INTERNATIONAL

 

May 10 - 16, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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FRANCE VOWS TO FIX FRAGILE BUDGET

Faster privatisation, sales of gold reserves and stronger growth will return France to fiscal health, Finance Minister Nicolas Sarkozy has said.
Mr Sarkozy predicted the budget deficit would return to eurozone norms 3% of gross domestic product by next year.
"France's word must be respected," he told a news conference.

 

 

 

 

Mr Sarkozy was handed France's finance and economy portfolio, with a brief to trim the budget without stirring up popular opposition to reform.

Mr Sarkozy's predecessor, Francis Mer, took the blame for a raft of unpopular cut-backs, in particular to France's expensive welfare and pensions systems.

The key to Mr Sarkozy's approach to France's public finances is an assumption of a recovery in economic output.

After growing by just 0.5% last year, the economy is now predicted to accelerate to 1.7-1.8% growth in 2004, Mr Sarkozy said.

He has earmarked half the extra revenues this growth should produce to pay off state debt, which is currently 64% of GDP.

He intends to introduce a law this year, which will oblige governments to use any surplus tax revenues to redeem France's debt.

Weak state finances are a disincentive to investment, he said, and have made the French economy especially sluggish.

At the same time, he has remained cautious about promising the sort of sweeping spending cuts some economists have called for.

France needs to reduce its budget deficit from the current 4.1% of GDP to below the eurozone ceiling, or face statutory penalties.

Mr Sarkozy pledged a freeze on spending this year and next, and in particular promised to cut state aid to companies that move jobs abroad.

The state is to sell up to 600 tonnes of the Bank of France's gold reserves an amount that is worth some $7.5bn at current prices.

BUSH ASKS FOR $25BN FOR WAR COSTS

US President George Bush has asked for an extra $25bn for military costs in Iraq and Afghanistan, reversing a previous spending pledge.

In a statement, the White House cited "recent developments on the ground and increased demands on our troops" as the reasons for the request.

There have been recent upsurges of violent resistance to the military occupations of both countries.

Earlier, the US said it had dropped plans to reduce troop numbers in Iraq.

It had said it would cut forces to 115,000 this month, but it now says it plans to keep 135,000 troops in Iraq until 2006.

Mr Bush had vowed not to seek more money for Iraq before the November presidential election.

The White House is now asking for an extra $25bn from Congress as a "contingency reserve fund" out of the proposed budget for the fiscal year 2005, beginning on 1 October.

That will come on top of the $160bn already allocated to Iraq and Afghanistan in President Bush's previous spending bills.

White House budget director Joshua Bolten went to Congress to brief top Republican lawmakers on the additional request.

"This is not money for Iraq, this is money for our troops, this is supporting our troops. Nobody is going to have any problem with that," House Majority Leader Tom DeLay, a Texas Republican, reportedly told journalists afterwards.

But the BBC's Pentagon correspondent Nick Childs says that previously, amid much controversy, administration officials had said that they would not be asking for more funds this year because it was impossible to work out what future needs would be.

BANK UPS INTEREST RATES TO 4.25%

The Bank of England has raised UK interest rates by a quarter percentage point to 4.25%.

The move had been widely expected by economists and comes as the Bank tries to cool soaring property prices and consumer debt.

The increase is the third quarter-point rise the Bank has made in the past seven months.

It will leave homeowners repaying 15 a month more on a 100,000 mortgage with a previous interest rate of 5.75%.

Many analysts now believe the cost of borrowing could reach 5% by the end of the year.

POOR COUNTRIES SEEK BETTER DEAL

Slow progress has been made at a meeting in Senegal's capital, Dakar, as trade ministers from the least developed nations argue a better deal.

The meeting, attended by World Trade Organisation (WTO) chief, Supachai Panitchpakdi, aimed to make proposals on key issues of agriculture and trade.

"Show realism, flexibility and a determination to make progress", Supachai told officials.

The ministers have expressed anxiety over their continued marginalisation.

Further concern was voiced by the ministers most of whom are from African nations over agricultural subsidies enjoyed by richer trade partners.

To help speed things up a group of African states said they will drop demands that cotton be treated separately if rich nations guarantee the issue will not hold up further negotiations.

EURO INTEREST RATE LEFT UNCHANGED

The European Central Bank (ECB) has decided to keep interest rates on hold at 2%, despite some calls for a cut to help boost the slow recovery.

The move had been widely expected with the latest economic data showing manufacturing orders and output rising at their fastest pace since 2000.

Prospects for exporters have also improved with the euro weakening against the dollar since February.

However, other reports say consumer confidence in the eurozone remains low.

Eurozone interest rates have now been at 2% for 11 months.

 

 

GREENSPAN WARNS OF DEFICIT THREAT

The soaring budget deficit could impact long term US economic stability, warned Federal Reserve Chairman Alan Greenspan in a speech.

He opened his Globalization and Innovation speech to a banking conference in Chicago with warnings of fiscal challenges ahead.

The US has been pressing "historic limits in recent years without financial disruption" he said.

"Financial disruption that almost surely would have arisen in the past".

He pointed to limits pressed against in external and budget balances.

Of main concern was the budget deficit. Mr Greenspan noted it would soon be over $500bn.

PROFITS RISE AT JAPAN MOBILE FIRM

Japanese mobile phone network giant NTT DoCoMo has seen its annual net profits triple to 650bn yen ($5.8bn; 3.3bn) for the year ending March 2004.

The giant rise, boosted by an upsurge in the take-up of next generation or 3G video phones, was further helped by its comparison with losses last year.

DoCoMo's annual pre-tax profit rose by 5.6% to 1.1 trillion yen, on revenues of 5.05 trillion yen.

PINEWOOD SHARE SALE RAISES 46M

UK film studio Pinewood Shepperton has said it raised 46.2m ($81.6m) from the sale of its shares, ahead of its London Stock Exchange debut.

The studio, home to the James Bond and Harry Potter films, said it had sold shares in the company at 180p each valuing the group at 82.5m.

FIRST SUPERSIZE AIRBUS ASSEMBLED

The assembly of the world's largest aircraft, the Airbus A380, has begun at a 240m factory in Toulouse, France.

The 555-seater super airliner is expected to revolutionise the airline industry and could lead to a doubling in Airbus' profits, some experts say.

Fittingly for a huge plane, the factory itself is very big: 49 metres long, 250 metres wide and 46 metres tall.

The first flight of an A380 will take place in 2005 and by 2008 production should reach four aircraft per month.

CABLE TV BOOSTS NEWS CORP PROFITS

The TV show American Idol has helped News Corporation boost revenues from advertising and post a 69% increase in net quarterly profits.

The global media giant, run by Rupert Murdoch, also saw profits boosted by sales of DVDs and films.

Net profits for its fiscal third quarter were $465m, compared to $275m for the same period last year. Among its various units, Cable TV income rose more than 50% and satellite television operating income rose 25%.

MUSIC STARS GET $50M IN ROYALTIES

The world's top five music companies have agreed to pay $50m (28m) in unclaimed royalties to artists including David Bowie and Dolly Parton.

Thousands of musicians will receive extra royalties as a result of a two-year investigation by New York Attorney General Eliot Spitzer.

Music companies including Sony, Warner and EMI failed to maintain adequate contact with artists, Mr Spitzer said.

Liza Minnelli and Sean "P Diddy" Combs will also receive extra payments.

SA LEAD 2010 RACE

South Africa's hopes of hosting the 2010 World Cup were given a major boost recently after Fifa inspectors rated their facilities as the best of five competing countries.

A 94-page technical evaluation report described South Africa's bid as "excellent" with those of north African rivals Egypt and Morocco termed "very good".

The report said: "Despite questions about security in the country, the legacy compared to the investment needed will be a great contribution to the country.

EXPERTS DIVIDED ON SASSER FUTURE

Global computer experts are divided on whether the Sasser worm will now fade away, or become yet more of a threat.

Some believe the virus, which has wrought havoc on computers around the world, will slow down as more and more people fit additional security patches.

Yet others warn that Sasser could now merge with earlier virus-like programs to wreak yet more havoc.

INTERNATIONAL POWER PROFITS RISE

International Power has reported a rise in earnings, boosted by a stronger performance at its businesses in Europe and Australia.

The UK electricity company saw its first-quarter, pre-tax profits rise by 12% to 84m ($150m).

RECORD HIGH FOR US SERVICES

US service sector activity rose to a record in April, in figures released by the Institute for Supply Management.

The sector, which makes up for 85% of the US economy, rose to 68.4 in April from 65.8 the month before in an index where higher than 50 means expansion.

US INTEREST RATES REMAIN ON HOLD

The Federal Reserve has as expected decided to keep US interest rates on hold at 1%.

But analysts now expect that the Fed will begin raising rates in the summer, in an attempt to match the strongly accelerating growth of the US economy.

In its accompanying statement the Fed itself hinted at a future upward trend, saying rates could now be boosted at a "measured" pace.

 

 

RBS GROWS IN US WITH $10.5BN BUY

The UK's Royal Bank of Scotland is expanding its push into the US by spending $10.5bn (5.8bn) on Cleveland-based bank Charter One.

The purchase is to take place through Citizens Financial Group, RBS's main vehicle in the US.

It will give the bank access to six Mid-Western states including the cities of Chicago, Detroit and Cleveland.

RBS has been a keen buyer of financial services firms in the US, but Charter One is its biggest buy to date.

TROUBLED DRESDNER BACK IN PROFIT

Germany's Dresdner Bank has returned to profit ending 18 months of losses according to its owners Allianz.

The news came as Allianz issued a preliminary earnings statement showing an estimated net profit of 650m euros (440m; $784m).

GERMAN UNEMPLOYMENT STILL RISING

Unemployment remains a serious problem in Germany and the economy is not growing fast enough to sort it out, according to the Federal Labour Office.

Seasonally adjusted unemployment rose to 4.367 million in April, up by 23,000 from March.

WATER BILL RISES IN THE PIPELINE

UK water companies have called for a sharp rise in customer bills starting in 2005.

If the proposed price rises are given the green light by the industry regulator, average bills will rise by 14 a year from 2005 to 2010.

This will mean that the average annual bill will rise from 240 a year in 2005 to 310 a year in 2010.

SPAIN'S TOURISM BOUNCES BACK

Spain's tourism industry has bounced back after the Madrid bomb attacks in March which killed 191 people.

In a study released at the Global Travel and Tourism Council Summit in Qatar, travel sector figures indicate a prompt and full recovery.

Following the 11 March disaster, Spain has compared well with other countries that suffered similar attacks.

DEVELOPER LOSES TWIN TOWERS CASE

The destruction of the World Trade Center by two hijacked planes on 11 September 2001 counts as a single attack, a jury has ruled.

The attacks killed more than 3,000 people, and destroyed the Center's iconic twin towers.

Developer Larry Silverstein had argued that two events had occurred, each attracting $3.5bn worth of insurance.

But the jury said otherwise, in a move which could reduce the money available for rebuilding by at least $1bn.