Jan-14 - 20, 2002

Japan says yen's fall 'too rapid'

Japan's finance minister said the yen has been falling too fast, remarks which prompted the currency's biggest rally since September.

The yen has fallen more than 10% against the US dollar in the past two months with the apparent blessing of the Japanese government, which was thought by analysts to see benefits for Japanese exports.

Finance minister Masajuro Shiokawa's comments came after the yen hit a fresh low of 133.37 to the dollar on Wednesday.

The currency's decline to 39-month lows has been "a little too rapid," said Mr Shiokawa.

The Japanese currency strengthened by more than a full yen against the dollar to 132.07 by 0615 GMT on Thursday.

Analysts put Mr Shiokawa's comments down to fears that the yen's decline - and the government's tacit endorsement - could alarm foreign investors into ditching Japanese assets by encouraging a bleak view of the economy's overall prospects.

"The rapid drop of the yen is raising fears overseas investors will instigate a 'sell Japan' scenario," said Koji Sakuratani of Asahi Life Asset Management.

The yen's slide began a few days after Japan was officially declared in recession last autumn.

Mr Shiokawa's support for the yen was echoed by Zembei Mizoguchi, head of the Finance Ministry's international bureau, who insisted the economy's "fundamentals are sound."

"The yen's fall has progressed considerably. Rapid moves are not good in the daily foreign exchange market."

The finance minister also said he was unhappy with swift fluctuations.

"I think a move of about one yen is within market mechanisms but a move of more than two yen in just about 10 days is a different story," said Mr Shiokawa.

Yen hits 3-year low against dollar

The yen has fallen to a three-year low against the dollar, in a sign that the Japanese government may be hoping to export its way out of recession.

The dollar posted its biggest one-day gain against the yen since September on Tuesday, momentarily reaching a value of 132.79 yen, the Japanese currency's lowest level since late 1998.

In Tokyo trade on Wednesday, the yen recovered slightly and by mid-afternoon was trading at 132.58 yen to the dollar.

The yen's sharp fall came after Japanese economy minister Heizo Takenaka signalled that his government does not intend to intervene in order to support the sliding currency.

"I myself do not think that the current exchange rate is misaligned with the fundamentals of Japan," he said after a meeting in Washington with US economics officials.

UK interest rates left unchanged

Bank of England chiefs have left interest rates on hold at 4%, despite increasing evidence of the strength of the UK economy.

The Bank's Monetary Policy Committee decided not to raise rates, despite a scenario of rebounding house prices and surging High Street sales which some feared could push inflation higher.

Last week, the governor of the Bank of England, Sir Edward George, warned that interest rates may have to rise this year to stem a credit card-fuelled spending boom in the UK.

Analysts said that with fewer signs of recovery in the global economy, a rate hike would have been too risky, and they believed this was why the bank did not raise rates.

The Bank also ignored pleas for a rate cut from the UK manufacturing sector, which is mired in recession.

"By not cutting the interest rate the MPC has today signed the death warrant for thousands of manufacturing jobs up and down the country," said the general secretary of the Amicus union, Roger Lyons.

"With unemployment rising, inflation in check and significant parts of the economy slowing, raising rates should be well off the radar," said Stephen Radley, chief economist of the Engineering Employers' Federation.

"If anything, there should be room for further cuts if we do not see clear signs of recovery."

But other economists were expecting rates to be moving in the other direction.

John Butler, economist at HSBC, said he was "not surprised" with the decision "given the mixed economic data coming out of the global economy and the extremely strong UK consumer".

"In our view rates have troughed but we don't see any scope for rises until much later in the year, probably September."

French criticise bank changeover

French banks say the changeover to the euro went swimmingly, but many of their customers are seething over what they see as inefficiency, bad manners and opportunism on the part of the country's financial institutions.

"Banks in Euro Hold-Up" was the front page headline of France Soir that neatly summed up many consumers' thoughts over the past week.

The newspaper went on to list its readers' grievances. These include accusations that some banks have been simply refusing to change francs for euros.

Others allowed only their own customers to change money and turned away any others trying to offload their last francs.

Economics Minister Laurent Fabius gave the banks a rap over the knuckles for this behaviour and told them they had to rise to the challenge that their central role in the euro changeover presented.

Bush promotes economic plan in high-jobless West

With the gloves off in an election-year battle over the economy, President George W. Bush on Saturday visits the unemployment-plagued West Coast to promote his plan to bring the nation out of recession.

The president is to preside at a town-hall style meeting in Ontario, California and will speak to families and workers in Portland, Oregon.

The entire West Coast has been hit hard by job losses during the current slowdown. Oregon's 7.4 per cent unemployment rate in November led the nation, followed by Washington with 7.0 per cent.

California had a 6.0 per cent unemployment rate, compared with a revised national rate of 5.6 per cent.

The national unemployment rate rose in December to a six-year high of 5.8 per cent, according to figures released on Friday. But the pace of layoffs slowed, sparking optimism that an economic turnaround may be starting.

Nevertheless, Bush is making the economy a top issue for the new year along with the war on terrorism, mindful of the political damage his father, former President George Bush, suffered from charges of insensitivity to a recession after the Gulf War.

Democrats have begun to accuse Republicans of mismanaging the economy as the parties square off for November elections that will decide control of both houses of Congress.

There is some indication of good news (but) we still feel there is a need to help those who have lost jobs, White House counselor Karen Hughes told reporters on Friday in Texas, where Bush is vacationing.

US retail sales disappoint

US retail sales were down on the year during the final weeks of 2001, casting doubt over recent forecasts of an early economic recovery.

Instinet said its Redbook Retail Sales Average for the five weeks to 5 January were 3.5% down on the same period one year earlier.

Also on Tuesday, the Bank of Tokyo-Mitsubishi and UBS Warburg said their joint retail chain store sales index slipped 0.6% during the week to 5 January, having risen by 0.9% the previous week.

Consumer spending, which accounts for two thirds of US economic output, is a key indicator of the health of the wider economy.

Analysts said the findings suggest that the US economy's long-awaited recovery may take longer than hoped.

"I believe recovery will occur around mid-2002", said Philadelphia Federal Reserve Bank President Anthony Santomero.

The retail indexes published on Tuesday come ahead of authoritative sales figures for December from the US Commerce Department, due out towards the end of January.

Ford job cut fears

Ford Motor Co is set to announce 20,000 job losses with the closure of five plants in North America, analysts say.

Ford, the world's number two vehicle maker, is expected to unveil its first annual loss since 1992 later this month after losing $1.4bn in the six months to the end of September 2001.

Westland closes factory

Westland Helicopters has confirmed it is to cut 950 jobs and close one of its Somerset factories. About 5,000 staff were called to a briefing on the restructuring at 1100 GMT on Thursday.

The Weston-super-Mare plant will close with the loss of 350 jobs with another 600 office and production workers going at the main site in Yeovil.

BMI to launch low-cost airline

BMI British Midland plans to launch a low-cost airline in time for Easter. The airline will operate out of its East Midlands hub, flying to European destinations including Barcelona, Nice, Palma, Malaga, Alicante and Faro.

Steel makers in new alliance

Japan's fourth-largest steel maker Sumitomo Metal Industries has said it has agreed to a broad alliance with Europe's second largest steel-producer Corus Group, as the companies seek to respond to intense competition.

The alliance will include exchange of thin steel plate and steel rod technology, and two producers will also consider expanding the partnership to construction steel.

The deal is the latest of a number of tie-ups in the global steel industry, driven in part by price pressure from the auto sector, which is one of its main customers.

Infosys profits beat the gloom

India's premier software company , Infosys Technologies, has kicked off the corporate earnings season by announcing a net profit of 2.06bn Rupees ($42.5m; £29.4m) for the last three months of the year.

China steps up stock market crackdown

China's stock market regulator has reprimanded the investment industry for behaviour that could destabilise the stock market, according to a letter reproduced in the Chinese media.

In unusually blunt language, Zhang Jinghua reportedly said he was "very angry" at fund managers who had applied to buy shares they could not pay for.

Mr Zhang is the director of the fund management division at the China Securities and Regulatory Commission (CSRC).

The Chinese authorities are eager to introduce international norms into the country's stock market and banking system and clean up corporate governance before the arrival of foreign competition.

Nigeria invites in refinery-builders

Nigeria, Africa's largest oil producing country, has taken its biggest step so far towards liberalising its downstream oil industry.

The government on Thursday invited international firms to bid to set up of private oil refineries in Nigeria.

According to the president's adviser on petroleum and energy Rilwanu Lukman, this step removes a major obstacle to investing in the oil sector.

Oil market liberalization is a part of the government's reform, backed by the International Monetary Fund and the World Bank.

China investment in Mauritius cotton

A Chinese company is to build a cotton spinning mill in Mauritius, taking advantage of laws that allow duty-free access to the US, the world's biggest textiles market.

Textiles exported from Mauritius qualify for duty-free access to the US under the African Growth and Opportunities Act (AGOA).

The act was signed into law by President Clinton to boost trade between Africa and the US, by offering African exporters trade advantages. The cotton mill is expected to produce 18,000 tonnes of cotton a year.

Alaska criticises BP cutback

The Governor of the State of Alaska, Tony Knowles, has criticised the oil giant BP for scaling back its plans for offshore exploration.

BP has postponed its development of the Liberty field - a move which could save it about $600m - and cut about 120 staff and 75 contract positions.

"It is about a fifth of BP's Anchorage workforce," the governor's spokesman Bob King told the BBC's World Business Report.

"Moreover I think we are concerned on BP's decision to focus solely on development of existing fields and not on more frontier development in Alaska," he said.

South Africa probes rand plunge

Amid allegations from business leaders that nefarious forces have been at work, the South African government has set up a commission to investigate the steep slide in the value of the rand last year.

The commission will be chaired by John Myburgh, a well-respected white high court judge whose career includes an official investigation last year into the collapse of the Regal Treasury Private Bank.

Kenyan opposition slams oil deal

Kenya's main opposition has voiced "strong objection" to government plans to import oil from Sudan, describing the deal as morally wrong.

Ford-Kenya Secretary General Gitobu Imanyara said it was hypocritical of the government to buy oil from the Khartoum government while attempting to play the role of an impartial mediator in the country's long-running civil war.

Unilever and AOL seal 'landmark' ad deal

Household products giant Unilever has signed a "groundbreaking" advertising and research contract with magazine-to-website giant AOL Time Warner.

The "multi-million dollar" deal will see Unilever products, such as Dove soap and Pond's cream, advertised across the range of AOL Time Warner media, including the Turner TV network, Time magazine and the America Online web services.

The announcement comes amid a growing trend among advertisers to seal cross-media agreements, with Procter & Gamble last May signing a $300m internet-to-billboard contract with media giant Viacom.

But the deal between AOL and Unilever, the world's largest advertiser, will build on traditional ad arrangements by including clauses on sharing internet know-how, and knowledge on customer feedback and marketing, the firms said.

Ukraine's privatisation falters

Ukraine failed to achieve the privatisation targets that it set itself for last year.

The government has reported that privatisation revenues totalled only 2.12bn hryvnias ($400m, $278m) last year, just over a third of its initial target.

The government had expected to raise 5.9bn hryvnias in 2001, but the programme suffered a blow when President Leonid Kuchma banned privatisation of several plants, producing military and aerospace equipment, pipes and gas turbines, and froze the energy sector sale-off.

The government hopes to raise 5.8bn hryvnias this year by completing the long awaited sale of the state telecom monopoly, Ukrtelekom and by privatising 12 electricity distributing companies.

The country so far failed to achieve a notable privatisation success, and analysts doubt whether Ukraine can reach this year's target.

Argentina currency fears mount

Argentina is bracing itself for the resumption of currency trading on Thursday, amid growing uncertainty over how its controversial new dual exchange rate system will bear up.

Analysts say the government's failure to explain clearly how the new system will work has stoked fears that the new system will unravel when the foreign exchange rate markets reopen, causing a surge in inflation.

"The lack of new economic announcements has allowed rumors surrounding the strong devaluation of the peso to gain dangerous ground and will without doubt increase investor nervousness," analysts Argentine Research wrote in a note to investors on Wednesday.

Energy firms warned off hard sell

Energy companies are being warned not to use hard-sell tactics in their attempts to sign up new customers.

Energy minister Brian Wilson is urging gas and electricity suppliers to abide by a special charter which came into effect this month, giving customers new rights.

The voluntary code aims to make it easier for customers who have switched suppliers in error to return to their original contract.

The move follows an increase in the number of complaints about suppliers since deregulation of the power industry.

German joblessness

The number of people out of work in Germany grew every single month in 2001 and is now only just short of four million, official data has shown.

Boeing 2001 orders down by half

The world's biggest aircraft maker Boeing has said that orders fell by nearly half last year, blaming savage cutbacks by the airline industry in the wake of the 11 September attacks.

The Chicago-based company said on Wednesday that it received a total of 335 new orders during 2001, 45% fewer than the previous year.

Accenture profits

Lower corporate spending on technology reduces profits Accenture, the world's biggest management consultancy, has unveiled a sharp decline in net profits.

The company said profits for the three months to 30 November fell to $81.7m from $148.5m during the same period one year earlier, a decline of almost 45%.

Reg Vardy profits rocket

Reg Vardy said its pre-tax profits rose 61% to £15.2m ($21.9; 24.6 euros) during the six months to 31 October.

Fresh protests rock Argentina

Mass protests have erupted in the Argentine capital Buenos Aires hours before currency markets reopen and the peso's devaluation becomes a reality.

Demonstrators overturned cars, lit fires in the street and threw stones at police, who responded with tear gas and rubber bullets to force about 1,000 people back from the presidential palace.