INTERNATIONAL

 

Dec 29 - Jan  04, 2003

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF


US CONFIRMS FIRST 'MAD COW' CASE

US officials have confirmed the country has discovered its first case of BSE. British scientists found the disease in tissue flown in from a dairy cow from the north-western state of Washington.The animal is believed to have contracted BSE, or bovine spongiform encephalopathy, after eating contaminated feed. Experts have predicted the news will cost the previously-booming US cattle industry billions of dollars, as countries around the world rush to ban American beef imports.

 

 

 

Japan, Mexico and South Korea the three top importers of US beef are already leading a list of more than a dozen countries to ban US meat. The European Union has banned most US beef for many years because of growth hormones.

The US dollar and Japanese stock markets fell earlier as the suspected case was announced, while cattle futures slumped as far as markets allow. Shares in McDonald's fell by about 5% on the New York Stock Exchange, although the burger giant said its supply chain was not linked to the suspected case. The US Department of Agriculture is expecting more information on the infected tissue from experts at Veterinary Laboratories Agency in Weybridge, Surrey, by the end of the week. BSE has been linked to new variant Creutzfeldt-Jakob Disease (vCJD), a human brain-wasting disease. First diagnosed in Britain in 1986, BSE affected 178,000 British cattle and resulted in the eventual destruction of 3.7 million animals. It cost British farming billions of pounds as countries around the world banned British beef.

UK ECONOMY TOPS GROWTH ESTIMATES

Britain's economy expanded faster in the third quarter than previously estimated, official figures show. GDP rose by 0.8% on the quarter between July and September and was up 2.1% on the same period last year, the Office for National Statistics (ONS) reported. The ONS had previously estimated that the economy grew by 0.7% on the quarter and 2.0% on the year. The upward revision was largely due to higher estimates for health and social work and business activities.Greater activity in the insurance services and wholesaling sectors also helped to boost GDP, the ONS said. The third quarter figure which analysts had expected to remain unchanged was the fastest quarterly growth since the third quarter of 2002, which also came in at 0.8%.

The figures will lend further support to the Bank of England's decision last month to raise interest rates for the first time in nearly four years. Many analysts now expect a further increase in the cost of borrowing early in the new year. However, while the upwardly revised GDP figures may have provided some Christmas cheer for the Chancellor, the news was not all good. Separate figures from the ONS show that Britain's current account deficit ballooned to 8.1bn in the third quarter, up from a revised 7.8bn in the previous three months.It was the highest deficit since the final quarter of 2000 and was driven by larger deficit in trade in goods. Britain's balance of payments deficit with the European Union was 5.9bn, while with non-EU countries it stood at 2.2bn, the ONS said.

GREYING JAPAN SEES BUDGET SWELL

Japan's rapidly ageing population will push its public debt to new highs in 2004 despite cuts to defence, foreign aid and public works spending. The draft 2004 budget, published last week, sees spending rise to 82.11 trillion yen ($760bn; 430bn). Borrowing will rise 0.4% to more than 36 trillion yen or almost half the overall budget, a new record. The rise is driven by a 4.2% increase in social security as the number of elderly Japanese swells. The rapid growth in social welfare programmes comes as the cost of sustaining Japan's massive public debt now amounting to nearly 140% of gross domestic product is also expanding close to 5% in 2004. Defence is being cut 1% to 4.9 trillion yen, although that still leaves Japan's defence budget among the highest in the world.Overseas aid spending is to fall almost 5%.

 

 

ASIA SUSPENDS US BEEF IMPORTS

Countries across Asia have temporarily halted imports of US beef after that country's first suspected case of "mad cow disease" was announced. Japan, South Korea and Singapore acted within hours of the news that a cow had tested positive in Washington state. Japan is the largest buyer of US beef, and has had its own BSE scare with nine cases of the disease. Australia, the world's largest beef exporter, saw meat prices rise sharply in anticipation of extra sales.

South Korea's agricultural ministry said it would suspend customs procedures on all US beef effectively ending imports. An agricultural ministry official told Yonhap, the state news agency, that this was just a temporary measure and the final decision to ban US beef would be made only after official test results were announced. About two-thirds of beef imported to South Korea is from the United States.

DATA BOOSTS HOPE OF US RECOVERY

US economy growth figures showed that the world's largest economy is well placed to continue its recovery next year. Consumer spending and sentiment has remained buoyant. The Commerce Department confirmed that the economy grew at its fastest pace for 20 years during the third quarter. Although economists warn that it is still early days, there is growing hope that interest rates and tax cuts have done enough to turn the US around.

The capture of deposed Iraqi leader Saddam Hussein and a small dip in unemployment also has helped convince people that the outlook is improving. Stock markets have reflected this new-found optimism, with the US's benchmark Dow Jones Index climbing to a 19-month high this week. Economic growth in the three months to September was 8.2%, according to revised figures released by the Commerce Department last week.

DOLLAR AT RECORD LOW VERSUS EURO (BOX)

The US dollar continued its record-breaking slide against the euro amid concerns about terrorist attacks over the Christmas holiday period. The dollar slid as low as $1.2450 in New York on Dec 22, before rebounding slightly. It also fell against the Japanese yen and in Europe. Many investors were spooked by the US raising its security alert over the weekend, warning that any attack may exceed those of September 11, 2001.

PARMALAT IN BANKRUPTCY PROTECTION

Italian food company Parmalat has filed for bankruptcy protection under new fast-track administration rules unveiled by the government. The firm, which has revealed a multi-billion euro hole in its accounts, is being dubbed "Europe's Enron". Two teams of investigators are now ready to probe the firm's books, to see how it based its business on an allegedly fake financial statement.

MORALE IMPROVES FOR FRENCH FIRMS

French businesses are more confident about the future but shoppers are still wary, new figures indicate. According to the national statistics office INSEE, business confidence rose in December to its highest level since May 2001, suggesting hope for recovery. The figures make a sharp contrast with latest consumer spending data, which showed November to have registered the worst fall in seven years. That could threaten the government's 1.7% growth target for 2004.

CHRISTMAS SALES 'UP ON LAST YEAR'

Christmas sales figures will be better than last year but the overall picture is patchy, retail analysts have said. While clothing stores have had a tough time, bumper sales for electrical goods retailers and supermarkets will push 2003's figures above 2002, they say. Yet analysts said the rate of the sales growth should be down this year at 2%, compared to last year's 5% to 6%. The warm autumn has been blamed for the reduced clothing sales.

IRISH DRUG GROUP TO SELL UNIT

Irish pharmaceutical group Elan is to sell its European sales and marketing business for 68m ($120m; 97m euros). It is being bought by Medeus UK, a new UK pharmaceutical company, backed by venture capitalists Apax Partners. Dublin-based Elan says the move will enable it to focus on its core business of pharmaceutical research, development and manufacture.

ARNIE DECLARES STATE OF EMERGENCY

The Governor of California, Arnold Schwarzenegger, has declared a state of emergency following the powerful earthquake which hit the state. The declaration allows state resources to be used to pay for rescue and rebuilding work in the affected area. The governor announced the move while visiting the town of Paso Robles, 300 km (185 miles) north of Los Angeles. Two women died in the town, which was worst-hit by the quake, after a building collapsed. The Republican governor and former movie star said more than 50 people had been injured in the severe quake, which had a magnitude of 6.5. Forty buildings were damaged while 100,000 people across the state experienced power cuts.

RUSSIA MAY VET POST-SOVIET RICH

President Vladimir Putin has indicated that some of the country's best-known tycoons may be investigated to see if they amassed their wealth illegally. Many of the country's wealthiest business people made their money following post-Soviet privatisations. Some are thought to have broken the law in a rush to gain from the free market. The news came as Russia's richest man lost a fight for bail as he awaits trial on charges of embezzlement and tax evasion totalling more than $1bn.

OPIUM THREATENS AFGHAN GROWTH: IMF

A huge surge in opium production and stubborn insecurity are threatening the Afghan economy, the International Monetary Fund has warned. In its first annual review of the war-ravaged country for 12 years, the IMF saw some progress in putting back together the country's institutions.But it warned that donors would have to keep on contributing for years to come. And it said opium farming, now worth half the official national output could become entrenched in the economy.

 

 

VODACOM'S $600M NIGERIAN PLEDGE

Vodacom, South Africa's leading mobile phone operator, has pledged to invest some $600m in Nigerian number two operator Econet Wireless Nigeria.

BANK FINED $80M OVER ENRON ROLE

Canadian Imperial Bank of Commerce (CIBC) has agreed to pay $80m (45m) to settle allegations it helped Enron hide debts and inflate earnings. Two CIBC executives also will pay fines totalling $600,000 following an investigation by the Securities and Exchange Commission (SEC). The discovery of widespread fraud at Enron led the Houston-based energy company to collapse in 2001. Citigroup, JP Morgan and Merrill Lynch have all previously paid fines.

CHINA MINER SOARS ON MARKET DEBUT

Shares in Chinese gold miner Fujian Zijin have soared by more than 70% on their Hong Kong stock market debut. The company raised $1.2bn Hong Kong dollars (88m; $147m) in a flotation that was oversubscribed 744 times. The sale, the most popular public offering in Hong Kong since 1997, was fuelled by rampant demand for Chinese shares among retail investors. Global gold prices, too, are firm, and mining companies around the world have seen their shares in high demand.

NEWS CORP RISES AFTER US TV DEAL

Shares in Rupert Murdoch's media firm News Corp have risen after regulators backed the firm's $6.8bn move into the US satellite TV market. Approval of the bid to take control of Hughes Electronics, owner of DirecTV, means Mr Murdoch can fulfil a 20-year dream of entering US satellite TV. Investors bought News Corp's Australian shares, pushing them up 1.5%.

INDIA 'ON TRACK FOR 8% GROWTH'

India could achieve economic growth of between 6% to 8% a year in the next few years, a key World Bank official has reportedly said. World Bank country director for India Michael Carter said: "India is set to achieve impressive growth as the potential is enormous.

SWISS RETURN FIRST ABACHA FUNDS

Officials in Switzerland have approved the return of some $88m (50m) linked to Nigeria's late General Sani Abacha. Since 1999, more than $600m connected to the former military leader has been frozen in bank accounts in Switzerland. The Nigerian government wants all the money released as soon as possible, but Swiss officials say this can't be done until investigations are completed. General Abacha is believed to have embezzled as more than $2bn from Nigeria whilst he was in power.