June 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 state.

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 interference.

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

Wahid's impeachment

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 too far.

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 13,219.51.

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 per cent.

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 Department reported.

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 Miller.

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 million.

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 tasks.

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 permits.

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.

Results

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 last year.

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 Microsoft's service.

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 hearing.

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.