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INTERNATIONAL

Feb 14 - 20, 2000

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

Nasdaq enjoys record close

The Nasdaq composite index soared to another record close Thursday, fuelled by gains from technology firms such as MCI WorldCom and Network Solutions.

But the Dow Jones industrial average fell amid weakness in the bond market following a poor auction of 30-year Treasury bonds.

The Nasdaq composite index rallied 122.39 points, or 2.8 percent, to 4,485.63, surpassing Tuesday's all-time high close of 4,427.50. The daily point gain is the fifth largest on record.

However, the Dow Jones industrial average fell 55.53 points to 10,643.63, while the S&P 500 index rose 5.12 points to 1,416.83.

On the New York Stock Exchange, declines outnumbered advances 1,799 to 1,229 on trading volume of 1 billion shares. On the Nasdaq, advances narrowly led declines 2,185 to 2,009, with volume of 1.82 billion shares.

Treasury prices fell sharply, with the benchmark 30-year bond losing more than a full point, raising its yield to 6.42 percent from 6.31 percent late Wednesday.

The dollar rose against both the yen and the euro.

Analysts said the same theme is apparent in the market this year as last year with the Nasdaq continuing to outperform blue-chip stocks and the broader market. So far this year, the Nasdaq is up about 10 percent while the Dow is off about 7 percent. Among broader indexes, the S&P 500 is off about 3.5 percent and the Russell 2000, which tracks small cap issues, is up about 7 percent. "Technology is where there's momentum," said Larry Rice, chief strategist at Josephthal & Co.

U.K. hikes interest rates

The Bank of England raised U.K. interest rates by a quarter of a percentage point to 6 percent Thursday in a widely-anticipated move likely to be followed by further tightening of monetary policy later in the year. The hike in the benchmark discount rate follows a similar rise last month and is the fourth in six months as the Bank's Monetary Policy Committee seeks to calm inflationary pressures.

Markets had expected the MPC to raise rates by either a quarter or even half a percentage point following the release of data pointing to the economy's continuing strength since its January meeting.

The decision was priced into the blue-chip FTSE 100 index, which was down 58 points at 6257, about where it was before the announcement.

The strength of the pound, primarily against the euro, has been one of the few factors arguing against a further rise in rates, with a 2 percent rise since the last MPC meeting. The currency was trading at $1.6086 after the announcement, just where it was prior to the hike, and about 0.9887 against the euro. "The pound's strength is tightening monetary conditions in the U.K., but it's not enough," said Stewart Newnham, treasury strategist at State Street Bank in London.

House prices, which have fuelled inflationary fears, rose 18 percent in the year ended in January, according to Halifax, Britain's largest mortgage bank. Strong retail sales figures released earlier this week confirmed the buoyant trend, which the MPC believes threatens its 2.5 percent inflation rate target. The Bank is due to release its quarterly inflation report next week.

The MPC's move is the latest in a line of central bank efforts to choke off inflationary pressures driven in part by rising commodity prices and the continuing strength of the U.S. consumer boom.

The European Central Bank raised rates in the 11-nation euro-zone to 3.25 percent on Feb. 2, a day after the U.S. Federal Reserve added a quarter percentage point to U.S. rates.

Korea hikes interest rates

The Bank of Korea hiked a key interest rate Thursday, but stressed the move was for technical reasons rather than any sign of pending inflationary pressure.

The central bank raised its target for the overnight call rate by a quarter percentage point to 5 percent, citing the need to iron out a distorted 5 percent spread between short and long-term rates.

The Bank has estimated that GDP grew more than 10 percent last year, sparking fears among some analysts that the economy's rapid rebound from the recession of 1998 spells higher inflation this year.

Frankfurt leads bourses

European stock markets ended in mixed form Thursday after a choppy session marked by sharp falls in high-flying media and telecom firms, with the banking sector providing the main corporate-news focus. Frankfurt reversed course at midday to forge ahead to a new record close, though London and Paris failed to recover from a sluggish start influenced by the sharp falls on Wall Street Wednesday.

In London, the FTSE 100 index closed down 36 points, or 0.56 percent, at 6,279.80, having fallen below 6,200 at one point.

In Frankfurt, the Xetra Dax moved back into the black, closing up 1.05 percent at a record 7,709.27, helped by speculation of a tie-up in the financial sector. The CAC 40 in Paris ended 1 percent lower at 6,207.52 as investors pulled back from its Net-related components after their strong recent gains. Most smaller markets remained lower, with the AEX in Amsterdam ending down 0.9 percent and the SMI in Zurich off 0.5 percent. The Mib-30 in Milan bucked the trend, up 1.5 percent on strong buying of financial stocks.

Results

Dell: Dell Computer Corp., the world's second-largest personal computer maker, reported a 3 percent increase in fourth-quarter net income.

Wassall: British mini-conglomerate Wassall Plc remained tight-lipped over talks that may lead to an offer for the company while reporting a 66 per cent rise in 1999 profits.

Adidas: German sportswear and equipment maker Adidas-Salomon AG posted a record operating profit of almost one billion marks ($501.8 million), boosting its share price by over six per cent.

MSFT eyes W2000 pirates

Windows 2000 hasn't even been officially released, but that hasn't stopped software pirates from ripping off Microsoft Corp.'s newest operating system.

Mergers & Acquisitions

Aether—Riverbed Tech: Wireless data systems provider Aether Systems Inc. agreed Thursday to buy Riverbed Technologies, a maker of mobile computing software, for about $800 million in stock.

Equifax—Polk: Equifax Inc., a provider of consumer credit information, agreed to buy the Consumer Information Solutions Group of privately held R.L. Polk & Co. for $260 million, the companies said.

CMGI—uBid: Internet investment company CMGI Inc. said Thursday it will buy Web auction site uBid.com for about $407 million in stock.

Intel—AT: Intel Corp, the world's largest computer chip maker, said that it plans to acquire Ambient Technologies Inc (AT) a privately held developer of chips used in digital subscriber line (DSL) technology and analog modems for $150 million in cash.

Telefonica—Latam: Telefonica shareholders cleared the Spanish telecommunications giant's $27 billion plan to seal its dominance of the fastgrowing Latin American phone market.

TCB—Ripplewood: Japan formally pulled down barriers to its domestic banking industry with a decision to allow a foreign consortium, led by U.S. investment group Ripplewood Holdings, to take over a failed crown jewel, the Long-Term Credit Bank of Japan (LTCB).

BCE—United Payors & United Providers Inc: BCE Emergis, the online arm of giant Canadian telecoms group BCE Inc. said it will buy U.S. claims processor United Payors & United Providers Inc for $580 million in cash to expand its e-commerce reach in North America.

Jobless claims rise

The number of Americans filing new claims for unemployment benefits climbed to 301,000 for the week ended Feb.5, up from 274,000 the prior week, the U.S. Department of Labor said.

Asia opens mostly higher

Hong Kong's Hang Seng Index surged 2.53 percent or 427 points to 17,272 shortly after the open on Friday, nearing the record high of 17,426.16 reached on January 3.

The Tokyo market is closed on Friday for National Foundation Day, and it will reopen on Monday.

Elsewhere in the region, Taiwan stocks were higher in early Friday trade. The benchmark weighted index opened 1.13 percent higher and rose to a high of 10,210.13 before profit-taking emerged to erode gains. Korea's main index was up 21.41 points or 2.22 percent at 9.87.59 after 10 minutes in trade.

Australian shares took an immediate hit Friday morning when News Corp opened down 70 cents to A$23.00 (US$14.49). The benchmark All Ordinaries Index fell 0.6 percent to 3,152.7.

Japan goes to banks for funds

In a rare move, the cashs-trapped Japanese government said it was seeking commercial bank loans rather than money from the bloated bond market to raise funds for local administration.

"We plan to borrow eight trillion yen ($75 billion) in loans from local private banks to secure a shortfall in funding for local governments for the fiscal year 2000 (from April)," said the finance ministry's Masato Tsuge.

The ministry's Trust Fund Bureau manages Japan's huge pool of postal savings, which at around 259 trillion yen forms the world's largest war chest in state hands.

With the Bank of Japan pursuing an ultra-lax monetary policy after a decade-long economic slump, the postal deposits offer the Japanese saver an average return of just 0.2 per cent.

Record trade surplus for Malaysia

Malaysia reported a record trade surplus of 8.6 billion ringgit ($2.3 billion) in December, confirming a resurgent economy driven by powerful overseas demand for semi-conductors and other electronic goods.

The surplus was far larger than the five billion to seven billion ringgit gap that economists had expected, and it outstripped the December 1998 surplus by 29 per cent.

Both exports and imports surged to record levels, a sign that both foreign and domestic demand were helping to drive the economy which last year began to emerge from its deepest recession in more than four decades.

ABN AMRO's Asia plan

Dutch banking giant ABN AMRO has said it had no specific plans to make more acquisitions in Asia but would focus instead on boosting revenues from existing business units.

ABN AMRO was active in the region last year, acquiring a bank each in Thailand and the Philippines and also Bank of America's consumer banking units in India, Singapore and Taiwan.

Volatile gold gains on producer buyback talk

Spot gold prices jumped in Europe, vaulting the key $300 area on market talk of a producer buying back its hedge position.

Dealers said the price rose sharply after talk of a producer buyback of its hedge positions swept through the market.

AngloGold said on Monday it would continue trimming its hedge book, which it had been reducing over the past four months.

Gold hit a high of $310.00 an ounce bid , four per cent up on the New York close. The yellow metal closed at $308.5 an ounce.

At London, the price was set at $308.60 a troy ounce compared to the $306.00 morning fix and $12.35 up on the previous day's fix.

Malaysia lifts GDP forecast

Malaysia has revised upwards its estimate of gross domestic product growth in 2000 and now expects it to expand by more than five percent driven by exports and a pick up in domestic demand.

Deputy Finance Minister Shafie Mohd Salleh told a gathering of foreign institutional investors that fundamentals had strengthened at a better-than-expected pace and growth in 1999 also could be higher than the official 4.3 per cent forecast.

Thailand says no need for IMF aid

International Monetary Fund help for Thailand will stop at the end of June, three years after the country's baht currency collapsed, plunging its economy and the rest of Asia into deep crisis, officials said.

Thai Finance Minister Tarrin Nimmanahaeminda told reporters Thailand had no further need of IMF assistance as its economy had now returned to strong growth.

Thailand entered an IMF economic rescue programme in August 1997 after taking a $17.2 billion bailout package from the agency following a collapse in the value of the Thai baht currency in July of that year.

SocGen plans Net trading in Japan

A brokerage unit of French financial group Societe Generale said it plans to start online broking of Japanese equities for individual investors later this year, possibly with technical backing from Japanese electronics giant NEC Corp.

A spokeswoman for the Tokyo branch of the unit, Societe Generale Securities (North Pacific) Ltd. said it plans to open a Web-based branch by September.

IBM secures $8m BT deal

International Business Machines Corp said it had won a contract initially worth $8 million from BT Plc for computers used to build one of the largest data storehouses in the world.

The installation, based on the IBM NUMA-Q line of computer servers it bought when it purchased Sequent Computer last summer, will hold more than 13 terabytes of data, or more than the sum of all text stored in the U.S. Library of Congress.