03 - 09 , 2001
ECB says euro will unify Europe
The European Central Bank has officially launched the new
euro single currency.
ECB president Wim Duisenberg said on Thursday: "In 100
days time the euro will be in our pockets, it will be our money — a tangible
reality and not just the virtual market currency that it has thus far been
perceived to be by many, if not most, Europeans.
"The euro is much more than just a currency. It is a
symbol of European integration in every sense of the word.
"In terms of economic integration, the euro is a symbol
of successful enterprise and initiative which has crossed borders and removed
barriers to people working, trading and living together.
"In terms of political integration, the euro is a symbol
of stability and unity. Countries from a continent which, throughout the ages,
has so often been ravaged by war, have together vowed to uphold the values of
freedom, democracy and human rights."
He added: "In addition to the economic and political
benefits which the euro brings, it will, I believe, help to change the way in
which we think about one another as Europeans."
The seven different denominations of banknote will become
legal tender on January 1, 2002.
On that date more than 14 billion banknotes and 50 billion
coins will be used in currency among 12 member states of the European Union —
Austria, Belgium, Finland, France, Germany, Greece, Italy, Ireland, Luxembourg,
Holland, Portugal and Spain.
Two months later, on March 1, traditional currencies such as
the franc, the mark, the lire and the peseta will cease to be legal tender and
Duisenberg added: "With the new single currency the
people of Europe have one more fundamentally important thing in common — their
IMF to cut global outlook
The International Monetary Fund will cut its global economic
growth forecast for this year to 2.8 per cent, but the outlook for 2002 remains
subject to vigorous internal debate, IMF sources said Tuesday.
Sources inside the international lender said the IMF plans to
cut its global growth forecast for 2001 to 2.8 per cent when it publishes its
World Economic Outlook in September, down from the 3.2 per cent it forecast in
The IMF is also set to lower its 3.9 per cent forecast for
2002 global growth.
But whether or not growth will pick up next year as earlier
expected remains a subject of debate.
Some at the IMF predict the U.S. economy, which has braked
sharply over the past year, will slow further next year, while others paint a
more optimistic picture.
IMF management and the fund's research department,
responsible for compiling the WEO, are calling for a rebound next year to more
robust global growth of 3.2 per cent, predicated on a U.S. pickup to 2.5 per
cent growth after a 1.5 per cent U.S. expansion this year, the sources said.
But the Western Hemisphere department, the group inside the
lender most attuned to the United States, expects a deeper slowdown in 2002 with
global growth of just 2.5 per cent.
That gloomier forecast is based on the U.S. economy slowing
further next year, with output expanding by a paltry 1.1 per cent. The IMF
maintained its earlier forecast of a 1.5 per cent U.S. expansion this year.
The sources said the final WEO prediction of U.S. 2002 growth
would fall somewhere between 1.1 per cent and 2.5 per cent.
With only about a month left before the IMF releases its
flagship WEO publication, which takes the pulse of economies around the world,
all forecasts remain subject to almost constant revision as data become
ECB cuts rate to 4.25%
The European Central Bank lowered interest rates by a quarter
point to 4.25 per cent, its second cut this year, to shore up economic growth.
Germany's economy, the biggest in Europe, stagnated in the
second quarter, prompting companies such as chemicals maker BASF and chipmaker
Infineon Technologies to slash thousands of jobs.
"Germany is singing out for a rate cut," Henk
Potts, a strategist at Barclays Stockbrokers, said before the ECB published its
verdict. Most economists polled by CNN had expected a quarter of a per centage
The ECB has been stung by criticism that it has done little
to fight slowing growth. The U.S. Federal Reserve has cut rates seven times this
year to try to boost investment and the sluggish economy, while the Bank of
England has made four cuts in 2001.
China, U.S. in dispute
A U.S. trade panel on Tuesday ruled unanimously that imports
of a low-cost molten iron ingredient from China have materially harmed U.S.
producers, setting the stage for the Commerce Department to impose anti-dumping
duties of up to 215 per cent.
In a case brought by the United Steelworkers union and five
domestic firms, the U.S. International Trade Commission voted 6-0 in favor of
duties for foundry coke. Foundry coke is used both as a fuel and an ingredient
for making molten iron.
In late July, Commerce wrapped up a 10-month investigation
with a final determination the Chinese foundry coke was being sold in the U.S.
market at 51-to-215 per cent below fair value.
China accounted for all U.S. imports of foundry coke in 2000
for a total of 132,747 tons, valued at $18.7 million.
The shipments represented 11.5 per cent of U.S. foundry coke
consumption last year, the ITC said. Before 1997, U.S. imports of foundry coke
from China were zero.
Taiwan to ease trade curbs with China
Taiwan's president has signaled a radical change in its
policy towards rival China, embracing trade as a way of improving ties and
boosting an ailing economy.
President Chen Shui-bian sided Sunday with a team of economic
advisers who urged him to make a historic policy change and boost economic ties
with China — the island's biggest security threat.
Chen has embraced the panel's advice as he seeks to rebuild a
crumbling economy, which has slipped into its first recession in three decades.
2Q GDP still positive
The U.S. economy grew in the second quarter at the weakest
pace in more than eight years, the government reported Wednesday, but avoided
falling into negative territory, easing fears that the world's largest economy
could be in a recession.
U.S. gross domestic product (GDP) — the broadest measure of
the nation's economy — grew at a 0.2 per cent annual rate in the quarter, the
Commerce Department reported. It was the government's first revision of
second-quarter GDP, compared with its initial estimate of 0.7 per cent growth.
Economists surveyed by Briefing.com expected GDP to come in flat.
If GDP had been flat or negative, it would have raised fears
that the economy was in a recession, technically defined as two consecutive
quarters of negative GDP.
Still, GDP was the weakest since it shrank at a 0.1 per cent
rate in the first quarter of 1993, and the number will be revised once more
Sept. 28, so there's still a possibility it could be negative.
Dow falls below 10,000
Another round of profit warnings and job cuts hit Wall Street
Thursday, igniting a selloff that sent the Dow Jones industrial average tumbling
below 10,000 for the first time in nearly five months.
The Dow industrials fell 171.32 points, or 1.7 per cent, to
9,919.58, while the Nasdaq lost 51.49 points, or 2.8 per cent, to end the day at
1,791.68. Nasdaq finished as low as 1,638.80 on April 4.
Nikkei stays below 11,000 mark
The slide on Wall Street sent Tokyo's benchmark Nikkei 225
average plunging to a fresh 17-year low on Friday morning before it rebounded to
10,803.16 by midday. This was still a drop of 135.29 points or 1.24 per cent on
Elsewhere in the region, key market indicators in Australia,
Korea, Taiwan and Hong Kong also fell in the morning session.
Australia's S&P/ASX200 was down 36.2 points or 1.1 per
cent to 3287.7 on continued weakness among heavyweights News Corp, Telstra and
BHP Billiton. In Seoul the Kospi slipped 16.7 points or almost 3 per cent to
Microsoft: New EU attack
The European Commission Thursday said it has expanded its
investigation into Microsoft Corp.'s business practices to see whether it is
acting illegally by incorporating digital streaming media technology into its
Windows operating systems.
China bans CSFB
Investment bank Credit Suisse First Boston has been blocked
from doing business in China, according to a report.
CSFB was due to underwrite a stock offering later this year
for Unicom Group, China's second-largest telecom. But it has been dropped from
Bonds mixed at close
Shorter U.S. Treasurys held firm on Thursday while long-dated
securities fell, as investors dumped stocks in droves and some shifted funds
into risk-free government securities.
New two-year notes sold Wednesday were flat at 100 even,
yielding 3.62 per cent. Five-year notes were also flat, at 101-4/32, yielding
4.35 per cent. Benchmark 10-year notes fell 5/32 to 101-20/32, yielding 4.79 per
cent. Thirty-year bonds fell 5/32 to 99-31/32 to yield 5.38 per cent, near their
lowest yield since March.
Chrysler to cut prices
Chrysler said Thursday it was cutting prices on its 2002
models to spur sales and take a small step back from ever-increasing incentives.
Mortgage rates inch up
Long-term mortgage rates advanced slightly in the latest
week, reversing their recent trend downward. But 15-year fixed-rate mortgages
stayed put, and adjustable-rate mortgages fell.
The benchmark 30-year fixed-rate mortgage was at 6.92 per
cent for the week ending Aug. 31.
The average this week for the 15-year fixed-rate mortgage was
6.47 per cent. One-year adjustable-rate mortgages (ARMs) averaged 5.67 per cent.
Japan's jobless rate hits record
Japan's stagnant economy has taken another hit with the
release of figures showing a record jobless rate of five per cent last month.
The bleak jobs outlook is a further indicator of the "no
pain, no gain" reform agenda being pursued in the world's second largest
economy by Prime Minister Junichiro Koizumi.
Europe bourses end mixed
Europe's main bourses ended mixed Wednesday, with
better-than-expected U.S. GDP figures being offset by anxiety about the impact
of a slowing U.S. economy on the rest of the world.
London's FTSE 100 ended 0.3 per cent lower at 5,417 while the
blue chip CAC 40 index in Paris closed 0.4 per cent higher at 4,834.89.
Frankfurt's electronically traded Xetra Dax was little changed at 5,312.17.
Among smaller markets, the SMI in Zurich fell 1.3 per cent to
6,580.6, while Milan's MIB 30 was 0.6 per cent higher at 35,591. Amsterdam's AEX
rose 0.3 per cent to 535.54.
The FT Eurotop 300, a broader based index of the region's
largest stocks, dropped 0.2 per cent, with its information technology and
automotive sectors among the worst-performing industry groups.
Cell phone orders fall
Shipments of mobile phones fell sharply in the second quarter
while manufacturers Motorola and Ericsson grabbed market share from leader Nokia,
research group Gartner Dataquest said Wednesday.
Mergers & Acquisitions
AES—CANTV: Global power company AES Corp. and one its
subsidiaries said Wednesday they planned to offer about $1.4 billion in cash for
a 43 per cent stake in Venezuelan telecommunications company CANTV.
Mead—Westvaco: Mead Corp. and Westvaco Corp. agreed
Wednesday to merge in a $3 billion stock swap, adding to the ongoing
consolidation in a forest-products industry beset with excess inventory from
weakening demand and falling prices.
AirGate—iPCS: AirGate PCS Inc. said Wednesday it will
buy iPCS Inc. for $802.8 million in stock, becoming the largest affiliate of
Sprint PCS Group, the No. 4 U.S. wireless telecommunications provider.
Citigroup—Nikko: Citigroup Inc. has agreed to acquire a
50 per cent stake in Nikko Trust and Banking Corp., a unit of Japan's
third-biggest brokerage house, Nikko Securities Ltd., the company said Tuesday.
Roche—Bayer: Swiss pharmaceutical company Roche Holding
rejected a report that it offered to buy the drug unit of German rival Bayer for
Ericsson—Sony: Swedish telecom equipment maker Ericsson
and Japanese consumer electronics group Sony Corp. have agreed the terms of a
merger of their mobile phone businesses into a joint venture, Ericsson said
Tyson—IBP: Tyson Foods Inc. expects to complete its
acquisition of IBP Inc. near the end of September.
RWE—U.S.: Germany's RWE is considering a $3.6 billion
bid for American Water Works, the largest U.S. regulated water business, a
Hyundai Securities: The U.S. group that is buying three
Hyundai financial companies will walk away if it doesn't see progress on the
Reaching a long-sought goal in computing research, scientists
have created a computer circuit based on a single molecule, which could lead one
day to far smaller and faster computer chips that use less power.
International Business Machines Corp. said Monday that its
researchers have built a logic circuit based on a tiny cylindrical structure
made up of carbon atoms that is about 100,000 times thinner than a human hair.