INTERNATIONAL

 

Dec 20 - 26, 2004

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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US INDUSTRIAL OUTPUT GROWTH EASES

US industrial production continued to rise in November, albeit at a slower pace than the previous month.
The US Federal Reserve said output from factories, mines and utilities rose 0.3% in line with forecasts from a revised 0.6% increase in October.
Analysts added that if the carmaking sector which saw production fall 0.5% had been excluded the data would have been more impressive.
The latest increase means industrial output has grown 4.2% in the past year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Many analysts were upbeat about the prospects for the US economy, with the increase in production coming on the heels of news of a recovery in retail sales.

"This is very consistent with an economy growing at 3.5 to 4.0%. It is congruent with job growth and consumer optimism," Comerica chief economist David Littman said of the figures.

The US economy grew at a respectable annual rate of 3.7% in the three months between July and September, while jobs growth averaged 178,000 during the same period.

While the employment figures are not spectacular, experts believe they are enough to whittle away at America's 5.4% jobless rate.

A breakdown of the latest production figures shows mining output drove the increase, surging 2.1%, while factory output rose 0.3%. But utility output dropped 1.4%.

Meanwhile, the amount of factory capacity in use during the month rose to 77.6% its highest level since May 2001.

LATIN AMERICA SEES STRONG GROWTH

Latin America's economy grew by 5.5% in 2004, its best performance since 1980, while exports registered their best performance in two decades.

The United Nations' Economic Commission for Latin America and the Caribbean said the region grew by 5.5% this year.

The Inter-American Development Bank (IADB) said regional exports reached $445.1bn (227bn;331bn euros) in 2004.

Doubts about the strength of the US recovery and overheating of the Chinese economy do however pose risks for 2005.

Both organisations also warned that high oil prices raise the risk of either inflation or recession.

Nevertheless, the Economic Commission for Latin America and the Caribbean (ECLAC) still forecasts growth of 4% for 2005.

Strong recovery in some countries, such as Venezuela and Uruguay, boosted the overall performance of the region.

ECLAC also said that the six largest Latin American economies (Argentina, Brazil, Chile, Colombia, Mexico and Venezuela) grew by more than 3% for only the second time in 20 years.

Chinese and US economic strength helped boost exports, as did strong demand for agricultural and mining products.

In fact, Latin American exports to China grew 34%, to $14bn.

Higher oil prices also helped boost exports, as Mexico and Venezuela are important oil exporters.

Regional blocs as well as free trade agreements with the US contributed to the region's strong performance, the IADB said

AIRBUS A380 IN $2BN OVER BUDGET (BOX)

The Airbus A380 superjumbo project is running 1.45bn euros (1bn; $1.9bn) over budget, the company's majority owner EADS has admitted.

"That is indeed a lot, that is indeed hefty," EADS co-chief executive Rainer Hertrich told journalists in Munich.

Total costs for the double-decker aircraft are now estimated to be more than 12bn euros, the company said.

Due to enter service in 2006, the A380 will replace the Boeing 747 jumbo as the world's biggest passenger aircraft.

But despite the increase in costs, the jet is on schedule and its inaugural flight should take place next year, the company said.

ASIA TO FUEL AIR TRAVEL GROWTH

Global air traffic is set to be boosted in the next three years by a rise in travel between Europe and Asia, thanks to growth in both China and India.

Cargo volumes will also enjoy growth but airlines' finances will take time to recover, a new report claims, as rising oil prices hit profits.

Global airline body IATA said international passenger numbers will rise 6% annually between 2005 and 2008.

IATA warned that carriers will struggle after making losses of $5bn this year.

General economic trends were positive for the airline industry, the organisation said in a report published last Wednesday.

The booming economies of China and India are set to fuel growth in passenger numbers.

Traffic within the Asia-Pacific region is forecast to rise by 8.3% over the period while traffic between Europe and Asia could grow by 7.1%. Cargo volumes, driven by the health of international trade, are forecast to rise 6%.

CHINA TO PLACE DUTIES ON TEXTILES

China is to impose tariffs on textile exports following criticism from other producers that it may distort world markets after a quota system is ended.

The move may reassure major trading partners, including the United States, that China will not flood the market after quotas end on 1 January 2005.

China, which made 17% of the world's textiles in 2003, said the move was designed to spur higher-quality goods.

The US is considering import tariffs to protect domestic textile producers.

China's move, reported by state media, may placate US producers and reduce the prospect of a potentially damaging trade dispute.

IMF AGREES FRESH TURKEY FUNDING

Turkey has agreed a draft proposal with the International Monetary Fund to borrow $10bn (5.19bn), extending its ongoing financial support until 2007.

Turkey's current $18.6bn loan agreement with the IMF expires in February and the new follow-on deal would see it get fresh support between 2005 and 2007.

In return for the funding, Turkey would be expected to keep inflation under control and introduce market reforms.

Turkey's economy has steadily recovered from a severe crisis in 2001.

Economic growth has averaged 6-7% in the past three years, ahead of IMF forecasts, while inflation fell below 10% this year for the first time in 30 years.

However, Turkey has a huge debt burden while its current account deficit has swelled to $10.7bn this year.

EU-TURKEY TALKS SET FOR OCTOBER

The EU has offered to begin membership talks with Turkey next year, with October 3 given as a start date.

EU leaders said the aim of the talks which could take up to 15 years would be full membership, but Turkey's entry could not be guaranteed.

Discussion between EU leaders on finalising the offer resumes at the two-day summit in Brussels, last week.

EU leaders warned Turkey that it would have to take steps to recognise Cyprus before the talks started.

BUSH VOWS PENSION FUND SHAKE-UP

US President George W Bush has vowed to push through big reforms to the Social Security programme in his next term.

"Now is the time to work together to confront the problem... the crisis is now," he told business executives and economists at the White House.

Mr Bush is proposing part-privatisation of the state pension fund, which will come under increasing pressure as baby-boomers retire. Democrats, unions and groups for the elderly are opposed to the plans.

STRONG QUARTERLY GROWTH FOR NIKE

Nike has reported its best-ever second quarter earnings, helped by strong demand for its athletic shoes and Converse sneakers.

The global sports giant said it posted a profit of $261.9m (135.6m), for the three months to 30 November, up from $179.1m in the same period last year. Revenues increased 11% to $3.1bn, from $2.8bn for the same period in 2003.

 

 

SYMANTEC IN $13BN VERITAS MERGER

Global security software maker Symantec is to take over Veritas Software in a merger deal valued at $13.5bn (7bn).

The all-share deal will see Symantec swap 1.1242 shares of common stock for each Veritas share.

After the deal Symantec shareholders will own 60% of the combined company, with Veritas shareholders owning 40%.

STORMY YEAR FOR PROPERTY INSURERS

A string of storms, typhoons and earthquakes has made 2004 the most expensive year on record for property insurers, according to Swiss Re.

The world's second biggest insurer said disasters around the globe have seen property claims reach $42bn (21.5bn).

"2004 reinforces the trend towards higher losses," said Swiss Re. Tightly packed populations in the areas involved in natural and man-made disasters were to partly to blame for the rise in claims, it said.

Some 95% of insurance claims were for natural catastrophes, with the rest attributed to made-made events.

JOBLESS LEVEL CONTINUES TO FALL

The number of people out of work in the UK fell by 29,000 between August and October to 1.39 million, the latest official figures have shown.

The amount of people claiming jobless benefit last month also fell, by 3,400 to 833,200, according to the Office for National Statistics (ONS).

MILLIONS 'TO LOSE TEXTILE JOBS'

Millions of the world's poorest textile trade workers will lose their jobs under new trade rules to be introduced in the new year, a charity has warned.

The World Trade Organisation (WTO) is to end its Multi-Fibre Agreement (MFA) on midnight of December 31.

Christian Aid condemned the move, saying it would see almost a million jobs in Bangladesh alone being axed.

However, supporters of the change claim it will mean increased efficiency and lower costs for Western consumers.

J&J AGREES $25.4BN GUIDANT DEAL

Pharmaceutical giant Johnson & Johnson has agreed to buy medical technology firm Guidant for $25.4bn (13n).

Guidant is a key producer of equipment that combats heart problems such as implant defibrillators and pacemakers.

CARLYLE BUYS INTO CHINA PACIFIC

Carlyle Group, a US buyout fund, will pay $400m ($206m) for a 25% stake in insurance company China Pacific Life.

The purchase will be China's biggest private equity deal yet.

Carlyle is working in partnership with US insurer Prudential and the move will give both firms access to China's rapidly expanding market.

KIDDE ACCEPTS 1.4BN TAKEOVER BID

British fire equipment manufacturer Kidde has agreed a 1.44bn ($2.8bn) takeover by US manufacturer United Technologies (UTC).

Kidde said UTC's offer of 165p per share, plus a 2p special interim dividend, was a "fair price".

In October, Kidde had rejected UTC's previous offer of 160p a share, saying the bid undervalued the company.

US RAISES INTEREST RATES TO 2.25%

The US Federal Reserve has raised rates by a quarter percentage point to 2.25% its fifth increase since June.

Encouraged by the country's economic performance, the Fed's policy-makers voted unanimously for the move.

Announcing the decision, the Fed added that future increases would remain "at a pace that is likely to be measured".

The current round of rate increases began in June, when the central bank ordered its first rise in four years, with rates at historic lows of 1%.

US MOBILE GROUPS CONFIRM MERGER

US mobile groups Sprint and Nextel have agreed to merge in a deal that will create the nation's third largest mobile phone operator.

The new company will be known as Sprint Nextel and will serve 35 million subscribers, drawing in revenues of $40bn (20.7bn).

BRAZIL APPROVES BANKRUPTCY REFORM

A major reform of Brazil's bankruptcy laws has been approved by the country's Congress, in a move which it is hoped will cut the cost of borrowing.

The bill, proposed in 1993, has finally been approved by the leadership of President Luiz Inacio Lula da Silva.

The old law, dating from 1945, gave priority first to workers, second to tax revenue and finally to creditors.

The new legislation changes this, giving priority to creditors and limiting payments to workers.

BUSINESS CONFIDENCE DIPS IN JAPAN

Business confidence among Japanese manufacturers has weakened for the first time since March 2003, the quarterly Tankan survey has found.

Slower economic growth, rising oil prices, a stronger yen and weaker exports were blamed for the fall.

December's confidence level was below that seen in September, the Bank of Japan said. However, September's reading was the strongest for 13 years.

US TRADE GAP BALLOONED IN OCTOBER

The US trade deficit widened by more than expected in October, hitting record levels after higher oil prices raised import costs, figures have shown

The trade shortfall was $55.5bn (29bn), up 9% from September, the Commerce Department said. That pushed the 10 month deficit to $500.5bn.

Imports rose by 3.4%, while exports increased by only 0.6%.

A weaker dollar also increased the cost of imports, though this should help drive export demand in coming months.

BANK WARNS ON PERSONAL DEBT BOOM

The rapid growth of personal debt could threaten the UK's financial stability, the Bank of England has warned.

UK household debt is rising at 15% a year, faster than in the US and most major European countries.

The bank said it was particularly worried about the amount of unsecured debt, such as credit cards.