market deal off
In a surprise move that throws the fate of Europe's largest
stock market into question, the London Stock Exchange Tuesday abandoned a
planned merger with its German counterpart the Deutsche Boerse, ending a
combination fraught with problems from the start.
In calling off the merger, the LSE said it wanted to focus
on fending off an unsolicited $1.2 billion offer launched two weeks ago by OM
Gruppen, the operator of the far smaller Stockholm stock exchange. The merger
of the German and U.K. bourses would have created an electronic exchange
called iX, big enough to rival the Tokyo Stock Exchange, the world's
"When the OM offer has been seen off, the board, in
full consultation with shareholders and customers, will review the means by
which London's pre-eminent role in European equities trading can best be
promoted," said LSE Chairman Don Cruickshank, his words a recognition
that many of the LSE's shareholders felt the exchange consulted too little
with them over the plan to form iX.
The OM Gruppen bid, perhaps the final straw in disrupting
the German-U.K. merger, brought into full relief the regulatory and managerial
difficulties that faced the alliance. The Swedish group on Monday formal
details of its unsolicited bid Monday. Under U.K. takeover rules, that
triggered a 60-day deadline for LSE shareholders to accept or reject the
offer, and forced the London exchange to respond.
The LSE has not discussed merging with any other bourses,
Cruickshank said Tuesday. He made clear that the issue would be taken up at
the exchange's general shareholders meeting, set for Thursday.
The Deutsche Boerse told that it received the LSE statement
"with regret". A spokesman quoted Chief Executive Officer Werner
Seifert as saying the Frankfurt exchange would "consider its
holds rates steady
The European Central Bank on Thursday opted to hold the
line on interest rates, keeping its key borrowing cost at 4.5 per cent, as
expected. It also used its dollar reserves to buy euros — a move just short
of market intervention, to help lift the ailing multi-country currency.
The central bank last raised its refinancing rate, the
amount charged on two-week loans to commercial banks, at its Aug. 31 meeting,
opting for a quarter-point increase to both bolster the euro and slow the pace
of economic growth. Almost all economists polled in a Reuters survey predicted
there would be no rate change this time around.
The rate decision followed a surprise announcement that the
ECB has already begun using interest earned on its international currency
holdings to buy euros in the open market — a move similar to, but not quite
equivalent to market intervention. It was the first time in its 22-month
history that the central bank opted to act in any direct way to stimulate
demand for the depreciating currency.
Using the interest accrued since the bank began operations
in January 1999, the ECB will spend the equivalent of about 2.5 billion ($2.17
billion) supporting the euro in the coming days, the central bank said. It
said it informed the U.S. Federal Reserve and the Bank of Japan of its plans.
The euro rose as high as 87.38 cents following the
announcement on the ECB's euro-purchase plan, then settled back to 86.78 U.S.
cents after the rate decision. Representatives of the ECB meet every two weeks
to discuss the progress of the euro zone economy and the direction of interest
Separately, the European Union said that the economy of the
11-nation euro zone grew 3.8 per cent in the second quarter from a year
earlier, the fastest pace since records began in 1992. The gain, along with
surging oil costs and the falling euro, raised the region's consumer price
inflation rate to 2.4 per cent in July, according to EU statistic agency
GDP above estimates
Japan's economy expanded a stronger-than-expected 1.0 per
cent during the April-to-June quarter, marking a second consecutive quarter of
growth and offering more evidence that the nation is pulling out of its worst
The inflation-adjusted increase in gross domestic product
from the previous quarter translated into a 4.2 per cent annual pace of
growth, the Economic Planning Agency said on Monday.
The quarter-on-quarter GDP growth, which the government
says will be key to deciding the size of a stimulus package aimed at ensuring
the recovery doesn't sputter, compares with a median forecast of 0.7 per cent
growth in a Reuters survey.
techs ride again
Europe's major bourses closed higher Thursday amid strong
gains for technology and telecom stocks as investors speculated that recent
losses were overblown. Declines for oil shares limited the gains on key
indexes after crude prices retreated from recent highs.
London's benchmark FTSE 100 index rose 77.3 points, or 1.2
per cent, to 6,555.5, with telephone and media stocks taking the lead.
The blue-chip CAC 40 in Paris rose more than 1 per cent to
6,637.91 and Frankfurt's Xetra Dax climbed 42.24 points, or 0.60 per cent to
7,048.50. In smaller markets, Amsterdam's AEX index was little changed at
677.32 and Italy's MIB 30 rose 0.6 per cent, but Zurich's SMI dropped 0.4 per
The FTSE Eurotop 300 index, a basket of Europe's largest
companies, gained 0.9 per cent, with sub-indexes for technology, telecom and
computer services shares all up more than 2 per cent. The oil and gas segment
was the leading decliner, off 2.8 per cent.
President Clinton has put proposed luxury-goods duties on
European goods on ice, according to a report Thursday.
Clinton delayed the publication of a new sanctions list
after British Prime Minister Tony Blair argued last week that the 100 per cent
duties would harm already shaky trade relations between the U.S. and the U.K.,
the New York Times said.
Among the items on the list are Scottish cashmere, Italian
pecorino cheese and British shortbread; the sanctions would hike the price of
British-produced cashmere substantially, for instance; some $50 million of
cashmere is imported annually for U.S. consumers, the newspaper said.
The move likely will stave off, at least temporarily, a
European Union backlash targeting U.S. exports, the paper noted. A senior
administration official told the paper the move had placed the issue of import
sanctions in "strategic limbo".
The U.S. Senate, meanwhile, is nearing passage of a trade
bill with China.
mixed in early trade
Key Asian markets opened mixed Friday as some telecom and
technology stocks rebounded after a healthy overnight performance by the U.S.
Nasdaq and European counterparts.
Hong Kong's Hang Seng index rose 0.09 per cent to
16,410.67, while the Australian share market slipped into the minus column by
midday, down 11 points at 3,333.60.
Taiwan stocks rebounded more than 2 per cent, gaining
153.86 points to 7,306.15, with dominant electronics stocks leading the pack.
World microchip foundry leader Taiwan Semiconductor jumped T$3.50 to T$123.50
after the firm said strong global demand would send its 2000 net profit
soaring 160 per cent to T$64.002 billion ($2.06 billion) from a year earlier.
South Korea's KOSPI index fell 0.69 per cent to 645.68, off
4.5 points. Memory chip giant Samsung Electronics traded down 2.3 per cent at
Ford—Daewoo: Ford Motor Co. said Friday it has
dropped its bid for South Korea's troubled Daewoo Motor Co. In a brief
statement, the No. 2 automaker said it would not make a final bid for the
company. A deal had been expected to be completed by the end of this month.
B&N.com—Fatbrain: Online bookseller Barnes &
Noble.com agreed to acquire Fatbrain.com Inc. Wednesday in a $64 million
stock-and-cash deal that will expand the bookseller's reach in the
Inktomi—FastForward: Internet search engine and
caching software provider Inktomi Corp. took aim at the burgeoning online
broadcast market Wednesday, agreeing to buy closely held FastForward Networks
for about $1.3 billion in stock.
AOL—Time: The proposed $129 billion America Online
purchase of Time Warner hit a snag Wednesday as the government tried to
determine what proposals it will seek from the companies before it grants
approval of the union.
commission Wednesday cleared the way for Bank Austria AG to be bought in an
agreed 7.4 billion ($6.42 billion) all-stock deal by Germany's HypoVereinsbank
AG creating Europe's third-largest bank in terms of assets.
Diamond—Cluster: Diamond Technology Partners agreed
to acquire Cluster Consulting for about $930 million in stock and cash in a
move that will expand Diamond's wireless consulting services to Europe and
Elan—Dura: Pharmaceuticals maker Elan Corp. agreed
Monday to purchase U.S.-based Dura Pharmaceuticals Inc., a maker of treatments
for infectious diseases and respiratory conditions, for about $1.8 billion in
stock, bulking up Ireland-based Elan's presence in the United States.
Oracle: Oracle Corp. reported net income of $501
million, or 17 cents a share, up from $237 million, or 8 cents a share, in the
year-ago quarter. Analysts polled by earnings tracker First Call/Thomson
Financial had expected Oracle to earn 13 cents a share during the quarter.
Adobe: Graphic design software maker Adobe Systems Inc.
reported net income, which includes non-operating gains and losses, was $78.3
million, or 61 cents per share.
Nike: Sports shoe and apparel maker Nike Inc. posted
net income for the three months ended Aug. 31 of $210 million, or 77 cents per
diluted share, up from $200 million, or 70 cents a share, in the same period a
LVMH: LVMH, on Thursday reported a 31 per cent increase
in half-year profit and raised its forecast for full-year earnings. The
Paris-based group earned first-half operating profit of 762 million ($662
million), or 77 European cents a diluted share, up from 581 million, or 61
cents, a year earlier.
BAE: British defense contractor BAE Systems PLC posted
a 34 per cent rise in first-half pretax profit Thursday. BAE (BA-) said pretax
profit for the six months ended June 30 rose to £480 million ($679.8 million)
from £358 million, while it sliced its net debt by £302 million to £523
Celltech: Celltech Group Plc reported, post-tax profit
for the six months ended June 30 amounted to £10.1 million ($14.1 million)
before one-time costs, compared with a loss of £5.8 million a year earlier.
Gold was seen under continuing pressure from the US dollar
on Tuesday, but if nothing else rocked the boat traders were hopeful strong
physical demand could hold the price above key $272.00 support.
woes to sting Europe
With protests over high gasoline prices threatening to
bring traffic to a standstill throughout the United Kingdom, economists are
pondering the economic impact that skyrocketing fuel prices will have on the
economies of Europe and the rest of the world.
Many economists are already re-jigging their forecasts for
global economic growth for the remainder of this year and 2001 as oil prices
around 10-year highs trickle down into the economies of the United Kingdom and
countries in the 11-member euro zone, of which the U.K. is not a member.
And it's not just about the gasoline that individuals need
to get to and from work each day. Shipments of food, clothing, medical
supplies — virtually everything that needs to get from A to B on at least
two wheels — is likely to go up in price, forcing producers to pass on their
rising transportation costs to consumers and prompting buyers to think twice
about forking out more for goods.
The yield on the 30-year bond ended above that of the
10-year note Thursday for the first time since January, as a slew of companies
selling longer-dated bonds weighed on these securities.
The benchmark 10-year Treasury note fell 13/32 of a point
in price to 99-23/32. The yield, which moves inversely to price, rose to 5.78
per cent from 5.73 per cent Wednesday.
The 30-year bond dropped 1-5/32 points to 106-5/32, its
yield soaring to 5.81 per cent from 5.73 per cent.
Mortgage rates slipped amid slower consumer spending and
hopes of a cooling down of the economy, according to a report released this
week by Freddie Mac. A 30-year fixed-rate mortgage (FRM) averaged 7.88 per
cent for the week ending Sept. 15. The average for a fixed-rate 15-year
mortgage was 7.60 per cent. A one-year adjustable-rate mortgage (ARM) averaged
7.26 per cent.
The number of Americans filing new claims for unemployment
benefits, after falling for two weeks, rose to 324,000 last week from a
revised 311,000 the prior week, the government reported Thursday.
prices up 0.2%
U.S. import prices rose modestly in August as higher prices
of petroleum and food were partially offset by lower prices for capital goods
and automobiles, the Labor Department said Wednesday.
The government said import prices rose a
weaker-than-expected 0.2 per cent in August after being unchanged in July.
Economists polled by Reuters had expected a 0.5 per cent gain in import prices
tops $1 trillion
Charles Schwab Corp. said Thursday it had surpassed $1
trillion in customer assets as of Aug. 31, putting the San Francisco-based
brokerage among the top brokers in the country.
Company spokesman Dan Hubbard said Schwab is now the third-
or fourth-largest brokerage in the country in terms of assets under
Google, one of the fastest growing search engines on the
Web and Yahoo's new default search engine, says it has launched full search
services in Japanese.
The Mountain View, Calif.-based company said in a release
on Tuesday it has also launched Chinese and Korean search functions, bringing
the range of its international services to 15 different languages.
Competition for an efficient search engine in Japan is
still in the beginning stages, with Yahoo Japan acting as the nation's primary
portal with nearly 1.4 billion page views a month, according to Nielsen/Netratings.
U.S. fund managers have turned increasingly bullish on
domestic stocks in hopes that the nation's economy is headed for a soft
landing, according to the Merrill Lynch Gallup Survey released on Tuesday.
Bulls of the stock market outnumbered pessimists by the
greatest margin since February 1995 and U.S. fund managers have moved
overweight domestic equities in their global portfolios for the first time in