INTERNATIONAL

 

Mar 01 - 07 , 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF


SCHROEDER CALLS FOR WEAKER EURO

German Chancellor Gerhard Schroeder has suggested that the European Central Bank (ECB) should cut interest rates to reduce the strength of the euro.
Speaking to the Financial Times he said the current dollar-euro exchange rate was "not satisfactory" for Europe.
While saying he respected the ECB's independence, he said he believed it would be looking at a possible change in interest rates.
Mr Schroeder made his comments ahead of talks with US President George W Bush.

 

 

 

 

They appeared to have an immediate effect on the currency markets, helping the euro fall against the dollar.

"The dollar-euro exchange rate, at least for the Europeans, is not satisfactory," Mr Schroeder told the Financial Times.

"I would just say that I believe the European Central Bank has recognised that this relationship between the euro and the dollar is not helping the export sector, to put it very mildly.

"I can imagine that as a result, with all due respect for the independence of the ECB, there will be some consideration about whether [euro] interest rates are at the right level."

Schroeder's opinions were later backed up by French Prime Minsiter Jean-Pierre Raffarin.

Mr Raffarin said he "shares the view" that the European Central Bank should consider cutting interest rates.

The current exchange rate between the dollar and the Euro is "not good for either the US or Europe," Raffarin said.

UK 2003 GROWTH REVISED UP TO 2.3%

Britain's economy grew by 2.3% last year, a faster pace than first estimated, official figures have shown.

The growth figure was revised upwards from the initial estimate of 2.1% after evidence of stronger exports of services and household spending.

Analysts said the new figure meant that another rise in UK interest rates could be on the cards. Earlier this month the Bank of England raised interest rates to 4% to keep the economy from overheating. The Office for National Statistics (ONS) figures showed that while the fourth quarter figure remained unchanged at 0.9% on the previous three months, year-on-year it grew by 2.8%.

That was up from the 2.5% estimated last month, making it the strongest fourth quarter since 2000. Jonathan Loynes, of consultants Capital Economics, said the revised figures would "underpin expectations of more rate rises to come".

"This obviously lifts the starting point for GDP growth this year and certainly lends some support to the strong growth forecasts of the Treasury and Bank of England," he added.

Richard Batley, economist at Halifax, said the stronger figures had come as something of a surprise. "We had expected a small downward revision because of weaker than expected industrial production numbers," he said. "The latest GDP figures are consistent with our view that the economy is growing above trend. We still expect the base rate to go up to 5% by the end of this year."

The 2.3% expansion during 2003 means the growth rate came in the middle of the chancellor's 2.0 to 2.5% forecast made in last year's Budget.

GLOOM GROWS OVER EUROPEAN GROWTH

Europe's nascent economic recovery has been dealt a blow by reports that show confidence waning in Germany and Italy.

The key Ifo poll of German executives unexpectedly fell in February, while a survey of Italian consumers recorded its lowest ever reading.

Economists cited the strength of the euro and accounting scandals as some of the reasons behind the mood change. There was better news from France where retail spending rose by 2% in January, four times the normal monthly average.

However, French shoppers were lured to the cash tills by discounts and there are mounting concerns that both corporate and consumer spending may now tail off in coming months.

GREENSPAN WARNS OF BUDGET CRISIS

The US Congress must take action to reduce the swollen US budget deficit, Federal Reserve chairman Alan Greenspan has said.

Mr Greenspan urged Congress to cut spending, particularly on the state pension scheme, social security, before the Baby Boomer generation starts to retire. The deficit could balloon under extra demand for state pensions and Medicare, he warned. But he was upbeat on the economy, saying 2004 got off to a strong start. The US budget deficit is targeted to reach a record $521bn (227bn) this year under spending plans put forward by President Bush, who has promised to cut it in half by 2009. Democrat politicians have objected to the president's proposals for tax cuts and a 7% rise in military spending as fiscally irresponsible.

US APPROVES NEW CANCER DRUG

The US government has approved a drug that aims to treat cancer in an entirely new way.

The drug, known as Avastin, has been shown to prolong the lives of those with advanced colon cancer. It works by starving cancerous tumours of blood, thus preventing them from growing in the body. Unlike chemotherapy, which works by killing all dividing cells, this new drug will target only the cancerous tumours themselves.

The backing of the new treatment is being seen as a potentially very significant breakthrough in the fight against cancer.

The drug has been shown to prevent the formation of new blood vessels, thereby denying tumours the oxygen and other nutrients needed for their growth. In approving it, the US Food and Drug Administration described it as the first drug that had been proven to delay tumour growth.

EU SET FOR TARIFFS ON US EXPORTS

The European Union is set to impose tariffs on US companies that will cost American business hundreds of millions of dollars.

The EU trade commissioner said a 5% duty would be put on exports from the US to Europe next week because of unfair help to firms by Washington. Pascale Lamy said rates would continue to rise unless the US changed its law. But with jobs an issue in the US, there will be grassroots political pressure not to back down. The trade dispute between America and Europe has been a war of words so far with tariffs threatened but not imposed.

EXCHANGE RATES HIT ANGLO PROFITS

Mining giant Anglo American has seen profits slip as the soaring value of key currencies knocked almost $600m off its bottom line.

The firm said it earned $1.69bn (890m) in 2003, slightly ahead of expectations but down 4% on the year before.

CHINA'S WEALTH GAP WIDENS TO GULF

China says the wealth gap between its urban and rural citizens is now one of the largest in the world.

A new survey by the Chinese Academy of Social Sciences found that in 2002 urban residents earned three times more than their rural counterparts. It is an issue that has been in the spotlight lately. But the man in charge of the study, Li Shi, says even the new figures do not paint a true picture of the disparity which he claims is even wider.

Farmers pay their own health care and education costs, meaning their real incomes are a sixth of China's urban residents.

 

 

SONY DELAYS PLAYSTATION RELEASE

Sony has announced it is to delay the US and European release of the handheld version of its Playstation console.

The much-anticipated new device, called PSP, was set to hit the shelves by the end of this year, but its launch has now been put back to spring 2005.

Sony said it had decided upon the delay because it wanted more time to prepare game software for the handheld unit.

HOUSE PRICES 'ROSE 3% LAST MONTH'

UK house prices soared during February at their fastest rate in nearly two years, said the Nationwide.

The building society's findings show the property boom is not over, and will cause worry at the Bank of England, which recently raised interest rates. The mortgage lender said house prices rose by 3.1% during the month, a rise of 17.1% over the past 12 months.

It is the strongest monthly increase since April 2002, and the largest annual hike since July 2003.

IMF SEES FASTER GROWTH FOR JAPAN

Japan is set on a solid path to growth as its economic prospects have "brightened", according to the head of the International Monetary Fund (IMF).

IMF Managing Director Horst Koehler said Japan may grow 3% this year, ahead of the IMF's previous 2.2% forecast.

Business spending and Asian exports would drive the recovery, he said.

The change of stance follows figures putting growth at an annual rate of 7% at the end of last year but showing prices were falling faster than ever. The rise in the value of the yen in recent months means imports are getting cheaper, accelerating the deflation that has dogged Japan for some years.

BAE SYSTEMS SEES DIP IN PROFITS

Europe's biggest defence contractor, BAE Systems, has reported a fall in pre-tax profits.

But the UK firm, which recently missed out on a 13bn RAF aircraft refuelling contract, said its defence operations this year would be slightly up on 2003.

BAE said pre-tax profits before exceptionals came in at 760m, down from 796m last year

 

 

WARNING OVER ARMS SALES LOOPHOLE

The UK government is allowing the sale of weapons components to "known human rights abusers", a new report claims.

A dramatic rise in sales to these nations undermines the government's own ethical policies, say the charities Oxfam, Amnesty International and Iansa.

The Foreign Office rejected the conclusions of the charities' report.

Foreign Secretary Jack Straw said the rise in sales was because production lines now operated internationally, but checks were as rigorous as ever.

EU SUSPENDS US POULTRY IMPORTS

The European Commission has ordered a one-month ban on live poultry and egg imports from the United States, after a bird flu outbreak in Texas.

US officials say the outbreak is different from the deadly Asian strand and poses a low health risk to humans.

But EU Health Commissioner David Byrne said "safety had to come first", adding the EU would review the ban next month.

A quarter of EU's annual egg imports come from the US, worth 20m euros ($25.17m) in trade. The EU also imports some 450,000 day-old-chicks a year from the US, more than half its imports in this category. Russia the largest poultry export market for the US and Taiwan have also announced bans but only on imports from Texas.

US ONLINE SALES HIT $50BN IN 2003

US shoppers spent more than $50bn shopping online in 2003, new figures show.

The numbers from the US Commerce Department indicates online shopping grew by 26.3% from the year before.

E-commerce occupied 1.6% of total retail spending of $3.5 trillion, up from 1.3% in 2003.

The sales were concentrated in the final three months of the year, when holiday shopping meant e-commerce made up almost 2% of total spending. Overall, retail sales grew 5.4% through 2003. Unsurprisingly, the data continues the trend of rapid growth marked in recent years for online shopping. And early figures for 2004 showing sales for Valentine's Day up 40% on the year before indicate a continuation of the trend this year.

The growth to the $50.4bn figure for 2003 does, however, mark a slight reduction in the pace of expansion.

UN WARNS OF BIRD FLU'S HIGH COST

The spread of bird flu has been a disaster for Asia's livestock industries, the United Nations food agency has warned.

The deadly disease may even threaten the region's attempts to end poverty, said Jacques Diouf, head of the Food and Agriculture Organization. Bird flu has killed 22 people in Vietnam and Thailand. Big chicken-processing conglomerates in the region have seen business suffer, while many small farmers face ruin.

US EMBARKS ON CHINA YUAN MISSION

US Treasury officials are heading for China to inaugurate a working group to improve economic co-operation.

The meeting is the result of a summit between the two nations' presidents, George W Bush and Hu Jintao, last year. The Treasury said it would cover a range of issues, but would not go into detail about whether it would focus on the dollar-yuan exchange rate.

The US has blamed China for keeping the yuan weak to boost its economy, saying the policy is destroying US jobs.

POOR TRANSPORT 'COSTS UK 15BN'

The UK's "crumbling" transport system is costing business up to 15bn a year, the British Chambers of Commerce says.

Just 10% of firms said the UK's system met their transport needs, a study by NOP for the BCC found. "Crumbling transport infrastructure is holding back British business," said BCC director general David Frost. The study found loss of man hours due to poor infrastructure was a problem for 84% of firms, with 37% saying it had a significant impact on business.