INTERNATIONAL

 

Sep 13 - 19, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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SLOWER GROWTH FOR JAPAN'S ECONOMY

Japan's economic growth has been revised downwards as high oil prices and lower government spending have taken their toll.
The annual rate of expansion for the three months to June was 1.4%, the government said down from its original 1.7% prediction.
The news took investors by surprise, and helped push the benchmark Nikkei 225 index below 11,000.
But the government said it was still sure that the recovery was on track.
"There is no need for us to alter our view of the economy," said economics minister Heizo Takenaka.

 

 

 

 

"The trend for consumer spending has not changed, and the reading for capital spending was revised upwards."

Despite the slowdown, the second quarter of 2004 marked the fifth straight three-month period of growth for Japan.

The run of expansion broke a pattern of stagnation and deflation which dogged Japan for much of the previous decade, following the collapse of asset and property prices in the early 1990s.

But the switch in the growth trend against expectations that the number would be revised up to 3.1% triggered concerns.

Government investment which throughout the late 1990s had single-handedly kept the economy afloat was a key culprit, down 7% from the previous quarter.

The reduction is part of efforts to bring the immense public sector deficit under control.

Also attracting attention were the figures for machinery orders released earlier this week, which showed an 11.3% fall in July, and a recent rise in unemployment.

GREENSPAN UPBEAT ON US ECONOMY

US central bank chief Alan Greenspan has said the economy is emerging from a summer lull despite soaring oil prices.

Mr Greenspan told a Congressional panel that economic growth had "regained some traction" in recent weeks.

He said that business investment and manufacturing output were on the rise, while the pace of new job creation had picked up in August.

Mr Greenspan added that last month's record surge in oil prices had had little impact on inflation.

However, he warned that the US public finances were set to "deteriorate substantially" in the years ahead unless current spending policies changed.

Mr Greenspan said extra pressure would fall on the public purse as members of the "baby boom" generation reached retirement age and became eligible for subsidised healthcare.

"As a nation, we may have already made promises to coming generations of retirees that we will be unable to fulfil," he said.

Last Tuesday, the Congressional Budget Office said the budget deficit the amount by which government spending exceeds revenues would reach a record $422bn (232bn) in the year to 30 September 2004.

It also predicted that annual deficits would grow by more than originally thought over the next decade, partly because of higher defence spending.

Budget deficits force governments to borrow more and reduce their scope for fiscal measures aimed at boosting economic growth.

US BUDGET DEFICIT OUTLOOK WORSENS

The US is set to rack up an even bigger budget deficit than originally thought over the next decade, officials say.

The Congressional Budget Office (CBO) said the deficit would grow to a cumulative $2.3 trillion (1.2 trillion) between 2005 and 2014.

The CBO had previously forecast a cumulative budget gap of $2.1 trillion over the decade. The agency added that the deficit for the year to 30 September 2004 would set a new record of $422bn.

Although a new record, the figure for the current financial year is slightly lower than the CBO's previous forecast of $477bn.

It is also smaller as a proportion of the overall economy than the budget shortfalls recorded during the late 1980s and early 1990s.

OIL MOVES UK TRADE DEFICIT HIGHER

The UK's worldwide trade gap widened in July, as it ran up a monthly deficit on its oil balance for the first time in more than a decade.

The Office for National Statistics (ONS) said the deficit widened to 5.16bn in July, its highest since January.

The figure was up on the upwardly- revised figure of 5.06bn for June.

A drop in North Sea oil production saw the UK import more oil than it exported for the first time since August 1991.

The UK posted an oil deficit of 61m in July from a revised 61m surplus in June.

 

 

The trade deficit with the European Union (EU) was unchanged at 2.4bn in July. And the gap with non-EU countries was also unchanged at 2.7bn.

INDONESIA SHARES SLIP AFTER BLAST

Indonesia's financial markets have reacted with shock to an explosion at the Australia embassy on Sept 9, with both shares and the currency sliding.

By 0530 GMT, two hours after the blast, Jakarta's main stock index was down 3.8%, with the rupiah down almost 1%.

The slide follows four months in which shares have risen amid hopes for a peaceful presidential poll.

So far six people are feared killed by what police say was a car bomb, with more than 100 injured.

BRAZIL WINS DOUBLE TRADE VICTORY

The World Trade Organisation has backed Brazilian complaints against US cotton subsidies and European Union support for sugar producers.

The decisions mark a victory for Brazil, Latin America's biggest agricultural exporter.

The WTO said the US had paid illegal subsidies worth $3.2bn (1.7bn) to its cotton farmers.

In a separate ruling, it said the EU had exported more sugar than it was allowed to under world trade rules.

The US announced that it would launch an appeal against parts of the WTO cotton ruling within the next two months.

The EU said it would study the Geneva-based body's decision on sugar before deciding whether to appeal.

VW THREATENS TO CUT 30,000 JOBS

Volkswagen is threatening to cut 30,000 jobs in Germany if unions fail to agree to pay freezes in next week's talks.

The carmaker is calling for a two-year pay freeze, amid declining sales in its key markets China, the US and Europe.

"If we end up nowhere... this would certainly be an extreme negative for the employment situation," VW finance chief Hans Dieter Poetsch told the Wall Street Journal.

ORACLE CLEAR TO GO FOR PEOPLESOFT

A federal judge has rejected the US government's bid to block software giant Oracle's proposed hostile takeover of rival PeopleSoft.

In his judgement, US district judge Vaughn Walker said US anti-trust authorities had failed to prove that a takeover would stifle competition.

Instead he gave Oracle clearance to restart its $7.7bn (4.3m) bid.

GERMAN GOVERNMENT SEEKS PAYMENT

The German government is now demanding more than 4.5bn euros ($5.48bn;3bn) in compensation from the consortium behind a late-running road truck toll system.

Under the Toll Collect scheme trucks will be charged for using German highways, but it has been beset by problems and repeatedly postponed.

DaimlerChrysler and Deutsche Telekom each own 45% of Toll Collect, with France's Confiroute the other 10%.

The dispute is now going to go before German arbitrators.

NOKIA SEES RISE IN HANDSET SALES

Mobile phone maker Nokia says its third-quarter results will be better than previously forecast, thanks to higher-than-expected handset sales.

The Finnish giant now predicts its quarterly sales will be as high as 6.9bn euros ($8.4bn; 4.7bn), compared to its past estimate of up to 6.8bn euros.

AIRBUS BOOST TO DEFENCE GIANT BAE

Europe's largest defence firm, BAE Systems, says it has been boosted in the first half of the year by sales at Airbus, in which it owns a 20% stake.

UK-based BAE reported a 4.5% rise in underlying operating profit during the first six months of 2004.

First-half earnings rose to 486m ($862m) from 465m a year earlier.

France-based Airbus delivered 161 airliners in the first half of 2004, up 12 from the same time last year, and "continues to perform well", it said.

DELTA PLANS TO CUT 10% OF STAFF

Delta Air Lines is planning to cut as many as 7,000 jobs, or 10% of its workforce over the next 18 months.

It will also overhaul flight routes, dropping Dallas-Fort Worth as a hub.

BANK SET TO KEEP RATES UNCHANGED

The Bank of England (BOE) is widely expected to keep interest rates on hold at 4.75%.

The BOE has raised interest rates five times since last November, most recently in August, to cool the UK property market and consumer spending.

The UK economy now appears to be slowing in response to the rate rises.

Data from the Halifax said house prices fell 0.6% last month while manufacturing output contracted for the second month running in July.

WORLD BANK PRAISES SLOVAK REFORMS

Slovakia and Colombia have improved their business climates the most during the past year, according to a report from the World Bank.

The two countries have cut the time needed to start a business, revamped labour laws, reduced red tape and made it easier for firms to collect debts.

The bank said that as a result, growth had picked up, there were more jobs for women and the black economy had shrunk.

But the study found that many African nations were lagging behind in reforms.

Helping to drive reform in Slovakia, as well in a number of other European nations, was the lure of European Union membership, the World Bank said.

 

 

AFRICA ' TOO TOUGH ON BUSINESS'

A new World Bank report has accused African governments of putting in place a web of regulations which strangle business and keep people in poverty.

The report was released as some 20 African leaders are discussing poverty and unemployment in the Burkina Faso capital, Ouagadougou.

But they are unlikely to give much of a hearing to the World Bank model.

African Union head Alpha Oumar Konare has rejected "rabid liberalism", saying the market imposes "brutal forces".

INVESCO DEAL ENDS US FUNDS PROBE

Invesco Funds Group (IFG) and affiliate AIM are to pay a total of $450m (254m) to settle an improper trading probe.

The UK's Amvescap, which owns both firms, said the two would pay $140m in civil penalties, $235m in restitution and cut management fees by $75m.

The payout was agreed in a preliminary settlement with the Securities and Exchange Commission and New York, Colorado and Georgia states.

BA TO SELL OFF 18% QANTAS STAKE

British Airways is to sell its stake in Australian airline Qantas in the next two days, the company has said.

The sale of the 18.25% stake in Qantas is expected to land BA at least A$1.1bn (425m; $753m), the UK airline added.

ABBEY SUITOR SELLS STAKE IN RBS

Banco Santander Central Hispano, the Spanish bank wooing the UK's Abbey, is selling half its stake in UK competitor Royal Bank of Scotland (RBS).

The sale of up to 79 million shares should raise more than 1bn. Santander said it would end cross-directorships and commercial co-operation with RBS, if its 8bn offer for Abbey succeeds.

TURKISH STOCKS SOAR ON EU HOPES

Turkey's stock market has closed at a record high on hopes that the European Union will soon invite the country to start accession talks.

The benchmark Istanbul share index closed 1.3% higher at 21,119, easily beating its previous closing high of 20,887 on 29 March.

The rally followed positive remarks from EU enlargement chief Guenter Verheugen, who is on a trip to Turkey.

It is his final visit before the EU decides whether to open negotiations.

That decision will be taken at a meeting of EU heads of government in December.

SRI LANKA TO GET $570M ADB LOAN

Sri Lanka will borrow $570m (322m) from the Asian Development Bank (ADB) over the next two years.

The money is part of a programme which aims to boost spending on infrastructure such as roads, and projects that try to boost education.

The ADB also wants to promote building in the north and east of the country, areas which have been hit by conflict.

UK MANUFACTURERS 'IN GOOD SHAPE'

UK factories enjoyed a strong upturn in new orders over the summer, but high oil prices are weighing on the service sector, surveys suggest.

Manufacturers' organisation EEF said new orders rose to a nine-year high in the three months to September.

The EEF survey also revealed a pick-up in recruitment and business investment.

But a report by the Confederation of British Industry (CBI) showed service sector sentiment declined for the first time in a year amid high fuel prices.

BEIJING SEEKS GAMES CUTS

Organisers of the 2008 Olympics in Beijing are seeking to cut up to 400m from the costs of building venues.

The cost-cutting measures come after Beijing mayor Wang Qishan warned it could cost more than 1.7bn to build the required facilities.

The biggest change so far is to the main stadium, which will no longer have an expensive retractable roof.

Organisers could also move some sports, such as the equestrian events, to Hong Kong in a bid to spread the costs.