INTERNATIONAL

 

Nov 01 - 07, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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EU LEADERS TO SIGN CONSTITUTION

European Union leaders are preparing for a lavish ceremony to celebrate the signing of the new EU constitution.
Heads of state from across the EU will be in Rome for the ceremony, to be held in the same room where Treaty of Rome was signed to establish the EU in 1957.
The ceremony will be held amid a row about the views of prospective Italian EU commissioner Rocco Buttiglione.

 

 

 

 

Incoming President Jose Manuel Barroso has withdrawn his entire proposed team and has hinted he may make changes.

The signing ceremony will be held at the Campidoglio, the Rome city hall inspired by Michelangelo in the centre of the Italian capital's historic district.

Up to 7,000 police and security personnel are expected to fan out across the streets of Rome in an effort to protect EU leaders from a possible terror attack.

A squadron of F-16 fighters is expected to enforce a no-fly zone over the city centre for the duration of the ceremony.

Mr Barroso is due to speak at the signing ceremony, which has been overshadowed by the continuing row over the make-up of his new team of commissioners.

Earlier Mr Barroso said he is considering making a number of changes to the commission, despite controversy focussing on Mr Buttiglione.

The Italian, a devout Catholic, has been widely scorned by MEPs unhappy at his views on a range of issues, including homosexuality and the role of women in society.

An influential committee of MEPs in Strasbourg voted against Mr Buttiglione's appointment to the sensitive justice and home affairs portfolio in the commission.

UK ECONOMY SLOWS IN THIRD QUARTER

The UK's economic growth slowed in the third quarter, as recent interest rate rises hit home.

Gross domestic output (GDP) increased 0.4% in the three months to September, according to provisional figures from the Office for National Statistics.

The slowdown in growth is thought to makes it less likely that the Bank of England will raise interest rates.

It could also create problems for Chancellor Gordon Brown's budget, as slower growth means lower tax revenues.

The figure represents the weakest pace of growth since the first quarter of last year.

Then slower growth was linked to the fact that the Iraq war had damaged business and consumer confidence.

The third-quarter figure compares unfavourably to the first two quarters of 2004, where the UK economy grew 0.7% and 0.9% respectively.

The slowdown was attributed to a 1.1% decline in industrial production, which includes manufacturing, mining and oil refining and accounts for about one fifth of the country's economy.

In contrast, the service sector performed strongly, growing by 0.8%.

The latest figures show that the retail and hospitality sectors performed strongly over the period.

Transport, storage, business services and finance sectors also enjoyed growth.

It now appears increasingly likely that interest rates will remain at their current level of 4.75% for the rest of the year.

The Bank of England's Monetary Policy Committee (MPC) will make its next interest rate decision on 4 November.

CHINA RAISES RATES TO COOL GROWTH

China has raised its core interest rates for the first time in nine years, as the country's central bank moves to rein in the booming economy.

The benchmark one-year lending rate is being increased to 5.58% from 5.31%, beginning on Friday.

China, the world's seventh biggest economy, has grown so quickly in recent years that it has caused energy and steel shortages

The rate rise follows other cooling measures such as curbs on bank lending.

Limits on investment spending have also already been introduced.

These earlier measures appear to have had some effect China's third-quarter 2004 gross domestic product (GDP) growth was 9.1%, down from 9.6% in the second, and 9.8% in the first.

OIL PRICES HITTING GERMAN ECONOMY

The German government has said surging oil prices are on track to cut economic growth by about 0.25% this year.

Economy Minister Wolfgang Clement said last week that the government expected growth of 1.8% this year, falling to 1.7% in 2005.

"We estimate that (high oil prices) have already dampened real growth this year by almost a quarter of a percentage point," he said.

Oil prices have soared this year because of tight global supplies.

Last Monday, US light sweet crude hit a record high of $55.53 a barrel amid fears that a labour dispute would halt output in Norway, the world's third largest exporter.

 

 

Mr Clement added that if prices were to remain above $50 a barrel for a sustained period, growth in Germany and around the world would suffer.

But he said that provided oil prices fell back, he was confident that an export-led recovery in Germany would feed through to the domestic economy.

WORLD TRADE 'SET TO GROW BY 8.5%'

Global trade is set to grow by 8.5% in real terms in 2004 despite soaring oil prices, the World Trade Organisation (WTO) has said.

Growth this year was boosted by trade and output expansion in China, Latin America and Africa, and a stronger-than-expected recovery in Japan.

But the high price of oil and other commodities may affect output in 2005.

WTO data shows trade in merchandise rose by 4.5% in 2003, up from 3% in 2002 and a decline in 2001.

"Strong demand is behind rising prices for oil and other commodities (in 2004), and markets appear to be handling this well," said WTO director-general Supachai Panitchpakdi.

The WTO said that in 2003: Stronger activity in manufacturing and mining, and a continued expansion in agriculture, was behind the recovery in world trade. Trade in merchandise expanded faster than output.

US ECONOMY 'CONTINUED TO EXPAND'

The US economy has continued to grow in September and early October, but was hampered by record oil prices, a report from the Federal Reserve has shown.

"Higher energy costs were constraining consumer and business spending," according to its Beige Book report.

Growth was patchy as a result, the Fed said, and in some areas such as New York and San Francisco it "moderated".

Some analysts said that the Fed may now put off a widely-expected interest rate hike in November.

Despite the increase in raw material costs, and many companies saying that they have managed to pass on costs to consumers, price growth has remained subdued.

BLAIR SET TO SIGN EU CONSTITUTION

Tony Blair is set to sign the new EU constitution on Oct 29 when he joins fellow European leaders in Rome.

The prime minister has already promised a referendum before the UK ratifies the constitution so it can come into force.

Ministers say the constitution is needed for good decision-making in an EU of 25 states. But the Tories say it will be an extra burden for business.

The Rome meeting is also likely to include talks on the halted appointment of the new European Commission.

JESSOPS CUTS PRICE OF SHARE OFFER

Jessops, the UK's largest photographic goods retailer, has cut its flotation price to 155p a share.

The firm said it had raised about 120m ($220m) with the sale of 77.3 million shares, ahead of its market debut on Friday.

Originally the company had planned to offer its shares at between 185p and 220p each which would have seen the group valued at up to 189m.

EXXON BOOSTED BY OIL PRICE BOOM

Exxon Mobil has become the latest oil firm to report bumper profits, driven by crude's recent record-breaking surge.

Net income in the July to September period jumped 56% to $5.68bn (3.1bn), compared with $3.65bn a year ago. Sales were climbed to $76.4bn from $59.84bn.

DELTA 'REACHES $1BN COSTS DEAL'

Troubled US airline Delta has reached a $1bn cost-cutting agreement with its pilots, a deal that could save it from bankruptcy.

The deal would see pilots accept a 32% pay cut in return for the right to buy 30 million Delta shares, unions said.

Delta chief executive Gerald Grinstein said the pact was a crucial step in securing Delta's future but warned that bankruptcy was still possible.

ROVER CUTS LOSSES

MG Rover has released figures for the year 2003, showing a loss of 77m ($128m), slightly less than the 95m of the previous year.

GEORGIA PLANS HIDDEN ASSET PARDON

Georgia is offering a one-off 'tax amnesty' to people who hid their earnings under the regime of former president Eduard Shevardnadze.

The country's new president, Mikhail Saakashvili, has said that anyone now willing to disclose their wealth will only have to pay 1% in income tax.

The measure is designed to legitimise previously hidden economic activity and boost Georgia's flagging economy. Georgia's black market is estimated to be twice the size of its legal economy.

EU SUSPENDS US EXPORT SANCTIONS

The European Union is to suspend sanctions on US imports worth $4bn after President Bush signed a bill removing illegal export subsidies.

The move could end a dispute which began in 2003 when the Word Trade Organisation ruled that the US subsidies breached trade laws.

The EU retaliated in March this year with tariffs on a range of US goods.

Brussels said it would ask the WTO to review the situation, and would not rule out reimposing sanctions.

 

 

EU trade commissioner Pascal Lamy welcomed the US bill repealing export subsidies, which was signed into law by President Bush last week.

As a result, some $5bn in financial assistance for US exporters will be phased out between 1 January 2005 and 31 December 2006.

PROFITS RISE AS SHELL UNITES BOARD

Oil giant Shell has said it is to abolish its twin board structure in a move aimed at easing investor unrest.

The news came as Shell unveiled a 70% rise in third-quarter net profits to $4.4bn (2.4bn) as the firm benefited from the recent record oil prices.

Investors welcomed news of Shell's restructuring, sending the firm's shares 4% higher in early trade on the London stock market.

BOOTS SEES PROFITS ALMOST HALVED

UK health and beauty retailer Boots has posted a sharp drop in profits, blaming rising competition and a wet summer. Pre-tax profits for the six months to September sank to 146.6m from 281.7m a year earlier.

ADVERTISING COSTS HURT CREATIVE

Digital music player maker Creative has seen a sharp fall in profits as it continues to battle with Apple's iPod for the lion's share of the market.

While Apple recently thanked sky-high iPod sales for a 50% jump in profits, rival Creative has posted an 84% fall in its year-on-year quarterly earnings.

Creative blamed higher advertising expenses and an investment loss for profits declining to $4.8m (2.6m).

SONY PROFITS DOWN AS RIVALS UP

Electronics giant Sony has reported a fall in profits, in contrast to strong gains seen by Matsushita and Canon.

Sony, which blamed a fall in sales of televisions and portable audio players, saw half-year pre-tax profits fall 12.5% to 69.9bn yen ($659m; 359m).

Panasonic-owner Matsushita benefited from new product launches, unveiling a 140% increase in pre-tax six-month profits to 137.3bn yen. And Canon's 162.6bn yen third-quarter profit was a record for the company.

MORTGAGE APPROVALS DROP SHARPLY

The number of mortgages approved by banks fell for the fourth month in a row in September, figures have shown.

According to the British Bankers' Association (BBA), 59,905 property loans were granted last month. This represented a 29% fall from the 81,635 new loans approved in September last year.

APPLE UNVEILS PHOTO-DISPLAY IPOD

Apple has unveiled an iPod with a photo display function aimed at maintaining the company's lead in the market for digital music players.

The new iPod comes in two versions, including a 60-gigabyte model capable of storing 25,000 colour photographs, which retails at $599 (335) in the US.

The device is intended to meet demand for convenient ways of storing pictures in the age of digital photography.

WEAPONS SALES BOOST BOEING PROFIT

US aircraft and defence company Boeing has reported a 78% jump in quarterly profits, driven by increased demand for equipment from the armed forces.

Net income in the third quarter ending 30 September was $456m (248m) from $256m a year earlier, topping market forecasts. Sales added 8% to $13.15bn.

WET SUMMER TAKES TOLL ON UNILEVER

Unilever, fresh from a shock profits warning last month, has said wet weather dampened its performance in the three months to September. Pre-tax profits were down 2% at 1.3bn euros (890m ; $1.6bn).

SPANISH BANK MAKES BUMPER PROFITS

The Spanish bank which is buying Abbey made a 2.2bn profit (3.1bn euros)in the first nine months of 2004.

Banco Santander Central Hispano, which is acquiring the UK lender in a 8.5bn deal, said profits including one-off charges rose 64% from 1.3bn last year.