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Jun 12 - 18, 2000

APEC urges early WTO talks

APEC trade ministers called for an early launch of a new WTO round in a communique issued here Wednesday and urged greater political will and flexibility.

The statement said more work was needed to broaden community support for multilateral trade and to explain how stronger integration in the world economy would bring social and economic rewards.

It stressed that extra attention should be given to the needs of developing and least-developed countries.

We reaffirmed the importance of trade expansion to making possible the sustainable economic growth and development needed to improve people's lives, said the communique, issued after two days of talks.

We agreed that building confidence in multilateral trade is a key to the launch of a new round.

We agreed that a new round will require a balanced agenda that is sufficently broad-based to respond to the interests of all WTO members.

The ministers announced a strategic plan to provide tailormade packages of technical assistance for developing APEC economies to implement their World Trade Organization commitments.

We also agreed that a successful launch conduct and expeditious conclusion to a round will require political will and flexibility from all participants, adequate preparatory work and enhanced capacity building.

In particular, they called for the world trade body to begin preparatory work on industrial tariffs while pledging themselves to work harder on understanding each others investment and competition policies.

State must guide market economies: Berlin summit

Fourteen centre-left leaders including US President Bill Clinton agreed after a summit in Berlin on Saturday that the state should combine with market economy forces to create full employment and social justice.

The text, which French and German officials provided ahead of a final news conference due at 1000 GMT, also said enhanced institutional frameworks were needed for financial markets, including regulations and corporate codes of conduct.

We believe market economies must be combined with social responsibility in order to create long-term growth, stability and full employment, said the statement, which the French officials said would be the final declaration of the summit.

The meeting, hosted by Chancellor Gerhard Schroeder, included leaders from five of the G7 rich nations.

Participants include the Italian, French, Canadian and Dutch prime ministers Giuliano Amato, Lionel Jospin, Jean Chretien and Wim Kok, the presidents of Argentina, Brazil and Chile, Fernando de la Rua, Fernando Henrique Cardoso and Ricardo Lagos as well as South African President Thabo Mbeki.

Portuguese Prime Minister Antonio Guterres and the prime ministers of New Zealand Sweden and Greece—Helen Clark, Goran Persson and Costas Simitis—also attended.

German Chancellor Gerhard Schroeder said that on Saturday's summit meeting of 14 centre-left world leaders in Berlin had been a stand against the domination of politics by market forces.

He said the aim was to achieve a "balance of power" between market forces and political forces.

Speaking after the 14 leaders issued a joint declaration on "progressive governance for the 21st century," the chancellor said the meeting had been about building a network of scientists and political leaders with which to influence formal political decisions of such bodies as the Group of Eight industrialised nations.

Indonesian debt at $134bn

Indonesia's government debt ballooned to $134 billion as of early this year because of the regional economic crisis, the World Bank said in a report received here on Saturday.

That compared with a precrisis level of 53 billion dollars, it said.

Though "very large," the debt was "manageable " the report said, adding that if the government followed a rigid reform programme the level could be reduced to 46 per cent of gross domestic product (GDP) within 10 years.

As of early this year the debt level was equivalent to 83 per cent of the country's GDP, it said.

Dow takes a plunge

The Dow Jones industrial average tumbled more than 140 points Thursday, hit by an earnings warning from Procter & Gamble and by financial stocks, which fell hours ahead of the week's most closely watched inflation yardstick.

The Dow declined by 144.14 points, or 1.3 per cent, to 10,668.72. The Nasdaq fell 13.70 to 3,825.56. The S&P 500 shed 9.69 to 1,461.67.

More stocks fell than rose Thursday. Declining issues on the New York Stock Exchange topped advancing ones 1,595 to 1,335, on volume of 845 million shares. Nasdaq losers beat winners 2,123 to 1,826 as more than 1.3 billion shares changed hands.

In other markets, the dollar rose against the euro and yen. Treasury securities gained.

Tokyo falls, Asia mixed

Asian stock markets were mixed Friday, with a decline in Tokyo following a report that chipped away at investors' hopes for a robust Japanese economic recovery. In Hong Kong and Sydney, key indexes rose in defiance of Wall Street's weak performance Thursday.

In Tokyo, the Nikkei average of 225 stocks fell 142.43 points, or 0.8 per cent, to end the session at 16,861.91, with pharmaceutical, technology and telecom stocks weighing down the index. The world's second-largest economy grew 0.5 per cent in the year to March, an official report showed, leaving growth just shy of the government's target rate of 0.6 per cent. For the first quarter of 2000, the economy grew 2.4 per cent, in line with economists' estimates.

The Straits Times in Singapore also lost ground, slipping 0.8 per cent to 2,043.12, led by banks and state-monopoly Singapore Press Holdings.

In Hong Kong, the Hang Seng rose 203.37 points, or 1.3 per cent, to 16,080.3 in mid-afternoon trading.

And Sydney's S&P/ASX 200 gained 0.6 per cent to 3,146.8, led by media heavyweight News Corp, which tracked its American Depository Receipts higher, rising more than 5.5 per cent to A$22.

Europe makes flat start

European equity markets opened little changed Friday, with only the blue-chip index in Frankfurt gaining any ground as investors digested Thursday's hike in euro-zone interest rates.

London's benchmark FTSE 100 index was down 12 points at 6,485.2 after 15 minutes of trade, weighed down by two heavyweight telecom stocks as regulators vowed to stick to their timetable for planned further liberalization of the market.

In Paris, the CAC 40 was little changed at 6,525.71, with narrow gains in financial and chemical shares countered by modest falls among and telecom tocks. Insurer Axa (PCS) rose 1.3 per cent in early trade to top the CAC 40.

Frankfurt's electronically traded Xetra Dax added 0.5 per cent to reach 7,280.56, with chemical, drug and financial shares all moving ahead.

385bn Taka BD budget

Finance Minister Shah A. M. S Kibria presented his 5th budget at the parliament on Thursday with the empty opposition benches glaring disdainfully at the thumping treasury benches.

The over Taka 385bn (nearly $7.5bn) budget has largely been described as 'the election year budget' by cross-section of the people who felt that the finance minister attempted to make almost everyone— donors as well as the electorates—happy.

Kibria said total revenue receipts for FY2000-2001 have been estimated at Taka 242bn, up 13.3% over the revised budget for '99-2000 that is ending on June 30 next. Total revenue expenditure in the new budget has been estimated at Taka 196.33bn — 6.4% higher than the revised estimates of the current year.

Prices slide

Gold firmed on Thursday afternoon, emboldened by a larger-than-forecast European interest rate rise, but its advance was rebuffed at resistance of $287.00. Gold fixed in the afternoon at $285.75, up from the morning fix of $285.10, but off the peak of $287 reached in a charge higher after the European Central Bank (ECB) raised its key interest rate by 50 basis points and switched to a variable auction rate.

EU proposes Web tax

The European Union has proposed plans to force companies based outside the region to charge value added tax on services delivered over the Internet to customers in the 15-nation EU.

The European Commission, the executive arm of the European Union, said the proposals are designed to create a level playing field for the taxation of online purchases for goods such as music, videos and computer games.

The proposals drew an immediate protest from the United States. Stuart Eizenstat, the U.S. Treasury Department's deputy secretary, said the Clinton administration "has serious concerns with both the substance and process" of the plan.

Ten exchanges plan tie-up

Ten of the world's top stock exchanges said on Wednesday they were planning to set up a 24-hour, $20 trillion global market controlling 60 per cent of the world equity market.

The ambitious global equity market (GEM) project, would be a direct competitor to Nasdaq-backed iX, the planned merger of the London and Frankfurt exchanges, which faced fresh hurdles on Wednesday.

The plan is being put forward by the New York Stock Exchange — the world's biggest bourse — with the Tokyo Stock Exchange, the Australian Stock Exchange, and bourses in Paris, Brussels, Amsterdam, Toronto, Hong Kong, Mexico and Sao Paolo.

German jobless falls

German unemployment fell in May by a bigger-than-expected 27,000 as exports expanded and a quickening rate of domestic demand growth created more jobs in Europe's biggest economy. Unemployment was down from a seasonally adjusted figure of 3.9 million, the Federal Labour Office said.

UK house prices fall

British house prices fell 0.4 per cent in May from the previous month, a survey said Tuesday, adding that hikes in mortgage rates and the abolition of tax relief on home-loan interest payments were beginning to take the froth out of a market that has boomed for more than year.

UK holds interest rates

The Bank of England held the U.K.'s key interest rate at 6 per cent Wednesday, after recent signs that the pace of economic growth is slowing eased pressure on policy makers to put a brake on rising wage costs and house prices.

Mergers & Acquisitions

French-UK—Nabisco: Britain's Cadbury-Schweppes and French food group Danone are planning a 10 billion ($15.1 billion) joint bid for Nabisco, according to a published report, which said the buyers would carve up the U.S. snack maker between them if their offer is successful.

GPU: U.S. utility GPU may sell its Midlands Electricity power distribution business in Britain for about 1 billion ($1.5 billion), following its failure to dispose of Australian electricity and gas assets, according to a press report.

Brit Land—Liberty: British Land hovered over real estate rival Liberty International Monday, after Britain's second-largest property investment firm bought a 29.9 per cent stake in Liberty for 515 million ($762 million).

Bestfoods—Unilever: Bestfoods' board of directors is set to convene late Monday afternoon to discuss a sweetened $20 billion takeover bid from Anglo-Dutch rival Unilever, according to sources familiar with the situation.

Swiss economy expands

Switzerland's first-quarter gross domestic product was up 3.4 per cent from a year earlier, the State Secretariat for Economic Affairs (SECO) said on Thursday, but its report showed that the pace of economic growth slowed.

GDP was up 4 per cent in the first quarter from the previous three-month period, a slowdown from the 4.4 per cent increase recorded in 1999's fourth quarter.

ECB hikes rates to 4.25%

The European Central Bank (ECB) surprised the markets with a bigger-than-expected half per centage point hike in its key interest rate to 4.25 per cent Thursday, in a pre-emptive move to keep inflation in check.

The euro quickly advanced against the dollar, jumping to $0.97 some 15 minutes after the announcement from $0.96, before falling back to $0.9656. But the move took the steam out of the stock markets.

Japan GDP grows 2.4%

Japan's economy in the first quarter grew its fastest pace since 1996, according to a report released Friday, prompting predictions the world's second-largest economy may finally be on the road to a sustained recovery after a decade-long slump.

The Economic Planning Agency said the economy grew 2.4 per cent in the January-March period, halting a two-quarter slide. The latest quarter's growth helped eke out a rise of 0.5 per cent in gross domestic product for fiscal 1999, which ended March 31. GDP had fallen 1.4 per cent in the October-December period and 1 per cent in July-September.