INTERNATIONAL

 

Apr 12 - 18 , 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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UK SEES GLOBAL TRADE GAP SHRINK

The UK's trade gap with the rest of the world narrowed sharply in February as exports to the US bounced back. Figures from the Office for National Statistics (ONS) showed the goods trade deficit narrowed to 4.25bn ($7.85bn) from a record 5.45bn in January.
The improvement was driven mostly by countries outside the EU - with exports to the US up 17%. The non-EU trade gap shrank to 2.05bn from 3.36bn, while the deficit with the EU widened to 2.2bn from 2.1bn.

 

 

 

 

The ONS added that the rise in exports was driven by chemicals, building materials and machinery. But imports also fell as the UK bought less oil and fewer aircraft from abroad.

Imports from the US were down to 1.6bn in February from 1.8bn the month before.

The news may provide a crumb of comfort to the UK's manufacturing sector, which has been hit by fears that a recent recovery is not as strong as earlier thought, after data this week revealed a dip in factory output.

But Brian Hilliard, economist at Societe Generale bank, said: "The overall story is that this is still bad news for the manufacturing sector and that partly explains why we're seeing volatility in the manufacturing output numbers as well."

KERRY VOW TO SLASH $500BN DEFICIT

Democrat presidential hopeful John Kerry has outlined plans to slash the $500bn US budget deficit by half within four years.

In a framework for cutting spending, Mr Kerry also accused President Bush of "economic mistakes" and "distortion".

He said Mr Bush's policies could lead to "fiscal cancer" resulting from "politics of deceit".

Mr Kerry outlined how he would run the finances of the US if he were to become president.

But Republicans have criticised Mr Kerry for over-blowing his campaign promises, but the Democrat senator says the ballooning budget deficit is forcing him to refine some of his strategies.

In a speech at Georgetown University, Mr Kerry said he wanted more invested in affordable health care. He wants free tuition for students and he would rollback President Bush's tax cuts.

But he said some of his plans would need to be watered down such as his planned proposal for universal pre-school education.

Mr Kerry proposed a return to the budget "pay-as-you-go" rules of the 1990s that capped discretionary government spending and required increases in entitlement benefits or cuts in taxes to be offset by other program cuts or other tax increases.

These rules expired in 2002 and the US Congress is considering bringing them back.

Better education will be paid for with cuts in jobs in Washington. Kerry wants to spend $200bn on a national education trust fund over the next decade.

His proposed cuts in government administration costs would mean losing 100,000 contractors, saving $90bn over 10 years.

BROWN SEEKS SUPPORT FOR AID PLAN

Ministers from 56 countries are being urged to come together to double global aid from $50bn to $100bn a year. Chancellor Gordon Brown will use a development summit in Paris to back his plans and increase pressure on the US and Germany to support the scheme.

Mr Brown will call on world leaders to "accept the challenge for our time and for our generation". He will be speaking on the centenary of the Entente Cordiale between Britain and France. The summit takes place in Paris exactly 100 years since the Entente Cordiale and reflects sensitivity in the French capital to criticism that the 1904 treaty allowed the superpowers of the world to build empires in what is now the Third World.

Mr Brown believes the backing he will receive at April 8 Ministerial Forum on Financing for Development will put pressure on the seemingly undecided Americans and Germans to support the scheme at key meetings of the International Monetary Fund and Wold Bank later this month.

He will also call on world leaders to have "the strength together to fight poverty, remove destitution, end illiteracy, and cure disease".

Forum will focus on the internationally-agreed Millennium Development Goals of halving poverty, cutting infant mortality by two thirds and ensuring universal primary schooling by 2015.

In his "call to action" speech, Mr Brown will warn that, at present rates, the Millennium Goal on cutting infant mortality would not be met in sub-Saharan Africa until 2165.

He will tell the summit: "I believe that the scale of the challenge is such that we cannot leave it to some other time and some other people but must act now, working together.

SCANDAL-HIT US FUND

Scandal-hit US fund to pay $110m Putnam Investments has agreed to pay fines totalling $110m to settle charges that it engaged in "market timing" of mutual funds.

It is the first fine in an industry-wide investigation by US state and federal regulators into improper trading in mutual funds.

Managers and clients were engaging in improper rapid trading of mutual fund shares at the expense of shareholders. The mutual funds industry is worth around $7.6 trillion. The practice of "market timing" is not illegal but breaches codes of conduct at most funds.

WORLD TRADE GROWTH PICKS UP SPEED

Growth in world trade picked up pace to 4.5% in 2003, recording a second year of recovery after shrinking in 2001, the World Trade Organisation has said.

Trade growth outstripped a cautious WTO forecast of a 3% increase, shaped to take account of the Sars outbreak and tensions in the Middle East.

Trade expansion was propelled by higher than expected economic growth in the US and Asia, the WTO said.

It is now predicting global trade could expand by 7.5% in 2004.

"Clearly the improved economic situation in the United States and Asia has given an important boost to world trade," said WTO director general Supachai Panitchpakdi.

"But when you look around the world, the pace of trade growth remains uneven and there remain many barriers to trade globally."

The WTO is struggling to reach agreement on furthering global trade liberalisation talks on sectors ranging from farm goods to the service sector.

UK ECONOMY 'ON ROAD TO STABILITY'

The UK economy is heading for a period of balanced growth and companies are creating wealth more rapidly than their European rivals, surveys have found.

Economic expansion will stabilize at a healthy 3% at the end of 2004, said business researchers BDO Stoy Hayward. The economy will peak in the middle of the year following seven successive quarters of rises, the firm said.

Meanwhile, value-added by the UK's top 800 firms rose 4% over the past year, the Department of Trade & Industry said. While Britain still lags the rest of Europe on labour productivity, UK firms make up for the shortfall by creating more wealth from readily available resources, DTI research found.

IMF WARNS OF POSSIBLE TERROR COST

 

 

Further terrorist attacks such as the Madrid train bombings could destabilise the world's financial markets and threaten global economic recovery.

That is the gloomy conclusion of the International Monetary Fund (IMF), which has just published its bi-annual Global Financial Stability Report.

But putting the terrorism threat to one side, the report paints an upbeat assessment of the world economy.

Interest-rate rises might hit some shares, but the outlook remained good.

The report added: "At any sign of that risk materializing, foreign investors could demand a risk premium on dollar assets including pushing bond yields higher and with more volatility than current market expectations."

BANK WITHDRAWS AID TO UZBEKISTAN

The European Bank for Reconstruction and Development (EBRD) is pulling aid to Uzbekistan, citing slow reform and the country's dire human-rights record.

The bank called for an improvement of human rights in the country and for economic restructuring last year but concluded little headway has been made.

The bank will only continue co-operation with the private sector and certain public-sector projects.

President Islam Karimov heads one of the region's most repressive regimes.

BRUSSELS WARNS ON DEBT TROUBLES

Half the 12 countries that use the euro will break the rules on budget deficits in 2004, the European Union has warned.

Slow growth is to blame for the probability of a widespread breach of the debt ceiling of 3% of annual output, the EU's spring forecast says.

Joining perennial culprits France and Germany are the Netherlands, Greece, Italy and Portugal.

The European Commission said it had rebuked the Netherlands and the UK for breaking the 3% rule in 2003.

Growth, the Commission said, was being damaged by high oil prices, the soaring value of the euro and increased security concerns following March's bomb attacks on Madrid.

INDIA IT FIRM ESTABLISHES US ARM

Indian software giant Infosys is to invest $20m (11m) in the United States to set up subsidiary supplying consultancy services.

The new business will be called Infosys Consulting and will hire 500 staff at its Texas base within three years. "This will counter the outsourcing sentiment out there," said Infosys Consulting chairman S Gopalakrishnan. The outsourcing of jobs to low wage countries, particularly China, India and Mexico, is a US election issue.

Both Republican and Democrat politicians have campaigned on pledges to prevent the loss of US jobs abroad if they win the election in November.

MGM RAISES STAKES ON WEMBLEY BID

MGM Mirage, the Vegas gambling giant, has raised its bid for Wembley PLC, the dog track and slot machine company.

It raised the stakes to $555m following a counter bid from BLB investors, a group of casino operators and developers.

It is $65m more than its own previous bid, easily topping BLB's $525m.

GENERAL ELECTRIC

Profits at General Electric have risen by 8% as industrial orders improved. The conglomerate, which makes more from finance than from any one manufacturing sector, made a $3.24bn net profit in the first three months of 2004.

UK INTEREST RATES ON HOLD AT 4%

UK interest rates are to remain on hold at 4%, the Bank of England has said.

Economists said the Bank's decision to resist a third rate rise since November was finely balanced.

Manufacturers had argued against any fresh rise, saying it would damage their prospects, particularly in light of the recent strength of the pound.

BERLIN STEPS INTO BUNDESBANK ROW

The German government has embroiled itself in a row over the country's central bank chief and a potentially unethical hotel bill.

Bundesbank chief Ernst Welteke stepped down temporarily after it was revealed that he accepted a stay in a luxury hotel from a bank he regulates.

But the Finance Ministry now says that is not enough to protect the bank's "high public reputation".

The move is being seen as a barely-veiled demand for Mr Welteke to resign.

LARGE FALL IN US JOBLESS CLAIMS

The number of people filing new claims for unemployment benefit hit a three-year low in the US last week, according to government figures.

The number of newly unemployed claiming benefits dropped 14,000 to 328,000 in the week ending April 3, 2004.

The figures come a week after government data showed 308,000 new jobs had been created in March.

IKEA CLAIM SPARKS RICH-LIST ROW

A fierce debate has been sparked in Stockholm, after a business magazine argued that software tycoon Bill Gates was no longer the world's richest man.

Swedish business weekly Veckans Affarer announced that Ingvar Kamprad, founder of Ikea, had topped Mr Gates, with a 400bn-kroner (29bn; $52bn) fortune.

The report was quickly taken up by media around the world.

But according to the furniture store, the magazine forgot that Mr Kamprad has not owned Ikea since 1982.

Veckans Affarer admits the anomaly, but insists that Mr Kamprad still calls the shots at the firm, and so can be considered its de facto owner.

RECOVERY UNDER WAY IN US SERVICES

Investors have cheered figures showing an upturn in the US service sector.

The Institute for Supply Management said its key index had risen to 65.8 in March, compared with 60.8 in February a sign of strong growth.

 

JAPAN PM HINTS AT RETIREMENT

Japan's Prime Minister Junichiro Koizumi has hinted he will not seek another term in office and wants to be "liberated as soon as possible".

However, Mr Koizumi said that first he wanted to see the realisation of structural reforms that are intended to revitalise the Japanese economy.

 

 

YAHOO

Yahoo, the internet search and media company, has more than doubled net profits in the first quarter to $101m.

AUSTRALIA JOBLESS AT 14-YEAR LOW

Australia's unemployment rate fell to a 14-year low of 5.6% in March, the Australian Bureau of Statistics said. The figure was lower than forecast and down from a 5.9% rate in February.

The Bureau said that 66,900 jobs were created in March, as last year's strong economic growth, helped by the Rugby World Cup, translated into jobs.

EURONEXT

Euronext, the pan-European stock market, has said it plans to cut trading fees on Dutch shares by 30%.

MUSIC SALES DECLINE AGAIN IN 2003

Sales of recorded music sales fell by more than 7% around the world in 2003, the International Federation of Phonographic Industries (IFPI) reports.

But the average figure included much bigger declines in some countries, such as a 19% drop in Germany, it said.

SA BANK IN BLACK EMPOWERMENT DEAL

South Africa's Absa bank is to sell a 10% stake worth $23m to a black-run investment consortium. The move means the company will meet targets set by the country's Financial Services Charter, which came into effect this year.

Up to 14% of the company's shares are currently indirectly held by black South Africans, according to an independent survey.

The charter requires South African firms to be one-quarter black-owned.

AFRICA METAL FIND BOOSTS UK FIRM

Shares in Britain's Cluff Mining have jumped by more than 50% after the firm announced a significant nickel and platinum find in South Africa.

The firm said it had found enough reserves at Sheba's Ridge, 200km north east of Pretoria, to transform it into a major metals producer.

Cluff's head Terence Wilkinson said the discovery was a "milestone".

The company also announced its 2003 results last week showing losses fell to $7.1m (3.9m) from $9.6m in 2002.

EUROTUNNEL REBELS SECURE VICTORY

Rebel shareholders of Channel Tunnel operator Eurotunnel have secured victory in their campaign to overthrown the company's board.

At the firm's AGM in Paris they won their vote not to renew the board seats of the chairman and chief executive, paving the way for new management.

The rebels, who have lost 90% of their investments since 1997, want new managers to cut the firm's 6.4bn debt.

IBM BUYS INTO INDIAN OUTSOURCING

Computer giant IBM has agreed to buy India's third largest business outsourcing firm.

The price tag for Daksh, based near Delhi, was not revealed but is thought to be about $150m-200m (80m-110m).

EUROTUNNEL DRILL BIDS REACH 5M

Eurotunnel has put a 580-tonne drill used to build the Channel Tunnel up for grabs on the online auction site eBay.

After 179 bids the price tops 5m, but the auction has taken a dubious turn with several bids of 10m and more withdrawn or annulled by eBay.

The Tunnel Boring Machine called B6 is the last remaining drill used in the building of the cross-Channel link.

GERMAN JOBLESS

The number of jobless Germans has risen by 44,000 to 4.3 million, a bigger than expected increase.

Many economists had predicted the rise to be half that amount, especially as employment is usually up in spring.

SRI LANKAN SHARES UP AFTER POLLS

The Sri Lankan stock exchange has shed 10% on the first day of trading since general elections returned a left-leaning minority government.

Replacing the pro-business Ranil Wickramasinghe, new Prime Minister Mahinda Rajapakse heads a collation that includes some Marxists.

The All Share Price Index shed 125 points to close at 1,188.

The Milanka index of blue-chip shares fell even further, down 12.75%.

BUOYANT US ECONOMY BOOSTS DOLLAR

Signs of renewed strength in the US economy are pushing the dollar higher, reversing the trend of recent months.

Figures released last week indicated that the massive US services industry was growing rapidly.

On top of a rise in US payrolls of more than 300,000 in March, the news was enough to lift the dollar to two-week highs.

The US currency rose 1.2% to 106.4 yen, with the euro barely above a four-month low at $1.20, and the pound down 0.5%.

The pound, meanwhile, slipped more than half a percentage point to $1.82.

LATIN AMERICA BUILDS TRADE MUSCLE

Latin American officials have reached an agreement to create a region-wide free-trade zone beginning in July.

 

 

The bloc will comprise Mercosur Argentina, Paraguay, Brazil and Uruguay and the Andean community of Bolivia, Colombia, Ecuador, Peru and Venezuela.

The agreement, which ends months of talks, aims to give the region greater muscle in global trade talks.