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Jan 29 - Feb 04, 2001

Japan's economics chief to quit?

Japanese Economics Minister Fukushiro Nukaga could resign as early as Monday amid allegations he took money from a scandal-hit insurer, dealing yet another blow to embattled Prime Minister Yoshiro Mori, domestic media said.

Nukaga would be the third minister to quit the Mori cabinet since the premier took office nearly 10 months ago and comes as his approval ratings languish near record lows.

Nukaga was set to tender his resignation after meeting top officials of his faction, the biggest in the multi-group ruling Liberal Democratic Party (LDP), economic daily Nihon Keizai Shimbun said.

Intercepted by reporters as he entered a meeting on Monday, Nukaga was unclear on whether he would bow to pressure to resign.

"I take it seriously... I believe it is good to carry out my duties calmly," he told reporters.

As minister in charge of economic and fiscal policy, Nukaga is a key figure in the government. He is seen as a rising star in the LDP and has played a leading role in a group considering measures to prop up Japan's ailing stock market.

His departure might not only put the brakes on already slow progress in economic restructuring but would have deep political ramifications for the LDP as it heads into an Upper House election in July under the leadership of one of the most unpopular prime ministers in years.

Nukaga reportedly received a contribution of 15 million yen or $128,200 from insurer KSD. He has said one of his secretaries received the money but he was not notified until much later, and that he then returned the cash, Japanese media reported.

Opposition politicians said they wanted to call Nukaga and other politicians to testify before parliament about their ties to KSD, an industrial insurer at the center of a bribery scandal that has led to the arrest of one LDP Upper House lawmaker and the resignation of the LDP's leader in the upper chamber.

UK snares Nissan's Micra

Japan's Nissan Motors on Thursday chose its main UK plant to build the new Micra small car, in a victory for an ailing British auto sector.

The Japanese automaker, on its own road to recovery, will inject some £235 million ($341 million) and create roughly 500 jobs at the Sunderland assembly plant in northeast England.

Nissan, which is controlled by French carmaker Renault (PRNO), had threatened to build the car at Renault's plant at Flins, France outside Paris. The move hands a key victory to Tony Blair's government as parliamentary elections loom this spring.

Last week, Britain pushed for and won European Union approval for the right to provide £40 million ($59 million) in aid to support Sunderland's bid.

Flanked by British Prime Minister Tony Blair at 10 Downing Street on Thursday, Nissan President Carlos Ghosn said the aid package "swayed the balance" in favour of Sunderland.

"The main factors we reviewed were currency risks — both mid and long-term, the record of productivity and performance at our Sunderland plant, the effect of assistance from the UK and opportunities coming from our alliance with Renault," Ghosn told reporters after the Blair meeting.

After production begins in 2002, Sunderland will produce some 500,000 cars per year, up from 320,000 per year now - making it Britain's biggest auto plant. The plant is also home to Nissan's Almera and Primera models.

Nissan also said it expects to return to profitability worldwide this year, while its European operations are expected to be back in the black next year.

One looming question mark over Sunderland was the British pound's strength compared to the euro currency, which makes the cost of doing business in the UK more expensive. Nissan said it will pay in euros for 65 per cent of the components it uses at Sunderland — up from a current 20 to 25 per cent no matter where those components are produced.

Greenspan eyes tax cuts

Federal Reserve Chairman Alan Greenspan gave his broadest endorsement of tax cuts to date Thursday, while also indicating that the U.S. economy has slowed dramatically, raising investors' hopes that further interest rate reductions are on the horizon.

In testimony to the Senate Budget Committee, Greenspan declined to comment on President Bush's $1.6 trillion, 10-year tax cut plan, saying a decision on the size of a cut was best left up to Congress and the political process. But the Fed chairman's backing of tax cuts as economically sound likely will provide a boost to the new administration's proposals.

Bush sworn in as 43rd president

Mr George W. Bush was on Saturday sworn in as the 43rd president of the United States on a cold and soggy morning and declared America would remain engaged in the world, build up its defences and confront weapons of mass destruction.

But the new president said the US would conduct itself not with arrogance, but with purpose.

Mr Bush was speaking during his inaugural address delivered from the steps of the Capitol in freezing temperatures and amidst an intermittent drizzle, watched by his father, former president Bush, and his mother, outgoing president Bill Clinton and former president Jimmy Carter, and thousands of people.

Mr Bush repeated his campaign pledge to reduce taxes, but also promised to reform medical care and social security.

Arroyo replaces Estrada

Philippine Vice-President Gloria Macapagal Arroyo, a college classmate of former US president Bill Clinton, was sworn in as president on Saturday after disgraced incumbent Joseph Estrada bowed to people power pressure to resign.

She fought back tears during the ceremony and said she was taking office with a sense of awe at what people power had achieved. With three children, Arroyo, 53, said recently she held off on politics until she could devote enough time to public service. Her husband Mike, she said, was supportive.

Euro pauses to catch breath

The euro slipped below 93 U.S. cents early Monday, but analysts said it was merely pausing before resuming its rally. Europe's common currency has risen so quickly over recent weeks that it needed to "correct," they said. A downbeat survey of Germany's business climate provided an opportunity for traders to take profits. Weaker-than-expected U.S. economic data are providing an opening for the euro to begin moving up again, analysts believe.

"The outlook for the euro is to strengthen," said Bob Lynch, currency strategist at BNP Paribas. "We are getting into a scenario where the U.S. economic data are measurably underperforming expectations."

The European Central Bank decided to hold all official interest rates unchanged at its Council meeting last week.

Nasdaq dives 3%

The Nasdaq composite index plunged more than three per cent Thursday after revenue caution from fiber-optics maker Corning sparked broad selling among U.S. tech stocks.

The Nasdaq composite index fell 104.87, or 3.67 per cent, to 2,754.28. The Dow Jones industrial average rose 82.55 to 10,729.52 — its highest level in nearly three weeks — while the S&P 500 shed 6.79 to 1,357.51.

Mergers & Acquisitionss

Hartford—Fortis unit U.S. insurer Hartford Financial Services Group agreed to buy Fortis Financial Group for about $1.12 billion in cash Thursday, in a move to expand its U.S. variable life insurance, annuity and mutual fund businesses.

EDP-Electricidade—Cantabrico: EDP-Electricidade de Portugal and Cajastur have offered to buy Spanish utility Hidroelectrica del Cantabrico for 2.7 billion ($2.5 billion).

Cisco—Softbank: Cisco Systems Inc. said Wednesday it will invest $200 million in Japan Internet giant Softbank Corp. and will buy most of Softbank's holdings in Cisco's Japan-based unit for $275 million.

ABN Amro—ING: Dutch bank ABN Amro is near a deal to buy parts of ING Baring's U.S. operations. ABN Amro is preparing to offer $200 million for the brokerage unit of ING Barings, the investment bank of Amsterdam-based ING Group.

BB&T: BB&T Corp., the nation's 17th-largest financial holding company, agreed Wednesday to acquire F&M National Corp. and Virginia Capital Bancshares Inc. for a combined $1.4 billion in stock.

Sony: Sony Computer Entertainment America Inc. said on Monday it bought software developers Red Zone Interactive Inc. and Naughty Dog Inc., in a bid to provide new video games for its PlayStation video game consoles.

Nasdaq retreat dulls Tokyo

Following the U.S. Nasdaq's retreat, Tokyo stocks fell in early trade Friday, as large-cap tech issues including sector leader Sony Corp. dropped its despite better-than-expected earnings results.

The Nikkei dropped 108.36 points or 0.79 per cent to 13,695.02 in the first 10 minutes of trade, extending a downturn that began Tuesday after the benchmark average had gained six per cent in a seven-day rally.

The broader TOPIX index lost 7.32 points or 0.56 per cent to 1,293.07. Sony quarterly earnings results showed its operating profit fell 11 per cent to ¥146.47 billion ($1.25 billion) in the crucial October-December period — slightly better than analysts expected.


Sony: Japanese electronics and media company Sony reported that its third-quarter profit shrank, forcing it to halve its full year forecast to $423 million — although the latest quarter earnings did beat expectations.

Phillips: Oil company Phillips Petroleum (P: Research, Estimates) reported fourth-quarter earnings of $701 million, or $2.72 a share, compared with $215 million, or 84 cents a share, in the year-earlier period.

Exodus: Exodus Communications Inc said it had a loss before one-time items of $55.8 million, or 13 cents a share, wider than the loss of $48.2 million, or 14 cents a share, it had a year ago. Analysts had forecast a16-cent-a-share loss.

T-Online: T-Online, Europe's largest Internet service provider, said it lost 125 million ($116.5 million) last year even as sales soared.

Del Webb: Del Webb (WBB: Research, Estimates) said earnings for the latest quarter rose 65 per cent to $22.6 million, or $1.20 a share, versus Wall Street forecasts of $1.10 a share.

Compaq: Compaq Computer earned $515 million, or 30 cents per share, compared with a profit of 19 cents per share during the same period a year earlier. Analysts had forecast 28 cents per share.

Broadcom: Communications chipmaker Broadcom Inc. earned $86.7 million, or 32 cents a diluted share, excluding special items. Analysts had expected 31 cents a share.

SCI Systems: SCI Systems Inc. reported net income rose 14 per cent to $56 million, or 37 cents a diluted share, compared with $49.3 million or 34 cents a diluted share for the same quarter a year ago. Analysts had forecast 42 cents a share. Click here for more.

Vitesse: Semiconductor maker Vitesse Semiconductor Corp. reported earnings of $47.6 million, or 25 cents per share, for the period ended Dec. 31, from $20.4 million, or 11 cents per share, in the year-earlier quarter

Enron: Enron earnings excluding one-time items rose to $347 million, or 41 cents a share, from $259 million, or 31 cents a share, a year earlier.

Treasurys creep up

Testimony by Federal Reserve Chairman Alan Greenspan, in which he said he thought the U.S. economy was nearing a standstill, boosted U.S. Treasury prices Thursday as traders anticipated a Fed interest-rate cut next week.

Newly auctioned two-year Treasury notes were flat at 99-29/32, as their yield, which moves inversely to the price, stayed at 4.79 per cent. Five-year notes rose 1/32 to 103-13/32, yielding 4.94 per cent. Benchmark 10-year notes rose 4/32 to 103-14/32, yielding 5.29 per cent. And 30-year bonds rose 16/32 to 108-29/32, yielding 5.63 per cent.

Mortgage rates move up

Mortgage rates edged higher for the second week, responding to signs that a U.S. economic slowdown may be less severe than anticipated.

According to Freddie Mac, the benchmark 30-year fixed-rate mortgage (FRM) av