Dow tumbles on earnings, rate concerns

U.S. stocks added to their losses in trading as the market focused on negative earnings and rising interest rates.

The Dow Jones industrial average was down 107.02 points, or 1.05 per cent, at 10,310.04. The Nasdaq Composite index was down 45 points, or 1.57 per cent, at 2,827.

The Standard & Poor's 500 index was down 17 points, or 1.31 per cent, at 1,295. The 30-year U.S. Treasury bond was down 23/32, with a yield of 6.28 per cent. The yield has not been that high since August 12.

 

Mergers & Acquisitions

NCB: Lehman Brothers, the U.S. investment bank, and Softbank, the Japanese Internet investment group, are each mulling over bids to acquire Nippon Credit Bank, the nationalized Japanese bank.

Con Ed—Northeast: Consolidated Edison Inc said it agreed to buy Northeast Utilities for $3.29 billion in cash and stock in a deal that would make it the largest U.S. electric distribution utility.

GM—Daewoo: General Motors Corp sweetened its efforts to take over Daewoo Motor by saying it was possible it would also buy two other South Korean vehicle makers — Ssangyong Motor and Samsung Motors.

Global Crossing—Racal: Global Crossing Ltd took a major step towards its goal of creating a worldwide telecom network by snapping up Britain's Racal Telecom from under the nose of Energis Plc for £1 billion ($1.65 billion).

AngloGold—Acacia: AngloGold Ltd. the world's largest gold producer, launched an A$832 million ($541 million) scrip takeover offer for Australian gold miner Acacia Resources Ltd yesterday, topping a previous bid by Delta Gold NL.

Air Canada—Onex: The battle for control of the Canadian airline industry escalated as Air Canada's board of directors called the AMR Corp.-backed takeover bid from buyout specialist Onex Corp illegal and recommended that shareholders reject it.

Nestle: Nestle SA has clinched a deal to sell part of its European frozen food business and nearly all of its Findus brand to a U.S.-Swedish investment group, the world's biggest food company said.

 

China opens insurance market

China, at a critical juncture in its long quest to join the World Trade Organization, took a modest step towards opening its insurance market to foreign investors.

Beijing gave its blessing to Taikang Life Insurance, a small Beijing-based insurer, to boost its capital and let foreigners own up to 20 per cent of it, the Shanghai Securities News reported.

Jobless rate in UK plunges

The number of Britons without a job fell by 5,400 in September to 1.21 million, the lowest level in almost two decades and a clear sign economic growth remains vibrant.

But strong demand for workers is pushing up wage awards, with average earnings rising 4.9 per cent in the three months to August on a year ago, up sharply from 4.6 per cent previously.

China's exports shoot up 20.2pc

China's exports rose 20.2 per cent year on year to $18.6 billion in September, the third consecutive monthly increase, custom officials said, a performance that will support the yuan.

The September figure followed double-digit export growth in August and contributed to a 2.1 per cent year-on-year rise in exports for January-September, to $137 billion, in what state media said was a further sign of recovery from the Asian crisis.

September imports leapt a year-on-year 32.5 per cent to $15.3 billion and jumped 19.3 per cent to $117.6 billion in the first nine months of this year.

The surging imports— fuelled by anti-smuggling measures, state spending on infrastructure and the need to import materials for export processing — resulted in a January-September trade surplus of $19.4 billion compared with $35.3 billion in the same period of last year.

Analysts said the shrunken trade surplus was less troubling than it appeared — largely because the record surplus of $43.59 billion last year left out billions of dollars of smuggled cars, computers and other consumer goods and raw materials that entered China before a crackdown launched in mid-1998.

BoJ expands operations to make policy effective

Japan's central bank decided yesterday to maintain its ultra-easy monetary policy, but said it will expand its range of market operations in an attempt to make the policy more effective.

Markets immediately took the Bank of Japan's announcement as a sign of a further easing of policy, with the yen dropping against the dollar, but analysts said that whether the expanded operations really amount to an easing will depend on what the BoJ does with its new tools.

In an unusually long meeting, the BoJ Policy Board's eight members voted by an undisclosed majority to begin outright buying of short-term government securities as a new way of supplying funds to the money market.

The bank said this was within the context of its eight-month policy of driving short-term rates essentially to zero by pumping money into the market.

"The zero interest rate policy is not changed but what is most important is having the effects of the zero interest rate policy permeate (the market)," said BoJ Governor Masaru Hayami.

"I think the pressure is still on the BoJ, and I suppose somewhere down the track they may be in a position to ease if the yen continues to strengthen or the economy falters," said Matthew Poggi, economist at Lehman Brothers.

The first big test of whether the BoJ has really changed policy will be when it undertakes its regular market operations. The markets will be keen to see if it expands the one trillion yen surplus it has left in the money market since late May.

For now, the BoJ said it would introduce outright or permanent purchases and sales of Treasury Bills and Financing Bills, in addition to the operations it now conducts under repurchase agreements.

Turkey plans sell offs worth $5.3b

Turkey plans to sell state-owned firms worth $5.3 billion next year, reviving a privatization programme stalled by economic weakness and earthquake devastation, State Minister Yuksel Yalova said.

Speaking after a meeting of the High Board of Privatisation Yalova said the government expected to receive $3.2 billion of this figure in 2000, with the remainder in subsequent years.

The board, chaired by Prime Minister Bulent Ecevit, was meeting for the first time since June.

August's earthquake, which killed more than 15,800 people, had placed a question mark over the country's sell-off timetable.

Political and legal obstacles have in the past prevented successive governments from fulfilling ambitious sell-off plans. Since March 1996, privatization revenues have totalled around $2.6 billion.

Samsung

Samsung Electronics Co announced an $8.5 billion deal to supply liquid crystal displays to Dell Computer Corp that would provide the financing needed to build a next-generation LCD plant.

Hong Kong unveils plan to sell blue-chip shares

The Hong Kong government said it would launch a public offering on October 25 to sell part of its large blue-chip share portfolio but failed to say how much of its more than HK$200 billion holding would be on offer.

The new fund will comprise shares from all 33 constituents of the blue-chip Hang Seng Index bought during the government's market intervention in 1998 to fend off a speculative attack.

The government said the IPO of the Tracker Fund of Hong Kong which would be weighted in line with its intervention and thereby linked to the performance of the Hang Seng Index. The offering will close on November 4.

The price of the fund will be set on November 8, government adviser Goldman Sachs said at a news briefing. But the maximum price of the units will be given in the prospectus on October 25.

The government gave no details on the size of the fund, the first index-linked fund to be listed on the stock exchange.

But it said it was determined to sell the blue-chip shares it purchased for HK$118.13 billion during a controversial foray into the stock and futures markets in August 1998.

"The government is committed, to disposing of the rest (of its share portfolio) in an orderly manner," Financial Secretary Donald Tsang told a news briefing.

The paper value of the shares has risen by 64.64 per cent to HK$194.49 billion. If a shareholding held previously by the government's Land Fund is included, the total shareholding is valued at HK$205.63 billion.

The government said information regarding the price, the fund size and incentives for investors who hold units long term would be included in the IPO prospectus.

EU, Asia lock horns over trade agenda

The European Union and Asian countries backed a new round of global trade talks but disagreed on its scope and on whether it should include the controversial issue of labour standards.

"Ministers pledged to give the strongest support to the launch of a new round of multilateral negotiations at the World Trade Organisation ministerial meeting in Seattle," economics ministers from the 15 EU nations and 10 Asian countries that make up the Asia-Europe Meeting (ASEM) said in a statement.

The two-day meeting in Berlin was billed as the last major gathering of trade ministers before the Seattle WTO conference in November which will decide the shape of future global trade talks.

It gave a foretaste of the clashes between industrialised and developing countries which can be expected in Seattle.

The statement highlighted the divisions between those countries—such as the EU nations and Japan — which want a comprehensive round of talks and those Asian countries wary of launching into an ambitious new process.

Brent drops further as funds flee

Oil's sudden downturn accelerated as speculators rushed to sell amid doubts about Opec's resolve to maintain strict adherence to its supply limits.

In a fifth straight day of losses benchmark Brent crude for November traded $1.50 a barrel lower to $20.58 in London, a seven per cent loss, after touching a low of $20.28.

Oil has slumped $3.70 a barrel, 15 per cent, since hitting a 33-month high.

U.S. economy sheds jobs

The U.S. economy shed jobs in September for the first time in more than three-and-a-half years, reflecting business shutdowns caused by Hurricane Flood but also hinting of a slowing in the red-hot expansion.

The Labour Department said that the number of workers on payrolls fell last month by 8,000.

Cyprus bourse hits record high

The Cyprus Stock Exchange rebounded after a four-week closure by hitting an all-time high with the general share index at 490.53 points and with 21.3 million Cypriot pounds ($38.3 million) in traded stocks.

The 1.08 per cent rise trading means the CSE has made 450 per cent gains since the start of the year.

Indian stocks vault over 5,000-mark

Indian share markets bounded to new highs as investors revelled in the re-selection of Prime Minister Atal Behari Vajpayee.

The benchmark Bombay Stock Exchange index vaulted over 5,000 points for the first time to hit a high of 5,091.24 before late profit-taking, in a market stacked with bulls waiting for this result, brought it back below.

The index ended at a record closing high of 4,981.74, a gain of 0.38 per cent, or 18.64 points.

The National Stock Exchange's top-50 index was up 0.65 per cent at 1,479.25, gaining 9.5 points.