Shares sink as oil stages
European stock markets closed broadly lower, while Wall Street stocks
held on to early modest gains as a bonds rally helped U.S. equities to shake off their
recent negative tone.
The dollar also staged a moderate rebound against the yen after
tumbling to a seven-month low. But dealers said the U.S. currency remained vulnerable to
fresh falls in the absence of Bank of Japan intervention to stem the rise in the yen.
Oil's seven-month rally touched a new peak after a trio of leading
exporters said they would retain tight export curbs during the northern hemisphere winter.
European retailers were among the few European stocks to advance,
buoyed by Monday's announcement by French supermarket giants Carrefour and Promodes of
plans to merge to create the world's second largest retailer.
Worries about another U.S. interest rate hike before the end of the
year pushed the broader market lower.
"The European market is sensitive to rates and the Dow so I don't
expect a fantastic performance this week," said Thierry Rojat, director of
Continental equities investment at Lombard Odier.
The London stock market Europe's biggest, pulled above the day's lows
after Wall Street's firmer opening, but the FTSE 100 still closed 2.02 per cent down from
last Friday. The market was shut Monday for a public holiday.
Like London, the German, French and Italian stock markets drew some
heart from New York's rebound, but still ended 2.26, 1.46 and 2.16 per cent lower
German state of Bavaria's finance minister Kurt Faltlhauser confirmed
that utility Viag was in merger talks with rival Veba and said such a tie-up would make
sense. A final decision is expected in the autumn.
Shares in Viag, in which Bavaria has a 25 per cent stake, were off 0.15
per cent. Veba gained 1.34 per cent.
Network supply pact
International Business Machines Corp said it had agreed to supply Cisco
Systems Inc. the No. 1 Internet equipment maker, with network technology, components and
computer services in a five-year deal initially valued at $2 billion.
G7 ministers focus on forex markets
Deputy finance ministers from the Group of Seven nations discussed the
situation on foreign exchange markets as part of talks on the global economy, German
Deputy Finance Minister Caio KochWeser said as the yen continued to surge.
But Koch-Weser declined to go into details on what delegates said about
the Japanese yen, which earlier gained nearly two per cent to set seven-month highs
against the dollar and an all-time high against the euro.
"We discussed the world economic situation extensively
exchange rates, markets and so on," KochWeser told reporters during a break in the
two-day talks which were due to wrap up later in the European afternoon.
Asked to comment specifically on the yen, he said: "You can
imagine that in the general surveillance discussion one of the subjects was exchange
But he declined to be drawn further. "You will understand that I
cannot comment on the results of this meeting," he said.
Koch-Weser stressed that the Berlin talks, which were being closely
watched by the foreign exchange market, were a routine gathering to prepare for
September's annual meetings of the World Bank and International Monetary Fund (IMF) in
Finance ministers from the G7 countriesthe United States, Japan,
Germany, Britain, France, Italy and Canadaare due to hold talks which coincide with
the Washington meet.
Forex players were on the lookout for any official comment which might
indicate that Washington and Tokyo might be mulling concerted currency intervention to cap
the yen's rise. The yen touched a seven-month high earlier of 109.05 to the dollar.
Japan's Vice Finance Minister for International Affairs Haruhiko Kuroda
declined to comment to reporters when asked about the yen as he arrived for talks.
But in Tokyo, a senior official in Japan's ruling Liberal Democratic
Party said he believed Kuroda would seek backing for joint U.S.-Japan currency
intervention at the talks here.
Smart car talks
Peugeot Citroen may help DaimlerChrysler produce a new version of the
struggling Smart car, the French firm said. "PSA and DaimlerChrysler are in
discussions on the supply of platform components for the future Smart," a spokeswoman
said from Paris, adding that no agreement has been signed.
TNT: Dutch TNT Post Group NV reported a 10.7 per cent rise in
first half net profit. The group, which combines the Dutch post office with Europe's
leading courier service TNT, recorded net profit of 40 million guilders ($191.7 million)
that was roughly in line with analysts' expectations.
BOC: The Bank of China (BOC) Group said pre-tax profits fell 47
per cent from a year earlier to HK$3.005 billion ($390 million) in the first half of 1999.
China Telecom: The Chinese mobile telecommunications giant
reported an interim profit of 3.95 billion yuan (U.S.$477.2 million) for the six months to
June 30, compared with 3.47 billion yuan in the year ago period.
KPN: Dutch telecoms group KPN Telecom NV reported a nine per
cent dip in first half net profit. First-half net profit came in at 918 million guilders
($435.5 million), down from 1.012 billion a year earlier.
National Bank of Canada:
The Montreal-based bank said profits
rose to C$104 million or 57 Canadian cents a share in the period ended July 31 compared to
C$98 million, or 53 Canadian cents a share, in the same quarter a year earlier.
MG shares to start trading this month
International metals trader MG said dealings in its shares will start
on the London Stock Exchange in late September, with the group likely to have a market
capitalisation of £250 million ($400 million).
MG's parent company MG trade services AG, a subsidiary of German
industrial group Metallgesellschaft AG, said it expects conditional dealings in its shares
to start on September 20 and unconditional dealings on September 27.
Fall in French jobless rate
France's Socialist-led government announced a further drop in
unemployment, the latest evidence of a mini-economic boom that has paved the way for
vote-winning tax cuts ahead of elections in 2002.
The Labour Ministry said the number of people unemployed fell by 1.9
per cent to 2,770,400 in July, while French national statistics institute reported that
June industrial output rose 0.8 per cent after a revised 0.5 per cent rise in May.
S. Korea to inject $4.2b into Seoulbank
South Korea said it would inject five trillion won ($4.2 billion) into
nationalised Seoulbank and appoint a foreign bank to manage it, after talks to sell the
troubled bank to HSBC Plc collapsed.
The announcement raised questions whether the government still wants to
sell Seoulbank and another nationalised commercial bank, Korea First Bank, to foreign
interests, as mandated by the International Monetary Fund.
Nahm Sang-duck, director general of banking in the Financial
Supervisory Commission said the government still intended "in principle" to sell
the bank to a foreign entity.
Singapore targets S$9b investment
Singapore has set its sights on securing S$9 billion of new investments
in the manufacturing and services sectors in 1999, government officials said.
Lee said in a speech at the launch of Singapore's Manpower 21
initiative the new investments on that scale would create 20,000 new jobs in the
The jobs would mainly be skilled and in high value-added industries, he
The Manpower 21 initiative is Singapore's blueprint to prepare its
labour market for the challenges of the next century.
Singapore suffers from a shortage of labour, especially in highend
electronics manufacturing, a core industry for the economy.
The Economic Development Board, responsible for attracting investment
to Singapore, said the S$9 billion figure was made up of S$7.5 billion in fixed asset
investments and S$1.5 billion in total business spending.
Creditors take over Daewoo Securities
South Korean credeitor banks have taken over the Daewoo Group's cash
cow, Daewoo Securities Co Ltd. in the first concrete step toward breaking up the
debt-ridden conglomerate, officials said.
Six major creditor banks, led by Korea First Bank (KFB) signed a
contract to take over Daewoo Group's 14.87 per cent controlling stake in the profitable
unit of the crippled group, KFB and Daewoo said.
"We signed an agreement with Daewoo under which creditors will
take over the management of Daewoo Securities " a KFB official said.
Japan vehicle market seen bottoming out
New vehicle demand in Japan where car sales have fallen for 28 straight
months from year-earlier levels, is at last showing some improvement, said a top official
of Nissan Motor, the nation's second-largest automaker.
"I have the impression that the market is bottoming out,"
Carlos Ghosn told a news conference. "It is more likely to go up in Japan than go
Domestic new car sales fell for the second consecutive year in the 12
months through March sliding just under seven per cent to 5.8 millionthe first time
since 1986-87 that sales have fallen below six million vehicles.
Known as "le cost-killer", Ghosn was brought in from Renault,
which earlier this year paid $5.4 billion for a 37 per cent stake in Nissan, to head
restructuring efforts at the money-losing and debts wamped carmaker.
Welteke to herald relaxed approach
Ernst Welteke will have a hard act to follow when he succeeds Hans
Tietmeyer, widely seen as the elder statesman of European monetary policy, as Bundesbank
Welteke, 57, lacks the experience in international policymaking that
Tietmeyer, previously the top civil servant in the finance ministry, brought to the job
when he took office six years ago.
Mastek eyes overseas flotation
Indian software firm Mastek Ltd is considering an overseas flotation as
it focuses on operations in the United States and Europe to boost revenues, chairman and
managing director Ashank Desai said.
"We have two options: either let subsidiaries go public or look at
Mastek coming out with an ADR (American Depository Receipt)," Desai said in an
interview at the weekend.
Mergers & Acquisitions
Japan's Toshiba Corp said it may sell its
stake in a semiconductor joint venture to U.S. electronics giant Motorola Inc.
Toshiba, a major electrical machinety maker, said it was holding talks
with Motorola about their joint venture set up in 1987 to make dynamic random access
memory (DRAM) chips.
Canadian airlines: The battle for control of Air Canada and
Canadian Airlines could shape up as a fight between some of the world's major air carriers
out to protect their business alliances. On one side in the C$1.8 billion takeover battle
is AMR Corp and its 33 per cent owned and troubled Canadian Airlines, and
the oneworld codeshare network. AMR is the parent of American Airlines.
Medical device maker Medtronic Inc has
agreed to acquire Xomed Surgical Products Inc for $800 million in stock in a bid to
continue growth beyond its core cardiac products business, the companies said.
Britain's National Westminster Bank Plc is
looking to buy the country's fourth biggest mutual life company Friends Provident for
Fed calls for close vigil on stock prices
Federal Reserve Chairman Alan Greenspan said central banks must weigh
the prices of stocks and other assets when setting interest rates, signalling a growing
focus on the equities market.
However, Greenspan avoided saying if he thought high-flying U.S. stock
prices were overvalued.
In prepared remarks to a gathering of top world central bankers in this
remote Rocky Mountains resort, Greenspan said policymakers could no longer afford to
simply look at "the flow of goods and services" when they decide interest rates.
"As the value of assets and liabilities have risen relative to
income, we have been confronted with the potential for our economies to exhibit larger and
perhaps more abrupt responses to changes in factors affecting the balance sheets of
households and businesses," he said.
"Central bankers, in particular, are going to have to be able to
ascertain how changes in the balance sheets of economic actors influence real economic
activity and, hence, affect appropriate macroeconomic policies," Greenspan added.
Hong Kong pulls out of recession
The economy in Hong Kong grew by 0.5 per cent in the second quarter,
pulling out of a drawn-out recession that sent unemployment to a record high and knocked
prices lower in the once-booming financial center.
The government's economist K. Y. Tang, reported a "distinct
rebound" that he said Friday should continue through the second half of the year. The
worst appears to be over for Hong Kong, although Tang warned of uncertainties ahead in an
economy that still faces problems.
Japan's top bank eyes brokerage stake
The Bank of Tokyo-Mitsubishi (BTM), Japan's biggest bank, said it may
take a minority stake in the country's fourth-largest securities house to bolster its
retail brokerage operations.
Analysts said a BTM stake in Kokusai Securities may also forge ties
between the bank and Nomura Securities Japan's biggest brokerage, which along with its
affiliates owns more than 30 per cent of Kokusai.
BNP loses battle for SG at last
French banking authorities ended a six-month boardroom battle to force
a three-way world banking power when it blocked BNP's attempt to take over its rival
Societe Generale (SG).
The Banque Nationale de Paris, which launched a double bid for SG and
investment bank Paribas on March 9, failed in its bid to establish the world's second
biggest bank but had the consolation of creating the world's number three bank in share
terms thanks to its successful takeover of Paribas.
Societe Generale's shares that went to BNP during its takeover bid will
be returned to their owners.
Analysts said the decision left SG ripe for a takeover by another,
possibly foreign buyer although a BNP source said it was unlikely to make a fresh bid.
One source close to BNP said BNP Paribas, with a joint war-chest of 4.4
billion euros, was more interested in foreign acquisitions.