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Oct 16 - 22, 2000

Clinton signs China trade bill

President Clinton closed years of political and economic debate Tuesday, and sealed a major achievement of his administration by signing a bill extending permanent, normal trade status to China.

"Today we take a major step toward China's entry into the World Trade Organization and a major step toward answering some of the central challenges of this new century," Clinton said in a bipartisan White House ceremony Tuesday afternoon.

"Trade with China will not only extend our nation's unprecedented economic growth, it offers us a chance to help shape the future of the world's most prosperous nation and to reaffirm our own global leadership for peace and prosperity."

The measure is considered the most important U.S. trade legislation since passage of the North American Free Trade Agreement in 1993. But it faced a long campaign of opposition from labor, human rights and conservative groups who wanted to retain the annual review of trade relations with China.

The Senate passed the China trade bill in September after supporters won a bruising battle in the House of Representatives in May. Lawmakers from both sides of the aisle joined Clinton on the South Lawn of the White House to watch him sign the measure, dubbed the U.S.-China Relations Act of 2000.

The ceremony capped years of negotiations with Beijing and an intense debate at home among the Clinton administration, business and labor interests. It will open China's mammoth market to U.S. businesses and pave the way for China's entry into the World Trade Organization -- it also ends a 20-year-old U.S. ritual of annually reviewing China's trade status.

U.S. business interests wanted the agreement in order to gain access to China's market of 1-billion-plus people. But critics argued that such an agreement would reward a repressive communist state, undermine the country's labor and environmental protections and cost jobs for U.S. workers.

Dow plunges more than 3%

The Dow Jones industrial average tumbled nearly 400 points Thursday, its sixth loss in as many sessions and its fifth-biggest point drop on record, after a surge in oil prices sparked fears that rising inflation could harm the economy.

Violence escalated in the Mideast, sending oil prices as high as $36 a barrel, in the latest blow to a market that has sold off steadily since Labor Day.

The Nasdaq composite index tumbled to its worst close of the year; the Dow hit a seven-month low.

The selling picked up by session's end, a development that bodes poorly for any rebound Friday.

The Dow Jones industrial average fell 379.21 points, or 3.6 per cent, to 10,034.58. The Dow's fifth-worst point decline on record takes the index back to levels not seen since March.

Worse, the index of 30 blue chip stocks is essentially unchanged since the spring of 1999, when the Dow first crossed 10,000.

The Nasdaq composite index, which has seen dramatic losses this month on earnings worries, held up better Thursday. Still, the index fell 93.81, or 3 per cent, to 3,070.68, below its previous lowest close of the year: 3,164.55, set May 23.

The S&P 500 shed 34.81, or 2.5 per cent, to 1,329.78.

More stocks fell than rose. Declining issues on the New York Stock Exchange topped advancing ones 2,145 to 767, on trading volume of 1.3 billion shares. Nasdaq losers beat winners 2,966 to 1,118, as more than 2 billion shares changed hands.

In other markets, Treasury securities edged higher. The dollar rose against the euro but was little changed versus the yen.

In New York, oil for December delivery rose $2.48 to $35.72 a barrel and was as high as $36.90. Five U.S. sailors were killed in a possible terrorist attack on a Navy ship in a Yemen port. And escalation in the recent violence between Israelis and Palestinians also affected oil prices.

Congress passes landmark

A landmark auto safety bill that Congress passed Wednesday would send auto executives to jail who withhold information about safety defects.

The auto industry had opposed the bill, but Congress passed it in the aftermath of the Firestone tire recall. U.S. President Bill Clinton is expected to sign the bill into law.

The bill passed the Senate on a voice vote Wednesday just hours after winning House approval.

The bill increases civil and criminal penalties for auto executives who hide safety problems, requires auto manufacturers to measure the risk of rollovers, and mandates the installation of new systems to measure tire pressure.

In addition, the bill requires automakers and their suppliers to give the National Highway Traffic Safety Administration more information about accidents, warranties and claims so it can identify problems earlier.


Guidant: The Cardiovascular device maker Guidant posted third quarter net income of $122.8 million, or 40 cents a share, compared with earnings of $98.2 million, or 32 cents a share in the year ago quarter.

Gateway: The No. 2 direct seller of personal computers turned in a third-quarter profit that matched Wall Street's expectations. Earnings were $152.6 million, or 46 cents per share, up from $113.1 million, or 35 cents per share during last year's third quarter.

Veritas Software: The maker of data-storage software used in corporate networks, reported third-quarter pro forma net income increased to $70.3 million, or 16 cents per share, from $38.9 million, or 9 cents per share, in the same period last year.

GM: General Motors Corp. posted record third-quarter earnings per share. The world's largest automaker earned $829 million, or $1.55 a diluted share.

Bausch & Lomb: Bausch & Lomb reported third-quarter earnings of 70 cents a share.

New York Times: Excluding one-time items The New York Times Co. reported earnings of $75 million, or 44 cents a share, versus $60 million, or 34 cents a share for the same period last year.

Mergers & Acquisitions

Vivendi—Seagram: Despite a last-ditch appeal to antitrust officials in Brussels Thursday, the European Competition Commission is expected to announce Friday that Vivendi SA's $34 billion plan to buy Seagram Co. Ltd. will face up to four months of additional scrutiny.

Deutsche—NDB: Deutsche Bank AG agreed Thursday to acquire the remaining interest in online brokerage National Discount Brokers Group it does not already own for nearly $1 billion.

AOL—Time Warner: European regulators conditionally approved the $125 billion merger of America Online Inc. and Time Warner Inc. Wednesday, diverting investors' attention back to two U.S. regulatory agencies that still hold the power to derail the blockbuster union.

France Tel—Equant: France Telecom SA confirmed Wednesday widespread rumors that it was in talks with data network operator Equant NV, but warned that no takeover would take place "under current market conditions".

Enel—Infostrada: Italian power company Enel SpA strengthened its position in Europe's fourth-largest telecom market Wednesday by agreeing to buy Infostrada SpA from Britain's Vodafone Group PLC for 12.1 billion ($10.6 billion) in cash, bonds, and assumed debt.

Intesa—BCI: Italian banking titan Banca Intesa agreed Tuesday to buy the 30 per cent of Banca Commerciale Italiana it doesn't already own for about 3.4 billion ($3 billion) speeding up integration with the bank it took control of last year.

SmithKline—Block: SmithKline Beecham PLC agreed Monday to purchase Sensodyne toothpaste maker Block Drug Co. for $1.24 billion cash, strengthening the company's worldwide consumer health-care product line.

UPC—Tele-Columbus: Dutch cable TV operator United Pan-European Communications NV is close to buying Germany's second-largest cable provider Tele-Columbus from Deutsche Bank AG, said a person familiar with the matter, in a deal reportedly worth about $1.3 billion.

Fortis—ASR: Dutch-Belgian financial services provider Fortis said on Monday it would pay 3.3 billion euros ($2.9 billion) in stock and cash for the 80 per cent of ASR Verzekeringsgroep of the Netherlands it doesn't already own. The deal would make Fortis the No. 1 insurer in the Benelux region.

Shell—Fletcher: A New Zealand regulatory agency on Thursday halted the NZ$4.6 billion ($1.8 billion) sale of Fletcher Challenge Energy to Royal Dutch/Shell Group and Apache Corp.

US Airways—UAL Corp.: US Airways Group Inc. shareholders Thursday voted overwhelmingly in favor of the proposed $4.3 billion takeover by United Airlines parent UAL Corp.

Asian markets slide

Tokyo stocks ended Friday morning trade lower on broad-based selling in blue chips after their U.S. counterparts were hit by surging oil prices and earnings jitters, but gains in several defensive stocks limited Tokyo's downside.

The Nikkei average was down 275.69 points at 15,274.95 at midday, after recovering from an earlier low of 15,101.64, the lowest intraday level since March 9, 1999.

The blue chip Hang Seng Index dropped 2.62 per cent to 14,679 points at the open and fell lower to 14,505.24, down 3.78 per cent at 10:05 a.m., the index's lowest intraday level since May 31.

The Taiwan Weighted index slipped 5.47 per cent or 317.33 to 5,487.68 in early trade. Taiwan Semiconductor Manufacturing Co. was limit down at T$90.50 and rival United Microelectronics Corp. was limit down at T$55.50.

The South Korea KOSPI was down 4.62 per cent, or 24.71 points to 510.00 in early trade.

Australia's benchmark S&P/ASX 200 index fell 38.1 points or 1.2 per cent to 3,188.4, in early trade.

Europe ends mostly higher

Europe's main markets ended mostly higher Thursday, as indexes in Paris and London were underpinned by oil and telecom stock strength while Frankfurt's leading gauge got caught in a downdraft from Wall Street.

London's FTSE 100 index edged up 14.3 points, or 0.2 per cent, to close at 6,131.9, with ad agency WPP Group (WPP) atop the list of gainers, up 5.3 per cent.

In Paris, the CAC 40 blue-chip index added 34.58 points, or 0.6 per cent, to 5,990.70. Telecom equipment maker Alcatel (PCGE) rose 3.2 per cent and oil company TotalFina Elf (PFP) gained 2.9 per cent.

The Xetra Dax in Frankfurt sank 96.37 points, or 1.47 per cent, to 6,465.26, mirroring a drop for blue-chip stocks on Wall Street.

Elsewhere, Amsterdam's AEX index closed up 0.6 per cent, the MIB30 in Milan ended down 0.9 per cent, and the SMI in Zurich finished with a gain of 0.4 per cent.

The pan-European FTSE Eurotop 300, a broad index of the region's largest stocks, climbed 0.6 per cent, with the information technology sub-index rising 2.1 per cent — but down considerably from its 5.9 per cent gain earlier.

Import prices jump 1.5%

U.S. import prices rose last month, boosted by a big rise in petroleum costs, the government said Thursday. The U.S. Labor Department said import prices rose a stronger-than-expected 1.5 per cent in September after rising 0.2 per cent in August. Economists polled by Reuters had expected a 0.6 per cent gain in import prices last month.

Jobless claims climb

The number of Americans filing new claims for unemployment benefits were reported at 306,000 for the week ended Oct. 7, up from a revised 301,000 the week before, the government reported Thursday. Jobless claims are at their highest level since Sept. 16, when they reached 310,000.

Euro woes continue

Currency traders and central bankers are playing a game of cat and mouse, as the euro remains weak despite last week's rate hike by the European Central Bank.

Traders are cautiously testing the downside, but they are not moving aggressively to sell the euro for fear that this will trigger another round of coordinated intervention by the Group of 7 major industrial nations.

Tokyo insurer goes under

In Japan's biggest corporate bankruptcy, Chiyoda Mutual Life Insurance Co. said on Monday it had filed for court protection from creditors under new fast-track laws for troubled financial-services firms.

The failure of the nation's 12th-largest life insurer, with total debt of ¥2.9 trillion ($26.9 billion), should heat up a survival battle in the hard-hit industry, already reeling from falling premium income, low investment returns and weak share prices.

Those still in weak financial health will have to seek mergers or be acquired amid the increasing competition that has developed since deregulation opened the way for international insurers to enter the domestic market in 1998.

China Mobile gets funds

China Mobile (Hong Kong) Ltd said on Monday it has entered into two loan agreements totaling 12.5 billion yuan (US$1.5 billion) with a syndicate of eight Chinese domestic and international banks to help finance its acquisition of seven networks from its parent company.

Turmoil lifts Treasurys

Most U.S. Treasurys rallied strongly on Thursday as escalating Middle East tensions sent oil prices rising, U.S. stocks tumbling and investors fleeing into the safe haven of government-guaranteed securities.

Two-year notes were up 5/32 to 100-8/32, yielding 5.85 per cent. Five-year notes gained 11/32 to 104-2/32, yielding 5.72 per cent. Ten-year Treasury notes rose 11/32 to 100-5/32, as their yield fell to 5.73 per cent, while 30-year bonds, capped by oil gains, rose only 5/32 at 106-3/32, yielding 5.82 per cent.

Mortgages rates flatten

U.S. Mortgage rates remained relatively unchanged this week as the housing market continued to chart a steady course, a newly released survey by Freddie Mac shows.

The benchmark 30-year fixed-rate mortgage (FRM) averaged 7.84 per cent for the week ending Oct. 13. The average this week for a 15-year fixed-rate mortgage was 7.52 per cent. One-year adjustable-rate mortgages (ARMs) this week averaged 7.23.