Nov 27 - Dec 03, 2000

World economy to grow

The OECD said on Monday the global economy was likely to expand by a healthy 4.75 per cent in 2001, as the U.S. powerhouse loses some steam, Europe settles back into cruising speed and Japan pulls out of the slow lane.

But it said world oil prices, at 60 per cent above last year's level, were a worry which could be aggravated by either conflict in the Middle East or a harsh winter, even if the toll was far less than during the oil crises of the 1970s.

"Global economic growth appears to have peaked during the first half of 2000, but world economic prospects remain relatively bright," the Organization for Economic Cooperation and Development said in its twice-yearly economic outlook.

It said growth across its 29 members as a whole was set to slow by about one per centage point in 2001 from 4.3 per cent this year but that a sharper-than-expected upturn in countries beyond the OECD bloc would secure global growth of 4 per cent or more in the coming two years.

"If oil prices go back to where they were a few months ago, $38 or $39 ... we could see a reduction in growth by 4/10 of a per cent and an increase in inflation by half a per cent," OECD chief economist Ignazio Visco said.

The report said it was assuming an OECD oil import price — which is about $1.0 cheaper than benchmark Brent crude prices on average — of $30 dollars a barrel until the middle of next year and a slight drop to $27 by the second half of 2002.

The report saw U.S. growth slowing to 3.5 per cent next year and 3.3. per cent in 2002, after 5.2 per cent this year.

The U.S. Federal Reserve might have to raise interest rates a bit more to help ease the pace in the short term. The OECD based its forecasts on an assumption it would raise its key fed funds rate half a per centage point, from 6.5 per cent currently.

EU seeks foreign economic migrants

The European Union should end its decades-old policy of "zero" immigration and start seeking out foreign economic migrants, the bloc's executive agency said on Wednesday.

Acknowledging for the first time that the EU needs foreign labour to work in its information technology and other sectors, the European Commission said the 15 nation bloc should hammer out common entry rules for foreign workers to fill the domestic skills gap.

"It is clear from an analysis of the economic and demographic context of the Union that the 'zero' immigration policies of the past 30 years are no longer appropriate," the Commission report said.

Since growing shortages of labour at both skilled and unskilled levels were already forcing a number of EU states to seek out foreign workers, this recruitment of foreign labour should be properly regulated at the EU level, the Commission said.

Adding to the appeal during a visit to Brussels, German Chancellor Gerhard Schroeder said simply: "We need immigration."

Although conservative parties in Germany and elsewhere were exploiting the issue for political reasons, Schroeder said it was important to take the debate on immigration in a "sensible direction."

EU officials stress that a fresh look at old-fashioned immigration policies is urgently required to compensate for Europe's ageing population.

Recent studies show that Europe's working age population (20 to 64 years) will begin to decline within the next 10 year, falling from 225 million in 1995 to 223 million in 2025. At the same time, the over-65 age group will continue to rise and reach 22.4 per cent of the population in 2025.

Admission rules for economic migrants should clearly address the needs of the market place, allowing the EU to respond quickly and efficiently to labour market requirements at national, regional and local level.

Nikkei edges higher

Tokyo's stock market recovered from an early drop Friday and ended the morning session mixed, with large-cap issues like Sony Corp. and Fujitsu Ltd. taking cues from a rebound in Nasdaq futures.

The Nikkei average rose 34 points, or 0.24 per cent, to end the morning session at 14,335.31. It had dipped to a low of 14,229.65 in early trade when investors were spooked by Wednesday's 4.04 per cent tumble in the Nasdaq composite index

The capital-weighted TOPIX index was slower to recover, finishing the morning down 7.08 points, or 0.53 per cent, at 1,339.50.

The S&P/ASX 200 index dipped 2.5 points to 3,278.7. In comparison, the energy index rallied about 0.8 per cent. The banking sector, which outperformed the wider market on Thursday, was down 0.6 per cent in early trade.

Singapore's main share index rose more than one per cent in early Friday trade. The key Straits Times Index was up 1.11 per cent or 21.58 points at 1,961.85.

Nasdaq hits 13-month low

The Nasdaq fell 116.11 points, or 4 per cent, to 2,755.34. The loss marks the Nasdaq's lowest close since Oct. 19, 1999, when it finished at 2,688.18.

The Dow industrials shed 95.18 to 10,399.32, while the S&P 500 lost 25.99 to 1,322.36.

Investors seeking safety from the sell-off snapped up fixed-income securities, sending Treasurys higher.

But at least one market watcher forecasts an end to the damage.

More stocks fell than rose. Declining issues on the New York Stock Exchange beat advancing ones 1,838 to 940. More than 965 million shares traded. Nasdaq losers topped winners 2,887 to 1,063 as nearly 1.87 billion shares changed hands.

Europe strong on techs

European markets soldiered higher without Wall Street to break their momentum Thursday, with "new-economy" stocks bouncing back strongly from the hammerings they've taken in recent sessions.

London's benchmark FTSE 100 index rose 65.9 points, or 1.1 per cent, to 6,287.3, with optical-component maker Bookham Technology and information technology company CMG leading gains.

France's CAC 40 jumped 108.34 points, or 1.8 per cent, to 6,053.04, led by telecom equipment maker Alcatel and the country's biggest TV-broadcaster TF1.

Frankfurt's late trading Xetra Dax climbed 1.4 per cent to 6,602.85. Chipmaker Infineon Technologies and automaker DaimlerChrysler powered the benchmark index to strong gains.

Amsterdam's AEX index dipped 0.5 per cent, Zurich's SMI gained 0.5 per cent and Milan's MIB30 rose 0.8 per cent.

The broader FTSE Eurotop 300 index, a basket of Europe's largest companies, rose almost 1 per cent with its telecom and information technology sectors rising more than 2 per cent.

F'furt mulls tighter rules

The Frankfurt stock exchange may tighten rules on the admission and conduct of companies listed on the Neuer Markt, its market for high-growth stocks, and exchange executive said Thursday.

Acquisitions & Mergers

AMRO—Michigan Nat'l: Dutch bank ABN Amro bought Michigan National Corp. from National Australia Bank Wednesday for $2.75 billion in cash.

NTT—AT&T: Japan's top mobile phone company, NTT DoCoMo, is close to taking a minority stake in AT&T Wireless Group Inc., a source close to the situation said Wednesday.

NBC—ValueVision: NBC and GE Equity upped their ownership stake in ValueVision International Inc., a home shopping network operator, to 44 per cent Tuesday, in exchange for a 10-year licensing agreement.

Fifth Third—Old Kent: Fifth Third Bancorp. agreed Monday to acquire Old Kent Financial Corp. in a nearly $5 billion stock swap, the biggest acquisition in Fifth Third's 142-year history.

Pogo—NORIC Corp: Oil and gas exploration company Pogo Producing Co. agreed Monday to buy NORIC Corp., parent of North Central Oil Corp., for about $630 million in cash, a move which will significantly increase the company's reserves.

France Tel—Equant: France Telecom SA finally took control of data network operator Equant NV in a $3.5 billion deal Monday after months of wrangling between the two Paris-listed firms.

BSCH—Banespa: Spain's biggest bank Banco Santander Central Hispano SA on Monday won Brazil's largest bank privatization auction, offering 7.05 billion reais ($3.6 billion), or more than three times the second-highest bid, for Banco do Estado de Sao Paulo SA.

Results

Softbank: Softbank Corp. estimated its consolidated net profit at 36 billion yen ($330.9 million) for the six months ended Sept. 30, making a solid turnaround from a loss of 3.52 billion yen in the year-earlier period.

Nissan: Nissan Motor Co. Ltd. reported a consolidated operating profit of ¥134.4 billion ($1.24 billion) for the April-September period on sales of ¥3.02 trillion. That was slightly below a preliminary estimate of the half-year results given three weeks ago, which put profit at ¥136.6 billion and sales at ¥3.05 trillion.

NTT: Nippon Telegraph & Telephone Corp. said operating profit reached ¥610.3 billion ($5.61 billion) in the six months ended Sep. 30, up from ¥563.9 billion a year earlier and easily beating analysts' forecasts of ¥400 billion.

Asian economies

Singapore, the region's fastest growing economy, hosts the ASEAN forum this week drawing together a group of troubled neighbours who threaten the stability of the economic grouping.

Singapore says it will attempt to steer the meeting toward measures to further integrate the 10 Association of Southeast Asian Nations members as well as expand trade ties with China, Japan and South Korea.

IMF leaves Russia

A top IMF team has left Moscow without agreeing to a new programme of cooperation that would open the way for Russia to restructure its massive Paris Club debts, the Fund said on Tuesday.

The IMF and Russia had agreed a programme in July 1999 allowing for loans of $4.5 billion, but the IMF suspended it two months later because Russia was not moving fast enough on structural reform. Russia inherited a backlog of debt when the Soviet Union collapsed in 1991, and the country's debt to its public creditors, who make up the Paris Club, has risen to $48 billion.

Russia pipeline in place

An international consortium has completed construction of an oil pipeline connecting petroleum fields in western Kazakstan to a Russian Black Sea port, giving a boost to Russia's ambition to control a main route to world markets.

The 948-mile pipeline will deliver its first oil from the Tengiz oil fields to the Russian port of Novorossiisk in mid-2001, after pumping and signalling equipment is installed, said Natalia Prutkovskaya, a spokeswoman for the Caspian Pipeline Consortium, Wednesday.

The $2.5 billion pipeline is expected to ship 600,000 barrels a day — a substantial boost to the exports of Kazakstan, which is believed to have the region's largest oil deposits.

Mortgage rates steady

U.S. Mortgage rates stayed flat in the absence of new economic reports. But rates were slightly ahead of last year's average, according to a survey released Wednesday by Freddie Mac.

The benchmark 30-year fixed-rate mortgage (FRM) averaged 7.73 per cent for the week ending Nov. 24. The average this week for a 15-year fixed-rate mortgage remained unchanged from the previous week's average at 7.41 per cent. One-year adjustable-rate mortgages (ARMs) this week averaged 7.28 per cent.

Treasurys take flight

U.S. Treasurys mounted a strong pre-Thanksgiving rally on Wednesday, outperforming corporate and federal agency debt, as the unsettled White House contest and concerns over corporate earnings sent stocks tumbling.

Benchmark 10-year Treasury notes gained 8/32 to 100-28/32, as their yield, which moves inversely to price, dipped to 5.63 per cent. Thirty-year bonds gained 26/32 to 108-4/32, after being up more than a full point earlier in the day. Their yields fell to 5.68 per cent. Two-year notes rose 1/32 to 99-26/32, yielding 5.84 per cent, while five-year notes gained 4/32 to 100-19/32, yielding 5.61 per cent.

Jobless claims climb

The number of Americans filing new claims for unemployment benefits climbed to 336,000 for the week ended Nov. 18 from a revised 329,000 the previous week, the government reported Thursday.

Yahoo! falls to 2-year low

Shares of Yahoo! Inc. tumbled Tuesday to their lowest level in two years, after an influential Morgan Stanley analyst said that the Internet portal has a 30 per cent chance of missing revenue targets in the next few quarters.

U.S. trade gap hits record

The U.S. trade deficit widened to a record in September as surging costs for oil, chemicals and other petroleum-based products failed to offset the dollar value of goods and services exported abroad, government figures released Tuesday showed -- a sign that the economy is still being fueled by strong demand.

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 September to a record $34.26 billion. That was almost $5 billion higher than August's revised $29.9 billion deficit and well above the $30.6 billion gap expected by analysts polled by Briefing.com.

German biz optimism dips

Germany's key business barometer, the Ifo index, fell in October for the fifth consecutive month to reach its lowest level this year, reinforcing views that euro-area interest rates will stay on hold for the time being.

The Ifo economic research institute's monthly survey showed that the headline index of business confidence in western Germany dropped to 97.2 from 98.0 in September, falling short of experts' forecasts that it would remain unchanged from the previous month.