INTERNATIONAL

 

Oct 18 - 24, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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US TRADE DEFICIT BALLOONS AGAIN

The US trade deficit widened to the second-highest level on record in August, official figures have shown.
The deficit the amount by which the value of imports exceeds the value of exports rose to $54bn (43.2bn euros ; 30bn), the Commerce Department said.
The figure marked a 7% increase compared with the previous month, and fell just short of the record $55.8bn deficit seen in June.
It also outstripped the $51.5bn pencilled in by forecasters.

 

 

 

 

 

 

 

The Commerce Department said the increase reflected the impact of soaring oil prices, which had pushed up the cost of imported fuel.

It also blamed an unexpectedly high volume of imports from China for the deficit.

The figure is likely to be seized on by Democrat presidential challenger John Kerry, who has claimed that the yawning deficit reflects President Bush's failure to enforce trade agreements with other countries.

High volumes of cheap imports have contributed to large-scale job losses among US manufacturers in recent years.

A large trade deficit is potentially destabilising as it tends to weaken the value of the dollar relative to other currencies.

"A deteriorating trade gap is a double negative for the US economy because not only do falling net exports take away from GDP growth, but rising oil imports weigh on the US consumer," said Ashraf Laidi, currency analyst at MG Financial in New York.

SINGAPORE ECONOMY LOSES GROUND

Singapore's economy shrank over the summer, weighed down by soaring oil prices, official figures have shown.

Gross domestic product contracted by an annualised 2.3% during the three months to September, according to the latest data.

The decline outstripped the more modest 0.8% shrinkage forecast by analysts in a Reuters poll.

However, economists said the city state remained on track to post full-year growth close to 9%.

The economy's poor performance in the July to September period followed four consecutive quarters of double-digit growth as Singapore bounced back strongly from the effects of the deadly Sars virus last year.

"It's probably just a temporary softness," said Claudio Piron, Asian currency strategist at JP Morgan Chase.

"GDP is on the softer side, but we have been growing at a very, very strong pace for some time."

The Monetary Authority of Singapore, the city state's central bank, said it would maintain its bias in favour of raising interest rates.

The MAS last raised interest rates in April.

The summer contraction reflected weaker manufacturing output and the impact of higher energy costs, fuelled by soaring oil prices.

US light sweet crude oil was changing hands at $53.15 a barrel in Asian trade last week.

US oil prices have risen by more than 60% since the start of the year, lifted by soaring demand from the US and China, and recurring worries over supply disruptions in producer countries.

US RIVALS CLASH ON DOMESTIC PLANS

President George W Bush and his Democratic challenger John Kerry have clashed over domestic policy and security in their last TV debate.

The two men revealed sharp differences over taxes, jobs and health care but neither was seen as an outright winner.

Both made pointed attacks Mr Kerry that Mr Bush had ruined the economy and health care, Mr Bush that Mr Kerry was dangerously out of the mainstream.

It was their last chance to address a mass audience before the November poll.

The candidates will now travel to battleground states for non-stop campaigning in the last three weeks of what polls suggest will be a very tight race for the White House.

OIL SET TO TOP RUSSIA-CHINA TALKS

Russian President Vladimir Putin has arrived in China for a three-day state visit set to be dominated by energy and trade issues.

Before setting off, Mr Putin said Russian interests would come first in deciding where to build a highly contested oil pipeline from Siberia.

Energy-hungry China and Japan have both been vying for Russia's oil.

The two Asian rivals have offered huge investments if their preferred pipeline route is picked by Moscow.

Chinese Prime Minister Wen Jiabao pledged to invest about $12bn (9.75bn euros) in the Russian energy sector during his Moscow talks in September.

The Japanese government has also promised at least $5bn in investment in Russia's underdeveloped Far Eastern region.

TATA TO INVEST $2BN IN BANGLADESH

Indian industrial group Tata has agreed to invest $2bn (1.1bn) in Bangladesh, the biggest single investment by a firm in the south Asian country.

Tata plans to build a power plant, steel mill and fertilizer factory.

Finance minister Saifur Rahman said that Tata's move should help attract other foreign firms to Bangladesh.

Tata chairman Ratan Tata said that "we are here to invest in Bangladesh where we see opportunities for doing business".

The agreement, or letter of interest, was due to be signed on 20 September, but was delayed by outbreaks of violence following a grenade attack at a political rally in Dhaka.

Tata said last month that it still had to finalise details such as gas prices and locations for the projects.

NORDIC NATIONS 'MOST COMPETITIVE'

Nordic countries are leading the way in global economic competitiveness, according to a new business survey.

Finland topped the World Economic Forum's (WEF) rankings as the most competitive economy in the world for the second year running.

The US took second position, followed by Sweden, Taiwan, Denmark and Norway, while the UK was 11th and Chad bottom of the list of 104 nations.

The rankings are drawn from a WEF poll of 8,700 business leaders worldwide.

The Swiss-based think tank's Global Competitiveness Report aims to reflect a broad range of factors affecting the status of a country's economy, including a stable macroeconomic environment, the quality of public institutions and the level of technological development.

UNIONS BACK T&N PENSIONS LIFELINE

 

Tens of thousands of workers at car parts maker Turner & Newall (T&N) look set to get their pensions after unions backed a new deal from its US owner.

Around 40,000 T&N current and retired staff had been set to lose all or part of their pension after parent company Federal Mogul filed for bankruptcy.

Unions said they were "cautiously optimistic" about the offer.

COPPER TAKES ANOTHER HAMMERING

Copper prices have fallen another 2% in value, after hedge funds joined in the sell-off which has seen the metal wrenched back from 15-year highs.

After peaking last Monday, copper has lost 13% in value after speculative fears of falling demand in China and the US sparked panic selling.

Other metals followed suit and mining stocks such as BHP Billiton and Anglo American saw their shares fall sharply.

Strong oil prices were also behind the metals market's correction.

THOUSANDS AT GLOBALISATION EVENT

Thousands of European activists are arriving in London for a weekend of anti-globalisation events and protests.

The third European Social Forum is taking place at London's Alexandra Palace with hundreds of organisations discussing world politics and society.

The gathering is the largest international event for broadly left-wing organisations that want to challenge the way society works.

STATOIL AGREES TO PAY BRIBE FINE

Norwegian oil and gas giant Statoil has agreed to pay a 20m-kroner ($3m; 1.7m) penalty imposed upon it for alleged bribery in Iran.

The company has however "not admitted or denied the charges".

Statoil was hit with the penalty in June after it paid a consultancy $15.2m to "influence decision-makers in the Iranian oil and gas industry".

SONY ERICSSON SEES PROFITS TRIPLE

Japanese-Swedish mobile phone maker Sony Ericsson has seen profits triple in the third-quarter, outperforming key rival Nokia whose earnings fell.

It reported that pre-tax profit in the three months through September was 136m euros (93.4m) from 39m euros a year earlier.

Sales were 1.68bn euros as it shipped almost 11 million handsets. The average price of a phone climbed to 157 euros.

GM TO CUT 12,000 JOBS IN EUROPE

US car giant General Motors has said it is to shed 12,000 jobs in Europe as part of a cost-cutting drive.

GM's German operations which include car firm Opel are expected to bear the brunt of the losses.

The job cuts most of which will take effect next year are part of an austerity drive aimed at cutting costs by 500 million euros ($600m; 340m).

YAHOO NETS SHARP SURGE IN PROFITS

Internet portal Yahoo has said surging online advertising helped the group more than triple profits in the three months to the end of September.

Profits jumped to $253.3m for the quarter a rise of 287% on the $65.3m seen in the same period last year.

TATA CS CELEBRATES PROFITS UPLIFT

Indian software giant Tata Consultancy Services has unveiled sharply higher profits in its first set of results since its stock market launch.

The company said second quarter profits before one-off costs came in at 5.76bn rupees ($125m; 70m), up by 52% on the same period last year.

YUAN ADJUSTMENT TALK 'GROUNDLESS'

China's authorities have ruled out any upward revaluation of the yuan in the near future, squashing rumours in Chinese financial markets.

The rumours were "groundless" and a misunderstanding" of China's exchange rate policy, the State Administration of Foreign Exchange (SAFE) said.

The revaluation rumours grew after Chinese officials told G7 leaders this month that reforms were progressing.

APPLE PROFITS JUMP ON IPOD DEMAND

Apple Computer has reported a 50% jump in fourth-quarter profits, driven by demand for its iPod music player.

Profits in the three months ending 25 September were $106m (59m), from $44m a year ago while sales totalled $2.4bn, the highest level for nine years.

Apple said it sold more than two million iPods, compared with 860,000 in the previous quarter.

INFOSYS CASHES IN ON OUTSOURCING

India's Infosys has turned in sharply higher quarterly profits, helped by new contracts to run other companies' technical support services.

The company said net profits for the second quarter came in at 4.5 billion rupees ($97.1m;54m), a 49% increase on the same period last year.

US TO FIGHT NAFTA LUMBER RULING

The US is to take the unusual step of challenging a Nafta ruling that Canadian imports are no threat to the US timber industry.

The US will now file an "extraordinary challenge" to the decision delivered in August by the North American Free Trade Agreement panel.

Nafta's original decision if it is upheld could mean an end to punitive duties on Canadian softwoods.

Only two other extraordinary challenges have been mounted in Nafta's history.

UK'S JOBLESS LEVEL FALLS FURTHER

Unemployment in the UK fell by 51,000 between June and August to 1.39 million the lowest since records began 20 years ago.

The jobless rate, based on the government's preferred ILO measure, fell to 4.7% between June and August from 4.8% in the previous three months.

OIL DRIVES UP FACTORY GATE PRICES

The cost of goods leaving UK factories has risen at its sharpest rate in eight years, driven by the surging price of oil and other supply materials.

According to the Office for National Statistics, UK producer output prices rose by 0.3% last month, taking the annual rate to 3.1%.

This is the highest figure since April 1996 and indicates that inflationary pressures remain in the UK economy.

As a result, economists say interest rates could rise once more this year.

Last week the Bank of England held interest rates steady at 4.75% for the second month in a row.

The vast increase in the price of crude oil up 45.3% over the past year has had the most inflationary effect on UK producer output prices.

This in turn has increased the price of other sectors, such as steel, leading to a rise in the price of raw materials in general up 7.4% so far this year, the fastest increase since November 2000.

 

UK INFLATION RATE FALL CONTINUES

A fall in the price of airfares helped to keep inflation under control in the UK in September, official figures show.

According to the Office for National Statistics, the consumer price index (CPI) fell by 0.2% in September to 1.1%, the lowest level since March.

Falling food prices helped cement the decline, which follows a fall in CPI to 1.3% in August.

The underlying rate of RPI inflation, which adds council tax and other household bills, fell by 0.3% to 1.9%.

NORWAY AND US SHARE NOBEL PRIZE

Finn Kydland and Edward Prescott have won the 2004 Nobel Prize for economics.

The Norwegian and American duo received the award in recognition of their work showing how business cycles affect international trade.

They demonstrated that the forces which drive fluctuations in the business cycle are crucial factors to study in economic research.

Kydland and Prescott, who both teach at US universities, will share a 10m kronor ($1.3m, 723,000) cash prize.