But Marks & Spencer has html the resources to play a long game."M&S has proved successful on the Continent, where its stores yielded a profit of £27m on sales of £247m last year.In the Far East, M&S has submitted library an application to establish an office in Shanghai which will html monitor the Chinese market and open discussions with government and local businesses.M&S has had a team of managers looking at the Japanese market. Yesterday library coat Sears, the Selfridges and Freemans coat catalogue group, pulled out of the German market after sustaining long-term losses in a shoe shop joint venture.Robert Snaife, retail analyst at Socit Gnrale Strauss Turnbull, said: "Germany is a difficult market and it can take a long time to break through. Laura Ashley has some German outlets and Biba, the fashion chain, traded with some success html during the 1980s. html The only constraint will be our coat ability to secure prime sites at the coat right library html prices."Finding retail sites in Germany library coat is notoriously difficult and very few British store groups have traded successfully there. It also has stores in Spain, the library Netherlands, Hong Kong and Canada, where it has 49 outlets.M&S has some representation in the former Eastern bloc, with franchise stores in Budapest and Prague.Keith Oates, M&S deputy chairman, said: "Development will follow the step by step formula which has been so successful for us in other countries.

M&S said yesterday that the first German store was likely to be in Hamburg, with others planned for big cities, including those in the former East Germany."We've researched the market carefully and believe there is room for our mix of quality, value and service," a spokesman said.The company has been operating stores in France and Belgium for nearly 20 years. BY NIGEL COPE Marks & Spencer is to develop a chain of stores in Germany and is investigating the possibility of expanding into China. The group is also considering opportunities in Italy but has decided against an assault on the Japanese market. He said monetary union could happen this decade but he thought that unlikely.There was a danger of political aspirations running ahead of economic reality, he said, but meanwhile the Maastricht convergence criteria were a very sensible guide to policy.. Short-term influences, including the British political situation, had also played a role. Mr George said: ``We have been drawn in a bit to the general turmoil.''The financial markets read the comments as a bid to damp down expectations of a further increase in interest rates before the next meeting between Mr George and Kenneth Clarke on April 5.Gerard Lyons, chief economist at DKB International (the securities arm of one of the major Japanese banks) said: ``The Governor wants to stop us all from trying to double-guess policy moves.''In minutes of the February meeting between the Chancellor and the Governor, published last week, Mr George emphasised market pressures as the reason for raising base rates at once rather than waiting.Some analysts concluded that market conditions had moved up the list of factors influencing monetary policy and some have also noted that the pound's fall this year is equivalent to 1 per cent off interest rates.Mr George ruled out sterling's early return to the European exchange rate mechanism. But he downplayed sterling's 4 per cent fall since January.The pound had fallen as a side-effect of the weakness of the dollar.

His comments cemented the City view that there will be no rise in base rates at next week's monetary policy meeting.Speaking in Helsinki, where he is visiting the Bank of Finland, Mr George said: ``We're seeing some signs that the economy is slowing down from a pace that was clearly unsustainable to a more sustainable pace.''The Governor pointed out that the underlying rate of inflation was still low but was above its trough of about 1.25 per cent.This modest upturn in inflation was the reason for the three increases in base rates since September - to the present level of 6.75 per cent - which he described as a ``not insignificant tightening'' of policy."Home-grown inflation pressure was ``pretty modest'' and the main short- term influences on inflation came from abroad, Mr George said. By DIANE COYLE Economics Correspondent The British economy is slowing to a sustainable pace, and sterling's recent weakness is ``essentially a wobble'', according to Eddie George, Governor of the Bank of England. Frank Barlow, Pearson's chief executive, said he did not regret buying the company."In the medium and long term, this is an exciting, even explosive sector, and we should be in it," Lord Blakenham, Pearson's chairman, said.Overall, operating profits were up 26 per cent to £272.4m, reflecting growth from continuing operations and before taking into account the BSkyB contribution.Newspaper publishing, under pressure in the UK as a result of the circulation price war and the rising cost of newsprint, turned in solid results, led by firmer profits from the Financial Times and Recoletos, the Spanish newspaper book in which Pearson took a controlling interest in 1994.Mr Barlow said the newsprint shortage had not caused the company any problems to date, but , in a reference to other newspaper publishers such as News International which have cut pages and print runs, said that the shortage might lead to "the demise" of at least one national title.Professional publishing, stitched together out of Longman and Financial Times assets, had a modest 11 per cent rise in operating profits but educational publishing in the US, was hit by lower sales to college students.The company's entertainment holdings, including the Alton Towers theme park and Madame Tussauds, performed well, while Penguin Books, celebrating its 60th anniversary this year, saw operating profits climb by 16 per cent to £40m.Thames Television, its independent production company, reported operating profits of £19m, compared with £6.5m a year earlier, although Pearson Televisionhad start-up losses of £7.4m.. The company had been accused of overpaying for the US-based video game and CD-ROM company, just as the market for game cartridges, for which Mindscape produces software, began to decline.The $462m (£312m) purchase in May 1994 gave Pearson a stake in new media, through a company with proven research and development capabilities but operating in a difficult market.Mindscape contributed only £3.5m to operating profits, below company expectations. BY MATHEW HORSMAN Early morning confusion over the boost in profits at Pearson, the information and education group that publishes the Financial Times, sent the stock on a roller-coaster yesterday. Reading the headline profit figure of £297.8m, many investors apparently did not realise it included a not-to-be-repeated profit of £57.6m from BSkyB, the broadcaster floated last year in which Pearson now holds 14 per cent, or that it masked disappointing results from the company's interactive media subsidiary, Mindscape.The shares shot up to 596p, before dropping back to close at 569p, 15p off on the day.Some analysts marked down their estimates for 1995, as concern about Pearson's move into interactive media resurfaced. Finding a way to complete it that will also meet regulatory concerns is another matter..