Demand for gold soars to
World gold demand hit a record high in the second quarter of 1999, an
industry group said, but market players said they don't see gold's price quickly
rebounding from 20-year lows.
The World Gold Council (WGC), which represents major gold producers,
said demand rose 16 per cent year-on-year, in the quarter to 810 tonnes. Demand for the
first half of the year was also a record at 1598 tonnes.
Demand for goid jewellery and for gold as an investment was spurred by
economic recovery in Asia as well as by continued strength in the U.S. economy, the
It said a recovery in oil prices boosted gold demand in the Middle East
and a stronger agricultural sector in India, the world's largest gold consumer, boosted
gold demand there.
But the spot price of gold hit a 20-year low of about $253 last month
as sentiment turned more bearish over gold sales by Britain and the prospects of other
The industry group sought to put a positive spin on gold's outlook with
the demand figures.
"The patient is alive and well and kicking," Haruko Fukuda
WGC's chief executive, said at a news conference.
She said gold demand figures gave evidence of the recovery in Asia and
of continuing faith in gold as a store of value.
Gold jewellery demand rose by 13 per cent worldwide and investment
demand, measured by such things as sales of gold coins, rose by 32 per cent.
Demand in Southeast Asia and South Korea was back to more than 90 per
cent of the levels seen before the financial crisis that led many Asians to sell their
gold to buy food and other essentials.
Daewoo appeases foreign banks
Foreign creditors of South Korea's debt-laden Daewoo Group agreed to
form a nine-member panel to negotiate a rescheduling of the group's foreign debts.
A Daewoo Group official said the nine comprised Arab Bank,
Tokyo-Mitsubishi, Dai-lchi Kangyo Bank, Chase Manhattan Bank, Citibank, National Australia
Bank, UBS, HSBC Holdings Plc and ABN Amro.
The committee was formed after Daewoo executives briefed foreign
creditors on a restructuring plan the group signed with its Korean creditors.
The plan calls for Daewoo to whittle down its sprawling empire of 22
companies to six auto-related firms by year's end.
Khatami outlines five-year plan
Iranian President Mohammad Khatami has outlined his next five-year
economic plan which remains heavily dependent on oil revenues but is based on a lower
estimate for crude prices, state radio said.
"The plan calls for $112 billion in state revenues, $58 billion of
that from oil exports," Khatami said late Tuesday following a meeting with members of
parliament and the government.
He said the plan has been approved by Iran's supreme leader Ayatollah
Ali Khamenei and would be presented to parliament in the coming days, the radio reported.
In addition to the $58 billion from oil the five-year plan also calls
for $34.5 billion in non-oil export revenues as well as a further $7.5 billion from
Khatami said that Iran was also seeking $12 billion from abroad in
loans and credits.
The plan is aimed at slashing Iran's current 15 per cent unemployment
rate to 10 per cent, Khatami said, and is based on an annual growth rate of six per cent
and a yearly inflation rate of 15 per cent.
BoE panel divided
The Bank of England's nine-member Monetary Policy Committee is deeply
split about the outlook for British interest rates, minutes of its latest rate-setting
That, and weaker than expected retail sales figures for July, dampened
the likelihood of a rise in interest rates in the near future, economists said, and pushed
the pound down against the dollar and the euro.
The minutes of the August 4-5 meeting, at which rates were left on hold
at 5 per cent for the second month running, showed the committee voted 9-0 in favour of
But they revealed some members, almost certainly including BoE Deputy
Governor Mervyn King, thought rates would have to rise, and possibly very soon, while
others felt rates may have further to fall.
Germany plans to issue new cash bills
The German government plans to broaden the menu of its debt instruments
at its short end by issuing new bills with maturities of up to one month, financial
The Bundesbank, which acts as fiscal agent for the federal government,
said in a statement the planned new instrument would serve the day-to-day cash management
and would not be used for budget financing.
The central bank confirmed the new "cash bills" or
Bundes-Kassenscheine, would be offered both at regular tenders and placed directly with
banks active in the money market.
Bank shares swing on merger talk
Shares in Spanish banks jumped on renewed talk of mergers and alliances
in the sector across Europe, but most stocks succumbed to profit-taking late in the day,
analysts and dealers said.
After several sessions of share price underperformance, investors
intially made the most of the renewed buzz to pick up cheap stocks.
Spain's biggest bank Banco Santander Central Hispano (BSCH) ended
higher, up nearly 1.6 per cent.
But other banks slithered, unable to resist the impact of losses on
Wall Street which sent the whole market skidding.
BICC: BICC Plc showed the scars of its exit from the
communications and energy cables business, reporting a first-half loss before tax of £392
million ($630.4 million).
Rentokil: Support services company Rentokil Initial Plc buried
its long-held 20 per cent growth objective as first-half pre-tax profits rose just 10.2
per cent to £253 million ($404.7 million).
Applied Materials: Applied Materials Inc said third-qauarter
profits more than tripled to $244.4 million. API said its earnings per share for the
period ending August 1 jumped to 61 cents from 19 cents, or $70.6 million, last year's net
income totalled $47.5 million, or 13 cents per share.
Bankgesellschaft Berlin AG:
Bankgesellschaft Berlin AG said its
pre-tax profit rose 107 per cent to 238 million euros ($250.8 million) in the first half
of 1999 due to a cut in risk provisions and lower administrative costs. But operating
profit at the troubled state-owned bank fell 16 per cent to 203 million euros as
own-account trading profits plunged 86 per cent to 38 million euros.
Ciba: Ciba Specialty Chemicals AG operating profit before
special charges fell 27 per cent in the first half to 358 million Swiss francs ($236
million), while net profit before charges plunged 53 per cent to 121 million.
TDK: TDK Corp said that consolidated net profit, calculated
under U.S. accounting rules, fell to 11.73 billion yen ($102 million) down 15 per cent
from a year earlier.
Telekom Malaysia Bhd, the country's largest
listed company, said net profit for the first six months of 1999 was 555.4 million ringgit
($146 million), down from 736.9 million in the same period last year and below analysts'
forecast of between 650 million and 700 million.
Dresdner: Dresdner Bank AG reported rising profits as expected
in the first half of 1999. Pre-tax profit at Dresdner's investment banking unit rose 170
per cent to 700 million euros ($740 million) in the first half, helping drive the group's
pretax earnings up 31 per cent to 880 million euros.
WPP: British advertising giant WPP Group Plc, the world's third
largest advertising firm, said its pretax profits rose 19 per cent to £112.6 million
($180.9 million) in the first half ended in June topping market forecasts of £107-112
Den norske Bank: Norway's biggest bank, Den norske Bank, posted
a 46 per cent jump in first half pre-tax profits, Den recorded pre-tax profits of 1.65
billion Norwegian crowns ($213 million) during the year's first six months, up from 1.13
billion in the same 1998 period.
United Assurance: British door-to-door insurer United Assurance
Plc's pre-tax profit before exceptionals fell to £124.6 million ($200.4 million) from
£194.3 million in the same half a year earlier.
Wall Street lifts Asian markets
Asian stock markets mostly firmed, boosted by gains on Wall Street and
signs that U.S. inflation was being kept in check.
Hong Kong stocks climbed 1.6 per cent to 12,993 points and Tokyo's
Nikkei 225 index gained 0.2 per cent to 17,892.
The dollar skidded to a six-month low of 113.35 yen in late Tokyo trade
on stop-loss sales related to options positions.
It and the euro had previously weakened against the yen as nervous
Japanese exporters and investors stepped up hedge selling of those currencies. The euro
hit a lifetime low of 119.02.
On Tuesday, the U.S. Labour Department said the consumer price index
rose a seasonally adjusted 0.3 per cent in July, easing fears of a big interest rate hike
at a meeting of the Federal Reserve's policy-setting group next Tuesday.
The Dow Jones Industrial Average ended up 0.6 per cent at 11,117. The
gain helped boost stocks in Australia and Singapore up 1.3 per cent at 3,026.0 and 3.3 per
cent at 2,048.9, respectively.
"The market is getting more and more confident that a rate hike in
the U.S. would only be 25 basis points," said Eric Gale, director of institutions at
brokerage Ord Minnett.
New Zealand's share market rose 0.4 per cent to 2,198.
Philippine stocks were 0.9 per cent firmer at 2,105. Bargain-hunters
picked up stock they believed was oversold but concerns remained over the volatility of
the peso and the fate of local interest rates, local traders said.
Bucking the regional uptrend were stock markets in South Korea, Taiwan
Taiwan stocks fell 1.1 per cent to 7,994 as profit-takers emerged after
a recent, strong rally. Brokers said further consolidation was expected in the short term.
South Korea slipped 0.5 per cent to 869 amid signs that Daewoo's debt
problems were undermining financial stability.
SocGen rejects BNP's plan
The board of Societe Generale rejected BNP's plan for a giant three-way
French bank merger as "impossible" as the national bank regulator stepped in to
resolve the country's mammoth banking battle.
The SocGen board, meeting to discuss Saturday's results of the
acrimonious banking battle, also said it was opposed to BNP holding a minority stake in
the bank following the failed takeover bid, and expressed full confidence in its chairman,
Banque Nationale de Paris (BNP) gained a majority stake in Paribas, but
won less than 40 per cent of shares in Societe Generale in a double hostile bid for both
banks, in what most analysts said was a worst-case scenario as it also scuppered SocGen's
rival plan for a two-way merger with Paribas.
SocGen boss Bouton has said he sees little point in trying to negotiate
a solution with BNP, as he is opposed to a three-way merger and hostile takeover, and won
his board's support for a bid by SocGen to go it alone.
Mergers & Acquisitions
AlcoaReynolds: Alcoa Inc. the world's largest aluminum
producer, said it planned to launch a hostile $4.2 billion bid for rival Reynolds Metals
Co, which has rejected a friendly offer.
INGBHF: Dutch financial group ING launched a friendly 2.2
billion euro ($2.35 billion) bid for the shares it does not already own in Germany's BHF
Bank signalling a cross-border takeover still rare in Europe's banking sector.
Singapore insurers: Singapore's life insurers will face fresh
pressures to merge if the government issues new insurance licences, the president of the
industry's trade body said.
Singapore's 14 life insurers have been isolated from external
competition since the government closed the doors to the sector in 1986, concerned about
Oil rally loses steam
Oil prices rallied to a 22-month peak of $21 a barrel as Wall Street
stocks leapt to session highs in late afternoon trading in an extended relief rally after
a surprisingly tame set of inflation data.
London September futures for Britain's Brent crude touched the
psychological $21 level, its highest since October 9, 1997, before dropping back to close
at $20.71 for a 22-cent gain, buoyed by Nigerian supply disruption declines in U.S. oil
stockpiles and Opec output restraint.
The price of oil is more than double the historic lows touched at the
turn of the year following disciplined reductions in supply under a market rescue accord
by the Organisation of the Petroleum Exporting Countries.
Sweden's central bank, the Riksbank, left its key repo rate steady at
2.90 per cent but warned it may have to raise interest rates soon to curb price pressures
fanned by robust economic growth.