authorities have got to be aggressive,” former policy maker Charles Goodhart, now a professor at the London School of Economics and Political Science, said in a Bloomberg Radio interview to be broadcast today. He said King should approach next year with “courage, flexibility and perhaps going a bit too far with the very serious occasion we’re in.”

More to Do

U.K. policy makers said that more needs to be done to unfreeze lending between banks.

“The committee agreed that bank rate was not the right policy instrument to tackle supply constraints in the credit market,” the minutes said. “Further measures to underpin lending growth would be needed, building on the government’s package announced in October to recapitalize and guarantee funding to the banks.”

Brown last month cut sales tax to 15 percent from 17.5 percent as part of a stimulus package for the economy. King said yesterday that will further depress prices after the U.K. inflation rate fell to 4.1 percent in November from 4.5 percent the previous month. The bank aims to keep annual price gains at 2 percent.

The U.K. economy shrank 0.5 percent in the third quarter, and the central bank last month predicted it would contract through most of next year. Policy makers said at the decision that surveys signaled further drops in gross domestic product in the fourth quarter and the first three months of 2009.

“The committee agreed that a significant margin of spare capacity would open up over the next couple of years,” the minutes said. “It was most likely that, without further policy action, inflation would substantially undershoot the target in the medium term.”

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With the clock ticking toward a Dec. 11 closing deadline, the $52 billion buyout of BCE Inc. appeared to dodge yet another bullet this week after Washington moved to bail out Citigroup Inc., the deal’s biggest financial backer.

Shares of BCE soared nearly 10 per cent, or $3.39, to $37.94 yesterday on the Toronto Stock Exchange after the U.S. government said a day earlier that it would shield Citigroup from hundreds of billions in losses from toxic assets by injecting $20 billion (U.S.) of capital into the bank.

Investors in the Canadian phone giant had become concerned about the deal’s chances last week as the spectre of bankruptcy was raised at Citigroup.

Such an outcome could put in jeopardy the bank’s commitment to funding the $42.75 per share (Canadian) takeover of BCE by the Ontario Teachers’ Pension Plan.

Citibank is estimated to be contributing between $11 billion and $13 billion of the deal’s $32 billion in financing, while Royal Bank of Scotland Group and Deutsche Bank are believed to be on the hook for between $8 billion and $9 billion each. Canada’s Toronto Dominion Bank has pledged $3 billion in loans.

Greg MacDonald, an analyst at National Bank Financial, said in a note to clients yesterday that bank insolvencies now pose the biggest risk to the deal’s completion, but noted that governments around the world have so far shown a willingness to provide bailouts for the financial sector.

"With recent international stability efforts for the global financial system, we believe the probability of deal close is growing," MacDonald said.

Signed at the height of the market in June 2007, the deal to privatize BCE was quickly thrown into doubt after the crisis in the U business card design.S. subprime mortgage market spawned a corporate credit crunch and, ultimately, a market meltdown.

As a result, investors have been concerned for months that the transaction would be scrapped as the banks backing the deal faced steep losses on the loans they pledged to fund the transaction.

More recently, questions arose about the solvency of the institutions themselves.

The U.S. government’s bailout of Citigroup, which last week revealed a plan to cut 52,000 jobs globally, represents Washington’s biggest effort yet to prevent a major bank from failing.

The bailout would give the U.S. government a 7.8 per cent stake in Citigroup and marks the latest effort to contain a widening financial crisis that has already brought down storied Wall Street investment firms, including Bear Stearns and Lehman Brothers Holdings Inc.

The move is designed to protect Citigroup from losses on $306 billion (U.S.) of troubled U.S. home loans, commercial mortgages, subprime bonds and corporate loans when the firms tumbling share price sparked concern that depositors might pull their money and destabilize the company. Citigroup has $2 trillion of assets and operations in more than 100 countries.

The $20 billion of new cash comes on top of a $25 billion infusion the bank received last month under the Troubled Asset Relief Program, passed by U.S. Congress to shore up the financial industry.

Shares of Citigroup surged 57 per cent to close yesterday at $5.95 on the New York Stock Exchange.

With files from the Star’s wire services

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In a sign that the global credit crisis is seeping across Canada’s borders, Bank of Canada Governor Mark Carney warned yesterday that the country "has been importantly affected by global events" and hinted that another interest rate cut may be in the offing.

Pointing to "a tightening in credit conditions," Carney said in a speech to the Canada-United Kingdom Chamber of Commerce in London that "the risks to growth and inflation in Canada identified (in October) appear to have shifted to the downside."

Carney emphasized that Canada is weathering the storm better than most major economies.

But around the world, some economists and policy makers are now anxiously considering another worrisome prospect: A deflationary spiral that could make recovery even more difficult.

Those concerns were heightened yesterday by a report that showed U.S. consumer prices plummeted by 1 per cent in October (month-over-month), the biggest one-month decline since record-keeping started.

The drop was driven by a precipitous fall in oil prices, which have lost more than 60 per cent of their value since peaking in mid-July. But core consumer prices, which exclude food and energy, also fell by 0.1 per cent last month, showing broader price declines.

U.S. Federal Reserve vice-chairman Donald Kohn said yesterday that the risk of deflation "is still small in my mind … But it is also the case that whatever I thought that risk was, four or five months ago, I think it is bigger now even if it is still small."

For consumers, the prospect of deflation – an ongoing fall in the general level of prices – might seem appealing.

Under normal circumstances, lower prices are "supposed to signal to people (that) now might be a good time to buy, and that brings about an adjustment," said Gregor Smith, an economics professor at Queen’s University.

"It encourages people to spend, and that helps sales for those companies."

But a period of deflation carries the risk of "a deflation mentality, where people, if they can, postpone purchases because they expect that prices will fall," said Michael Gregory, a senior economist at BMO Capital Markets cash in one hour.

Businesses may follow suit by postponing building plants or buying new equipment in anticipation of lower prices, creating a pernicious cycle of decreasing demand, production cuts and layoffs that can cause demand to dip even further.

Such a spiral is "very hard to break," said Gregory, pointing to the Great Depression of the 1930s, and Japan’s 10-year spiral of falling prices and economic stagnation.

While rare, he added, "it’s a low probability of something really, really bad happening, which weighs in on your policy thinking."

Some officials have publicly mused about the possibility.

"Deflation is probably the worst case for the financial sector because it is very difficult to overcome. Therefore, all central banks are going to do everything to avoid it," European Central Bank policy maker Ewald Nowotny said earlier this month.

But Smith warned not to read too much into yesterday’s U.S. consumer price figures.

"Certainly, the credit crisis … is one of the causes of a fall in demand in the economy. And that in turn can show up in some falling prices," he said.

"Whether it will really show up in deflation is still an open question. I think it’s a bit early to say based on one month’s CPI numbers."

Canada’s consumer price index for October is scheduled to be released tomorrow .

In September, annual inflation stood at 3.4 per cent, just off August’s five-year high.

Minutes from the Federal Reserve’s October meeting, released yesterday, show that officials slashed economic growth forecasts for 2009, and some believed more interest rate cuts might become necessary.

At that session, the central bank cut its key interest rate by a half a percentage point to 1 per cent.

Its next scheduled interest-rate setting meeting is Dec. 16.

The Bank of Canada is to consider its overnight rate, which sits at 2.25 per cent, on Dec. 9.

With files from the Star’s wire services

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For the world’s largest brewery, the sale of Labatt USA represents a small ripple in an ocean of beer.

But for brewery workers in Canada, it could mean the loss of up to 15 per cent of production in Canada within three years.

And for border-town beer drinkers, it means the future of two favourite brands, Labatt Blue and Blue Light, is in doubt.

Belgium-based InBev announced yesterday it had agreed to divest Labatt USA as part of a $52 billion (U.S.) deal to buy America’s largest brewer, Anheuser-Busch Cos.

The U.S. Department of Justice required the divestiture as a condition for approval of the larger deal.

"At this time, it’s too early to tell what the impact will be to our Canadian operations," Charlie Angelakos, a spokesperson for Labatt Brewing Company Ltd., said yesterday.

However, he confirmed the sale of Labatt USA to an unidentified third party would mean the end of production of U.S.-bound beer at Labatt’s Canadian breweries within three years.

The London, Ont.-based company said it brews all the Labatt beer sold in the U.S., which accounts for "just under" 15 per cent of Labatt’s total production in Canada.

The company declined to reveal which of Labatt’s seven breweries ships to the U.S. market, citing competitive reasons.

The breweries are in London, Ont., Edmonton, St freecreditscore. John’s, Nfld., Montreal, Halifax, Creston, B.C. and the recently acquired Lakeport Brewery in Hamilton.

Considered the best-selling Canadian brand south of the border, Labatt USA accounted for 1.7 million hectolitres of production last year.

InBev said yesterday the sale of Labatt USA would have no material impact on its earnings.

The brewer also said it has identified "a number of interested potential purchasers" but has not yet determined a fair market value for the asset.

InBev has owned Labatt since 1995.

Labatt Blue and Blue Light have less than 1 per cent of the broader U.S. market, but upstate New York accounts for 60 per cent of those sales, said Eric Shepard, executive editor of trade publication Beer Marketer’s Insights, based in Nanuet, N.Y.

In Syracuse, Buffalo and Rochester, Labatt competes head-to-head with Anheuser-Busch brands such as Bud and Bud Light. Regulators feared the merger could lead to price increases.

"This divestiture will ensure that consumers will continue to benefit from the significant competition between the merging companies in upstate New York," deputy assistant Attorney-General Deborah Garza said in a statement.

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NEW YORK–The percentage of Americans who were delinquent on their credit card payments rose slightly in the second quarter from the same time last year, while average debt per borrower jumped 8.6 per cent, according to credit reporting agency TransUnion LLC.

For the quarter ended June 30, 1.04 per cent of credit card holders were delinquent at least 90 days on one or more of their cards. That compares with 0.91 per cent for the second quarter of 2007, although it did represent a decline from 1.19 per cent in the first quarter of 2008.

The decline from the first quarter to the second quarter likely reflected tax refunds and economic stimulus cheques, according to Ezra Becker, principal consultant in TransUnion's financial services group. Becker said delinquency rates tend to be seasonal, "and it does tend to go down in the second quarter."

Banks have been tightening lending standards and credit card limits, which also may have contributed to the quarter-over-quarter decline, he said. "A lot of people who would have gone delinquent in the past are no longer getting new credit cards or those higher limits," Becker said.

The figures are culled from TransUnion Trend Data, which consists of 27 million consumer records randomly sampled each month from the credit reporting agency's national consumer credit database.

Second-quarter delinquency was highest in Nevada, at 1.72 per cent, followed closely by Florida, at 1.34 per cent paydayloans. These two states are among the hardest hit by the housing and mortgage crisis.

The lowest credit card delinquency rates were found in North Dakota, at 0.59 per cent, Vermont, at 0.68 per cent, and Utah, at 0.70 per cent.

Meanwhile, the average debt per borrower for the second quarter stood at $1,717, up 8.9 per cent from $1,581 in the second quarter of 2007. Debt per borrower increased 2.6 per cent from the first quarter, when it stood at $1,673.

Becker said the increases are likely due to the slow economy and the spike in gasoline prices during the quarter.

The highest state average card debt was in Alaska, at $2,494, followed by Tennessee at $2,109 and Alabama at $2,015. Residents of Iowa had the lowest average debt of $1,281, with North Dakota second at $1,318 and South Dakota third, at $1,388.

TransUnion expects the 90-day delinquency rate to fall again in the third quarter, but rebound in the fourth quarter as spending increases toward the holiday season. High gas prices and the addition of heating oil and natural gas costs are expected to contribute as well, Becker said.

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NEW YORK – Lehman Brothers Holdings Inc.'s rescue plan got a dismal reception from Wall Street today, with shares of the battered bank plunging about 40 per cent.

The stock price unravelled in early trading after analyst reports cast doubt that the nation's fourth-largest investment bank can survive.

Its shares fell $2.91 to US$4.34 – down more than 94 per cent from their 52-week high of $67.73.

Other financial stocks were also pulled lower amid fear that banks and brokerages still have more pain to go before the year-old credit crisis begins to wane. Merrill Lynch & Co. shares fell 11 per cent, Goldman Sachs Group Inc. dropped three per cent, and Washington Mutual Inc. shed 22.9 per cent.

On Wednesday, the 158-year-old investment bank (NYSE: LEH) outlined a blueprint to sell off its well-respected investment management unit and spin off its commercial real estate assets. The strategy is part of a last-ditch effort to rescue the investment bank from bad bets on real estate-related holdings that have already laid low other storied Wall Street firms.

Lehman Chief Executive Dick Fuld, 62, the longest serving CEO on Wall Street, also said the firm would examine all other options – including a sale of the company he joined right out of college.

For investors, the strategy seemed long on hope, short on details and raised questions about timing and execution, analysts said. Investors had hoped to see a solid plan in place to offset almost $6.5 billion of losses during the past two quarters.

"Management did not successfully put to rest the issues that had been pressuring the stock," Goldman Sachs analyst William Tanona wrote in a research report.

The nation's fourth-largest investment bank plans to sell a 55 per cent stake in its investment management division, which includes its prized Neuberger Berman asset management unit credit scores. Lehman said it is in advanced talks with several bidders, but refused to give a timeline about when a deal would take place.

Investors were discouraged that no buyer had been named. Lehman began pitching a deal to private-equity firms two months ago. Analysts believe the sale could fetch about $3 billion.

Further, the firm is also taking a big bet that a spin off of its commercial real estate assets will get a strong market reception in early 2009. The new entity will be called Real Estate Investments Global, and will be run by independent management.

Wall Street remains skittish about financial stocks since a run on Bear Stearns caused the U.S. government to orchestrate its sale to JPMorgan Chase & Co. in March. Lehman, the biggest U.S. underwriter of mortgage-backed securities, was automatically scrutinized.

Global banks have lost more than $300 billion from write-downs since the housing slump evolved into a full-blown credit crunch.

Analysts believe that trying to engineer a reconstruction of Lehman Brothers will be a tough proposition considering the environment. The current financial crisis shows no sign of ending soon, credit conditions remain tight and big acquisitions are rare. Big institutional investors – like state-owned sovereign wealth funds and private-equity firms – aren't as willing to make major investments.

If all else fails, Fuld left open the option of selling the company.

"We remain committed to examining all strategic alternatives to maximize shareholder value," Fuld said on a conference call on Wednesday.

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Tight capital markets that are restricting lending helped dramatically drive down earnings at two of the biggest real estate services companies, CB Richard Ellis Group Inc (CBG.N: Quote, Profile, Research, Stock Buzz) and Jones Lang LaSalle Inc (JLL.N: Quote, Profile, Research, Stock Buzz), the companies said on Tuesday.

Shares in CB Richard Ellis, the world’s largest commercial real estate brokerage, fell 12 percent in after-hours trading.

The tighter lending standards have made borrowing for commercial real estate purchases either difficult and expensive or downright impossible. In the United States, commercial real estate sales have dropped by around 70 percent.

Most of the deals getting done are either seller financed, or already have assumable mortgage debt. More often, unless they are financially strapped, owners are refusing to sell at the prices that the higher financing costs demand.

The lower volume of sales has crimped property brokers’ fees and commissions same day payday loans. After the market close, Jones Lang said its quarterly profits tumbled 69 percent to $24.5 million, or 73 cents a share, from $77.9 million, or $2.23 per share a year earlier.

At CB Richard Ellis Group, second-quarter net income plunged 88 percent to $16.6 million, or 8 cents per share, from $141.1 million, or 59 cents per share.

Excluding one-time charges, Los Angeles-based CB Richard Ellis would have earned $33.2 million, or 16 cents per share, compared with $157.3 million, or 66 cents last year, still far from the 44 cents analysts on average had expected, according to Reuters Estimates. 

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Kroger Co (KR.N: Quote, Profile, Research, Stock Buzz), the largest U.S. grocery chain, posted better-than-expected quarterly profit on Tuesday, helped by an emphasis on lower prices, gasoline discounts and other efforts to appeal to cash-strapped consumers.

The company also raised its sales forecast and the lower end of its earnings forecast for the full year, and its shares rose as much as 9.6 percent.

The company, which has also rolled out a $4-per-prescription generic drugs program and offered shoppers a bonus for cashing tax rebate checks at its stores, said its latest research shows its customers are most concerned about soaring food and gasoline costs.

Sales of Kroger’s store brands also increased in the quarter, a sign that consumers are looking for lower-priced products.

“We did see solid growth in Kroger corporate brand share in the first quarter,” said David Dillon, chief executive officer, during a conference call with analysts.

Kroger posted a fiscal first-quarter profit of $386.0 million, or 58 cents per share, up from $336.6 million, or 47 cents per share, a year earlier.

Identical-store sales — stores open for at least five full quarters and which have not been moved or expanded — were up 5.8 percent, excluding gasoline sales.

“Kroger has now put up 10 consecutive quarters of (identical-store sales increases) between 5 percent and 6 percent, amazing consistency,” said Goldman Sachs analyst John Heinbockel in a research note online cash advance. He also pointed out that the increases came without Kroger significantly increasing its store base. “Simply put, the company is chewing up meaningful market share.” 

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Despite posting a deeper loss in the first quarter, the chief executive of Nortel Networks Corp. says he's satisfied a long turnaround at the major telecom equipment maker remains on track.

The Toronto-based company (TSX: NT) said Friday its loss in the quarter was US$138 million, deeper than US$103 million a year-ago on restructuring costs, foreign exchange rates and a patent lawsuit settlement.

"The transformation of Nortel continues," president and CEO Mike Zafirovski said on a conference call with analysts, adding that the company expects to meet its full-year goals, thanks to strong operational progress in margins combined with steady revenue growth.

"As we enter the third year of our turnaround, I can see that the hard work, the strategy and the plans which we have put in place are bearing fruit."

On a per share basis, the loss amounted to 28 cents, compared to a loss of 23 cents a year ago. Excluding special charges, Nortel pegged the per share loss at five cents.

Revenue rose 11 per cent to US$2.76 billion, up from US$2.48 billion, boosted by deferred sales associated with a contract in an LG-Nortel joint venture.

Nortel shares, which have fallen dramatically from about $29.50 three years ago, nudged upward slightly Friday. At mid-morning, they were at $8.97, up 10 cents, on the Toronto Stock Exchange.

Analysts surveyed by Thomson Financial were expecting a loss of 14 cents per share and revenue of $2.5 billion.

One-time items affecting earnings included a restructuring charge of $88 million, a $19 million charge due to changes in foreign exchange rates, $12 million related to a patent lawsuit settlement and a gain of $16 million primarily from mark-to-market gains on interest rate swaps.

Once among the most sought-after of Canadian stocks, Nortel's shares were devastated when the dot-com bubble burst at the beginning of the decade payday loans. On top of that, the company has been hampered by stiff global competition, accusations of questionable accounting and allegations of executive fraud.

It's latest management team, headed by Zafirovski, a former CEO of Motorola Inc., has made sizable inroads in improving Nortel's performance, though it has not yet made a complete recovery.

"We do understand that customer momentum is the key element of any strategy and we do also understand that 2008 is a pivotal year for Nortel," Zafirovski said.

He noted that Nortel's operating margin, a key measure of its turnaround plan, was 4.7 per cent in the first quarter, increasing by 512 basis points compared to the year-ago quarter.

"We started the year off with a good quarter in a pretty tough macro environment, and we remain firmly focused on achieving our 2008 objectives" to grow Nortel's business in low single-digits, record gross margin of 43 per cent and grow operating margins by 300 basis points.

"We continue our relenting focus on driving operating earnings growth ahead of the markets, which I believe the best way to measure that is the operating margin, and continuing to build marketing and customer momentum."

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VANCOUVER – Canfor Corp. is cutting production by about 15 per cent by dropping shifts and reducing work weeks at a number of its mills, citing the continued "raging storm" in lumber markets that shows no sign of calming any time soon.

The Vancouver-based forestry company (TSX: CFP) said today about 97 jobs will be cut as it moves to two shifts from three at its Prince George sawmill, and to one shift from two at its Clear Lake finger joint operation.

The money-losing company is also reducing work weeks at eight mills to four days from five.

The decision will reduce its annual lumber production by 600 million board feet, or about 15 per cent from its 4.1 billion board feet of production in 2007.

Canfor president and CEO James Shepard said in an interview that the cuts were necessary due to the continued falling demand and poor pricing for softwood lumber.

"We are basically sailing this ship through a raging storm and we are making the course corrections as we see absolutely necessary, and that’s the decision point we reached when we made the announcement," Shepard said.

With lumber demand from the slumping U.S. housing market at its lowest level in years, Shepard said he sees no recovery in the near term.

"(This year) doesn’t look any better than 2007," Shepard said.

Frank Everitt, president of United Steelworkers union Local 1-424, said rumours of the job cuts had circulated through some of Canfor’s mills Monday.

"I think it’s certainly better than having downtime in all of the operations or indefinite shuts, but it is never good news when people lose their spendable income," Everitt said.

He said the union is organizing a conference in the northern Interior of British Columbia with the local college to encourage workers, especially those whose jobs were cut, to get new training during the industry downturn.

"It is to help them move on and educate themselves better, or retrain, whether it be for a different industry or to be better skilled when the industry takes an upswing."

Daryl Swetlishoff, an analyst with the Raymond James brokerage, said the cuts aren’t surprising considering the lumber markets are in a historic trough from the combination of the high Canadian dollar, sunken U.S. housing market and low lumber prices.

U.S. housing starts are down by at least a third in many regions because hundreds of thousands of American homeowners caught in the subprime mortgage mess have abandoned their homes or plan to do so when their mortgages are reset at far higher rates http://paydayintime.com. That has left a glut of houses on the market and sharply curtailed demand for new homes.

"You stack all of these factors on top of each other and it’s very, very difficult to be profitable today. You make more money by not operating, and it’s true of all companies in the sector," he said.

"A company like Canfor has a strong balance sheet and will weather the storm, but with the cash losses, this is a necessity."

Swetlishoff said cutting production is often better than closing mills because closures have a greater impact on communities, which could lead to workers relocating. When the industry recovers, the company is left with less qualified workers – a growing problem as labour shortages develop in many trades.

Canfor, which employed about 7,900 people at the end of 2006, operates mills in B.C., Alberta, Quebec, Washington state, and North and South Carolina.

The company is one of the largest producers of softwood lumber in Canada and also makes oriented strand board, a popular plywood substitute, as well as plywood, remanufactured lumber products and specialized wood.

It also owns 50.2 per cent of Canfor Pulp Limited Partnership, a major producer of northern bleached softwood kraft pulp in Canada and a manufacturer of kraft paper.

Canfor board member Jim Pattison had no comment on the latest cuts when reached by phone today.

Pattison, who owns a 29 per cent stake in Canfor through his investment company Great Pacific Industries Inc., said he wouldn’t comment on Canfor, or any other public company.

He has been pressing for changes to Canfor’s operations to stem mounting losses.

Last year, he helped defeat management’s plan for a “poison-pill" takeover defence against unwanted takeovers. Industry observers believed the poison pill was aimed at thwarting Pattison from acquiring more of Canfor to influence the company’s direction.

Shepard said Pattison had no say in the company’s decision announced today to cut production.

Earlier this year, Canfor reported a 2007 fourth-quarter loss of $237 million including an asset-impairment charge of $189.1 million, reversing a year-ago profit of $465.3 million which included $551.2 million of softwood lumber duty refunds.

Sales in the quarter fell to $711 million from $892 million.

On the Toronto Stock Exchange today, Canfor shares closed up 13 cents at $8.18.

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