ends 0% rate target
Bank of Japan raised its leading short-term interest rate for the first time
in a decade Friday, saying the economy has largely improved over the last year
and a half. The independent panel rejected a last-ditch request by the
government to delay its decision.
central bank lifted the short-term official discount rate target to 0.25
per cent, abandoning —
at least for now —
its so-called "zero interest rate policy."
the target of zero per
has been policy only since last year, the BoJ has been lowering rates over the
last decade. The last time it raised the official discount rate was in August
1990 — by 0.75 of a
point to 6 per cent.
were divided about whether
rates would rise. But the BoJ had
been increasingly expected to hike rates amid a mounting call from central
bank Governor Masaru Hayami to raise rates.
rate hike comes against the will of the
government of Prime Minister Yoshiro Mori, which has pushed for the BoJ
to maintain the cheap money tack to cement
Japan's economic recovery.
said a zero-rate policy papers over the need for structural reform, hurts
pensioners and destroys the market's ability to assess risk.
after the announcement, Japan's Jiji news service quoted Mori as saying he
believed the hike was too premature.
the currency market, the dollar dipped slightly to 108.50 against the Japanese
yen, compared to 108.85 in late U.S. trading Thursday.
leading economist said the rate move isn't likely to have a deleterious effect
on the world's second-largest economy and Asia's major economic engine.
idea of a rate hike has been on the table for a long time," said Sonia
Gibbs, chief economist with Nomura International in London. "This will
signal the economy is stronger, it's more of a psychological impact."
Korea rail to re-open
Near the border with North Korea, rusting train tracks
lined with sesame and red and green pepper shrubs disappear into a bank of
earth. A sign reads in English: "We want to get back on track."
The last train to run this stretch of railway linking
Seoul and Pyongyang passed by in 1945. That was the year American and Soviet
forces divided the Korean peninsula at the close of World War II. Now the
line, built by Japanese colonizers in the early 1900s, is poised to reopen as
a symbol of reconciliation between communist North Korea and democratic South
It could also be a boon to fledgling inter-Korean trade,
and allow South Korea
to open a land route for exporting goods to its markets in China and Europe.
At talks in Seoul a week ago, negotiators agreed to reconnect the 309-mile
rail line that runs from Seoul, South Korea's capital, to
Pyongyang, the North's capital, and on to Shinuiju on the North's border with
China. On Thursday, a South Korean official said he hoped the railroad would
be running by the fall of 2001.
"We hope to get to work right away and we can
complete the work in a year," said Hwang Ha-soo, chief of the Exchanges
and Cooperation Bureau of Seoul's Unification Ministry. The deal, one of
several initiatives arising from the groundbreaking summit in June between
leaders of the Koreas, delighted Chae Il-soon, a 68-year-old shopkeeper in
Munsan, 28 miles north of Seoul. Chae hopes
the reopening of the railway will let her visit a stop only 71/2 miles away -
her abandoned hometown of Changdan, which lies on the border within the
Demilitarized Zone that separates the two Koreas.
I get the chance to go back to my hometown, I would look for my father's
grave," Chae said. It will be a long wait. South Korea prohibits its
citizens from traveling to the North, and both governments are looking to the
railroad at least initially as a means of ferrying cargo,
not passengers. South Korea's transportation
ministry estimates it will cost $45 million to restore
its portion of disused line.
looks for direction
leading markets wavered near break even Friday morning, with financial stocks
generally higher while top technology shares declined after a sharp drop for
the sector on Wall Street a day earlier.
Xetra Dax index was up 3.8 points, to 7,284.77. Insurer Munich Re (FMUV) led
the way higher with an advance of 2.1
FTSE 100 index trickled down 3.4 points to 6,383.9. Leading the loser board in
London was chip designer ARM Holdings (ARM), which fell 4.9
CAC 40 in Paris lost 0.1
to 6,556.36, with chip maker STMicroelectronics (PSTM) declining 1.8
FTSE Eurotop 300 index, slipped fractionally, with its telecom component down
0.8 per cent.
stocks on Wall Street took a tumble Thursday, driving the Nasdaq composite
down 2.4 per cent.
The blue-chip Dow Jones
industrial average rose
stocks were expected to open higher later Friday. S&P index futures
trading on the Globex system were up 0.9 point at 1,475.20.
up as BoJ looms
top markets ended mixed Friday, with Tokyo's leading index edging higher as
investors considered the prospect of the first interest rate hike by the Bank
of Japan in a decade.
benchmark Nikkei 225 index closed up 141.85 points, or 0.9
per cent, to 16,117.50.
Hang Seng index in Hong Kong was down 0.7
to 17,204.10, while the Singapore Straits Times rose 0.2
per cent, or 4 points, to 2,088.33.
other leading Pacific Rim markets, Australia's S&P/ASX 200 index shed 0.2
per cent. The Taiwan Weighted index in Taipei
fell 0.6 and the KOSPI index in Seoul declined 1
U.S. economy showed
signs of slowing in June and
July but labor markets were tight, forcing firms to raise pay and to find
creative ways to entice workers, the Federal Reserve said Wednesday.
U.S. central bank's latest Beige Book, a summary of coast-to-coast business
conditions, reported that easing
consumer demand for goods and services appeared to be restraining price
increases. It noted that energy prices, which have soared in the last year,
may have already hit their peak.
seem to be absorbing the indirect costs of more expensive energy without
passing them on to consumers "for the time being," the Fed said.
the scarcity of workers seemed to be "limiting growth of activity in some
areas," the Fed said, noting that many firms reported that wages were on
the rise and some companies were using free meals and signing bonuses to lure
Beige Book findings will be used when the Fed's policymaking Federal Open Market Committee next meets on Aug. 22 to
set U.S. interest rates. Analysts expect the Fed will leave rates unchanged.
Holdings: Flextronics International extended its
ongoing shopping spree Thursday, paying $640 million in stock for
Singapore-based JIT Holdings Ltd. in a deal that significantly expands the
company's Far East electronics manufacturing capabilities.
label cookie and cereal maker Ralcorp Holdings Inc. said Tuesday it agreed to
merge with animal feed maker Agribrands Inc., reuniting former pieces of
Ralston Purina Co. in a deal marking further consolidation in the food
Nokia—DiscoveryCom: Finland's Nokia, the world's largest mobile phone maker, got a stronger footing in the
market for fast Internet access services on Tuesday by buying U.S. technology
firm DiscoveryCom for $220 million.
private equity firm Cinven said on Sunday it had reached an agreement to buy
aerospace parts group McKechnie Plc for some £434 million
($653 million) in cash.
and Software.com, two software companies that enable mobile
phone users to access the Internet agreed Wednesday to merge in a $6.8 billion stock swap and recruited a
top Cisco executive to lead the new entity.
Corp. has agreed to buy GPU Inc. Tuesday for $4.5 billion in cash and stock,
creating one of the largest electric companies in the United States.
AG, posted a 31
jump in operating profit for the first half of the year.
Bayer, earned 2 billion euros ($1.8 billion)
in the first six months of 2000, up from 1.5 billion euros in the year-earlier
said net profit surged to a record HK$2.183 billion ($280 million) in the six
months ended June 30, from HK$108 million, in the first six months of 1999.
Holdings PLC said Wednesday that first-quarter earnings climbed 31
per cent. The Irish carrier said net income rose
to 20.4 million ($18.3 million), or 28.76 cents per share, from 15.5 million,
or 23.06 cents per share, in the year-earlier period.
Amoco PLC reported a 164
per cent jump in second-quarter earnings. The
Anglo-American company said second-quarter adjusted replacement cost profit, rose to $3.67 billion from $1.37
billion in the year-earlier quarter
Airways PLC, reported a 65
slide in pre-tax profits for its fiscal first quarter. The
airline earned £8 million ($12.4 billion)
in the quarter ended June 30, compared with a net profit of £23 million in
the 1999 period.
Cisco Systems reported fourth-quarter
revenue and earnings that exceeded analyst
expectations. Cisco reported
earnings of $1.2 billion, or 16 cents per share, from $710 million, or 10
cents per share.
unemployment fell in July by a less-than-expected 9,000, the Federal Labor
Office said Tuesday, as Europe's largest economy expands on rising demands for
had expected the seasonally adjusted figure to fall by 21,000. The
unemployment rate, which is based on unadjusted data, rose to 9.3
per cent, compared with 9.1
per cent in June.
euro has fallen 22 per
against the U.S. dollar since its inception in 1999, making exports cheaper in
international markets. That has encouraged manufacturers to employ more
workers to meet demand.
Germany added 3,000 to unemployment rolls.
falls in Germany
industrial output fell an unexpectedly large 3.5 per cent in June from the previous month, official data showed
Monday, while industrial output in Britain was stronger than expected, up 0.1
decline in Germany's output was the biggest in more than five years.
Finance Ministry said the decline amounts to a one-time blip downward after a
strong 2.8 per cent
increase in May and three straight months of gains. Economists polled by
Reuters expected a month-to-month decline of 0.4
Britain's Office for National Statistics said Monday that industrial output
rose to an annual rate of 2
in June. Economists had expected the rate to decline to 1.8
output, which excludes the volatile energy sector, ticked higher
by 0.2 per cent on the month and 2.1
per cent on the year.
wholesale inventories increased for the 17th consecutive month in June, the
Commerce Department said Wednesday, suggesting businesses expect consumer
spending to remain strong.
inventories rose 1.0 per
in June to a seasonally adjusted $323.45 billion after gaining 1.0
per cent in the previous month. May's gain
initially was reported as a rise of 0.8
inventories gain was much stronger than the 0.4 per cent increase forecast by economists in a Reuters poll.
stock-to-sales ratio — a
measure of how long it would take to totally deplete inventories at the
current sales pace —
held steady at 1.29 months.
Bonds rose sharply Thursday, with the 10-year
note's yield falling to its lowest level in
one year, as a favorable refunding auction and positive technical factors
The dollar gained against the yen but fell
against the euro.
benchmark 10-year Treasury note rose 6/32 of a point in price to 99-28/32. The
yield, which moves inversely to price, was at 5.77
The 30-year bond rallied 25/32 to 108-5/32,
its yield falling to 5.67
from 5.73 per cent Wednesday.
rates continued their gradual slide for the third straight week, according to
a report released by Freddie Mac.
30-year fixed rate mortgage (FRM) averaged 8.04 per cent for the week ending Aug, 11, down from 8.12
per cent a week earlier. The same mortgage was
8.15 per cent one year earlier.
average for a fixed rate 15-year mortgage was 7.75
per cent this week, down from last week's
average of 7.88 per cent
the previous week. A year ago the rate was 7.70
one-year Treasury-indexed adjustable-rate mortgage (ARM) averaged 7.28
per cent, unchanged from last week. The same
mortgage averaged 6.24
per cent one year earlier.
indices in the Americas finished their sessions lower Wednesday as market
gauges in Brazil and Mexico fell more than 2.0 per cent, and Toronto failed to keep up with Tuesday's impressive
Bottling COO named
Bottling Group Inc. on Wednesday said it named John Cahill to the new post of
president and chief operating officer and hired a senior PepsiCo Inc.
executive to replace Cahill as executive vice president and chief financial