Oil slides as Opec pumps more barrels
Oil prices slipped further from recent heady heights after a survey
showed waning Opec compliance with self-imposed output restrictions.
Benchmark Brent for November delivery lost ground for the third
straight day to close 18 cents lower at $22.75 a barrel, down from a brief afternoon move
up to $23.03.
The falls followed news that adherence by the Organisation of the
Petroleum Exporting Countries to export limits loosened again in September as high prices
drew extra supplies from core Gulf producers.
The export group raised wellhead output in September by 140,000 barrels
a day to 26.68 million bpd from a revised 26.54 million in August, according to the survey
of Opec and industry officials and consultants.
Oil prices more than doubled to a 33-month peak of $24.30 a barrel late
last month thanks to good compliance by Opec and some non-Opec producers with output
limits imposed to rescue the market from historic lows touched earlier in the year.
Dow stages smart rally
Wall Street added to its gains in early afternoon trading as the market
started to turn its attention to the much-anticipated third-quarter earnings season.
The Dow Jones industrial average was up 155.77 points, or 1.45 per
cent, at 10,556.36 at 3pm. The Nasdaq composite index was up 54 points, or 1.96 per cent,
to 2,854. The Standard & Poor's 500 index edged up 21 points, or 1.65 per cent, at
The 30-year U. S. Treasury bond was up 9/32 with a yield of 6.15 per
Advancing stocks led decliners 1,624 to 1,226 with 566 million shares
trading hands on the New York Stock Exchange by midday. There were 121 stocks setting new
lows while 42 set new highs.
Wall Street is hoping strong third quarter earnings will boost the
market up from its recent lows.
Mergers & Acquisitions
Nomura: Nomura Securities International Inc said it has started
up a new business, Principal Capital Group, aiming to buy North American businesses worth
$1 billion to $3 billion.
AllianzPimco: Giant German insurer Allianz AG looked set
to deliver on its much-awaited move into U.S. fund management with the acquisition of
Pimco Advisors in an all-cash deal valued at $4.68 billion.
BHP: Resources group The Broken Hill Pty Co Ltd. Australia's
largest steel company, put nearly half of its A$6.6 billion steel division up for sale to
focus on improving returns from its flat products business.
MCI WorldCom Inc. the No. 2 U.S.
long-distance phone company, unveiled the biggest corporate takeover ever saying it would
buy No. 3 carrier Sprint Corp for $115 billion in stock.
DTEMCN: Electric utility DTE Energy Co said it would buy
natural gas holding company MCN Energy Co in a $2.6 billion cash-and-stock deal that will
create the largest electric and gas utility in Michigan.
Clear Channel Communications Inc said
it would buy larger rival AMFM Inc in a $17.4 billion stock deal that combines the two
largest radio station owners in the United States.
SeitaTabacalera: French cigarette group Seita and Spanish
counterpart Tabacalera said they were discussing an alliance that would form the world's
fourth biggest tobacco group if it led to a full merger.
Kellogg Co, the world's top cereal
maker, said it would buy vegetarian and health foods maker Worthington Foods Inc for about
$307 million, opening the door to a new growth area as its dominant cereal franchise faces
EU's tax package takes leap forward
The European Union's stalled savings tax package sprung to life when
the EU's executive held out the prospect of a compromise on a key issue and Britain vowed
action on tax avoidance in its dependent territories.
The unexpected announcements, on the eve of a meeting of EU finance
ministers in Luxembourg raised hopes the bloc may still be able to reach agreement on the
plans to tackle "harmful" tax competition by a self-set December deadline.
At his first news conference since taking office last month, European
tax commissioner Frits Bolkestein said existing Eurobond issues should be excluded from a
planned savings tax, partly addressing the most controversial issue in the package.
Bolkestein noted that as drafted the tax would trigger redemption
clauses in many existing Eurobonds, which financial market associations have said would be
costly to investors because most issues trade at a premium to their redemption level.
Britain has been accused by its EU partners of intransigence over
attempts to make the proposed savings tax apply to London's multibillion dollar Eurobond
Britain has said it will not introduce any withholding tax on foreign
investors' savings, favouring an option in the EU plan of passing information to tax
But it has made excluding existing Eurobonds one of its conditions for
accepting any of the EU's other tax proposals.
Britain's tough stance, and the apparent lack of success in addressing
the Eurobond issue, led some EU tax experts to speculate that its partners in Europe would
use a meeting next week to clamp down on corporate tax avoidance, something dear to
Apple introduces new line of iMacs
Apple Computer Inc introduced a new line of its popular iMac computers,
with prices starting at $999 and higher-end models that include DVD players and software
for making home movies.
Apple interim Chief Executive Steve Jobs, who unveiled the new machines
at a presentation near the company's headquarters in Cupertino, California said the new
basic model should help Apple make further inroads with first-time computer buyers seeking
a cheap way to get connected to the Internet.
He predicted the video features incorporated into the higher-priced
models would prove to be the next "killer" application, driving large volumes of
Microsoft, BT plan wireless Net launch
Microsoft Corp and British Telecommunications Plc announced plans to
roll out wireless Internet services in Europe beginning with a trial involving about 1,000
mobile phone users.
The three-month trial described as the biggest ever, will allow
employees of five major companies in Britain and Norway to use their wireless phones to
access electronic mail, calendar information and other data including content Tom Web
pages customised for the small phone screens.
At the end of the test period BT and Microsoft expect a sizeable
commercial deployment of the service in early 2000, according to a statement from the two
companies. The planned service is the fruit of an alliance between the two companies
announced in February.
Malaysia may revise bank merger plan
Malaysia may revise its programme of forced bank mergers due to
difficulties in uniting banks and finance companies into six large groups, Prime Minister
Mahathir Mohammed said.
"The government is not going to force this down their
throats," Mahathir said.
Asked whether the draconian plan would be revised to allow more than
six "core" banks Mahathir said: "It all depends on the banks. If they find
it is impossible to achieve the six then they have to make a clear case.
Fed leaves key rates unchanged
The Federal Reserve left U.S. rates unchanged at a meeting but left its
options open to raise them in the future should that be necessary to keep the booming
economy from overheating.
The decision, announced after a closed-door meeting of the Fed's
Federal Open Market Committee, leaves the federal funds overnight bank lending rate at
5.25 per cent. The less often used discount rate on direct loans to banks remains at 4.75
Gold hits two-year high
Gold surged to new two-year highs in European trading before producers
swooped on the selling opportunity and knocked it off its peak.
Dealers said short-covering by investment funds pushed gold up to $338
a troy ounce bid but when U.S. trading opened the price sank to the day's starting levels
to close at $330 in London.
Dealers said the fund shortcovering and concern over producer buybacks
of hedge positions contributed to the volatile trading which saw gold swing in a wide $16
The spread moved between $3 and $2, rather than the more usual 50
cents, indicating dealers were reluctant to buy at present price levels.
Gold took off early last week after 15 European central banks pledged a
limit on reserve sales gold lending and derivatives activity, lifting uncertainty about
official sector sales while spooking an edgy derivatives market.
Citibank sued over credit card late fees
Three law firms representing a Texas woman have sued Citibank, seeking
hundreds of millions of dollars in damages from the No. 2 U.S. credit card issuer for
allegedly tricking consumers into paying bloated fees for late credit card payments.
The lawsuit seeks class-action status, alleging that Citibank
deliberately adopted "hypertechnical and misleading payment crediting
guidelines" to make it difficult for consumers to avoid fees for late payments,
according to court documents.
"Citibank's scheme is a trap designed to collect fee
revenue," said the lawsuit, filed on October 1 in Texas Eastern District Federal
Court in Texarkana.
The Thai baht rose sharply against the dollar after the Bank of
Thailand tightened rules limiting trade in the local currency.
The baht powered up through 40 per dollar and by 1115 GMT had reached a
high of 39.30 to the greenback its highest level since September 13. The baht had
begun Asian trading on Tuesday around 40.23/40.28.
ICI to sell Belgian-based business for £505m
Imperial Chemical Industries Plc said it had agreed to sell its
Belgian-based acrylics business, including the Perspex brand, for £505 million.
The sale, which the company had said last week was imminent, is an
important step in ICl's make-over as a speciality, rather than bulk, chemical producer and
will reduce debt levels significantly.
S. Korea takes new steps
South Korea announced fresh measures to stabilise interest rates and
shore up shaky investment trusts major buyers of stocks and bondsto stave off
a feared market crisis next month.
"The government plans to stabilise the long-term interest rates in
order to remove the market's uncertainties and maintain its stability," the Financial
Supervisory Commission (FSC) said in a statement.
The announcement was made after a meeting of top officials from the
FSC, the central bank and the finance ministry.
The focal point of the stabilisation measures was increasing the
capital of a bond market stabilisation fund to 20 trillion won ($16.7 billion) by October
15 from the current 10.5 trillion won ($8.77 billion).
The FSC said the fund's capital could be increased further if deemed
Tokyo in search of a buyer for NCB
The Japanese government is now actively seeking a foreign or domestic
financial group to purchase Nippon Credit Bank the Japanese bank which was nationalised
It follows last week's announcement that the government had taken the
unprecedented decision to sell Long Term Credit Bank, the other recently-nationalised
bank, to U.S. private equity group Ripplewood in a deal worth 121 billion yen ($1.1
Officials at NCB and the Financial Reconstruction Commission, the body
promoting reform, have not commented on the sale, but a senior NCB official insists the
bank "has no prejudices against a foreign buyer and is already in talks with some
Chances of new rubber pact look dim
The International Natural Rubber Organisation (INRO) faces its demise
at the age of 19 and industry officials see little hope of a new global rubber pact to
INRO's governing council on Thursday decided to terminate the current
global rubber agreement from October 13, marking the end of the world's last commodity
pact with economic clout.
The accord was originally scheduled to end in February 2001.
INRO's announcement followed the decision by key producers Thailand and
Malaysia to quit the organisation as they were unhappy over rubber prices, currently at
Industry officials said it was very unlikely there would be a new pact.
Euro soars against greenback
The euro rose to its highest level against the dollar in nearly two
months as investors speculated that the European Central Bank would raise interest rates
At 1550 GMT, the euro was up to $1.0722 from $1.0630 the previous day:
the euro's strongest showing since August 10.
The dollar fell back to 105.10 yen from Thursday evening's closing
price in London of 106.76 yen.
Move to speed up trade reforms
Economic ministers from Asean, Australia and New Zealand agreed to try
to speed up trade liberalisation and ensure a wider role in global commerce.
"Once we have a free trade area then we're talking about a
significant part of the world economy which can then deal on the basis of some equality
and strength with the EU, with NAFTA with Japan and China," Singapore Minister of
Trade and Industry George Yeo said.
The group agreed on establishing a task force to look into a free trade
area by 2010.
The study, due to be completed by October 2000, would examine the
potential of a free trade area, consistent with the World Trade Organisation, and the
adjustments it would require.
When asked if targeting 2010, already specified as a target for
liberalization under Asia-Pacific Economic Cooperation (Apec) would actually provide
results, New Zealand responded that the move would nudge nations forward.
"We need to be realists and recognise that these things don't
happen on their own," said New Zealand Trade Minister Lockwood Smith. "We need
to pursue every avenue available to us."
A trade row between Indonesia and Australia that threatened to
overshadow the Asean meeting was avoided when Indonesian Trade Minister Rahardi Ramelan
had to return to Jakarta on Thursday for a parliamentary session.
The row was sparked by Canberra's leading role in the multinational
force in East Timor.
Australian Trade Minister Mark Vaile called for calm. "I would
certainly hope that cooler heads continue to prevail as far as our trade relationship is
concerned and that the trade relationship is not interrupted," he said.