INTERNATIONAL

 

Oct 25 - 31, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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CHINA'S ECONOMIC BOOM SLOWS DOWN

China's economic growth has slowed for a third straight quarter as efforts by the government to rein in booming expansion continue to take hold.
Third-quarter gross domestic product (GDP) was 9.1%, down from 9.6% in the second and 9.8% in the first.
Curbs on investment spending and bank lending were introduced amid signs that the world's seventh largest economy was in danger of overheating.
The measures should alleviate the need for interest rate rises, analysts said.
Even so, it probably is too early to lift restrictions, officals said.

 

 

 

 

"We should further enhance and expand the achievements of macro-control to guard against a rebound of those problems," said Zheng Jingping, a spokesman for the National Statistical Bureau.

China has been devouring commodities such as oil with a seemingly unquenchable thirst that has helped push the price of crude to record levels.

Even though economists agree that the country's expansion needs to slow to ensure that it is sustainable, there are concerns that any dip in demand may have negative effects on corporate profits and growth worldwide.

Analysts said that China will be heartened by Friday's data, which showed urban fixed-asset investment, a key indicator, slowing.

It rose by 28% in the third quarter, less than the 30% increase seen in the previous six months.

Separate figures showed that consumer price growth slowed by more than expected in September. The annual rate of inflation was 5.2% last month, compared with a forecast of 5.3%.

"The modest slowdown in fixed-asset investment and the pronounced slowdown in inflation are what the authorities want to see," said Tim Condon of ING in Singapore.

NEW EU MEMBERS FACE TOUGH EURO TEST

The European Union's ten newest members will have to make more of an effort to get their economies into shape if they plan to join Europe's single currency this decade.

So says the European Central Bank (ECB) in a report last week.

Its views are supported by a separate report from the European Commission which said that Poland and Hungary have failed all five of the economic tests they need to pass to join the euro.

The ten mostly former Communist states joined the European Union (EU) earlier this year, and set themselves ambitious targets to join the single currency in the process.

All of them want to adopt the euro either before or in 2010.

But current report by both the Commission and the ECB have poured cold water on the hopes of six of the newcomers: Poland, Hungary, the Czech Republic, Slovakia, Cyprus and Malta.

Brussels and the ECB said the six still had a long way to go to meet the economic criteria for euro entry. They needed to demonstrate lasting progress in reining in government spending and debt levels.

Joaquin Almunia, the Monetary Affairs Commissioner, said all ten countries had put in huge efforts to satisfy the criteria for EU membership.

But that sort of commitment shouldn't slacken now:

"Progress with fiscal consolidation has generally been too slow and a majority of countries have yet to achieve a situation which, in a broader view, might be judged as sustainable in the medium term," Mr Almunia said.

Latvia, Estonia and Lithuania fared better according to the Commission. Along with Slovenia, they're on the fast track to euro entry.

JAPAN EXPORTS HIT RECORD LEVELS

Exports from Japan hit their highest level for more than 50 years last month, but high oil prices could still spell economic slowdown, analysts said.

Japan's exports rose 12.5% on 2003 to 5.46 trillion yen ($50.6bn; 27.9bn), a high since records began in 1947.

But an oil-fuelled rise in imports meant the boost to the trade surplus was smaller than expected.

Japan's economy minister said this week that oil prices were the biggest threat to economic growth.

Although the September exports figure showed strong growth over the same month in the previous year, it was down slightly on August when seasonally adjusted.

The same pattern could be found in the trade surplus, the amount by which exports exceed imports.

September produced a surplus of 1.24 trillion yen, up 12.7% in comparison with 2003.

But that figure was 21.8% lower than August's surplus.

GREENSPAN PLAYS DOWN OIL BURDEN

Soaring oil costs do not yet present a serious threat to the US economy, says Federal Reserve chief Alan Greenspan.

The veteran central banker's attempt to calm nerves about energy prices came as crude oil futures set a new record of $55 a barrel in New York.

But Mr Greenspan noted that after the 1979 Iranian revolution, oil leapt to $80 a barrel in today's money.

The effect of 2004's 70% surge are "likely to prove far less consequential", Mr Greenspan said.

But, he warned, further rises could pose a significant risk, in terms of both growth and inflation.

ECONOMIC GROWTH 'WILL CONTINUE'

Growth in the Scottish economy will continue its upward trend into next year, according to a report.

The forecast comes in the Bank of Scotland's corporate index of leading economic indicators.

It suggests that the rising trend which began in the first quarter of this year would continue into early 2005.

Growth was set to peak, however, in the middle of next year, before moderating in the second half towards a more average rate.

The index showed that the effect of tighter monetary policy was starting to have a dampening effect, with a slowdown in economic expansion expected around the start of the third quarter.

But the bank said higher interest rates were likely to affect Scotland less than the wider UK economy, with the country's solid industrial base supporting economic expansion during the coming year, as the rising cost of borrowing subdues the boom in public spending.

GERMAN BANKS TO REPAY STATE AID

The European Commission has ordered seven publicly-owned German banks to repay 3bn euros ($3.7bn; 2.0bn) in illegal state aid.

EU Competition Commissioner Mario Monti said the decision would "end a long and painful dispute between private and public banks in Germany".

The dispute began in the early 1990s, when German regional governments gave the public banks cheap loans.

The settlement follows talks between Mr Monti and the German government.

The seven banks got the cheap loans in order to help them top up their reserves to comply with new laws on capital adequacy and insolvency.

Interest rates on the loans were less than 1%, while market rates were between 6% and 7% at the time.

GOOGLE EARNINGS SURGE

The world's most popular internet search engine, Google, has seen profits and sales more than double in the third quarter on strong advertising demand.

In its first earnings report since floating on the stock market, the firm said net profit was $52m (28.4m) in the three months ending 30 September.

BANK 'LOOKS TO BLOCK GLAZER BID'

Nomura, the Japanese bank, is involved in a plan to block any bid for Manchester United by Malcolm Glazer, according to the Financial Times.

The paper has claimed that Nomura has been approached by Keith Harris, former chairman of the Football League and Utd fan, to try to raise 200m ($366m).

DHL SCRAPS BRUSSELS GROWTH PLAN

Courier firm DHL is ditching plans to site its international hub in Brussels at a likely cost of 1,700 jobs by 2008.

Negotiations with local and federal authorities over increasing the number of night flights have failed, the firm told BBC News Online.

Many of the firm's 3,000 staff at Zaventem airport walked out in protest when told the news.

MICROSOFT SEES PROFITS CLIMB 11%

Microsoft, the world's largest maker of computer software, has reported an 11% rise in first quarter profit driven by sales of home and business products.

Profit was $2.9bn (1.6bn) in the three months ending 30 September, from $2.6bn a year earlier. Sales rose to $9.2bn.

 

 

NEW PHONES BOOST FOR MOTOROLA

Mobile handset maker Motorola has unveiled a fourfold increase in quarterly profits, crediting strong demand for its new-look phones.

Earnings for the three months to September were $479m (268m), up from $116m a year earlier, the firm said.

UNION EXPECTS WINTER POWER CRISIS

Britain faces winters of blackouts and energy price hikes because of a looming crisis in generating capacity, a power and engineering industry union warns.

Amicus says Britain risks becoming dependent on foreign gas imports from unstable countries.

It says the government must invest more in coal, renewable and nuclear energy if it is to maintain power supplies.

OIL WEALTH 'CAN CAUSE CORRUPTION'

Oil wealth is often a breeding ground for corruption, according to the latest survey by anti-corruption campaign group Transparency International (TI).

The report estimates that billions of dollars are lost to bribery in public purchasing, citing the oil sector in many nations as a particular problem.

Bangladesh, Haiti, Nigeria, Burma, Azerbaijan, Paraguay and Chad were seen to be the most corrupt, said TI.

Finland, New Zealand, Denmark and Iceland were deemed the least corrupt.

UK GAS PRICES 'PUSHED UP BY OIL'

Gas prices in the UK are likely to remain high for at least the next three years, a report has predicted.

The study blamed the knock-on effect of the current record high oil prices and supply shortages, which planned new import pipelines should ease.

Commissioned by trade body UK Offshore Operators Association (UKOOA), it found no evidence that suppliers were restricting production to lift prices.

But a consumer watchdog said the report just sought to justify high prices.

eBAY PROFITS SURGE

Profits have continued to surge at eBay, the online marketplace, thanks to growing international sales and the success of online payment unit Paypal.

eBay recorded a 77% rise in third quarter profits to $182.3m as sales increased 51% to $805.9m.

CHINA OKAYS FIRST PRIVATE AIRLINE

China is to launch its first private airline named Okay Airways by the end of the year, according to state media reports.

Okay will concentrate on domestic air cargo and charter flights within China, the Xinhua news agency said.

Demand for air travel in China is expanding fast as the middle classes take more business trips and holidays.

STEEL COSTS HIT ELECTROLUX PROFIT

Electrolux, the world's largest maker of consumer electronics, has said third-quarter profits have been hit by higher raw material costs.

Pre-tax profits in the three months through September fell 27% to 944m Swedish kronor (72m; $131m) from a year earlier, it said last week.

US INSURERS HIT BY PROBE THREAT

US health insurance stocks were hit last week amid concerns that New York attorney general Elliot Spitzer will widen a probe into price rigging.

The insurance industry reeled when Mr Spitzer sued Marsh & McLennan, the world's largest insurance broker.

He alleged that it got illegal payments for steering clients to selected firms.

INDIA'S WIPRO SEES PROFITS SURGE

Wipro, India's number-three software exporter, has reported a 65% jump in profits, driven by European demand and a rise in outsourcing by telecom firms.

Profits totalled 3.8bn rupees ($46m) in the second quarter from 2.3bn a year earlier, higher than market estimates.

CHINA PRESSURES PUTIN ON PIPELINE

Russian President Vladimir Putin is continuing his China visit amid growing frustration by his hosts over failure to agree to a contentious new pipeline.

Mr Putin is in the ancient city of Xian after Beijing talks with Chinese leaders including President Hu Jintao.

The two heads of state signed several agreements last week, including a demarcation of borders which resolves 40 years of bilateral disputes.

But there was no pipeline deal, which China needs to improve energy supplies.

China and Japan have been pursuing rival plans to build pipelines to exploit oil from Siberia.

US RETAIL SALES ARE BOUNCING BACK

US retail sales have risen by more than expected in September, easing concerns that US growth is in danger of slowing.

Commerce Department figures showed sales up 1.5% from August and 7.7% from a year earlier, with car sales rising faster than in nearly three years.

But consumer sentiment figures soured the mood as the University of Michigan index slid to 87.5, far below forecasts and indicating possible trouble ahead.

Industrial output of 0.1% in September also fell short of expectations.

YUKOS UNIT MAY BE SOLD FOR $4BN

Yukos' future has been thrown into fresh doubt amid reports that Russia is planning to sell 77% of its key oil production unit by the end of November.

Adding to the concern is a local media report that Yuganskneftegas, which accounts for 60% of Yukos' oil output, may be sold for $4bn (2.2bn).

Yukos is facing an $8bn bill for unpaid taxes and fines and investors now fear the complete break-up of the company.