Analysts said the rise in foreign sales is likely to
safeguard the US recovery.
There had been concerns a recovery in the world's
largest economy would wane unless export sales picked up.
Jim Glassman, a senior economist at JP Morgan
Securities, said the improving trade figures may now prompt some observers
to increase US growth forecasts for the second quarter.
The market is tipping expansion of about 3.5% during
April, May and June.
The Commerce Department's report on Tuesday also
indicated the US still has a keen appetite for imported goods.
The total value of imported goods during May rose
slightly to $143.1bn, compared with $97.1bn-worth of exports.
The increase in imports is partly down to a surge in
oil costs which in turn pushed up the value of vehicle-related products -
as well as food, drinks and animal feeds.
Despite the first narrowing of the trade deficit for
six months in May, the shortfall is still on track to reach record levels
After five months, the trade gap totals $231bn compared
with $208.7 billion in the same period a year earlier.
JAPAN BANK UFJ EYES MEGA-MERGER
UFJ, Japan's fourth biggest bank, has confirmed it is
seeking a takeover by Mitsubishi Tokyo Finance Group (MTFG), to create the
world's biggest bank.
The combined assets would be worth 188 trillion yen
($1.74 trillion; £0.94 trillion) - bigger than Citigroup.
A merger would be part of the ongoing process of
restructuring the nation's ailing financial system.
It would act as a rescue plan for UFJ, say analysts,
after three years of heavy losses.
By contrast, MTFG, Japan's second largest bank, is one
of Japan's healthiest.
In a statement, MTFG said it has not yet received any
approach regarding business integration from UFJ.
If the deal goes ahead it would help MTFG gain ground
on Mizuho Financial Group, currently Japan's largest bank, by boosting its
retail business, said analysts.
UFJ is a relative laggard in clearing up its bad loans
UFJ reported large losses for the last financial year
and was criticised by the Financial Services Agency in June for being
evasive when inspections by regulators were taking place.
In May this year, UFJ reported a loss of 402.8bn yen,
making three straight years of losses.
Its bad debts rose to 3.95 trillion yen, up 6.5% in six
months, and its president announced he will resign.
The merger talks have yet to begin but it has emerged
from a UFJ official, who wishes to remain anonymous, that the planned sale
of UFJ's trust-banking operations to Sumitomo Trust will be scrapped.
Shortly after the plan was announced, Sumitomo
threatened to take legal action against UFJ's proposal.
CHINESE ECONOMIC GROWTH SLOWING
Economic growth slowed unexpectedly in the second
quarter in China, with GDP up 9.6% on a year ago, compared to a 9.8% rise
in the first quarter.
It suggests government limits on borrowing, and other
measures to curb investment, may be working.
Banks have been told to hold more money in reserve,
providing less for lending.
Inflation was up 5% in the year to 30 June, but fell
0.7% in June from May, suggesting the central bank may not need an
interest rate rise.
Any hike would be the first in nine years.
China has avoided raising rates to cool growth, over
worries it would make it harder for state firms to repay their debts.
Instead, the financial authorities have curbed lending
and investment projects, particularly in the property and automobile
There has also been a tightening of land-use rules to
slow industrial developments.
Analysts had been expecting GDP to grow around 10.5%
Earlier it was revealed that the flow of foreign
investment into China shows no sign of slowing down.
Despite the efforts by China's government to cool its
fast-growing economy, the country drew in almost $8bn (£4.3bn) of foreign
direct investment last month.
June's $7.97bn figure was up 14% on the previous high
of $7.66bn set in the same month last year.
Foreign firms are attracted by China's vast pool of
cheap labour and growing economy.
FLOOD RELIEF EFFORTS HIT PROBLEMS
Relief efforts for millions of people in South Asia
affected by floods are being badly hit by continuing bad weather and
In the Indian state of Bihar, 400 soldiers are
struggling to help four million victims. Thousands are still without food
or drinking water.
Up to 80 more people were reported missing in separate
incidents in India and Bangladesh.
Scores have already died in India, Nepal and Bangladesh
in recent days.
Accurate figures for the devastation are hard to come
by. Conservative estimates suggest at least 10 million people are affected
in the three countries.
INTRA-AFRICA TRADE 'IS TOO LOW'
Trade among African countries accounts for only about
10% of their total exports and imports, according to a report.
The study by the Economic Commission for Africa (ECA)
blames the continuing low level of trade on poor transport links among
Instead it suggests that colonial-era patterns remain,
with most trade still to and from the former colonial powers.
It says Africa has a long way to go before reaching EU-style
As a result the full potential of a vast market has
clearly not been realised, it said.
"Many of the countries are small so we need to
have regional integration, larger markets," said the ECA's executive
secretary, K.Y. Amoako.
The report makes many recommendations on how to
accelerate the integration process.
BASE RATE WORRIES DOG UK INDUSTRY
Confidence levels in UK industry have been hit by
worries about higher inflation and interest rates, a leading business
lobby has said.
The divide between services and manufacturing has also
widened during the second quarter of the year, the British Chambers of
Commerce (BCC) said.
Services performed strongly, but trade was more mixed
Rising concerns about prices and the cost of borrowing
in both services and the manufacturing sector was making life more
difficult as the general economic recovery matured, business leaders said.
David Frost, director general of the British Chambers
of Commerce, said: "The slight fall in confidence balances is a
"We are concerned that the focus on house prices
may result in damaging interest rate overkill," he added.
FRANCE PLANS EU CONSTITUTION POLL
President Jacques Chirac says France will hold a
referendum next year on the European Union constitution.
The new constitution agreed by 25 EU leaders last month
must win approval in each member state either by a vote in parliament or
by public referendum.
Mr Chirac made the announcement during a Bastille Day
Other countries to have said they will hold a
referendum are the UK, Ireland, the Netherlands, Portugal, Luxembourg,
Spain, the Czech Republic and Denmark.
Others have decided to hold a vote in parliament while
some are still undecided.
The EU constitution sets out the powers of the national
governments of the member states and the EU's various institutions as well
as including a charter of fundamental rights.
Mr Chirac said he thought his traditional Bastille Day
interview was a good occasion to announce the referendum.
FRENCH ECONOMIC OUTLOOK IMPROVES
The Bank of France has said its latest business survey
indicated a 0.6% growth in French GDP in the second and third quarters of
That is 0.1 percentage points higher in both quarters
than previously expected, making growth over nine months of 2.3%, although
no yearly figure is available.
The business sentiment indicator also rose to 106 in
June from 105 in May.
The French economy grew by a stronger-than-expected
0.8% in the first quarter of 2004, according to official figures.
The Bank of France surveys some 12,000 companies each
"Industrial activity clearly increased in
June," the central bank said in a statement. "Production should
continue to increase in the coming months."
The French economy is the second largest in the
eurozone area. President Jacques Chirac said economic growth was returning
to the country, but not as strongly as in the United States and Asia.
US CONSUMERS REIN IN SPENDING
US retail sales fell by their largest amount in 16
months in June, down 1.1%, the Commerce Department has said.
The decline, the biggest drop since February 2003 was
led by a 4.3% crash in car sales caused by the recent high price of petrol
at US pumps.
Sales of food, drink and clothing also dipped after US
job creation figures came in below expectations in June.
Yet the Federal Reserve said the US economy was still
growing and is now strong enough for a possible rate rise.
This would be the second rise in US interest rates in
The 1.1% drop in retail sales in June was ahead of the
0.7% predicted by economists; while US employers took on an extra 112,000
new workers last month, less than half the 250,000 predicted by analysts.
Economists said the higher petrol prices effectively
acted as an extra tax; but despite June's 1.1% retail sales fall on May,
the year on year figure is still plus 6.3%.
US NUCLEAR LAB LOSES SECRET DATA
One of America's largest nuclear weapons research
laboratories has suspended its activities after secret information data
Officials are not saying what data has gone missing
from the Los Alamos National Laboratory in New Mexico, but it is thought
to be highly sensitive.
This is said to be the first time in living memory that
Los Alamos has suspended part of its operations. The laboratory was the
birthplace of the first atomic bomb.
LIB DEMS STEAL LABOUR SEAT
The Liberal Democrats have overturned a big Labour
majority to win the by-election in Leicester South.
Parmjit Singh Gill became the first Liberal Democrat MP
from an ethnic minority in a 21% swing from Labour.
In his victory speech, Mr Gill said the people had
spoken for Britain and "the message is that the prime minister has
abused and lost their trust" over Iraq.
IBM SEES PROFITS CONTINUE TO RISE
Computer giant IBM has seen its profits grow for the
sixth straight quarter.
The company known as "Big Blue" made a
$1.99bn (£1.07bn) profit in the second quarter of 2004, compared with
$1.71bn for the same period last year.
Sales across all the company's geographical regions
rose to total $23.2bn, up from $21.6bn in 2003.
LG PHILIPS RAISES £1BN WITH OFFER
Electronics firm LG Philips has raised $1bn (£0.54bn)
in an initial public offering (IPO) designed to fund further development
of flat screens production.
However the size of the share sale was cut, and the sum
fell short of the $1.95bn maximum it had hoped to raise.
The firm will start trading on the New York Stock
Exchange and the Korea Stock Exchange on 23 July.
LG Philips LCD is a 50-50 joint venture between South
Korea's LG Electronics and Dutch firm Philips Electronics.
CITY BONUS BOOST FOR TAX REVENUES
Bonuses awarded to workers in the City are helping to
boost the government's tax revenues, the chancellor has said.
"Tax revenues have started to rise because of
bonuses in the City," Gordon Brown told a committee of MPs.
The government also remains on target to meet its
fiscal rules, Mr Brown told the Treasury Select Committee.
The rules state that Mr Brown may only borrow to invest
over the current economic cycle and that public debt must be kept below
40% of GDP.
NOKIA SEES MOBILE MARKET SHRINK
The world's biggest mobile phone maker, Nokia, has seen
its market share shrink as second quarter sales were down 5% on 2003 to
6.6bn euros ($8.18bn; £4.4bn).
The Finnish firm said it estimated its market share in
the May to June period was 31%, down from 32% in the first quarter of the
year and 39% a year ago.
Pre-tax profit was up 9.5% year-on-year at 1.04bn
euros, but Nokia said profits would be under pressure later in 2004.
Nokia shares were down 14% to 9.75 euros, a level not
seen since 1998.
APPLE PROFIT SURGES ON IPOD SALES
Apple Computer has said that quarterly profits more
than tripled, driven by demand for its iPod music player.
Profit in the three months ending 26 June jumped to
$61m (£33m) from $19m a year earlier. Sales, meanwhile, surged to just
over $2bn from $1.55bn.
SALES BOOST LIFTS SONY ERICSSON
Japanese-Swedish mobile phone maker Sony Ericsson has
reported higher than expected second-quarter profits.
Pre-tax profit in the period May to June was 113m euros
($139.6m; £75.4m), after a loss of 102m euros a year ago.
The world's fifth-biggest mobile maker said the
increase was thanks to strong demand for camera phones, and revised up its
global handset sales forecast.
Sales of phones were up to 1.5bn euros, from 1.1bn
euros a year earlier, up 34%, and ahead of market expectations.
COMPLICATIONS' IN SONY'S MGM BID
Sony has said a deal to take over film and TV studio
Metro Goldwyn Mayer may be facing some "complications".
Talks began in April on a possible deal worth up to
However Sony chief executive Nobuyuki Idei told Reuters
news agency: "There are some complications... It's up to the MGM
Earlier this month it was reported that Time Warner,
the world's biggest media group, had also stepped into the MGM fray with a
bid of around $4.7bn.
UNITED AIRLINES DEFERS ON PENSION
Bankrupt United Airlines has said it is deferring
$72.4m (£39m) in quarterly pension payments as it seeks to "manage
resources and preserve its options".
UAL Corp, the airline's parent, said the move would
enable it to organise its funds to exit bankruptcy.
In late June the company failed in its attempt to get a
$1.1bn US government handout.
COMMISSION AIMS TO BOOST SPENDING
The European Commission wants to boost spending between
2007 and 2013, a move that is likely to prove unpopular with some of the
EU's biggest members.
The EU's executive arm plans to lift spending over that
period to more than 900bn euros (£601bn; $1.1 trillion).
The EU's six largest members, including France, the UK
and Germany, last year called for cap on spending.
EC president Roman Prodi, however, said that more money
was needed after the trade bloc admitted 10 new members.
The new members are mostly from eastern Europe and the
Baltic area, and include Poland, Hungary, the Czech Republic, Lithuania,
Latvia and Estonia.
Under the new plan, the EU's 25 member states would
each contribute an average 1.14% of gross national income to the budget.
That is more than 1% limit proposed by the EU's main
players back in December.
INTEL SALES GET MOBILE PHONE LIFT
Intel, the world's largest chipmaker, has reported a
surge in second-quarter profits, driven in part by increasing demand for
mobile phone processors.
Sales of chips for desktop computers are slowing and
Intel has been tapping into the faster growing market for laptops and
Profit for the three months ending 26 June was $1.8bn
(£969m) compared with $896m a year earlier.
RISE IN UK'S UNEMPLOYMENT TOTAL
Unemployment increased by 6,000 between March and May
to 1,432,000, according to official data.
But the number of people claiming unemployment benefit
last month fell by 9,600 to 850,900, the Office for National Statistics (ONS)
Average earnings growth in March to May was 4.3%
compared with a year ago, unchanged on the previous figure.
MCDONALD'S BOOSTS GLOBAL SALES
McDonald's new range of salads and other healthier
options may be starting to win back both customers and profits.
The fast food giant said in a trading statement that it
expects to report a 27% rise in second quarter profits after improved
sales around the globe.
In a trading statement ahead of its results on 22 July,
it said sales were up 7.8% during the period, the highest second quarter
rise since 1987.
McDonald's said the US market did best, with sales
twice that in Europe.
INDIA'S BIOCON DOUBLES PROFITS
India's largest biotechnology firm, Biocon, has sent a
positive signal to investors with a doubling of profits for the first
quarter ending in June.
Biocon shares rose 5.7% after it said net profits rose
112% to 486m rupees, ($10.6m; £5.7m), from a year ago.
BROWN WARNS AGAINST STRIKE THREAT
Gordon Brown has said he will not allow strike threats
to derail his plans to axe 104,000 civil service jobs.
The Public and Commercial Services Union (PCS) says the
cuts will cause "carnage" and warns it cannot rule out
industrial action as a result.
But defending his spending review, the chancellor urged
those talking of strikes to "think again".
"We will not be diverted from what's got to be
done to get more resources to the front line," he told BBC Breakfast.
BANK OF JAPAN STICKS TO LOW RATES
The Bank of Japan's nine-member policy board has voted
unanimously to keep its almost zero interest rates on hold.
As expected, it shows the central bank continuing to
stimulate the country's economic recovery while trying to turn past
deflation into mild inflation.
In April the bank said Japan's economic growth would
range between 3% and 3.2% in the year to March 2005.
SINGAPORE'S ECONOMY RACES AHEAD
Singapore's economy is growing at its fastest rate
since 1996, official figures have shown.
The country's GDP was 11.7% higher in the second
quarter of 2004 compared with the same period last year.
Quarterly growth was up 9.1% on an annualised basis as
manufacturing and service sectors saw double digit rises.
The figures provide clear evidence of Singapore's
recovery from last year's downturn, which was prompted by the outbreak of
the Sars virus.
The figures, based on preliminary data for April and
May, represent Singapore's strongest growth since the first three months
of 1996, when its GDP rose 12.4%.