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Jul 24 - 30, 2000

G7 tackle poor nations

Africa's leaders said talks with Group of Seven leaders Thursday yielded agreement the world's poorest nations need better debt relief schemes, but they said the encouraging words, while welcome, were not enough.

"We are satisfied with the words that are coming from them. What we want is that those words are matched with action," Nigerian President Olusegun Obasanjo told a news conference.

He was joined by South African President Thabo Mbeki and Algerian President Abdelaziz Bouteflika. Earlier in the day they and Thai Prime Minister Chuan Leekpai met with leaders of the Group of Seven industrial nations for talks on the issue.

A year ago, in a blaze of publicity, leaders of the Group of Seven announced a package of up to $100 billion in debt relief by the end of 2000 for some 40 of the poorest nations on earth.

But very little of that money has been released under the Highly Indebted Poor Countries (HIPC) initiative as the leaders meet for a three-day summit beginning Friday on the southern Japanese island of Okinawa.

The relief, which not all the HIPCs say they want, has been held up by conditions laid down for qualification and the reluctance of creditors to put up the cash, with a U.S. contribution blocked by Congress.

Obusanjo said the fruit of Thursday's talks lay in the realization the HIPC initiative has not worked and that something more is needed.

"Everybody now agrees that we have to go beyond the HIPC," he said. "What we got from them was that they themselves realize they did not perform up to what they said last year."

Poor nations argue that debt stifles development, locking them in cycles of poverty and disease too difficult to break.

But some G7 leaders say easing the debt burden is often not that simple and tough qualification rules are there for a reason.

Germany signs slave fund

Germany on Monday signed a long-awaited accord to compensate nearly 1.5 million now elderly people who were pressed into work in their youth as slaves and forced labourers by Nazi Germany's Third Reich.

"A final open chapter of the Nazi past has been closed here," said German Chancellor Gerhard Schroeder at a news briefing. "We are making a lasting sign of our historic and moral responsibility."

German Foreign Minister Joshcka Fischer said the suffering of Nazi slaves could never be truly compensated but that the indemnity was a symbolic gesture by Germany.

Germany, seven other nations and victims' groups signed the pact at a ceremony at the Foreign Ministry in Berlin.

Chief United States negotiator Stuart Eizenstat said the accord would probably be the last between Washington and Berlin on remedying injustices stemming from the Third Reich.

The U.S. and Germany signed a separate agreement that assures big German companies will be protected from further lawsuits in U.S. courts relating to actions committed in the Nazi era.

This threat had been a main lever motivating Germany to approve compensation. A 10 billion mark (4.9 billion dollar) foundation, "Remembrance, Responsibility and the Future", has been set up to make the payments, which will range from 5,000 to 15,000 marks per person.

The German government and German business are each paying half of the fund.

The accord was signed by Germany, the U.S., Israel, Poland, Russia, the Czech Republic, Ukraine, Belarus, the Jewish Claims Conference, the German business compensation foundation and U.S. lawyers representing victims.

Europe in a mixed mood

Europe's major markets opened in mixed fashion Friday, with London's key index headed lower as media companies Carlton Communication and United News and Media abandoned their planned merger, while stocks in Paris headed higher amid demand for telecom shares.

London's benchmark FTSE 100 index slipped 0.5 per cent to 6,438.9, with information technology consulting firm Sage Group (SGE) dropping 4.8 per cent.

The CAC 40 index in Paris added 0.2 per cent to reach 6,577.33, as index heavyweight France Telecom (PFTE) climbed 1.7 per cent, and network operator Equant (PEQU) rose 1.1 per cent.

Frankfurt's electronically traded Xetra Dax index was little changed, while the SMI index in Zurich fell 0.1 per cent.

U.S. markets appeared set to open higher later Friday. S&P index futures declined 0.9 points to 1,515.30 on the Globex trading system, but fair value, a measure that accounts for interest costs and dividend payments, was quoted at 1,508.22 by New York traders. That 7.08-point difference suggests a higher Wall Street open.

Okinawa G-8 summit

Leaders of the world's richest nations, joined by Russia, have retooled their annual economic summit in an effort to persuade poor countries that a world that is growing more connected economically can work for everyone.

In many ways, the agenda for this week's meetings at the 26th annual economic summit, being held this year on the hot, subtropical Japanese island of Okinawa, was set last December on the cold, damp streets of Seattle, where massive protests doomed efforts to launch new global trade negotiations.

The anti-globalization protesters came from a collection of labor unions and human rights and environmental groups who got worldwide attention with their complaints that globalization benefits corporations and has done nothing for the world's poor.

As a result of those protests, this year's annual Group of Eight summit of the top industrial countries — the United States, Japan, Germany, France, Britain, Italy and Canada, joined by Russia -- will have a much broader agenda than the usual talk about economic growth and currency exchange rates.

Asian markets mixed

Asia's leading markets were mixed late Friday, as Tokyo's technology stocks came under pressure but their peers in Hong Kong rose after a strong climb for the U.S. Nasdaq market the previous day.

Tokyo's benchmark Nikkei 225 index closed down 172.08 points, or 1 per cent, at 16,811.49. Among high-tech manufacturers, Sony fell 2.5 per cent and Fujitsu 4.8 per cent.

The Hang Seng index in Hong Kong rose 1.9 per cent to 18,088.85 in late trading, while the Singapore Straits Times was up 0.4 per cent at 2,141.53.

In other leading Pacific Rim markets, Australia's S&P/ASX 200 index climbed 1 per cent, with media conglomerate News Corp. rising 2.4 per cent. The Taiwan Weighted index in Taipei fell 0.6 per cent, and the Kospi index in Seoul edged up 0.5 per cent.

Elsewhere in Asia, Jakarta's JSX index fell 0.1 per cent, Manila's PHS composite fell 0.7 per cent, the KLSE composite in Malaysia slipped 0.3 per cent while in Bangkok, the SET index dropped 0.2 per cent.

Trade deficit hits record

The U.S. trade deficit widened to another record in May as imports of consumer goods such as televisions and DVD players surged and the cost of petroleum-related imports jumped to the highest level in almost two years, government figures released Wednesday showed.

Both imports and exports declined for a second straight month as trade of other goods such as autos and auto parts with Canada tapered off, the Commerce Department said.

The trade deficit, which measures the amount of money spent on imports coming into the United States versus the amount received from exports leaving the country, widened in May to a record $31.04 billion. That was more than $500 million above April's revised $30.5 billion deficit and the $30.5 billion gap expected by analysts.

Fujitsu AMD builds plant

Fujitsu AMD Semiconductor Ltd., a joint venture of American semiconductor maker Advanced Micro Devices and Japanese electronics company Fujitsu Ltd., broke ground Wednesday for a new manufacturing plant in Aizu-Wakamatsu, Japan, which would produce flash memory chips.

Mergers & Acquisitions

ING—Aetna: Netherlands-based ING Groep NV won the battle for the troubled U.S. health insurer Aetna Inc.'s financial services and international businesses Thursday, in a deal valued at $7.7 billion in cash and debt.

Reliance—Leucadia: Insurer Reliance Group Holdings announced Wednesday that Leucadia National Corp. terminated its agreement to buy the company for nearly $1 billion in stock and debt.

British Airways—KLM: The U.S. government would block a proposed merger of British Airways PLC and KLM Royal Dutch Airlines NV unless Britain and the U.S. reach an agreement to stimulate competition on the tightly controlled routes between the two countries, a published report said Thursday, depressing the U.K. company's shares.

BoE unanimous on rates

Britain's monetary policy czars voted unanimously to keep the country's key short-term interest rate at 6 per cent in July, according to minutes of their July 5 and 6 meeting released Wednesday.

BoJ keeps rates at zero

The Bank of Japan decided on Monday to keep pushing short-term interest rates virtually to zero, concerned to avoid putting a squeeze on the economy in the wake of the collapse of major department store chain Sogo Co Ltd.

Economy boosts dollar

Growing indications that the U.S. economy will land gracefully, and not with a thud, are boosting the dollar, currency traders and analysts said.

"The dollar has strengthened even as Federal Reserve tightening expectations have been scaled back," said Bob Lynch, currency strategist at Paribas.

"Slower growth and tame inflation are certainly more supportive of the dollar than a hard-landing scenario would be," Lynch said.


AOL: AOL beats forecast America Online. Excluding one-time items, the company earned $334 million, or 13 cents a share, for the three months ended June 30, compared with $155 million, or 6 cents a share, in the year-ago quarter.

Sun: Sun Microsystems Inc. reported better-than expected results for the fiscal fourth-quarter. Before one-time items, earned $659.5 million, or 39 cents per share.

Computer Associates: Software maker Computer Associates reported a sharp drop in fiscal first quarter profits. The company earned $84 million, or 14 cents a share in the three months ended June 30, compared $272 million, or 49 cents, in the year ago period.

R.J. Reynolds: R.J. Reynolds Tobacco Holdings Inc., reported second-quarter earnings of $107 million, or $1.05 per diluted share, for the quarter ended June 30, from $98 million, or 90 cents, in the year-ago period.

Gillette: Gillette Co. posted a modest 2 per cent gain in second-quarter operating profit. The Boston-based Gillette posted operating profit of $296 million, or 28 cents per diluted share, up from $290 million, or 25 cents per share, in the year-earlier period.

Polaroid: Polaroid Corp posted second-quarter earnings that jumped 36 per cent. The maker of instant film and cameras posted second-quarter net earnings of $20.4 million, or 45 cents a share, compared with net earnings of $15 million, or 33 cents, in the year-ago quarter.

Lucent: Lucent Technologies Inc. one of the most widely held U.S. stocks, earned $1 billion, or 30 cents a share, in its fiscal third quarter.

UPS: United Parcel Service posted net income of $695 million, or 60 cents a diluted share. The company posted earnings excluding special items of $588 million, or 52 cents a share, in the year-earlier period.

Caterpillar: Caterpillar Inc. the world's largest construction and mining equipment maker, reported second-quarter earnings of $315 million, or 90 cents a share, up from $283 million, or 78 cents a share, in the year-earlier quarter.

Delta Air: Delta Air Lines Inc. reported fiscal fourth-quarter operating earnings of $376 million, excluding one-time items, or $2.86 a share, compared with $364 million, or $2.40 a share, a year earlier.

Colgate: Colgate-Palmolive Co. reported second-quarter earnings of $262 million, or 42 cents a share, compared with $228 million, or 36 cents a share, a year earlier.

German confidence drops

An index of German business confidence unexpectedly fell in June, pushing the euro to an eight-week low, but analysts remained upbeat about European economic growth.

The business climate index published by Ifo, a German economic research institute, fell to 100.4 in June from a nine-year high of 102.0 in May. The index, Germany's most closely watched leading economic indicator, was well below the lowest forecast in a Reuters survey of 27 economists, which had shown a median forecast of 102.1 for June.

The survey pushed the euro down to 92.25 U.S. cents, an eight-week low against the dollar, from 92.50 in late trading in New York on Tuesday.