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Dec 11 - 17, 2000

China pushes WTO bid

Chinese negotiators and members of the World Trade Organization met Tuesday in a new effort to overcome final obstacles to China's WTO membership.

"I think the momentum is there," China's lead negotiator Long Yongtu told reporters as he entered the meeting. China was "not far" from completing the deal, he added.

The body's working party dealing with the Chinese membership bid meets from Tuesday to Thursday, with a formal meeting set for Friday. China has been trying for more than 14 years to join the body that sets global rules for international trade.

Members arev hopeful that progress will be made on some of the issues that still divide China and the WTO's 140 members, WTO spokesman Keith Rockwell said. But, "It would be a surprise if this is the breakthrough meeting that brings China into the WTO," he added.

The issues include China's use of agricultural and industrial subsidies, the right of foreign services companies to trade in China, and how to determine whether Chinese goods are being sold below market price.

Talks last month brought substantial progress on some issues that had been holding up membership, including a transitional mechanism to monitor Chinese compliance with its WTO obligations, measures to increase transparency, and a system to simplify and standardize administration of import duties.

China still must complete a trade deal with Mexico, but that country has said it will not oppose Chinese membership even if their deal isn't completed. It now is impossible for China to join the WTO this year.

The WTO general council, which is holding the year's last meeting this week, needs to approve the final deal before Beijing ratifies it. China would become a member 30 days after reporting the ratification to the WTO.

Speaking in Brussels Monday, EU Trade Commissioner Pascal Lamy said he was hopeful this week's talks will make progress.

Strong growth: World Bank

The global economy appears poised for solid growth in the coming years as technological advances and globalization have helped boost growth prospects, the World Bank said in a report Tuesday.

In its annual Global Economic Prospects report, the bank said that while many developing countries could see the fastest growth in a decade, some of the world's poorest countries are hampered by industrial nations' trade barriers, further widening the gap between rich and poor.

The report forecasts world economic growth of 3.4 per cent in 2001, up from a March forecast of 3.1 per cent, and predicts growth of 3.2 per cent in 2002, up from an earlier 3.1 per cent prediction.

It also projects U.S. economic growth of 3.2 per cent in 2001, down from a rapid 5.1 per cent in 2000, before slowing further to 2.9 per cent in 2002. In March, the bank forecast U.S. growth of 2.7 per cent and 2.8 per cent for 2001 and 2002, respectively.

Growth is expected to be strongest in developing countries, where the bank sees economic expansions of 5.0 per cent in 2001, up from an earlier 4.8 per cent estimate, and 4.8 per cent in 2002.

The report also contained the following regional growth forecasts: East Asia and Pacific of 6.4 per cent in 2001 and 6.0 per cent in 2002. Europe and Central Asia of 4.3 per cent and 3.9 per cent in 2001 and 2002. Latin America and the Caribbean of 4.1 per cent and 4.3 per cent in 2001 and 2002. Middle East and North Africa of 3.8 per cent and 3.6 per cent in 2001 and 2002. South Asia of 5.5 per cent in both 2001 and 2002. Sub-Saharan Africa of 3.4 per cent and 3.7 per cent in 2001 and 2002.

The bank credited the positive prospects for developing countries to many nations' adoption of reforms to cut inflation, increase global integration and improve the health and education of their citizens. But, despite those improvements, further inroads into poverty reduction face significant risks, the report warned.

IMF hands Turkey $10b

Turkish Prime Minister Bulent Ecevit said Wednesday that agreement had been reached with the International Monetary Fund on more than $10 billion in aid to help the country weather a crisis in its banking sector and financial markets.

IMF and Turkish officials said $7.5 billion would come from a new supplemental reserve facility (SRF) and another $2.9 billion from Turkey's year-old $4 billion standby accord with the fund.

An SRF is a short-term facility charged at interest rates designed to encourage quick repayment.

Turkey needs the fresh money to replenish central bank reserves drained by a massive liquidity crisis sparked by fears of banking sector instability.

Turkey also expects the World Bank to discuss and approve $1 billion in financial sector reform loans before the end of this year, following legislation aimed at paving the way for the privatization of four large state banks.

IMF moves swiftly to avoid past mistakes

While the swiftness of the IMF's response to liquidity crunches in Turkey and Argentina underlined lessons learned from the global financial crisis of 1997-99, a slowing US economy and unresolved reforms could yet make for a rocky year in emerging markets, analysts say.

Early on Wednesday, after just a few days of intense talks, the International Monetary Fund came to Turkey's aid with a package worth about $10 billion to help the country deal with the effects of a sudden banking crisis.

And weeks of talks with Argentina are near conclusion for a preemptive rescue package to help South America's No. 2 economy meet $21.5 billion in financing needs next that have unsettled financial markets worried over Argentina's ability to come up with the necessary cash.

In both cases, swift action by the Washington-based lender helped calm global markets, analysts said. But it has not always been that way.

Senate passes bankruptcy bill despite

The lame-duck Senate on Thursday sent President Clinton a bankruptcy overhaul bill he has promised to veto because he believes it would hurt working families that fall on hard times.

Senators, by a 70-28 veto-proof vote for the bipartisan legislation, approved the most sweeping bankruptcy law changes in 20 years, making it harder for people to erase credit card and other debts in court. Supporters have pushed for the changes over the past three years.

The House and Senate passed competing versions of the legislation, both by veto-proof margins. The current compromise measure cleared the House by voice vote on Oct. 12.

For much of the year, lawmakers have sought to reach a deal on the legislation, which has divided Democrats. Supporters in both parties have received millions of dollars in political contributions from banks and credit card companies this election year.

In the final hours of Senate debate on Thursday, one longtime opponent, Sen. Paul Wellstone, said the bill was "harsh" and he accused the banking and credit card industries of "blatant hypocrisy" for aggressively soliciting new business.

Europe caught in tech drift

Europe's main markets closed lower Thursday as falling computer software and telecom stocks submerged indexes across the region.

London's FTSE 100 closed down 41.9 points, or 0.7 per cent, at 6,231.4 with fiber-optic component company Bookham Technology (BHM) falling 9.2 per cent after rocketing more than 20 per cent a day earlier.

In Paris, the blue-chip CAC 40 index closed virtually unchanged, off 0.55 of a point at 5,984.69, bouncing back from a earlier loss of as much as 1.4 per cent as TotalFina (PFP) rose 3.2 per cent.

Frankfurt's Xetra Dax was down 16.29 points, or 0.25 per cent, to 6,605.96. In Amsterdam, the AEX index fell 0.4 per cent, the SMI in Zurich shed 1 per cent, and Milan's MIB 30 slid 0.7 per cent. But Helsinki's HEX rose 3.4

The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, fell 0.2 per cent.

Nasdaq falls again

A fresh rash of corporate earnings worries hit the troubled technology sector Thursday, sending the Nasdaq composite index lower for the third time in four sessions and bringing its annual loss to 32 per cent.

The Nasdaq fell 43.85 points, 1.8 per cent, to 2,752.65 Thursday. The Dow Jones industrial average slipped 47.02 to 10,617.36, while the S&P 500 lost 7.91 to 1,343.55.

Market breadth was mixed. Advancing issues on the New York Stock Exchange beat declining ones 1,443 to 1,390 on trading volume of 1.1 billion shares. Nasdaq losers beat winners 2,361 to 1,554 as more than 1.7 billion shares changed hands.

In other markets, the dollar rose against the euro and yen. Treasury securities were little changed following a two-day rally.

Lackluster trade in Asia

Pressure from U.S. indices in conjunction with sell-offs in some key tech and property issues dulled or depressed a number of Asian markets by midday Friday.

In Tokyo, the Nikkei 225 was down 0.44 per cent to 14,655.64. In Hong Kong, the Hang Seng Index was up 0.47 per cent at 15,082.15.

The benchmark Nikkei 225 average fell 64.72 points to 14,655.64 by midday and the broader TOPIX index eased 4.85 points or 0.35 per cent to 1,363.32.

Hong Kong stocks were flat in early trade on Friday as the benchmark index tested support at 15,000.

The Hang Seng Index was up 70.63 points, at 15,082.15, after dipping to 14,968.64.

The Hang Seng properties sub-index was up 0.77 per cent, or 131.72 points, at 17,278.73.

In Singapore, the Straits Times Index was down 0.42 per cent, or 8.25 points, at 1,950.48.

Australian shares were mixed in early trade on Friday. The S&P/ASX 200 index dipped 3.3 points to 3,305.7, in early trading.

ADB to lend $140m

The Asian Development Bank (ADB) has approved US $140 million assistance to finance a US $300 million power plant in Bangladesh to produce 450 MW electricity. This is the first private sector power plant project in the country being supported by the ADB.

Bank of England keeps rates at 6%

The Bank of England announced on Thursday it had left its key Base Rate unchanged at 6.00 per cent for the tenth month in a row, in line with market expectations.

October figures showed underlying inflation at 2.0 per cent on the year, down from 2.2 per cent in September and well below the 2.5 per cent target the government has set the BoE.

China sees $240 billion export this year

China has predicted its final trade value for this year will reach a record US $455 billion, up 26 per cent from 1999.

The Ministry of Foreign Trade and Economic Cooperation (MOFTEC), in a report released on Thursday, said the export value is likely to reach $240 billion, a rise of 23 per cent, while import value should surge 30 per cent to $215 billion.

The official Xinhua news agency, quoting the report, said the customs statistics for the first 10 months of the year showed a rise in trade of 35.1 per cent to $387 billion, more than the total for the whole of 1999.

The huge growth is fuelled by healthy international markets and rising prices, as well as improvements to the domestic economy, including government policies to encourage trade, it said.

Mergers & Acquisitions

Philip Morris—Nabisco: The U.S. Federal Trade Commission cleared Philip Morris Cos.'s $14.9 billion acquisition of Nabisco Holdings Corp. Thursday, but required the tobacco and food company to divest several minor food operations to avoid antitrust concerns.

Emulex inks—Giganet: Electronics components maker Emulex Corp. struck an agreement Thursday to acquire closely held Giganet Inc. for $621.2 million in stock, extending the company's network solutions production capabilities into the Internet protocol category.

Best Buy—Musicland: U.S. electronics retailer Best Buy Co. agreed Thursday to purchase Musicland Stores Corp., the No. 1 U.S. specialty home entertainment products and music seller, for approximately $425 million in cash.

Shaw—Moffat Communications: Shaw Communications Ltd., Canada's second-largest cable company, extended its reach in Western Canada on Thursday by acquiring smaller rival Moffat Communications in a C$1.2 billion (US$785 million) deal.

C&N—Thomas Cook: Germany's second-largest travel firm C&N Touristic AG said Thursday it was buying tour company Thomas Cook Holdings Ltd. for £550 million ($795 million), securing a place in the British market.

Apache—Zama: Independent U.S. energy firm Apache Corp. said on Wednesday it would buy Phillips Petroleum Co.'s marquee Alberta oil and gas property for $490 million, marking its third major Canadian acquisition in the past 12 months.

Wanadoo—Freeserve: French Internet service provider Wanadoo agreed to buy Britain's Freeserve for £1.65 billion ($2.4 billion) in stock, giving it access to Europe's second-biggest Internet economy, the two companies announced Wednesday.

Safeway—Genuardi: Supermarket chain Safeway Inc. is buying Genuardi's Family Markets Inc., a 36-store chain in Pennsylvania, Delaware and New Jersey, for an undisclosed cash sum, the companies said Tuesday.

Results

Ciena: Telecommunications equipment maker Ciena Corp., based in Linthicum, Md., said pro forma net earnings rose to $41.3 million, or 14 cents a diluted share, in the fourth quarter ended Oct. 31, from net income of $4.7 million, or 2 cents a diluted share, in the year-ago period.

BG: BG Group PLC said operating profit from continuing operations rose to £168 million in the three months ended Sept. 30 from £65 million a year earlier, as revenue increased 36 per cent to £585 million.

Sage: British business software maker Sage Group PLC said its pretax profit for the year ended Sept. 30 rose to £108.7 million ($155.4 million), up from £74.3 million in the previous year.

Jobless claims fall

The number of Americans filing new claims for unemployment benefits for the week ended Dec. 2 was 352,000, down from a revised 361,000 for the week before, the U.S. Labor Department reported Thursday.

Natural gas prices rise

Natural gas wholesale prices in the United States spiked almost 20 per cent early Wednesday into record territory, as freezing temperatures over much of the nation again sent buyers scrambling for supplies. Arctic air blanketing much of the nation this week drove January wholesale prices on the New York Mercantile Exchange (NYMEX) to an all-time record high Wednesday of $8.80 per million British thermal units (mmBtu).

U.S. factory orders fall

Orders placed with U.S. manufacturers declined at a faster-than-expected pace in October, a government report released Tuesday showed, offering more statistical evidence that the U.S. economy is slowing down.

The Commerce Department said factory orders fell 3.3 per cent in October, a sharper decline that the 2.5 per cent drop expected by economists polled by Briefing.com and well below September's revised 1.1 per cent gain. September's orders initially were reported as a 1.6 per cent increase.

Euro hits two-month high

The euro rose sharply Monday to reach a two-month high against the dollar, amid expectations the pace of U.S. economic growth will slow over the coming months.

Europe's beleaguered single currency jumped to 89.05 U.S. cents from 87.92 cents in late New York trade on Friday. The dollar fell to its lowest level since the Group of Seven industrial nations intervened in support of the euro on Sept. 22.

Mortgage rates dip again

U.S. Mortgage rates dipped for the second week, reaching their lowest level in 17 months. The benchmark 30-year fixed-rate mortgage (FRM) averaged 7.54 per cent for the week ending Dec. 8, its lowest level in 17 months. The average this week for a 15-year fixed-rate mortgage was 7.19 per cent, its lowest in 17 months. One-year adjustable-rate mortgages (ARMs) this week averaged 7.21 per cent.

Long-term Treasurys rise

Longer-dated U.S. Treasurys rose Thursday, holding their ground after a potent two-day rally fired by optimism a slowing economy may prompt the Federal Reserve to cut interest rates early next year. Benchmark 10-year Treasury notes rose 3/32 to 103-9/32, while their yield, which moves in the opposite direction to prices, fell to 5.31 per cent. Thirty-year bonds rose 7/32 to 110-23/32, yielding 5.51 per cent. Two-year notes shed 1/32 to 100-10/32, yielding 5.44 per cent, while five-year notes were unchanged at 102-3/32, yielding 5.26 per cent.