04 - 10 , 2001
G-15 summit ends with call for unity
The 11th summit of the G-15 nations closed on Thursday with
fervent appeals from heads of state for greater unity among developing nations
in closing the gap in wealth and privilege with the developed world.
We have to unite, there are no other options, said Venezuelan
President Hugo Chavez as he assumed the rotating chairmanship of the G-15 forum
during its closing ceremony. Venezuela will play host to the next G-15 summit in
Caracas in 2002, taking over the chairmanship from Indonesia.
The 19 heads of state and government at the two-day summit,
including four presidents and three prime ministers, agreed on a resolution
called the Jakarta Declaration, which Chavez insisted on expanding in last
minute deliberations. He won agreement that the declaration would include or be
accompanied by the setting up of a commission that would coordinate all
decisions made in G-15 summits and make recommendations to the forum's heads of
The Declaration focused on bridging the digital divide
between the developed and developing worlds. Its key platform was the
establishment of a G-15 taskforce on information and communication technology (ICT).
It warned that without efforts to bring developing nations up
to speed with their wealthier counterparts in ICT, the information and knowledge
revolution could increase economic inequalities among and between peoples,
countries and regions of the world. We are deeply concerned that at present the
huge potential of ICT for advancing development is largely eluding most
developing countries resulting in a growing digital divide, it stated.
The document called on multilateral institutions and
developed countries to encourage and strengthen ICT-related applications and
local industry in developing countries through investment, education and
training. Chavez described the agreement on a commission for coordinating such
resolutions as the "most positive outcome" of the summit.
Euro hits 5-month yen low
The euro hit this year's lows against the yen and the dollar
on Thursday, its latest losses coming after comments by European Central Bank
officials were seen playing down the prospect of intervention in its defence.
The latest lurch lower in the euro came after ECB President
Wim Duisenberg said the central bank did not have an exchange rate target and
that the euro's exchange rate would pose a problem only if did not support the
ECB's inflation target, which was not the case.
His comments came after ECB council member Klaus Liebscher
told Reuters conditions now were "completely different" from when the
ECB last intervened and that the euro's exchange rate was only one of a number
of risk factors.
Also, Japan's Finance Minister Masajuro Shiokawa had said
earlier on Thursday that small daily currency movements did not warrant
The accumulated losses left the euro down two per cent down
on the day and its weakest in five months against the yen. It had already hit
six-month lows against the dollar and extended its fall to as far as $0.8465
according to Reuters data.
"Intervention concern had been providing a floor for the
euro but this
morning's comments don't give the impression that
intervention is likely anytime soon," said Nick Stamenkovic, chief
strategist at Nomura International in London.
The speed and magnitude of the euro's losses against the yen
dragged the dollar to three-month lows against the Japanese currency, with lows
of 118.70 yen tested according to Reuters data.
The euro fell to lows below 100.80 yen and also fell to new
six-month lows below 59.70 pence
Indonesian lawmakers voted overwhelmingly on Wednesday to
seek a special meeting of the national assembly that could impeach President
Abdurrahman Wahid, as one Wahid loyalist died in violence against the vote.
A total of 365 lawmakers of the lower house, the People's
Representative Council (DPR), voted for the special session, four were opposed
and 39 others including the military, abstained. Some 4,000 supporters of the
embattled leader who hours before smashed through police lines and tore down the
fence and occupied the front lawn of the parliament complex for two hours,
failed to deter the impeachment push.
Modest Wall St. rebound
U.S. stocks pared their gains but still ended modestly higher
Thursday as investors geared up for two key economic reports on Friday about
unemployment and manufacturing, hoping for signs of strength.
The Nasdaq composite index gained 25.99 to 2,110.49. The Dow
Jones industrial average advanced 39.30 to close at 10,911.94, and the S&P
500 added 7.74 to 1,255.82.
Thursday's advance came a day after the Dow closed below
11,000 and the Nasdaq closed below 2,100 for the first time in two weeks. But
not much has changed fundamentally — investors still anticipate a dismal
Tokyo holds up after Wall St gains
Tokyo stocks held onto modest gains by midday Friday,
bolstered by rises on Wall Street and an inkling that Japan's techs had fallen
The benchmark Nikkei average ticked up 0.44 per cent or 58.30
points to 13,320.44, while the capital-weighted TOPIX index gained 0.38 per cent
or 4.93 points to 1,315.74.
Australia's benchmark S&P/ASX200 was up 18.8 points to
3397.9, but still well below the record high of 3444.3 reached in May.
The Shanghai B index dipped slightly, losing 1.2 points to
238.519 The Shenzhen B index was up 3.2797 points to 428.7857.
The Hang Seng index in Hong Kong was up about 45 points to
Europe closes flat
Europe's major bourses stabilised on Thursday after the
previous day's falls, with Wall Street starting perkier and defensive stocks in favour.
Frankfurt's electronically traded Xetra Dax rose 1.2 per cent
in late trading to 6,111.36, boosted by the performance of financial stocks.
London's FTSE 100 closed virtually unchanged at 5,796.1.
In Paris, the CAC 40 blue chip index gained 0.2 per cent to
reach 5,454.19. In Amsterdam, the AEX index rose 0.4 per cent and Milan's MIB30
index gained 0.1 per cent. But the SMI in Zurich was down nearly 1 per cent. The
pan-European FTSE Eurotop 300, a broader index of the region's largest stocks,
was up 0.3 per cent, with the distributors sub-index rising by 6.7 per cent.
Mortgage rates inch higher
Mortgage rates continued to move higher in the latest week
even though new and existing home sales fell in April.
According to Freddie Mac's Mortgage Market Survey, The
benchmark 30-year fixed-rate mortgage (FRM) averaged 7.24 per cent for the week
ending June 1. The average this week for a 15-year fixed-rate mortgage was 6.78
One-year adjustable-rate mortgages (ARMs) averaged 5.89 per
cent, rising from last week's average of 5.82 per cent.
U.S. Treasurys rise
U.S. Treasurys jumped higher on Thursday, pushing yields on
two-year notes to three-week lows, as investors bet that signs of further labor
market and manufacturing weakness will spur the Federal Reserve to cut rates
again when it meets next month.
Tthe new two-year Treasury notes auctioned on Wednesday were
up 6/32 at 100-2/32, yielding 4.21 per cent. Five-year notes rose 14/32 to
98-20/32, yielding 4.94 per cent.
Benchmark 10-year notes rose 25/32 to 97, yielding 5.40 per
cent, and 30-year bonds rose 31/32 to 94-13/32, yielding 5.77 per cent.
U.S. jobless claims higher
New jobless claims rose for the third straight week in the
United States last week, the government said Thursday, a steeper increase than
economists had expected and a sign of continued weakness in the labor market.
New claims for state unemployment benefits rose to 419,000 in
the week ended May 26 from a revised 411,000 the prior week, the Labor
Putin shakes up Gazprom
A shake-up at the state-owned gas monopoly Gazprom has shown
President Vladimir Putin's willingness to tackle reform, but his task of
changing the way Russia is run remains vast and his plans ill-defined,
economists said Thursday.
Putin took markets and political commentators by surprise
Wednesday, authorizing the dismissal of veteran Gazprom boss Rem Vyakhirev and
his replacement with an ally, the little-known Deputy Energy Minister Alexei
Analysts said they hoped the change heralded a new era, which
would see the start of reforms to improve Gazprom's profitability, potential and
transparency — the ability to clearly follow the company's activities.
Mergers & Acquisitions
Telekom—VoiceStream: Deutsche Telekom, Europe's biggest
phone company, said on Thursday it completed the acquisitions of VoiceStream
Wireless and Powertel. The completion of the VoiceStream takeover, originally
valued at $53 billion, comes a year after the deal was announced, as Deutsche
Telekom overcame various U.S. regulatory and national security concerns.
GM—Daewoo: General Motors on Wednesday submitted a
proposal to buy Daewoo Motor Co., a move that formally starts the negotiation
process. Detroit-based GM declined to comment on press reports that the world's
largest automaker had bid $775.7 million for Daewoo Motor.
Medtronic—MiniMed: Medtronic Inc. agreed Wednesday to
buy two companies that make products to treat diabetes, MiniMed Inc. and Medical
Research Group Inc., for a total of $3.7 billion in cash and stock.
Bertelsmann—Myplay: Bertelsmann AG agreed Wednesday to
acquire Myplay Inc., the latest effort by a major label to put its music on the
Internet. Bertelsmann's e-commerce group inked a deal to buy the Internet start
up for an undisclosed amount though press reports pegged the purchase at $30
Tyco—Bard: Diversified manufacturer Tyco International
Inc. agreed Wednesday to acquire medical equipment maker C.R. Bard Inc. for $3.2
billion in stock.
Sequenom—Gemini: San Diego-based Sequenom Inc said on
Tuesday it will buy Britain's Gemini Genomics Plc for $203.2 million in stock,
part of a wave of consolidation in the emerging genomics industry.
Conoco—Gulf Canada: Integrated oil producer Conoco Inc.
said Tuesday it agreed to buy Gulf Canada Resources Ltd. for C$6.7 billion ($4.3
billion) in cash and also assume about $2 billion of debt.
France awards 3G licences
France awarded two third-generation (3G) mobile phone
licences on Thursday to France Telecom's Orange and Vivendi Universal's SFR.
Orange and SFR were the only two candidates to apply for the
licences for high-speed mobiles that will allow phones to carry out multimedia
The companies will pay a fee of 4.95 billion ($4.2 billion)
for the licences, but the payment schedule will be changed following concerns
over the debt burden Europe's phone companies are taking on to acquire 3G
UK house prices jump
UK house prices have risen by an average of 50 per cent under
the Labour government, the biggest increase since the early 1980s.
The average price of a house in the UK is now £87,267
($124,500), the mortgage-lending Nationwide Building Society said, compared with
£58,196 when Labour came to power in May 1997.
Nationwide said house prices rose by 0.8 per cent in the last
full month of the Labour government, bringing the annual increase in May to 7.7
per cent from 6.6 per cent in April.
Boots: The UK's No. 1 personal care and drugs retailer
Boots said pretax profits before one-time items rose 1.8 per cent during the
year to £581 million ($827 million) compared with £570.8 million last year, in
line with forecasts.
365 Corp: The troubled UK Internet group 365 Corp.
announced widening full-year losses of £16.9 million, up from £5.9 million
Microsoft targets AOL
A week after America Online said it is raising rates for
unlimited monthly Internet access, Microsoft Corp.'s MSN Internet division has
launched a $50 million campaign aimed at getting AOL users to switch to
Michael Powell's call
Michael Powell, the new Federal Communications Commission
chairman, came into office promising to give corporate America his own brand of
tough love. He vowed to ease regulatory burdens but warned that those caught
breaking the rules would face his wrath. "When you cheat, I'm going to hurt
you and hurt you hard," he told lawmakers at a March 29 congressional
Powell's pledge will soon be put to the test, thanks to the
disclosure this week that SBC Communications (SBC: down $0.74 to $42.35,
Research, Estimates), the nation's second-largest local phone company, provided
false information when it won FCC permission to offer long-distance service in
two states. The chairman's response will be closely watched; with phone
competition foundering, many watchdogs argue that only stronger government
enforcement can ensure a level playing field.