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Jan 31 - Feb 06, 2000

  1. International
  2. Finance
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Euro plumbs new depths against dollar

The euro slid to a record low against the dollar, undermined by offficial silence about the single currency's weakness, stronger than expected U.S. economic data and gains on Wall Street.

European government bond yields rose as the euro sank, with cash bonds falling amid growing speculation the European Central Bank will soon raise interest rates.

Telecoms, drugs and bank stocks lifted European bourses.

Oil prices fell as traders cashed in their gains and as the United States raised the heat on the Organisation of Petroleum Exporting Countries (Opec) to supply more crude.

The euro fell below the one-to-one level against the dollar to hit a new low of $0.9869, dragging the Swiss franc to 10-year troughs against the greenback in its wake. At 1700 GMT, the euro was trading at $0.9890 from $1.0015 late Wednesday in New York.

The euro slipped nearly two yen to below 103 yen, before recovering slightly. The dollar's yen rate slipped three-quarters of a yen to around 104.80 yen.

U.S. stocks climbed as a profit warning from the world's No. 2 personal computer maker, Dell Computer Corp, failed to roll investors and the technology sector led the market up.

The Dow Jones Industrial Average was up 73. 22 points at 11,106.21 by the the European traders headed home. The technology-heavy Nasdaq was up 30.49 points at 4,100.40.

Among leading European blue-chip bourse indices London's FTSE 100 added 1.03 per cent, Frankfurt's DAX rose 2.25 per cent and Paris' CAC was up 0.74 per cent.

European government cash bonds slid on the falling euro, accelerating losses after a strong rise in U.S. durable goods orders of 4.1 per cent in December. U.S. Treasuries also weakned.

Asia stocks 'to rise 25pc despite U.S. rate risk'

Asian share prices are set to rise 25 per cent in 2000, outperforming most other global markets despite the risk of higher U.S. interest rates and a correction on Wall Street, a top Sardine Fleming analyst said.

"Although Asian markets will fall short of l999's impressive 53 per cent rise in 2000... (we) expect Asian markets to rise at least 25 per cent this year," Dan Fineman, the investment house's Hong Kong-based regional strategist, said in a report.

"The U.S. poses far and away the largest risk to Asia but, even here, investors can do better in Asia than in other regions at worst we expect Asia to perform in line with the U.S., not underperform," said the report. It said Asian shares would be buoyed by strong earnings growth, stable low-interest rates, ample liquidity, strong currencies and falling risk premiums.

Taiwan, Malaysia, India, China and Hong Kong are the top picks in the region, in that order. Fineman backed a switch into "old economy" cyclical stocks like consumer, bank and property shares, and he also suggested a shift within the technology sector from pure Internet plays to hardware manufacturers.

Asian banks 'set to raise $11b'

Asian banks are forecast to raise more than $11 billion in 2000 to recapitalise their balance sheets in the wake of the Asian financial crisis, Credit Suisse First Boston (CSFB) banking analysts said.

"Across Asia in 2000, banks are looking to issue equity totalling $11 billion, " John Ogden, head of regional banking research at Credit Suisse First Boston, told a briefing.

Equity investors would be very selective because of the large volume of new issues and not all the banks' issues would be successful, he said.

Approximately 25 per cent of the expected new issuance would come from Korean banks, particularly those banks with relatively large exposures to Daewoo Group, Hobson said.

CSFB analysts said they favoured Korea, India and Singapore banks in the coming year.

The better capitalised banks such as Shinhan Bank and Kookmin Bank, were the best investments, Hobson said. The brokerage also liked Housing and Commercial Bank, Hana Bank and KorAm Bank.

In Singapore, further consolidation in the industry was likely, analysts said.

Both OCBC and OUB, the two favoured banks in the sector, have retained independent advisers to study the feasibility of in-market consolidation, it said.

In addition, Singapore should enjoy a cyclical recovery in 2000, improving capital management, and positive regulatory changes.

The brokerage house was also upbeat on Indian banks' earnings growth on the back of greater political certainty and rising private sector consumption in 2000.

The house is neutral on Hong Kong banks. Its top picks in the Hong Kong market are Dah Sing Financial, Dao Heng Bank Group Ltd. and Heng Seng Bank Ltd.

CSFB had a zero weighting on Indonesia banks, regional analyst Mehdee Reza told the briefing.


Ford: Ford Motor Co said that fourth quarter profits increased 73 per cent to $1.81 billion. Ford's fourth period earnings per share were $1.47 versus 84 cents.

DuPont: DuPont Co, the No. 1 U.S. chemical company, said its earnings fell more than 14 per cent and income from continuing operations dropped to $583 million from $682 million in the same period last year.

Compaq: Compaq Computer Corp has said fourth-quarter net income fell 56 per cent to $332 million. Net income fell to $332 million, or 19 cents per diluted share, from $758 million, or 43 cents, in the year-earlier quarter.

AT&T: Long-distance telephone company AT&T Corp's earnings fell 42 per cent, to $1.15 billion, or 36 cents a share, from $1.99 billion, or 75 cents a share, a year ago.

BBVA: Spain's new bank Banco Bilbao Vizcaya Argentaria (BBVA) reported a 22.6 per cent rise in earnings. The bank said net attributable profit was 1.75 billion euros ($1.76 billion) in 1999.

Kodak: Photography icon Eastman Kodak Co reported fourthquarter profit jumped by 21 per cent. The film maker reported net profit of $475 million or $1.50 a diluted share, compared with $272 million, or 83 cents a share in the year-earlier penod.

Siemens: Germany's Siemens AG said income after tax and before extraordinary items more than doubled to 625 million euros from 327 million in the October 1 to December 31 period.

Caterpillar: Caterpillar Inc. said that net income fell more than 20 per cent in the fourth quarter. Net income for the quarter was $239 million, down from $301 million a year ago.

Sun Micro: Palo Alto, California-based Sun said its net income rose to $353 million from $273 million, excluding one-time acquisition-related items, in the year-ago quarter.

Lucent: Telecommunications equipment maker Lucent Technologies Inc has said its first quarter profits fell 23 per cent. New Jerseybased Lucent said it earned $1.175 billion or 36 cents a share, compared with $1.52 billion, or 48 cents a share, a year ago .

Samsung Electronics: Chipmaker Samsung Electronics Co announced a record net profit of $2.8 billion in 1999, up over 900 per cent from a year earlier. Samsung Electronics, said net profit for the year totalled 3.17 trillion won, compared with 313 billion won in 1998.

Mergers & Acquisitions

EMI-Warner: Britain's EMI Group Plc and Time Warner Inc said they were merging their music businesses to create the world's top record company, worth $20 billion, with a powerful presence on the Internet.

SingTel—C&W HKT: Singapore Telcommunications Ltd (SingTel) confirmed it was in talks about a merger with Hong Kong's Cable & Wireless to create an Asian telecoms giant with a combined market capitalisation of about $61 billion.

Bell Atlantic: New York-based Bell Atlantic said profits, excluding one-time items, rose to $1.2 billion or 77 cents a share, compared with $1.1 billion or 69 cents a year ago.

FrontLine—CarrAmerica unit: FrontLine Capital Group, a developer of business-to-business Internet companies, said it planned to buy CarrAmerica Realty Corp's executive office suites affiliate for $380 million in cash.

MNB—Christiania: Norway's state bank fund reiterated its opposition to a $3.1 billion bid for Norway's Christiania Bank from Swedish-Finnish MeritaNordbanken (MNB).

Sprint—Global One: Long-distance telephone company Sprint Corp said it will sell its stake in money-losing international joint venture Global One to Deutsche Telekom AG and France Telecom for $1.13 billion in cash.

Citicorp—Bank Handlowy: U.S. financial giant Citicorp wants to buy Poland's biggest corporate Bank Handlowy and a stake in insurer PZU, a banking source said extending its foray into Europe after buying the investment unit of Britain's Schroders.

Bangladesh drug firm eyes U.S. market

Bangladesh's largest private pharmaceuticals producer, Beximco Pharmaceuticals Limited (BPL), expects to start exporting to the United States in three years under a market expansion plan, the company said.

The BPL, with a 16 per cent local market share, aims to raise its exports by 10 per cent in 2000 from 250 million taka ($4.90 million) in 1999, BPL's commercial director Nazmul Hassan said.

British gold auction surprises market

The Bank of England sold 25 tonnes of official gold reserves for $289.50 a troy ounce yesterday, a price above market expectations as the auction attracted more bids than the previous bullion sale.

The auction will provide the UK Treasury revenue of around $233 million and was the fourth in a series aimed at reducing British gold holdings by 58 per cent to 300 tonnes as part of a plan to modernise its holdings.

By mid-aftenoon, gold had slipped some $3 to $287.90/ 8.50. The afternoon fix was $288.00 an ounce, down from the morning's $288.70.

The world's number one miner, Anglogold, said it bought less than 10 per cent of the gold sold at auction. It gave no further details of its purchase but earlier it had said it did not intend to take part in the auction.

Just hours after the UK sale, the Dutch central bank said it sold 23 tonnes of gold last week as part of its programme to sell 100 tonnes before next September.

Analysts said the auction result was good in terms of the level of cover, with bids covered 4.3 times compared to the 2.1 times at the previous auction in November 1999.

"It is good in terms of level of cover, and good in terms that there was sufficient bids above the prevailing morning price to lift it to higher than the fix.

"What detracts from it is that it looks as if 60 per cent was at levels below the price at which it went out. On balance it is marginally positive, given that last time around nobody seemed to be particularly interested, " said T Hoare Canaccord metals analyst Rhona O'Connell.

Japan receives four bids for Nippon Credit Bank

Japan's commission handling banking reforms said it had received four bids to take over the failed Nippon Credit Bank (NCB).

The Financial Reconstruction Commission "has received bids from four parties but given the fact that negotiations are still under way, we are not commenting on who the individual bidders are," an official said.

The official, who declined to be named, would not confirm a Financial Times report saying insurance giant American International Group (AIG) and U.S. investment bank Lehman Brothers could be among the four.

The newspaper reported that New York-based AIG and Lehman Brothers were holding informal discussions about a possible joint bid for NCB.

FTSE to create new e-tailing stock index

Britain's FTSE International said it would recognise e-commerce retailers by creating a new e-tailing index sub-sector from April 3.

FTSE International said the provisional list of companies to be included in the new subsector included Amazon.com Inc. eBay Inc. Gameplay Plc and QXL Plc.

FTSE International said it would also monitor the level of e-commerce companies within the financial, leisure and media sectors and would introduce new e-commerce subsectors for these types of companies when appropriate.

S. Korea, foreign banks reach Daewoo debt pact

South Korea said that leading foreign creditors had reached a debt restructuring agreement with troubled Daewoo Group, once one of the country's mightiest conglomerates.

The plan to purchase loans for cash would apply to $4.84 billion in non-secured loans to four Daewoo affiliates out of Daewoo's total foreign debts of $6.7 billion, South Korea's Corporate Restructuring Coordination Committee (CRCC) said.

"If all debt is tendered, the purchase price on an overall basis will be the equivalent of between 39 per cent to 40 per cent of face value," the CRCC said.

Oil prices up as cold snap cuts US stocks

World oil prices made a renewed push towards nine-year highs on Wednesday as fresh data showed larger-than-expected declines in US petroleum stockpiles.

North Sea benchmark Brent Blend for March delivery climbed more than 40 cents per barrel in opening trade in London to hit an early peak at $26.95 per barrel.

By 1145 GMT, Brent stood 29 cents higher at $26.83 per barrel, just 28 cents off the previous nine-year high of $27.11 set on Friday.

Brent prices, which had dipped below $26 per barrel on Tuesday, were pulled higher by weekly stocks data from the American Petroleum Institute (API) showing stocks eaten away by recent cold weather in the United States.

US oil inventories fell by three million barrels in the week to January 21, doubling expectations of around 1.5 million barrels.

Moulinex may close

Ailing appliance-maker Moulinex will probably close some French factories as part of a restructuring plan which includes cutting 1,500-2,000 jobs over 18 months, chairman Pierre Blayau said.

Blayau, asked on French radio whether he would close factories in France, said: It's probable." He added that he did not want to sum up the future of Moulinex in terms of closed factories.