They had expected growth in the world economy to lead
to more export sales for US firms.
The consensus among economists was for April's trade
gap to shrink to just under $46bn, according to a Reuters poll.
America's politically sensitive trade deficit with
China grew to $12bn in April, the biggest since October 2003.
The shortfall with Japan, however, narrowed to $6.4bn
from $6.7bn in March.
"If US consumers are buying, they are buying a lot
of foreign goods," said Mark Zandi, chief economist at research firm
A separate survey from the Commerce Department helped
dispel any concerns that US consumers were not venturing to the shops.
According to the figures, retail sales increased by
1.3% in May, yet another sign that the US economic recovery is continuing.
The figure topped both the 1% rise predicted by many
economists and the 0.6% drop in retail sales during April.
The car industry was the best performing retail sector,
with sales rising 2.7% in May, compared with April's 2.1% decline.
CHINA CAR SALES GO INTO REVERSE
Figures have shown that Chinese car sales fell by
nearly a fifth in May, in a sign that efforts to cool China's booming
economy are taking effect.
Just 177,500 vehicles were sold last month, down by
more than 19% from April, the China Association of Automobile
The decline reflected tighter credit terms designed to
help prevent the fast-growing economy from overheating.
It comes just as global car firms are expanding rapidly
Last week, GM, the world's biggest carmaker in terms of
sales, said it planned to spend $3bn in an effort to double its Chinese
production capacity over the next three years.
Altogether, foreign car makers have pledged to spend a
total of $13bn by the end of the decade, an investment which will triple
the country's total car manufacturing capacity.
This has stirred fears that the supply may soon
outstrip demand, with the Chinese government warning that capacity could
reach 14 million vehicles a year against demand of just 7 million by 2007.
Fears that the bottom could be falling out of China's
booming car market — now ranked the third biggest in the world —
forced auto stocks sharply lower last week in Hong Kong.
However, analysts remained confident, pointing out that
the latest sales figure for May, while down sharply on the previous month,
were still 21% up on the same period one year ago.
"Judging from what we know now, the next couple of
months' sales are probably going to be down," said Christopher Lee at
Standard & Poor's Asian Equity Research.
"If I took a 12-month view, I think maybe you'd
see car sales picking up at the end of the year."
POOR NATIONS PLAN TO BOOST TRADE
A group of developing countries have launched
negotiations intended to stimulate trade with one another.
The move was announced at a meeting of the United
Nations Conference on Trade and Development in Brazil.
The proposed negotiations are intended to build on an
existing scheme known as the Global System of Trade Preferences.
Under that arrangement, 44 countries have already been
negotiating better access to one another's markets.
That means lower tariffs imposed by importing countries
on goods from others in the group.
The Sao Paulo announcement proposes extending this
arrangement to another 40 developing countries.
Removing barriers to what is sometimes called
south-south trade does have the potential to create new opportunities for
Some developing countries have already registered
strong increases in incomes in the last few decades and so created an
enlarged market for others to sell their goods to.
In many cases the barriers developing countries face in
exporting to others are higher than those imposed by rich countries, so
removing them can make a big difference.
Most, however, would not see this initiative as an
alternative to better access for their goods, especially farm produce, to
the markets of the rich countries.
Negotiations on that are underway in the World Trade
Organisation and, after a period of deadlock, seem to be making progress
BLAIR FACES TOUGH EU NEGOTIATIONS
Tony Blair faces another day of difficult negotiations
over the proposed European constitution.
French President Jacques Chirac accused the UK prime
minister of trying to water down the constitution.
He was complaining about the UK Government's 'red
lines' over issues like tax, defence and foreign policy.
With talks already under way, there are also splits
between leaders at the summit over the choice of a new EU President to
succeed Romano Prodi.
France is opposed to former Conservative minister Chris
Patten getting the job and is backing Belgian Prime Minister Guy
Verhofstadt, whose candidature is being blocked by Mr Blair.
PUTIN OFFERS YUKOS OLIVE BRANCH
Russian President Vladimir Putin has said the
authorities do not wish to see embattled oil giant Yukos go bankrupt.
"The government will do its best to prevent the
collapse of the company," Mr Putin said.
"Russian authorities, the government and economic
authorities, are not interested in the bankruptcy of such a company as
Yukos' future has been in doubt since the Kremlin
presented it with a $3.4bn (£1.8bn) tax demand earlier this year.
US DATA POINTS TO STRONG RECOVERY
A fresh batch of US economic data has signalled that
recovery in the world's biggest economy is powering ahead.
A closely-watched index of leading indicators and
producer price figures both beat market expectations.
Price growth also continued to pick up and many
observers are warning that the Federal Reserve will have to raise interest
rates in coming months in order to combat inflation.
The threat of higher borrowing costs has dented the
stock and bond markets.
FRANCE STARTS PRIVATISATION PLAN
The first phase of an ambitious French privatisation
programme has got under way with the partial sell-off of aero engine firm
Trading in the shares will start, after investors
bought a 35% stake in the firm earlier this week.
It is the first in a series of privatisations aimed at
plugging a gap in France's public finances.
However, proceeds from the sale look set to fall short
of the government's initial hopes.
On Snecma's share price analysts betting on a range of
between 15.4 and 16 euros (£10.10 - £10.50).
That is at the bottom end of the government's target
range of 15.45 - 17.2 euros, reflecting fears that rising oil prices may
deter aircraft makers, Snecma's main customers, from placing new orders.
US INDUSTRIAL OUTPUT GAINS PACE
US industrial production surged in May, posting its
biggest rise since August 1998, Federal Reserve figures show.
Total industrial production jumped 1.1% in the month,
after April's 0.8% rise, to stand 6.3% up on May last year.
While the Fed explained "unseasonably warm
weather" had pushed up utility production, the rise was wide spread
with factories continuing their revival.
Manufacturing production, which makes up more than four
fifths of total output jumped 0.9% in May.
The increase, the biggest since February, came despite
the third consecutive monthly fall in automotive and auto parts
BROWN VOWS TO RESIST EU TAX MOVES
Chancellor Gordon Brown has vowed to preserve the
government's "red lines" on tax and the economy from Brussels.
In a speech to the City he warned he would resist any
efforts from the European Union to push through "fatally flawed"
tax harmonisation plans.
At London's Mansion House, Mr Brown also said the EU
needed to face up to the need for economic reform.
"It is right that the conduct of fiscal policy
remains the responsibility of member states," he told key financiers.
"That is why Europe must avoid endorsing a
federal-style fiscal policy which would make the Commission and not member
states responsible for fiscal discipline," he added.
GREENSPAN GETS FIFTH US FED TERM
The US Senate has confirmed Alan Greenspan as chairman
of the Federal Reserve for a fifth and final term.
The unanimous vote came just days before Mr Greenspan's
current term was due to expire and after he was re-nominated by President
Bush last month.
Mr Greenspan, 78, first became chairman in 1987 and has
served under Presidents Reagan, Bush Sr and Clinton.
Mr Bush made the nomination earlier than expected
because of the US presidential election campaign.
A controversial tie-up between Sony Music and BMG has
won the support of the European Union's top competition official,
according to media reports.
EU anti-trust chief Mario Monti decided to back the
merger after talks with the firms last week, news agencies reported,
citing unnamed sources.
JAPAN TECH GURU PREDICTS SLUMP
Japan's top-rated technology analyst has said waning
demand for computers will trigger a fresh slump in tech stocks next year.
Deutsche Securities' Fumiaki Sato told Reuters the
downturn could force the Nasdaq index of technology shares more than 20%
Japan's Nikkei index, heavily exposed to tech stocks,
is also vulnerable.
Mr Sato said investors should consider selling
computer, microchip, and liquid crystal display (LCD) shares.
ADOBE PROFIT RISES
Adobe, the world's biggest maker of graphic design
software, said quarterly earnings beat market forecasts.
Profit in the fiscal second quarter was $109.4m (£60m)
compared with $64.2m a year earlier. Sales jumped to $410.1m from $320.1.
VW CUTS PRICES FOR CHINESE BUYERS
Volkswagen is to slash the price of its Chinese-made
models in an effort to stimulate flagging demand.
The firm plans to introduce discounts of between 1.2%
and 11% on selected models, Chinese media reported.
The price-cutting strategy comes days after industry
data showed that Chinese car sales fell by 19% last month compared with
SRI LANKA PLANNING 100% LAND TAX
Sri Lanka will re-impose a 100% tax on foreigners
buying land, claiming that locals are being priced out of the domestic
According to the BBC's correspondent in Colombo,
Frances Harrison, the tax has been a hot topic both during and after
Resentment and house prices have risen as expatriates
from India, Hong Kong, Singapore and Europe buy holiday homes.
The government claims the sales do little to boost Sri
INDIA'S TATA TO TARGET TELECOMS
India's vast conglomerate Tata has said it will
increase spending on telecoms and may even enter the world of
A leading Tata director J.J. Irani said cash raised
from a flotation at Tata Consultancy Services would be primarily invested
"The most important one is telecoms... We may go
into any new area, biotech for example" Mr Irani said.
The IPO at India's largest firm will be India's biggest
DAILY MAIL ENDS ITS TELEGRAPH BID
The Daily Mail has confirmed it has pulled out of the
bidding for rival newspaper the Daily Telegraph.
It said the price had now risen too high for it and bid
partner, venture capital firm CVC Capital Partners.
The Daily Mail's withdrawal leaves just two remaining
bidders, media tycoons the Barclay brothers and a consortia led by venture
capital firm 3i.
The final price for the Daily Telegraph and sister
title the Sunday Telegraph may reach as much as £700m ($1.3bn).
UN CHIEF URGES FAIR TRADE ACTION
United Nations Secretary-General Kofi Annan has called
on trading nations to do more to help the poor benefit from international
Opening the UN Conference on Trade and Development in
Sao Paulo, Mr Annan urged participants to create a "development based
approach to trade".
"Let us help developing countries take full
advantage of trading opportunities," he said.
The talks are seen as a chance for poor nations to get
a better deal.
BUNDESBANK HIT BY FRESH PERKS ROW
Germany's central bank has found itself mired in a
fresh scandal, only weeks after its chief was forced to resign for
accepting unauthorised perks.
Axel Weber, the new Bundesbank head, is to testify to
the parliamentary budget committee later.
Lawmakers want him to explain why the bank bought and
built some 4,700 flats and houses for its staff.
Germany's Government is on an austerity drive, and
wants to avoid accusations of wasting taxpayers' money.
HYUNDAI TO GET BIGGER IN CHINA
South Korea's Hyundai has become the latest car maker
to announce a big expansion in China.
Hyundai said it planned to spend $740m (£414m) in an
effort to boost production at its Chinese operation.
The move will increase Hyundai's output potential in
China more than fourfold, to 600,000 vehicles a year by 2007.
Separately, Hyundai's Kia subsidiary is to spend nearly
$360m raising its Chinese capacity to 430,000 cars a year, from 130,000
The investment programme will lift Hyundai's total
output potential in China to more than 1 million vehicles a year.
REGULATORS RAID JAPAN TYRE FIRMS
Japan's fair trade watchdog has searched the offices of
Bridgestone and 10 other tyre makers as part of a probe into rigged
military supply contracts.
The investigation centres on alleged collusion aimed at
pushing up the price of tyres supplied to the Japanese army and air force.
Bridgestone said it would not comment as the inquiry
was still under way.
Japan's Defence Agency orders about 2 billion yen
($18m) of tyres every year, according to local media reports.
MILLIONAIRES' CLUB GETS BIGGER
The number of dollar millionaires in the world grew by
500,000 to 7.7 million last year, helped by resurgent stock markets, a
Their combined wealth grew by 7.7% in 2003 to $28.8
trillion (£16 trillion), recouping losses incurred during the market
downturn of 2001/02.
And their cash pile is set to soar to $40.8 trillion by
2008, authors Merrill Lynch and Capgemini predicted.
The bullish forecast reflects a growing appetite for
SUNNY WEATHER BOOSTS RETAIL SALES
High street sales have raced ahead as the sunny weather
encouraged shoppers to continue spending.
Sales rose 0.8% in May as consumers bought clothing,
sportswear and garden furniture, official figures show.
On the year, retail sales rose 7.4% — the fastest
rate since April 2002 — indicating that higher interest rates have so
far not curbed spending.
The Bank of England has raised rates by a percentage
point since November, in a bid to rein in consumer spending.
UK JOBLESS FIGURE STILL FALLING
UK unemployment fell by 9,000 in the three months to
April to 1.43 million compared with the previous three months, official
figures have shown.
The Office for National Statistics also showed the
number claiming unemployment benefit dropped by 12,000 to 862,000 in May,
the lowest level since 1975.
Average earnings growth fell to 4.3% in the three
months to April, down from the previous figure of 5.2%.
The earnings growth dip was due to City bonuses
dropping out of the figures.
FIRST MOBILE PHONE VIRUS CREATED
The first ever computer virus spread by mobile phones
has been sent to anti-virus firms.
No infections have been reported and the worm is
harmless but it is proof that mobiles are at risk from virus writers.
The worm, known as Cabir, infects phones and devices
running the Symbian operating system.
Anti-virus firms are divided on whether it will open
the floodgate to similar viruses.
SMITHS WINS NEW £873M BOEING DEAL
UK defence group Smiths has won a new multi-million
pound deal to supply technology for Boeing's Dreamliner jet.
The London-based group said its aerospace division had
won a deal worth more than £873m ($1.6bn) to supply landing gear systems
for the aircraft.
The contract comes on top of an agreement in February
to supply the 7E7 jet's "backbone" or Common Core System.
Total revenues on the deals are expected to near
£1.64bn ($3bn) during the aircraft's lifetime, Smiths added.
THAI FIRM TO LEAD LIVERPOOL BID
Thai entertainment group GMM Grammy is putting together
a consortium to buy a 30% stake in Liverpool football club, according to
The bid will replace a previous offer made by
Thailand's Prime Minister, Thaksin Shinawatra.
GMM Grammy said it would need about five billion Thai
baht (£66.7m) for the stake in Liverpool.
Mr Thaksin announced plans to buy a stake in the
English Premiership club earlier in the year.
INFLATION GAINS GROUND IN THE US
Inflation appears to be gaining ground in the US,
fuelling expectations that the US central bank will raise interest rates
sooner rather than later.
Consumer prices surged by 0.6% in May — the biggest
rise since January 2001 — on the back of surging oil prices.
Despite the higher prices, consumers showed no sign of
reining in their spending, and there was a surprise upturn in sentiment.
The Fed has not raised interest rates for four years.
Meanwhile, a third report showed business inventories
in April rising 0.5% to $1.212 trillion — a record high and the eighth
monthly increase in a row.
OIL PRICES FUEL UK INFLATION RATE
The UK inflation rate has surged to its highest level
in over a year as high oil prices pushed up transport costs.
The consumer price index (CPI) rose to 1.5% last month,
official figures showed, up from 1.2% in April.
Worries over inflationary pressures have led the Bank
of England to raise interest rates to 4.5%, with two rate rises in the
past two months.
Although the CPI remains below the 2% target, many
analysts expect the Bank to raise rates further.