IEA warns of massive oil supply deficit next year

Opec oil producers next year can look forward to accelerating world petroleum demand growth and only marginal extra supply from non-Opec competitors, the International Energy Agency said.

The Paris-based thinktank said its initial estimate for oil demand in 2000 showed growth of 1.8 million barrels per day (bpd) to 77 million bpd, double the 900,000 bpd increase this year.

Asian demand growth would account for an extra 610,000 bpd of oil consumption with the increase concentrated in China and the other developing countries of the region.

China is already proving a strong factor in the oil market recovery attracting net imports of about 1.2 million bpd in the three months to end-May after purchases were limited by import bans.

Oil price rises could be exacerbated by the slow return to growth of supply from producers outside the Organisation of the Petroleum Exporting Countries. Non-Opec countries next year were likely only to manage an extra 660,000 bpd of extra supply to 45.25 million after a fall of 140,000 bpd this year.

Japan sweetens bid

Japan has offered to invest $4 billion in Saudi Arabia over the next decade in a bid to renew a lucrative upstream oil contract in the kingdom, an industry source said.

"The Japanese trade ministry has offered the Saudis $4 billion in investments over 10 years," the source said. "That's equivalent to its total investment over the last 30 years."

Mergers & Acquisitions

Lucent—INS: Telecommunications equipment maker Lucent Technologies Inc said it would buy communications consulting and software firm International Network Services for $3.7 billion in a move to strengthen its presence in the data communications networking market.

BOC—Air Liquide—Air Products and Chemicals: Britain's BOC Group Plc said that an agreed £7.2 billion ($11.6 billion) takeover of the group by France's Air Liquide and U.S.based Air Products and Chemicals, remained on track.

Meyer—Graham: Britain's Meyer International Plc unveiled an agreed £269 million ($431.7 million) bid for fellow building materials company Graham Group Plc, marking further consolidation of the UK building supplies industry.

Shell—Chevron Corp—Western Oil Sands Inc: Chevron Corp and newly created Western Oil Sands Inc joined Shell Canada Ltd.'s proposed C$3.8-billion Alberta oil sands venture, ending a month-long search by Shell for new partners.

Volvo—Scania: Sweden's AB Volvo said it had agreed to buy rival truck and busmaker Scania for 60.7 billion crowns ($7.5 billion) to create the world's second largest maker of heavy trucks.

Hoechst—Rhone: The European Commission gave the go ahead to the merger of Germany's Hoechst AG and Rhone-Poulenc SA of France after the companies agreed to sell some assets and grant licences to remove competition concerns.

One20ne—Virgin: Virgin Group Plc and British mobile phone group One20ne confirmed that they were linking up for a £100 million ($161.5 million) plus joint venture to sell Virgin branded cellphones.

 

World Bank

The World Bank gave a vote of confidence to Lebanon's economic policy by agreeing to open an office in Beirut to help channel aid and knowledge to the country.

U.S. rejects oil dumping case

The U.S. Commerce Department threw out a landmark oil dumping case that accused Saudi Arabia, Venezuela, Mexico and Iraq of selling crude oil at unfair prices in the United States.

In its ruling, the Commerce Department said overall opposition in the U.S. oil industry exceeded support for the case by the small producers.

The ruling was a defeat for a group of independent oil producers known as Save Domestic Oil, who filed the case earlier this summer saying that the underpriced oil had driven many independent firms out of business.

Russian shares trim early gains

Russian shares ended little changed after a fresh rash of selling pushed prices down, wiping out earlier gains which traders attributed to an easing in political concerns.

Trader said the firing of Prime Minister Sergei Stepashin on Monday was unlikely to bring major changes in economic policy. But they said the market was unable to maintain prices at the higher level.

The key RTS1-Interfax share index finished up 0.7 per cent at 102.42 on strong volume of $12.8 million. Earlier in the day the market had hit 106.15.

Microsoft, U.S. still at odds in findings of fact

The U.S. Justice Department argued that evidence presented in federal court here proved that Microsoft has engaged in illegal, anticompetitive practices, a finding vigorously challenged by the software giant.

The parties in separate filings to U.S. District Court Judge Thomas Penfield Jackson put forward their "findings of fact," interpretations of testimony and documentary evidence presented to the court since the trial of Microsoft on anti-trust charges began October 19.

The parties will respond to the other's filing on September 10, with closing arguments in the landmark case scheduled for September 25.

Stocks tumble on U.S. rate hike

European shares were pulled lower in thin trade, mirroring weakness on Wall Street, the dollar remained weak and European government bonds gyrated as thoughts of higher U.S. interest rates preoccupied investors.

The dollar slipped below 115 yen, while the euro rose above $1.07 after strong economic data from Japan and Germany.

European government bonds fell sharply earlier after data showed euro-zone unemployment unchanged at 10.3 per cent.

But they were lifted by short covering towards the close with the benchmark 10-year Bund yield dipping below the psychologically important five percent level breached last Friday.

"There are still not many buyers around but it looks like a short covering rally," said a bund trader at a U.S. bank in London. "There is a bit of relief on the stronger euro and the market got a lift from the Treasury future rising above 114."

U.S. stocks traded near the day's lows in early afternoon as markets awaited results of a government bond auction that could guide the trading direction for the remainder of the afternoon.

The Dow Jones industrial average was down 130.12 points, or 1.2, at 10,577.58. The Nasdaq composite index was down 72.21 points, or 2.87 per cent at 2,446.77.

The U.S. Treasury 30-year-bond was down 8/32 with the yield of 6.26 per cent, up from Monday's close of 6.24 per cent, which was the highest closing yield since November 5, 1997.

In Europe, rate-sensitive shares such as banks, retailers, technology, telecoms and media bore the brunt of investor worries.

Among interest rate sensitive technology stocks, Finnish mobile phone maker Nokia was off over four per cent.

Thais approve stimulus plan

The Thai cabinet approved a multi-billion dollar stimulus package the prime minister said would provide long-term support for economic recovery but was not a cure-all.

The package, which may be worth up to $3 billion, was passed unchanged from a draft that included new funds to help businesses, loans for small- and medium-sized enterprises, steps to help the property sector and tariff cuts and reductions on around 625 products.

Singapore economy

Singapore's jump in economic growth during the year to the second quarter has raised expectations that even better things are to come.

Singapore's Ministry of Trade and Industry (MTI) said the economy grew 6.7 per cent during the year to the second quarter, with all major sectors except construction posting positive growth.

Seasonally adjusted quarter-on-quarter figures show the recovery to be even more impressive with 21.7 percent annualised growth in second quarter against 3.6 per cent expansion in the first quarter.

Aid for Iran

Japan is close to resuming low interest loans to Iran after a six-year freeze, a foreign ministry offficial said.

"We are continuing our talks toward the resumption of low-interest loans to support the construction of a dam in Iran," he said.

Another Japanese bank buckles under insolvency

Japan's regional bank Namihaya Bank Ltd was declared insolvent after the bank applied to be put under state control officials said.

The commission decided to appoint two administrators to take over the bank and find a buyer for its healthy assets, the commission said in a statement.

Namihaya, based in the western city of Osaka, was ordered by authorities in June to raise its weak capital base.

Namihaya said its group capital-to-asset ratio had fallen to minus 1.46 per cent at the end of March.

Oil prices breach $20 a barrel

Oil prices surged above $20 per barrel for the first time in almost 21 months, buoyed by Opec supply curbs and strength in refined products markets.

Brent for September delivery breached the psychological $20 mark for the first time since November 14, 1997, last trading at the day's high of $20.07 to show a 27 cent gain.

London bourse

The London Stock Exchange's plan to expand the use of its electronic share dealing platform is evidence of the growing confidence among its users in the once controversial trading system financial industry representatives said.

The expansion of the electronic orderbook, also known as Sets should also strengthen the hand of the LSE, in the midst of-negotiations with Frankfurt and other European bourses about the creation of a pan-European market.

 

Results

Unilever: Anglo-Dutch food and con: uwer products group Unilever plc/NV reported 1999 second quarter pre-tax profits to June 30 of £726 million ($1.17 billion), on sales that rose three per cent to £7.15 billion. This followed a tough first quarter when profits and turnover fell.

United News: Britain's United News & Media Plc, which derives most profits from global business services but is also a major force in British TV and tabloids posted headline pre-tax profits of £149.5 million ($241.7 million), down from 152.9 million a year ago.

Telewest: Telewest Communications Plc Britain's number two cable company — which is controlled by 29.9 per cent shareholder Microsoft — unveiled half-year pre-tax losses of £273.42 million ($444.2 million), up from £145.09 million last time, amid a hefty investment programme in new services.

Royal & Sun: British composite insurer Royal & Sun Alliance Insurance Group Plc reported a 22 per cent fall in first-half profits. Royal & Sun's group operating profit fell to £315 million ($508.8 million) from £406 million in the first half of 1998.

BASF: BASF AG, Europe's largest chemicals group, said second-quarter operating profit dropped more than 40 per cent as an Industry slump and fines and legal costs weighed on earnings. Second-quarter operating profit totalled 421 million euros ($454.7 million) after 723 million last year.

 

Seoul nationalises insolvent Korea Life

South Korea said it would nationalise the insolvent Korea Life Insurance Co, brushing aside an 11th-hour bid by a US consortium to take over the country's third largest insurer.

The Financial Supervisory Commission (FSC) declared Korea Life insolvent and announced plans to inject between 1.35 and 2.7 trillion won ($1.1 to $2.25 billion) into it before auctioning it off.

All existing Korea Life shares will be scrapped and the company board has been suspended, the FSC said.

Nervous Asian markets retreated on U.S. job fears

Nervous Asian stocks retreated on fears U.S. job data could point to a rate hike, with a strong yen, China-Taiwan ties, and Daewoo's troubles overshadowing individual markets.

Tokyo's benchmark Nikkei 225 average ended down 1.6 per cent at 17,084 as the market fell for a third consecutive session, while Hong Kong's Hang Seng index dropped 0.7 per cent at 13,167 by the close.

Selling across the region was triggered by worries that if U.S. employment data were strong, it would increase pressure on the U.S. Federal Reserve to raise interest rates.

"People are more or less waiting for the economic data from the U.S.," said William Li, stock market analyst with Celestial Asia Securities Holdings in Hong Kong.

Tokyo's decline was compounded by fears the yen's strength could nip economic recovery in the bud as hopes of intervention to buttress the dollar dimmed.

The dollar was quoted at 114.54/64 at 0930 GMT, against 114.40/50 in late New York on Thursday, after sticking to a 40-pip range all day on pre-job data tension.

The euro fared no better at $1.0744/49, against $1.0755/ 60 in late New York, with investors disappointed by its failure to sustain a break of $1.0800 overnight.

The fall in Tokyo share prices and a decline in interest rates at the short end of the yield curve pushed key September 10-year Japanese government bond futures to a higher close.

Hong Kong stocks were depressed further by concerns about the stability of the Chinese yuan and ties between China and Taiwan.

Taiwan stocks fell for the sixth straight session as a spat over Taiwan's status showed no signs of abating.

BoE leaves key rate steady

The Bank of England left Britain's key short-term interest rate unchanged at its 22-year low of 5 per cent, a move that had been widely expected by economists.

The Bank's Monetary Policy Committee (MPC) has faced growing evidence in recent weeks that Britain's broad-based economic recovery is gathering pace.

Economists were almost unanimous in predicting steady rates this time, with a growing number now expecting the next move to be up, possibly by the end of the year.

GM may start building cars in Japan

U.S. auto giant General Motors Corp, the world's largest car maker, said it may start building cars in Japan.

The move would make GM the first U.S. car maker to set up a production plant in Japan since World War II.

General Motors is considering buying a plant or working with a partner, it said. It already has two affiliates in Japan, Suzuki Motor Corp. and Isuzu Motors Ltd.

China eases norms for foreign banks

China's central bank expanded trials allowing foreign banks to carry out local currency business in Shanghai and Shenzhen into neighbouring provinces, state media reported.

A People's Bank of China spokesman said the 19 banks doing yuan business in Shanghai now have access to the markets in neighbouring eastern provinces of Jiangsu and Zhejiang, according to the official Xinhua news agency.

Samsung to face creditors' wrath

Creditors moved to impose punitive sanctions on the giant South Korean Samsung Group unless its owner contributes more towards the huge debts run up by his ill-fated auto unit, bankers said.

The tough decision was aimed at galvanising Samsung Group chairman Lee Kun-Hee into complying with government demands that he cough up more cash to cover multi-billion dollar debts of failed Samsung Motors Inc.

Malaysia to frame rules

Malaysia's central bank said it would set up rules for valuation of local banks as it pushed ahead with a plan to merge 58 financial institutions into six core groups.

Bank Negara governor Ali Abul Hassan Sulaiman, allaying doubts in the financial markets over the plan, said the government was committed to the merger plan.

Ali told a capital markets seminar in a speech read out by an adviser that shareholders of acquired banks in the scheme would have the option of being paid either in cash or in shares of the merged entity.

Danmark enters Norway

Danish telecoms operator Tele Danmark, 42 per cent owned by U.S. firm Ameritech, said it had bought into the Norwegian wireless market and injected capital in a fastgrowing Polish mobile carrier to maintain its one-fifth stake. It said in a statement it had acquired 19.6 per cent of Norwegian NetCom from Singapore Telecom, paying 288 Norwegian crowns ($37.5) per share, or a total of 2.68 billion crowns ($347.8 million).