. .

Mar 12 - 25, 2001

French fearful as world slams door

Farmers were demanding action to save their industry on Wednesday, one day after France triggered a global loss of faith in European meat production when it revealed a foot-and-mouth outbreak.

But Agriculture Minister Jean Glavany brushed off calls for a mass vaccination programme, preferring to stick to a policy of sealing off farms suspected of harbouring foot-and-mouth and slaughtering livestock.

Governments around the world, including the key North American market, on Tuesday shut their doors to French and, in many cases, all European meat and livestock exports following the news that the British epidemic had spread to some French cows.

So far more than 40,000 sheep, pigs and cows have been killed and burned.

For a livestock industry already suffering from the effect of the mad-cow crisis the new embargo is a body blow, and it has caused an atmosphere of desperation among farmers who thought they had done all they could to halt the virus in its tracks.

French farmers knew the risks and, apparently, Francis Leroyer's farm in La Baroche-Gonduin, in the western Mayenne region, where the French outbreak began was well-maintained.

"Francis has one of the best kept businesses in the region and he took all the right precautions after the warning about the sheep," Daniel Maetairie, the village's mayor and a pig farmer himself, told the daily Le Parisien.

"He installed disinfecting baths for his boots and vehicles, but that looks pointless today. The virus goes too fast."

Leroyer's herd of prime dairy cattle was kept just opposite a herd of sheep which were imported from Britain. The cattle and the sheep have now been burned, but farmers across France have started to demand if enough has been done.

Senate marches toward sweeping bankruptcy overhaul

Senate, after suppressing Democratic attempts to restrain banks in issuing credit cards, moved Thursday toward passage of legislation that would make it harder for people to wipe out debts in bankruptcy court.

The Senate voted 80-19 Wednesday to limit debate time on the most sweeping overhaul of bankruptcy laws in 20 years. A final vote is expected Thursday evening, but the bill would have to go to a House-Senate conference committee and approved again by both chambers before it would reach President Bush's desk.

A similar bill overwhelmingly passed the House on March 1. The Senate measure is expected to gain a significant amount of support when the vote is called, and Bush has pledged to sign the final House-Senate compromise version when it reaches him.

There are concerns within the administration, however, over sections of the bill Secretary of State Colin Powell said will have to be adjusted before Bush gives it his approval.

Powell said Wednesday that the administration opposes a provision in the legislation that could block insurer Lloyd's of London from collecting debts from some U.S. investors.

"We strongly oppose it," Powell said in testimony before the Senate Budget Committee. "It will cause us international difficulties, and it opens up other opportunities for others to try to seek similar relief."

Sen. Charles Grassley, R-Iowa, has been trying for at least four years to pass the measure.

Bankruptcy overhaul bills passed the Senate in each of the past three years, and one even made it to President Bill Clinton for signature last December. Clinton vetoed the measure, arguing it did little to protect needy debtors.

This year looks to be Grassley's year, with many Democrats supporting the bill and a friendly Republican in the White House.

Washington bans EU meat products

The United States said on Tuesday it is temporarily banning the importation of all animals and animal products from the European Union after France reported its first case of the highly contagious foot-and-mouth disease in a herd of cattle.

"This temporary action is being taken following confirmation of foot-and-mouth disease in France," the USDA said in a statement.

Earlier on Tuesday, French officials confirmed the nation's first case of foot-and-mouth disease since 1981 in a herd of 114 cattle at a farm in the northwest region of the country.

The United States has not imported any cattle or beef products from France since 1997 because of mad cow concerns.

Nasdaq falls, Dow gains

The Nasdaq composite index fell for a third time this week Thursday, as investors nervous about slowing profit growth unloaded shares of Oracle Corp. ahead of the software maker's quarterly earnings report.

The Dow industrials rose 57.82 points to 10,031.28, one session after falling below 10,000 for the first time in five months. It's been a wild week. After falling more than 400 points Monday, the Dow rose nearly 100 points the next day, only to lose more than 300 points Wednesday.

The Nasdaq shed 31.38 points, or more than 1.6 per cent, to 1,940.71, a slide that brought the index within sight of a 27-month low. And the S&P 500 gained 6.85 to 1,173.56 but, like the Nasdaq, remains in bear market territory.

Advancing issues on the New York Stock Exchange beat declining ones 1,626 to 1,420 as 1.2 billion shares traded. But Nasdaq losers topped winners 1,980 to 1,666 as more than 1.7 billion shares changed hands.

Asia claws back

Shares prices across Asia clawed back from an early sell-off on Thursday, but remained weak as investors reeled from Wall Street's massive retreat.

Japan's key Nikkei average fell to 11,433.88 in early trade — touching below 11,500 for the first time since December 26, 1984 — but was marginally higher at 11848.83.

The Hang Seng Index was trading down 0.91 per cent at 13209.06 after earlier breaking below 13,000 for the first time since October 1999.

Elsewhere, several equity markets were improving after a negative, with Singapore's Straits Times index 0.45 per cent weaker at 1784.14 — but at its high for the earlier falling to 1757.8.

Korea's KOSPI index was 2.12 per cent weaker in early trade, close to its 12-month lows at 531.77, while the tech-focused Kosdaq market was faring worse, tumbling 3.82 per cent to 69.29.

Australia's benchmark all ordinaries index closed 1.1 per cent weaker at 3188.4, off 22.6 points.

Europe sharply lower

Europe's main markets closed sharply lower on Wednesday, although markets recouped earlier losses as Wall Street's rout was short-lived.

London stocks, which plumbed a two-year closing low on Tuesday, fell further. The FTSE 100 index fell 1.7 per cent, or 94.8 points, to 5,625.9, with Internet data carrier Energis (EGS) diving 13 per cent.

In Frankfurt, the late trading Dax index slid 2.1 per cent, or 128.05 points, to reach 5,834.88, after sliding more then 4 per cent before the U.S. markets opened.

France's CAC 40 fell 1.4 per cent, or 71.37 points, to 5,115.50, after falling setting a new 17-month low of 4,978.07 earlier in the session. In other European markets, Zurich's SMI slid 2.1 per cent and Amsterdam's AEX fell 1.5 per cent. The MIB 30 in Milan fell 1.2 per cent.

China trade growth

China's trade growth will slow this year as the global economy loses steam, Minister of Foreign Trade and Economic Cooperation Shi Guangsheng said on Tuesday.

China's exports rose 14.5% in the first two months of the year to $36.14bn while imports climbed 17.7% to $33.77bn but Shi said growth would likely slow in coming months.

Treasurys up and down

Prices for short-term U.S. Treasury bonds rose Thursday, driving yields to two-year lows, as dealers bet that severe stock market losses this week will push the Federal Reserve to cut interest rates aggressively next week.

Two-year Treasury notes rose 4/32 to 100-25/32, yielding 4.20 per cent. Five-year notes rose 6/32 to 105-6/32 to yield 4.50 per cent. Benchmark 10-year notes rose 4/32 to 101-18/32, yielding 4.80 per cent. Thirty-year bonds slipped 9/32 to 101-10/32, yielding 5.29 per cent.

Mortgage rates hold tight

Long-term mortgage rates continue to hold below the 7 per cent mark and likely will remain there if the Federal Reserve, as expected, lowers interest rates next week, economists suggest.

The 30-year fixed rate mortgage averaged 6.96 per cent with an average of 0.9 points for the week ending March 16. The 15-year fixed rate mortgage hovered at 6.52 per cent, with an average 1 point. One-year adjustable rate mortgages (ARMs) that are indexed to the Treasury averaged 6.32 per cent this week, with an average 0.9 point.

U.S. jobless claims flat

The number of Americans filing for first-time unemployment benefits was unchanged last week from a revised total of 375,000 in the previous week, the U.S. Labor Department said Thursday.

U.S. trade gap sets record

America's deficit in the broadest measure of trade surged to an all-time high of $435.4 billion last year as an increase in U.S. exports failed to offset a huge rise in imports of consumer goods and oil.

The Commerce Department reported Thursday that the deficit in the current account was up a sharp 31.3 per cent from the previous record of $341.5 billion set in 1999.

The increase for the year came as no surprise, given that the quarterly deficits rose steadily to record highs. The fourth-quarter deficit rose to $115.3 billion, a 1.9 per cent increase from the $133.1 billion third-quarter imbalance.

The quarterly figures on the current account paint the fullest picture of America's trade troubles. They cover not only goods and services, which are reported in the government's monthly trade statistics, but also investment flows and unilateral transfers, a category that includes foreign aid.


AXA: French insurer AXA's 2000 net profit after goodwill writedowns and before one-off items came in at 2.261 billion euros, up from 1.865 billion a year earlier. Net profit before goodwill and exceptionals rose 24.2 per cent to 2.540 billion euros from 2.045 billion.

Kingfisher: U.K.-based retail and home improvement chain Kingfisher said annual pretax profit fell 16 per cent. Kingfisher, said profits before tax and one-offs were £606 million ($887 million).

BASF: Chemicals giant BASF reported a 15 per cent jump in annual profits. Europe's largest chemicals firm said it made an operating profit before one-off items of 3.4 billion ($3.1 billion). Net profit for the year was virtually unchanged at 1.24 billion.

Trinity: Trinity Mirror, Britain's largest newspaper publisher, said on Thursday that underlying profits rose 12 per cent to £196 million ($283 million) last year.

Credit Suisse: Credit Suisse, Switzerland's second-largest bank said 2000 net profit rose to 5.8 billion Swiss francs ($3.5 billion), or 20.8 francs per share, from 5.2 billion francs, or 19.2 francs, a year ago.

Japanese banks take a hit

In the latest challenge to the Japanese economic outlook, international debt rating agency Fitch said on Wednesday it has placed warnings on individual ratings of 19 Japanese banks, including the world's biggest banking group, Mizuho Holdings Inc.

The action was taken in response to growing concern over the impact of falling share prices and lingering asset quality problems on the banks' capital adequacy, performance, and prospects, Fitch said in a report.

UK jobless falls

Unemployment in Britain has fallen below the symbolic one million mark for the first time in 25 years, far below the European average. National Statistics reported the number of jobless people claiming unemployment benefit fell by 10,600 in February to 996,200 — the lowest level since November 1975.

Mergers & Acquisitions

Tyco—CIT: Tyco International Ltd. agreed Tuesday to acquire commercial finance firm CIT Group Inc. for $9.2 billion in cash and stock, giving the diversified manufacturer a financial services arm.

Barrett—Shell: Barrett Resources Corp. announced Monday that it will now consider the $1.8 billion takeover offer from Shell Oil Co., a unit of Royal Dutch/Shell Group.

Novell—Cambridge: Computer networking software vendor Novell Inc. said Monday it will buy technology consulting firm Cambridge Technology Partners Inc. for $266 million in stock.

SPX—United Dominion: SPX Corp., which supplies parts and services to vehicle manufacturers, agreed Monday to buy United Dominion Industries Ltd. for $954 million in stock plus the assumption of $876 million in debt, bring the total transaction value to $1.83 billion.

Pru—American Gen.: British insurer Prudential on Monday agreed to buy American General for $26.5 billion, in one of the largest insurance industry deals of all time. But the news sent the British firm's shares down 13 per cent.

Sony, IBM set chip venture

Sony Computer Entertainment Inc., maker of the PlayStation 2 game console, said Monday it would join forces with Toshiba Corp. and IBM in a $400 million, five-year plan to develop a new type of microprocessor. The three said they aim to create next-generation chips with processing power equal to a supercomputer that could be used in a variety of "intelligent" consumer electronics able to communicate with each other or connect with the Internet.

Japan's finances 'close to collapse'

Japanese Finance Minister Kiichi Miyazawa warned Thursday its finances are on the brink of disaster.

Miyazawa told a parliamentary committee that the country's finances "are very close to collapsing."

Miyazawa blamed the country's burgeoning public debt. Japan's $5.4 trillion public debt equals 130 per cent of its gross domestic product. This is a higher ratio than any other leading industrial democracy.