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INTERNATIONAL

May 08 - 21, 2000

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

Rover sold to Phoenix for 10

BMW abandoned its Rover subsidiary with an agreement to sell the failing business to the Phoenix consortium for a symbolic sum of $15, in a deal saving thousands of British jobs.

The sale price is less than the cost of a tank of petrol. In the six years since the German luxury car maker paid 800 million pounds for Rover, the business has sucked in investment but lost an estimated nine billion marks.

A former Rover chief executive, John Towers, hopes that his Phoenix consortium can succed where BMW failed and turn the company around, having signed an agreement to produce, distribute and develop Rover cars.

BMW chairman Joachim Milberg said in a joint statement that the deal would prevent the loss of thousands of jobs at Rover.

The British government immediately said it would not finance the Phoenix rescue but expressed cautious relief at the outcome.

Milberg said: After intensive negotiations we have managed to find a buyer for Rover whose aim is to continue running Rover and to therefore prevent the loss of thousands of jobs in the Rover plant in Birmingham, in the supply industry and in the retail.business.

Unions had feared that up to 50,000 jobs would be lost in the ailing industrial heartland of Britain if Rover was forced to close.

Towers said in a statement: We are delighted that together with BMW we have secured a brighter future for Rover.

Unions had feared that up to 50,000 jobs would be lost in the ailing industrial heartland of Britain if Rover was forced to close.

Under the terms of the deal, Phoenix will continue to produce the Rover 25, 45 and MG sports car marques at the huge Longbridge factory in Birmingharn, central England.

Tokyo stocks slump 4.6%

Tokyo's blue-chip stock index crumbled in the wake of another sell-off on U.S. markets as expectations of higher interest rates and slower global growth sent investors scurrying from equities.

The region's other markets also posted heavy losses following a 5.6 percent slide in the Nasdaq composite Wednesday while the Dow Jones industrial average dropped 1.6 percent.

Tokyo's benchmark Nikkei 225 tumbled 819 points, or 4.6 percent, to close at 16,882.46, just above its session nadir. It was the Nikkei's lowest point since October last year.

Singapore's Straits Times was down almost 3 percent in late afternoon trade.

Sydney's S&P/ASX200 index was 1.5 percent lower.

Taiwan's TAIEX index closed down 2.45 percent at a year-to-date low of 8,349.91 as the Nasdaq decline hit technology stocks and chipmakers. Manila's PHS Composite ended down 1.2 percent at 1,505.21, an 18-month low. The Set 50 in Bangkok was 1.7 percent lower in late afternoon trade, having fallen almost 10 percent so far this week. Kuala Lumpur's KLSE Composite was also down 1.7 percent and the JSX index in Jakarta slid 2.7 percent.

Nasdaq takes a plunge

The Nasdaq composite index tumbled more than 5 percent Wednesday, flirting with its lowest close of the year in a broad technology selloff led by many of 1999's best-performing stocks.

No major news rocked the markets. Instead, analysts blamed the three-day rout on growing investor sentiment that high-flying tech shares have come too far too fast.

The Nasdaq fell 200.08 points, or 5.6 percent, to 3,384.93. That's less than 64 points above its lowest close of the year: 3,321.17, reached April 14.

The Dow, meanwhile, shed 168.97 to 10,367.78, hurt by its major tech components, IBM, Intel and Hewlett-Packard.

The S&P 500 lost 29.06 to 1,383.08.

More stocks fell than rose. Declining issues on the New York Stock Exchange beat advancing ones 2,117 to 878 as trading volume reached 975 million shares. Nasdaq losers topped winners 3,262 to 892, with more than 1.5 billion shares changing hands.

End to BoJ zero-rate nearer

The Bank of Japan has stepped up discussions on when to lift its zero interest rate policy aimed at holding off deflation in the world's second biggest economy, reports said.

The central bank's policy board was closer to deciding when to guide short-term interest rates higher, Bank of Japan deputy governor Sakuya Fujiwara was quoted as telling parliament by Kyodo News agency.

We are continuing discussions with the aim of terminating (the zero-rate policy) after we confirm that all is well with the economy, he told an upperhouse financial affairs committee. Talks are close to being concluded, he said.

Japan PC sales soar 32%

Sales of personal computers in Japan jumped more than 30 percent to a record 9.94 million in the last business year, industry data showed Tuesday, reflecting Japan's growing appetite to surf the Internet.

Ferguson: 'Uncertain times'

The Federal Reserve's vice chairman said these were "uncertain times" for central bankers that required cautious analysis of statistical data, suggesting he had yet to make up his mind on whether the Fed should move more aggressively in raising interest rates.

Roger Ferguson said Tuesday he saw signs of imbalances between supply and demand and said the Fed must show an "obvious stance of vigilance" in fighting inflation in order to maintain credibility.

U.S.-China trade gets push

Federal Reserve Chairman Alan Greenspan and three former U.S. presidents threw their weight Monday behind pending legislation that would grant China permanent trading privileges in the U.S.

"The addition of the Chinese economy to the global marketplace will result in a more efficient worldwide allocation of resources and will raise standards of living in China and its trading partners," Greenspan said in a letter released on Monday to House of Representatives Banking Committee Chairman James Leach, an Iowa Republican.

The U.S. administration signed a landmark trade agreement with China last year, calling on Beijing to open a wide range of markets. In exchange, the White House has asked Congress to grant China permanent normal trade relations (PNTR), which would allow Chinese goods low-tariff access to U.S. markets.

"As China's citizens experience economic gains, so will the American firms that trade in their expanding markets," wrote Greenspan, a long-time proponent of reduced trade barriers.

"Further development of China's trading relationships with the United States and other industrial countries will work to strengthen the rule of law within China and to firm its commitment to economic reform," Greenspan said in the letter, a copy of which was released by Leach's office.

In a united stand, three former presidents Monday joined President Clinton in strongly urging Congress to grant China permanent trade benefits. "In economic terms, the case is clear," they said in an open letter.

Orchestrated by the White House, the two-page letter gives the Clinton administration more clout to persuade Congress to extend permanent trade status to China and ease the Asian nation's long-sought entry into the World Trade Organization.

Mergers & Acquisitions

Air Liquide—Air Products: France's Air Liquide and U.S.-based Air Products and Chemicals dropped their $11.2 billion joint offer for British rival BOC Group Wednesday after failing to win the approval of U.S. antitrust regulators, but said they may make a revised bid. BOC, though, said it wants to remain independent.

AT&T—MediaOne: AT&T Corp.'s planned $58 billion acquisition of cable television company MediaOne Group Inc. should be approved rapidly, Federal Communications Commission Chairman William Kennard said on Tuesday.

Amvescap—Trimark: Anglo-American investment group Amvescap PLC said Tuesday it will buy Canada's Trimark Financial Corp. in a $1.8 billion deal, filling a hole in its global profile.

Y&R—WPP: U.S.-based advertising firm Young & Rubicam agreed in principle late Monday to a $5.7 billion takeover by Britain's WPP Group, creating the world's leading advertising and public relations company, according to sources and published reports.

JDS—Fujian Casix Laser: JDS Uniphase Corp., the world's largest supplier of parts for fiber-optic equipment in phone networks, says it has bought Fujian Casix Laser Inc., its first venture into China.

DoCoMo—KPN: NTT DoCoMo, Japan's largest mobile-phone operator, agreed Tuesday to pay about $4.5 billion for a 15 percent stake in the cellular arm of Royal KPN, the biggest telephone company in the Netherlands — paving the way for further expansion in Europe.

BC Partners—Mark IV: BC Partners is close to a deal to buy the automotive and industrial products maker Mark IV Industries for about $1.2 billion, a published report said Wednesday, in what would mark the biggest U.S. purchase to date by a European private equity firm.

German joblessness falls

German unemployment fell in April as exports expanded and a quickening rate of growth in domestic demand created more jobs in Europe's biggest economy.

A month-on-month drop of 8,000 in the seasonally adjusted unemployment tally, according to the Federal Labor Office, was smaller than the decline expected by economists polled by Reuters, who predicted a fall of 27,500.

Germany's industrial production fell a more-than-expected 2.5 percent in March as mild winter weather played havoc with seasonal adjustments for construction activity.

Results

News Corporation: Operating earnings at News Corporation, the Australia-listed firm at the hub of Murdoch's empire, rose 15 percent to $417 million in the three months ended March 31. The earnings improvement was on the back of a 5 percent jump in revenue to $3.24 billion.

Matsushita: Matsushita Electric Industrial Co. Ltd., whose brands include Panasonic, National and Technics, said operating profit slid 17.9 percent to 159.1 billion yen ($1.46 billion) in the fiscal year ended March 31.

British Energy: The Edinburgh, Scotland-based company said pretax profit for the year ended Mar. 31 fell 19 percent to 241 million ($367.5 million) from 298 million the previous year.

BNP Paribas: BNP Paribas, France's largest bank, posted a 22 percent rise in first-quarter earnings. The company, posted net earnings of 1.35 billion ($1.23 billion), though it didn't disclose a comparable pro forma figure for the first quarter of 1999.

Unilever: Unilever, Europe's largest consumer-goods maker, posted a 4 percent rise in first-quarter earnings. The Anglo-Dutch company, reported net earnings of 643 million ($579 million) in the three months to Mar. 31.

Cisco: Cisco Systems, the world's leading supplier of data-networking equipment, posted an operating profit of $1.03 billion, or 14 cents per share, in the quarter ended April 29.

VW: Volkswagen, Europe's biggest carmaker, said on Tuesday booming U.S. sales of new Beetles, Jettas and Passats were behind a 36.3 percent increase in first-quarter profit.

Europe weighed by techs

Europe's key markets closed lower Wednesday as concerns about looming interest rate concerns hit the tech-laden Nasdaq composite and added to investor skittishness about tech stocks in Europe.

Frankfurt's Xetra Dax led the European bourses lower, dropping 159.68 points, or 2.2 percent, to 7,120.86 amid broad sell-off for software, auto and electronics shares, with relatively few companies on the upswing.

Also in a slump was France's blue-chip CAC 40, off 103.81 points, or 1.6 percent, to 6,265.80 with pay-TV operator Canal Plus (PAN) slipping 8.2 percent.

London's benchmark FTSE 100 fell 23.2 points, or 0.3 percent, to 6,100.6 with Hilton Group (HLT) down 16 percent after Deutsche Bank sold its shares in the hotel and gaming firm. Zurich's SMI fell 0.1 percent to 7,587.5.

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, slipped 1.8 percent.