Euro slips to lowest level against yen

The euro plumbed all-time lows against the yen and set four-month lows against the dollar amid concern that Europe's economy needed structural reforms before it could achieve sustained growth.

The contrasting positive view growing on the Japanese economy also cast the single European currency in a bad light, keeping it broadly under pressure particularly as investors sought safe-havens for the thin year-end market.

"Japan's got weaker growth than Europe, but the point is that it's instituted a structural change," said Claudio Piron, treasury economist at Standard Chartered Bank in London. "So it looks promising in the sense that it may sustain an extended upturn once things kick off."

Besides some weak economic data recently from Germany, Europe's largest economy, a number of high-profile government interventions in private sector business clouded the outlook for investment in Europe, analysts noted.

Shares soar to new highs in Europe

With Wall Street shut for Thanks-giving European traders had expected the day to be dull and yet European shares sprinted to new records while the euro wobbled again.

The main action was in Europe's share markets which took their cue from Wall Street's Nasdaq index which rose 2.32 per cent to a new record close of 3,420.5 on Wednesday.

The star performer was Italian software house Finmatica which provoked frenzied demand on its debut and hit a high of 40 euros, 100 per cent above its five euro float price.

The Internet-inspired buying spree lifted the Milan bourse almost two per cent to above its end-1998 level for first time since July.

The mania for tech stocks and telecoms also drove the Paris bourse up more than three per cent to a new record close, its 16th over the past 20 sessions, traders said.

Canal Plus surged 18.6 per cent to 92 euros amid a re-crating of its interest in inter-active television operations linked to the Internet.

Among the telecoms, France Telecom and Bouygues both rose 5.55 per cent, while Alcatel gained 5.3 per cent.

Germany's DAX index climbed almost 2.5 per cent with Mannesmann rallying for a second straight day after its takeover predator Vodafone AirTouch Plc, said Mannesmann shareholders overwhelmingly backed its bid.

Mannesmann, the most heavily traded stock, put on 8.2 per cent.

Meanwhile, building firm Philipp Holzmann gained 32.9 per cent after a Chancellor Schroeder-led rescue bid succeeded.

Britain's FTSE 100 closed up 1.8 per cent at a new record at 6,682.8, smashing the previous record of 6,620.6 set on July 6.

The new level meant the index has risen by 13.6 per cent since the start of the year.

It reached an intra-day peak of 6,686.1 as Vodafone Airtouch shot up 7.2 per cent and British Telecommunications rose 4.6 per cent.

US, Japan officials fail to make trade progress

US and Japanese trade negotiators failed on Friday to narrow their differences over US anti-dumping policies, which Tokyo wants to add to the agenda of upcoming World Trade Organisation (WTO) discussions.

"They remained at odds on antidumping," a spokeswoman for Deputy US Trade Representative Susan Esserman said after Esserman met with Japan's Vice Minister for International Affairs Hisamitsu Arai in Washington.

Arai was in Washington ahead of a meeting of WTO trade ministers in Seattle starting Nov 30.

Tokyo alleges that US antidumping laws, which protect US companies against import surges, violate international free trade rules, and wants the WTO to intervene.

Anti-dumping is one of a number of disputes between the United States and Japan ahead of a new round of global trade talks that is expected to be launched in Seattle. Other issues include competition policy, investment agreements and agriculture. The United States opposes dragging anti-dumping into the next round of global trade talks.

US Under Secretary of Commerce for International Trade David Aaron has described Japan as the "greatest dumping country in the world," and has said it was hypocritical of Tokyo to assail US trade policies given its own record.

Japan said on Thursday it had formally filed a complaint with the WTO over the United States' imposition of anti-dumping duties against its steel exports.

Tokyo charges that Washington violated WTO and other tariff agreement rules when it decided in June to impose anti-dumping duties of 17 to 67 per cent on Japanese hot-rolled steel sheet.

Japan's Trade Ministry, which first flagged the move last month, said in a statement on Thursday Japan would seek bilateral talks on the issue, the first stage of the trade organisation's dispute settlement procedure.

Holzmann rescue stains Germany's reputation

Philipp Holzmann AG promised to earn the trust banks placed in it with a govemment-backed rescue that has raised doubts about Germany's commitment to the free market.

Saved by the dramatic intervention of Chancellor Gerhard Schroeder on Wednesday night, the building giant said it would now shed 3,000 jobs, sell non-core units and focus on profitable projects to avoid repeating the losses that almost wrecked it.

But the 4.3 billion-mark ($2.2 billion) bailout, agreed by reluctant creditor banks only after Schroeder offered 250 million marks in state aid, failed to remove doubts about Holzmann's long-term viability and enraged rival construction firms.

Congress approval of IMF gold plan expected—Gramm

Republican leaders and the Clinton administration were close to a deal that would allow the International Monetary Fund to revalue part of its gold reserves to fund international debt relief, Texas Republican Sen. Phil Gramm told reporters on Monday.

"I think we are about to make a deal," Gramm told reporters during a late-night negotiation with US Treasury officials on Capitol Hill. "The deal is basically going to allow for the revaluation of gold sufficient to raise roughly $3.1 billion."

Gold higher in range in European trade

Spot gold ticked higher in a range in London on Tuesday morning, but dealers said it was capped at around $300 a troy ounce ahead of next week's third Bank of England auction.

Spot gold was last quoted at $296.45($296.95 an ounce, up from Monday's New York close at $294.50)$295.50.

 

Mergers & Acquisitions

DaimlerChrysler—Honda: German-US car giant DaimlerChrysler is interested in buying Japanese group Honda, the business weekly WirtschaftsWoche said in a report. DaimlerChrysler chairman Juergen Schrempp saw Honda as a preferable takeover candidate to either Fiat in Italy or Peugeot in France, the magazine reported without quoting any sources.

Coca-Cola—Orangina: The French government refused to allow Coca-Cola to buy Orangina from the French drinks group Pernod-Ricard due to opposition from the country's Competition Council.

Bank of Scotland—West: Bank of Scotland announced an increased offer for National Westminster Bank PLC worth 1,532 pence per share. The total value of the increased offer is 25.58 bln stg, compared with 22 bln stg previously.

Carlton—United: Carlton Communications PLC and United News & Media PLC have unveiled merger plans which will create the UK's biggest TV company valued at 7.8 bln stg.

Vodafone—Mannesmann: Vodafone Airtouch PLC chairman Chris Gent said he has received largely positive feedback from institutional Mannesmann AG shareholders on his plans to submit a written offer for Mannesmann shares at the end of December.

Bridgestone—PT Mahkota Bumi: Bridgestone Corp said it has purchased a rubber plantation in southern Kalimantan Selatan in Indonesia from PT Mahkota Bumi.

Citroen China—Dongfeng: The debt of Automobiles Citroen's Chinese joint venture Dongfeng Citroen Automobile Co Ltd valued at 2.43 bln yuan will be converted into equity, Shenzhen's Securities Times said.

Unilever—Amora Maille: Anglo-Dutch food and consumer products group Unilever Plc/NV said it was buying French mustard maker Amora Maille for 4.7 billion francs, or £460 million ($743.8 million).

NTT—Telekom: Ending months of speculation, Telekom Malaysia Bhd said its major state shareholder was negotiating for Japan's Nippon Telegraph and Telephone Corp (NTT) to buy a stake.

UBS Capital—Groupe Serse: UBS Capital, the private equity division of UBS AG, said it had agreed to buy French Groupe Serse which specialises in services to the banking and retailing industry.

Changi—NZ airport: Singapore's Changi Airport, one of Asia's busiest hubs, made its first foreign investment by buying a small stake in New Zealand's international flagship airport for about NZ$87 million ($44 million).

Thames Water—U.S. utility: British utility Thames Water Plc, facing regulatory constraints at home, took the latest step in its strategy of expanding overseas with the £575 million ($922.8 million) buy of U.S. utility E'town Corp.

Valeo—LuK: French car parts maker Valeo announced the sale of its 50 per cent share of German clutch firm LuK to the company's other shareholder, INA Holding-Schaeffler, for 1.215 billion euros ($1.25 billion).

Heath Group—Lambert: British insurance broker Lambert Fenchurch Plc agreed to a £135 million ($218.3 million) takeover bid from privately-held fellow broker Heath Group Plc, creating the world's sixth largest insurance broker.

 

Firms set up e-commerce wrong-expert

Many big companies believe that putting up an Internet website will get them onto the roaring e-commerce bandwagon but they're wrong, an electronic business consultant said on Thursday.

Many websites set up by large companies focused only on their own products, or failed to provide a one-stop shop for consumers, Alison Spottiswoode, the global head of e-business at PA Consulting Group, told Reuters in an interview.

"If you take large organisations, quite often they have different parts of their group to deal with a different product.

They're not thinking in terms of the customers, thinking in terms of the products," Spottiswoode said.

 

Results

CCF: French bank CCF reported a 39.8 per cent jump in net attributable profit to 323 million euros in the nine months through September and said net earnings per share would be over six euros this year.

Meyer: British building materials firm Meyer International Plc said pre-tax profits rose seven per cent to £39.8 million in the six months ended September 30 compared with £37.1 million a year earlier. It raised its dividend to 5.3 pence a share from five pence.

ING: Amsterdam Financial services group ING Groep reported a 51 per cent rise in nine-month net operating profit. Net operating profit of the Netherlands' second largest bank came in at 2.42 billion euros slightly better han analysts' consensus forecast.

UBS: Swiss banking giant UBS AG announced a near doubling in profits for the first nine months of the year. Net profits rose to 5.18 billion Swiss francs from 2.60 billion in the same period in 1998, in line with analysts' forecasts.

 

Japanese bank sector begins to recover

A set of healthy interim earnings unveiled by top Japanese banks backed up the view that the nation's troubled banking sector took the first steps towards a long-awaited earnings recovery.

The announcements included results from industry leader Bank of Tokyo-Mitsubishi (BTM), whose current profits more than doubled on a parent-only basis to 101.04 billion yen ($953 million) for the six months to September.

But analysts warned that the sector, humbled by years of painful losses amid bad loans, still needed more years to boost profitability, adding that a possible rise in problem loans remained a worry in a climate of fragile economic growth.

BTM, Japan's biggest commercial bank, said its current profits were fattened by one-off gains from a surging stock market. Current profits are before tax and include profits and losses from non-operational activities.

The bank predicted a 180 billion yen profit for the full year against a loss of 22.3 billion yen the previous year.

Japan firms need to do more: S&P

The credit standing of Japanese companies is unlikely to get any worse but much needs to be done as they emerge from economic crisis, Standard & Poor's said .

In a survey of more than 250 firms in Japan, the U. S . credit ratings agency said their financial performance was stabilising after years of deterioration in the 1990s.

But to maintain credit quality "Japanese companies need to boost profitability and cash-flow generation while at the same time lowering their debt usage," said the agency's corporate ratings chief Daisuke Fukutomi.

The median S&P rating of Japanese firms had fallen to "BBB" from "A" in 1992, when Japan's bubble economy burst, Fukutomi noted in the report.