INTERNATIONAL

 

Feb 10 -  23, 2003 

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

JAPAN'S DESPERATE MARKET MOVE

Desperate to prop up the Japanese stock market, the country's economy minister has called on his cabinet colleagues, including the Prime Minister, to start buying shares.Heizo Takenaka said he would invest in tracker funds and "will definitely make money".

 

 

 

"I want us to take the lead," he said.

Japan's economy has been lingering near recession and the Tokyo Stock Exchange's Nikkei index of leading shares has been at near 19-year lows since last year.

Mr Takenaka expects Prime Minister Junichiro Koizumi to follow his lead.

But Chief Cabinet Secretary Yasuo Fukuda said Mr Koizumi did not say whether he agreed with the policy at Friday's cabinet meeting.

"The time to buy is now," claimed Mr Fukuda.

"I may have to buy something, but I want everyone to buy," he added.

The news did little to prop up the Japanese market, which fell slightly on Friday to 8,455.4.

Mr Takenaka wants the ministers to buy exchange-traded funds (ETFs), investment trusts linked to stock market indices.

"In order to encourage individual investors to buy stocks, it is important that policy leaders buy stocks too," Mr Takenaka said.

Japan's economy staged a weak export driven recovery last year but falling demand from the US and fears of a possible war in Iraq have dampened the mood.

NOBEL WINNERS SLAM BUSH ECONOMICS

Ten Nobel prize winning economists have attacked President George W Bush's tax cutting policies which he hopes will revive the US economy.

Mr Bush sent his budget to Congress which also includes a big increase in military spending and record budget deficits last achieved by his father more than 10 years ago.

"Regardless of how one views the specifics of the Bush plan, there is wide agreement that its purpose is a permanent change in the tax structure and not the creation of jobs and growth in the near term," the economists said in a statement published by the Economic Policy Institute.

Nobel economic laureates Joseph Stiglitz, Franco Modigliani and Lawrence Klein reserved much of their scorn for the proposal to cut the tax on share dividend payouts.

"The permanent dividend tax cut, in particular, is not credible as a short-term stimulus," the statement said.

"Moreover, the proposed tax cuts will generate further inequalities in after-tax income," it said.

The statement, which has been signed by almost 400 economists, will be formally released at a news conference by the Washington-based think-tank.

"Overcapacity, corporate scandals and uncertainty have and will continue to weigh down the economy," they said

The economists offered an alternative economic plan.

"To be effective, a stimulus plan should rely on immediate but temporary spending and tax measures to expand demand and it should also rely on immediate but temporary incentives for investment," they said.

The seven other Nobel winners who signed the statement were George Akerlof, Kenneth Arrow, Daniel McFadden, Paul Samuelson, Robert Solow, Douglass North and William Sharpe.

POOR COUNTRIES RAISE WEAPONS BUDGETS

A report by the US State Department says developing countries are spending a record amount of money on weapons.

The study looks at military spending worldwide at the end of the 1990s, and reveals an 18% increase in expenditure by developing countries over the previous decade.

The State Department study reveals a baffling array of figures on defence spending around the world, but some interesting trends emerge from the statistical fog.

The end of the Cold War led to a collapse in military investment in Eastern Europe.

 

 

SURPRISE CUT IN UK INTEREST RATES

City analysts by cutting interest rates by one quarter of a percentage point.

After 14 months on hold, rates have been cut to 3.75%, taking borrowing costs to their lowest level since 1955.

The move surprised City analysts, who had thought that the Bank would maintain rates at 4% to keep a lid on the housing market and general inflation.

House prices last month were 24.9% higher than in January 2002, Halifax, the UK's biggest mortgage lender, said last week.

ANGER OVER FEDERAL EU PLAN

British politicians say draft plans for the future European Union being run "on a federal basis" are unacceptable.

The president of the convention on the future of Europe, Valery Giscard d'Estaing, unveiled the constitution's first 15 draft articles last week.

But the UK Government has raised concerns about the use of the word "federal" and suggestions that the EU should have sweeping economic and foreign policy making powers.

Welsh Secretary Peter Hain, who also handles some European negotiations, said the draft was contrary to the wishes not just of the UK but of most EU governments.

"This does not reflect the consensus of people on the convention," he said.

"A lot of representatives are wondering whether the people who drew up this document have been going to a different convention."

BUSH TO DETAIL OIL POLICY

US President George W Bush is set to give details of his administration's energy policy in a speech.

The President has been criticised for refusing to sign up to the Kyoto Treaty and instead relying on voluntary measures to reduce global warming.

The central plank of the President's energy policy is likely to be an attempt to make America less dependent on foreign oil sources.

As such, he is set to push once again for oil companies to be given permission to begin drilling in the Arctic National Wildlife Refuge in Alaska.

The President's recent budget proposal foresees over $2bn in revenue from the refuge by 2005, despite widespread opposition to the plan.

US SHRUGS OFF N KOREA THREAT

The United States has shrugged off a threat from North Korea that any decision to send more troops to the region might prompt it to make a pre-emptive attack.

"Obviously the United States is prepared [with] robust plans for any contingencies," White House spokesman Ari Fleischer said in a briefing last week.

"But this type of talk and the type of actions North Korea has engaged in - or says it is engaging in - only hurt North Korea."

DIAMOND MARKET FACES TOUGH YEAR

Gem giant De Beers has forecast a difficult year for diamond sales, as economic and political uncertainties weigh on big spenders.

De Beers, which supplies 60% of the world's diamonds, said that sales of diamond jewellery held up "reasonably well" in 2002, despite a fall in global consumer optimism.

BANANA GROWERS FEAR SAFEWAY BATTLE

Caribbean banana growers have warned the take-over of Safeway could spell disaster for their industry.

Farmers fear large-scale job losses if Morrisons or Wal-Mart, which owns Asda, wins the six-way tussle for the supermarket chain.

In contrast to most UK retailers, who have traditionally bought their bananas from the Caribbean, the two companies import the fruit from Africa or Latin America.

The Caribbean growers are under pressure to cut prices after preferential EU trade quotas were outlawed.

WAR THREATENS SOUTH ASIAN TEA

Tea producers from the world's leading exporters India and Sri Lanka have warned a war with Iraq will seriously affect their businesses.

"Already the Indian tea industry is in a bad shape and the situation could take a turn for the worse if there is a war in Iraq," said D.M. Jain, president of the Indian Tea Association (ITA).

His comments come after Sri Lanka's tea factory owners issued a similar assessment.

Tea has seen "a drop in prices and less demand mainly in the low grown sector due to the impending war in Iraq," Sarath Samaraweera, chairman of the Private Tea Factory Owners Association said last week.

SHELL OFFERS PROFITS

Strong oil prices have helped Shell to a 46% jump in earnings, enabling it to post the biggest quarterly profit by a European company this year.

During the last three months of 2002, the Anglo-Dutch firm made a net profit of $2.8bn (1.7bn), or $9.2bn for the year as a whole.

FRENCH CLAIM AIRBUS VICTORY IN INDIA

The French Prime Minister has claimed victory for Airbus in its battle with Boeing for a 43 passenger plane order from Indian Airlines worth $2.1bn.

"Indian Airlines has chosen to buy 43 Airbus planes," Prime Minister Jean-Pierre Raffarin in a statement.

"I am of course hopeful that this choice will soon be made official."

SHOCK SURGE IN GERMAN JOBLESS

German unemployment has risen to 11.1%, its highest rate during the government of Chancellor Gerhard Schroeder.

The January unadjusted jobless total of 4.62 million represents a jump of almost 400,000 since December.

The news is the latest blow to Mr Schroeder, whose popularity has been battered by a string of gloomy economic data since he was re-elected in September.

VODAFONE PREPARES FOR JAPAN SELLOFF

UK mobile phone giant Vodafone is in talks to sell its landline operations in Japan for as much as $2.5bn.

The plan is to shift the high-volume, low-margin side of its two-thirds owned Japan Telecom subsidiary onto someone else's shoulders while keeping hold of the more lucrative mobile service, J-Phone.

First in the line of suitors is US investment fund Ripplewood, Japan Telecom said recently after a blizzard of news reports suggesting a deal was close.

CISCO QUARTERLY EARNINGS SURGE

The networking giant earned $991m (603m) in the second quarter, up sharply from $660m a year ago.

 

 

US STEEL TARIFFS 'COST THOUSANDS OF US JOBS'

Tariffs imposed on steel imports to the United States last year are largely responsible for the loss of nearly 200,000 American jobs, a business lobby group has said.

The Consuming Industries Trade Action Coalition (CITAC) says the number of job losses is greater than the total number of people employed in the steel industry.

The tariffs announced by US president Bush last year were intended to protect steel companies and workers from a surge in imports, much of which, the industry maintained, were either unfairly subsidised or dumped sold for less than the cost of production.

DUTCH GIVE NOD TO 'GURU CURRENCY'

A new "currency" issued by a group founded by Beatles guru Maharishi Mahesh Yogi may be used and has not violated Dutch law, the Dutch central bank has said.

The Global Country of World Peace, set up by the Indian mystic, issued the brightly coloured notes of one, five and 10 "raam" last October.

Since then, more than 100 Dutch shops, some of them part of big department store chains, in 30 villages and cities have accepted the notes.

VENEZUELA PEGS CURRENCY TO US DOLLAR

Venezuela has pegged its currency at a rate 17% stronger than what it last traded at to protect its foreign cash reserves.

Venezuelan President Hugo Chavez made the move as substantially reduced, two-month-old strike by right-wing opposition groups continues to drag on the economy.

INDUSTRY GLOOM HITS EVERY CORNER OF UK

Industry is gloomy about its prospects across every region of the UK, according to the Confederation of British Industry (CBI).

For the first time in a year confidence is down across the entire country, with all regions, except Northern Ireland, expecting job cuts.

The CBI is predicting around 42,000 redundancies by the end of April.

UPBEAT VERDICT ON PRIVATE FINANCE PROJECTS

Most building projects under the controversial Private Finance Initiative are being delivered on time and under budget, according to the public spending watchdog.

The National Audit Office said PFI which involves private firms in public sector projects such as hospitals, roads and government offices seemed to be offering some improvements.

It said less than a quarter of 37 construction projects it looked at came in over budget.

NO CHANGE FOR EUROZONE RATES

Europe is waiting to see how inflation may develop this year Eurozone interest rates have been left unchanged at 2.75%.

The European Central Bank (ECB) made a hefty half-point cut at its meeting in December, and had been widely expected to leave rates alone this month.