23 - 29, 2001
Bush suggests grants
President Bush proposed Tuesday that the World Bank and other
international lending institutions dramatically increase the share of their
resources provided as grants rather than loans.
In a speech at the World Bank's Washington headquarters, Bush
also called on the world's lending institutions to make major increases in loans
and grants aimed at boosting education in Africa and other poor and developing
nations. Many of those countries are burdened with huge accumulated debts.
"The United States is and will continue to be a world
leader on responsible debt relief," Bush said.
"I also propose the World Bank and other development
banks dramatically increase their share of funding provided as grants rather
than loans to the poorest countries," Bush said. "Specifically, I
propose that up to 50 per cent of the funds provided by the developing banks to
the poorest countries be provided as grants for education, health, nutrition,
water supplies, sanitation and other human needs."
"It would be a major step forward," the president
Bush called his proposals "compassionate conservatism at
an international level."
Bush's suggestion that the World Bank substitute grants for
many of the heavily subsidized loans it now makes is an effort to keep the
world's poorest nations, already struggling under mountains of old debt, from
building new debt burdens.
But critics say unless the administration offers to provide
more money to the World Bank, the bank would end up with less money to help poor
nations because the bank now uses the repayments of its old loans to make new
World Bank officials estimate that if the United States ended
up persuading other bank members to agree to convert half of the bank's loans to
grants, the United States would have to double its current $803 million annual
contribution just to keep the bank's pool of aid at current levels.
Hardline group threatens G8 battle
Anti-globalisation campaigners are threatening to storm a
security cordon in place around the G8 summit which opens in Italy on Friday.
The sealed off "red zone" in the heart of Genoa is
expected to be the focus of protests as world leaders meet inside the cordon.
But the first major demonstration, on Thursday, passed off
peacefully with an estimated 50,000 people campaigning in support of a range of
causes from immigrant rights to the environment.
Police in riot gear watched as the demonstration snaked
through Genoa's streets with a convoy of eight police vans in the lead, but the
atmosphere remained largely festive.
March organisers had agreed with authorities earlier in the
week that the demonstration would bypass the "red zone" and not
attempt to enter the off-limits area.
But the hardline Italian group Tute Bianche, or White
Overalls, has vowed to smash through the cordon.
Group leader Luca Casarini told the Reuters news agency
thousands of demonstrators would attempt to attack the summit venue on Friday.
Huge steel fences and concrete barricades have been built to
cordon off the "red zone" from the rest of the city with tight
security covering all entry points.
Only security pass holders and residents are being allowed
inside the "red zone" ring of steel by police for the duration of the
G8 summit — an annual meeting of the leaders of the world's leading
industrialised nations and Russia.
Up to 100,000 campaigners — the majority expressing a
desire for peaceful protest — will be in Genoa where 15,000 police will be on
duty as part of a $110 million security operation.
Surface-to-air missiles, fighter jets, and naval ships form
part of the security operation, which is also responsible for defending the G8
from extremist attacks.
ECB keeps rates frozen
The European Central Bank announced on Thursday it is keeping
its key interest rate steady at 4.5 per cent.
The move had been widely anticipated after the central bank's
president, Wim Duisenberg, recently said the ECB believed its rates were
"appropriate for some time to come", despite mounting evidence of a
euro-zone economic slowdown.
John Butler of investment bank DKW told CNN: "It was
unlikely that we would see dramatic action from the ECB in cutting rates such as
we've seen in the United States."
"The economic slowdown in the euro zone has not been as
rapid as that in the U.S., so Europe's central bank can afford to be more
Inflation figures released on Wednesday by Eurostat, the
European Union's statistics office, showed the rate of consumer price rises in
the region slowed year-on-year in June for the first time in five months.
Japan's debt scrutinized
The chief of Japan's financial watchdog said Thursday the
amount of bad debts hobbling the country's top banks was 25 per cent more than
banks have declared, but he said public money should not be used to clean up the
Hakuo Yanagisawa, head of the Financial Services Agency, said
that inspections by his agency had shown the size of non-performing loans held
among Japan's 15 major banks at about ¥18 trillion ($145 billion).
He said this was about 25 per cent more than the banks
themselves had estimated.
In a government package released in April, Japan set a
deadline for top banks to eliminate loans to borrowers in or at risk of
bankruptcy — totaling ¥11.7 trillion ($95.24 billion) — in two years, or
three years for new such loans.
European markets tumble
Europe's main markets fell in midday trading on Friday, after
downbeat U.S. forecasts rattled technology stocks.
London's FTSE 100 index fell 67.5 points, or 1.2 per cent, to
5,369.9, with software company Sage (SGE) the main loser, down 6.9 per cent,
followed by one of the biggest distributor of electrical parts,
Electrocomponents (ECM), down 6.2 per cent.
In Paris, the CAC 40 blue chip index fell 60.36 points, or
1.2 per cent, to 4,870.03 with Europe's top computer services group Cap Gemini
Ernst & Young (PCAP) led decliners, falling 6.6 per cent.
In Frankfurt, the electronically-traded Xetra Dax fell 88.53
points, 1.5 per cent, to 5,741.16, without showing a single riser. It was led
lower by one of Germany's biggest banks HypoVereinsbank (FHVM), down 4.4 per
In Amsterdam, the AEX index shed 0.6 per cent while the SMI
in Zurich was down 0.5 per cent. Milan's MIB30 was more than 1.4 per cent lower.
Australia, Korea lead markets down
Stock markets in Australia and Korea ended the morning lower
Friday as domestic factors outweighed Wall Street's rise.
In Australia, the benchmark S&P/ASX200 was down 3.2
points to 3391.2, reflecting weakness in media and bank stocks.
In Korea, the Kospi was off 8.49 points at 537.26 after
heavyweight Samsung Electronics reported a fall in revenue and said it would
reduce capital spending.
Markets were up in New Zealand and Taiwan, with the Taiex
picking up about 40 points to 4230.87 after a difficult week.
Ericsson: Sweden's Ericsson posted a net loss of 14.2
billion Swedish crowns, or 1.81 crowns a share, in the three months to June 30.
That compares to a profit of 10.2 billion crowns, or 1.28 crowns a share, in the
Electrolux: Electrolux, the world's No. 1 household
appliance maker, said profits after one-time items fell to 3.25 billion Swedish
crowns ($305 million) from 4.07 billion crowns a year ago.
Samsung: Samsung Electronics made a net profit of $675.8
million (880 billion won) in the second quarter, down from 1.24 trillion won in
the first quarter.
Nortel: Nortel Networks Corp., reported net losses from
continuing operations of $1.55 billion, or 48 cents a share compared to $637
million or 21 cents a share for the same time last year.
Sun: Sun Microsystems said it earned $134 million, or 4
cents per share, during its fiscal fourth quarter ended June 30. That's a sharp
decline from a profit of 20 cents per share during the same quarter a year ago.
ebay: For the quarter ended June 30, ebay Inc. reported
second-quarter earnings of $33.5 million, or 12 cents a share, compared with $10
million or 5 cents a share a year earlier.
Gateway: Personal computer maker Gateway Inc. reported a
second-quarter loss before taxes of $9 million, or 2 cents per share, down from
earnings of $118.2 million, or 36 cents per share, in the year-ago quarter.
Lilly: Eli Lilly & Co. said its net profit rose 24
per cent to $827.7 million, or 76 cents a diluted share, in the quarter, from
$666.2 million, or 61 cents a share, a year earlier.
Dell: Dell Computer Corp. said it expects to report sales
of $7.6 billion and earnings of 16 cents a share for its second fiscal quarter
ending in August, excluding a $700 million charge for previously announced job
cuts and restructuring.
Whirlpool: Whirlpool Corp., reported second-quarter
earnings of $88 million, or $1.30 per share, before charges and a one-time loss.
That's compared with $121 million, or $1.66 per share, a year earlier.
E*Trade: Online broker E*Trade Group Inc. reported
earnings from continuing operations of $5.4 million, or 2 cents a share,
compared with a loss of $0.2 million, or no earnings per share, a year earlier.
J.P. Morgan: J.P. Morgan Chase & Co. reported
earnings of $690 million, or 33 cents a diluted share, down from $1.76 billion,
or 89 cents a share, in the year-earlier quarter.
FleetBoston: FleetBoston reported second-quarter profit
shrunk 45 per cent, earning $531 million, or 48 cents a share, compared with
$971 million, or 87 cents a share, in the year-earlier quarter.
Intel: Chipmaker Intel Corp. said it earned $854 million,
or 12 cents per share, during the quarter excluding acquisition-related costs.
Pfizer: Pfizer earned $1.89 billion, or 30 cents per
diluted share, from continuing operations excluding special items.
Johnson & Johnson: Johnson & Johnson earned $1.58
billion, or 51 cents a share, excluding special items in its second quarter, up
16 per cent from the year-ago period.
Bonds beat a retreat
U.S. Treasurys slipped on Thursday as investors cashed in on
the big rally a day earlier sparked by remarks from Federal Reserve Chairman
Alan Greenspan that more interest rate cuts may be needed to bolster growth.
Two-year notes were down 2/32 at 99-27/32, yielding 3.95 per
cent. Five-year notes slipped 4/32 to 99-28/32, yielding 4.65 per cent.
Benchmark 10-year notes fell 4/32 to 99-6/32, yielding 5.11 per cent.
Thirty-year bonds lost 6/32 to 97-25/32, yielding 5.53 per cent.
U.S. trade gap shrinks
The U.S. trade deficit fell in May to its lowest level in
more than a year, the government said Thursday, while an index of future
economic activity rose in June — both figures showing signs of strength in the
sluggish U.S. economy.
The nation's trade gap shrank to $28.34 billion from a
revised $31.99 billion in April, the Commerce Department reported. Economists
polled by Briefing.com had expected a much larger deficit of $32 billion.
The trade gap is the narrowest since a $26.36 billion deficit
in January 2000.
Exports rose to $87.73 billion in May from $86.93 billion in
April. But imports plunged to $116.07 billion — their lowest level since
February 2000 -from $118.92 billion in April.
Mortgage rates retreat
Mortgage rates dipped lower in the latest week, influenced in
part by Fed Chairman Alan Greenspan's remarks about another possible interest
The benchmark 30-year fixed-rate mortgage (FRM) averaged 7.08
per cent for the week ending July 20. The average this week for the 15-year
fixed-rate mortgage was 6.65 per cent. One-year adjustable-rate mortgages (ARMs)
averaged 5.62 per cent.
U.S. jobless claims lower
New jobless claims were weaker than expected and below Wall
Street forecasts last week, according to a government report
Thursday, after soaring to their highest level in 9 years the
New claims for state unemployment benefits fell to 414,000 in
the week ended July 14 from a revised 449,000 the prior week, the Labor
Department reported. Analysts surveyed by Briefing.com had forecast new claims
Mergers & Acquisitions
Royal—Mellon: Royal Bank of Scotland said on Tuesday it
agreed to buy the retail banking unit of Mellon Financial for $2.1 billion to
expand in the U.S.
Sanmina—SCI: Sanmina Corp. agreed Monday to acquire SCI
Systems for $4.5 billion in stock, a move that will create one of the world's
largest electronics contract manufacturers.
USA—Expedia: USA Networks agreed Monday to buy
Microsoft Corp.'s controlling interest in online travel service Expedia Inc. and
to buy National Leisure Group Inc., deals USA Networks said will give it a major
portion of the interactive travel market.
AT&T—Comcast: The board of AT&T Corp. on
Wednesday unanimously rejected Comcast Corp.'s unsolicited $44.5 billion offer
for AT&T's cable unit, opening the door to other potential bids.
BP— E.ON: British Petroleum is to buy the oil
refineries and petrol stations of Germany's largest power group E.ON, the pair
Havas—Tempus: French advertising agency Havas has
agreed to buy UK media-buying firm Tempus for up to £425 million ($603 million)
U.S. gasoline prices dip
Gas prices fell 13 cents during the past three weeks,
dropping to a national average of $1.47 for a gallon of self-serve regular, a
survey said. That's 16 cents a gallon lower than a year ago.