Dec 27, 2004 - Jan 02, 2005






Russia's president has defended the purchase of Yukos' key production unit by state-owned oil firm Rosneft, saying it followed free market principles.
Vladimir Putin said it was quite within the rights of a state-owned company to ensure its interests were met.
Rosneft bought 100% of Baikal Finance Group, in a move that amounts to the renationalisation of a major chunk of Russia's booming oil industry.
Rosneft will now control about 16% of Russia's total crude oil output.









Rosneft is already in the process of merging with Gazprom, the world's biggest gas company, a move that will see Gazprom return to majority state-ownership.

Baikal was the surprise buyer of oil and gas giant Yukos's main production division at a forced auction on Sunday.

"Everything was done by market methods," Mr Putin said at his year-end press conference in Moscow.

Shedding some light on the Kremlin's motivation, Mr Putin referred to a period of so-called "cowboy capitalism" that followed the collapse of the Soviet Union.

He said privatisations carried out in the early 1990s had involved trickery, including law breaking, by people seeking to acquire valuable state property.

"Now the state, using market methods, is safeguarding its interests. I think this is quite normal," the Russian president said.

A Gazprom spokesman has said the acquisition is part of its plan to build a "balanced, national energy corporation."


The European Commission (EC) has called a truce in its battle with France and Germany over breaching deficit limits.

The move came after France and Germany vowed to run their budget deficits below the EU cap in 2005 for the first time in four years.

But, the EC did warn the two were under close scrutiny and it would act if their fiscal situations deteriorated.

Under EU rules, member countries must keep their deficits below 3%. France and Germany will breach that this year.

It will be the third year in a row that the two countries have broken the European Union's Stability and Growth Pact rules.

The eurozone's two biggest economies left the pact in tatters in November 2003 when they persuaded fellow EU members to put the threat of penalties for deficit breaches on hold.

The commission then took the pair to the European Court of Human Justice which ruled EU countries could not put the pact "in abeyance", and confirmed the EC's right to launch "excessive debt procedures".

After announcing its decision to erase France and Germany from its list of deficit rule breakers, the EU said that the time lag created by the ruling meant that 2005 should be the target year for the pair to bring their budget's below 3%.

"The commission concludes that the two countries appear to be on track to correct their excessive deficits by 2005," it said in a statement.

The EU expects the German deficit to fall to fall to 2.9% of GDP next year from 3.9% this year, while France's is forecast to drop to 3% from an expected 3.7% this year.

The forecasts are based on EC predictions of GDP growth of 1.5% in Germany next year and 2.2% in France.


US president George W Bush has pledged to introduce a "tough" federal budget next February in a bid to halve the country's deficit in five years.

The US budget and its trade deficit are both deep in the red, helping to push the dollar to lows against the euro and fuelling fears about the economy.

Mr Bush indicated there would be "strict discipline" on non-defence spending in the budget.

The vow to cut the deficit had been one of his re-election declarations.

The federal budget deficit hit a record $412bn (211.6bn) in the 12 months to 30 September and $377bn in the previous year.

"We will submit a budget that fits the times," Mr Bush said.

"It will provide every tool and resource to the military, will protect the homeland, and meet other priorities of the government."

The US has said it is committed to a strong dollar.

But the dollar's weakness has hit European and Asian exporters and lead to calls for US intervention to boost the currency.


The EU and Turkey have struck a deal over an EU demand that Turkey recognise Cyprus before membership talks begin.

The solution they found after two days of tough and at times heated talks was for Turkey to tacitly acknowledge the Cyprus government for the first time.

The deal clears the way for Turkey large, poor and overwhelmingly Muslim to start entry talks in October 2005.

But Turkish Prime Minister Recep Tayyip Erdogan insisted signing the protocol was not a formal recognition of Cyprus.

"We did not obtain all that we wanted 100%", he told a news conference, "but we can say that it was a success."

EU leaders confirmed that Turkey had completed the last of the essential changes in its laws needed to meet the EU's democratic conditions for opening talks.




The Japanese government has forecast that the country's economic growth will slow to 1.6% in the next fiscal year starting in April 2005.

While it predicts this fall from the current 2.1% level, it said it was making progress on ending deflation.

The figures were given by economics minister Heizo Takenaka who said the economy would grow by 2% in 2006/07.

He said the consumer price index (CPI) would rise 0.1% in the next fiscal year, the first gain since 2000/01.

"We are attempting to make real economic conditions better and to overcome deflation. I think we are on track," said Mr Takenaka.

Deflation or falling consumer prices has plagued Japan for more than five years.


Boeing is to supply Japan Airlines with up to 50 of its forthcoming 7E7 planes in a deal that could be worth as much as $6bn (3.1bn) for the US giant.

Japan Airlines has made a firm order for 30 of the aircraft, at $120m each, with the option to buy 20 more.

Asia's biggest airline joins Japanese rival All Nippon as one of the first carriers to order the mid-size 7E7, which Boeing says is super-economical.

Airbus last week announced the first pre-sale of its 7E7 rival the A350.

Boeing's great European competitor is to sell 10 of its forthcoming A350 to Spanish carrier Air Europe, which has the option to buy two more in a deal that could be worth more than $1.8bn.

Both the 7E7 and the A350 are being designed to be as fuel-efficient as possible in the 200 to 300-seat sector, and each will be available in both short and long range versions.


A European court has turned down an appeal by Microsoft to delay hard-hitting sanctions from the European Commission.

The US software giant went to the European Court of First Instance to try to get the penalties for abuse of monopoly suspended.

Microsoft wanted to delay the opening up of aspects of its Windows software system to rivals, and a record EU fine. The court dismissed Microsoft's plea "in its entirety".


Irish publishing group Independent News & Media is buying up a 26% stake in Indian newspaper company Jagran in a deal worth 25m euros ($34.1m).

Jagran publishes India's top-selling daily newspaper, the Hindi-language Dainik Jagran, which has been in circulation for 62 years.


House prices fell further in November and property sale times lengthened as rate rises took their toll, the Royal Institute of Chartered Surveyors found.

A total of 48% of chartered surveyor estate agents reported lower prices in the three months to November the highest level in 12 years.

Meanwhile the number of sales dropped 32% to an average of 22 per surveyor.


The Ministry of Defence has awarded a 160m contract to design and develop the new Hawk trainer jet to the UK firm BAE Systems.

The work will be carried out at the arms giant's Brough factory in East Yorkshire, helping secure the site.

A BAE spokesman said it was the perfect Christmas present for the 2,500 staff who will work on the project.

Defence minister Lord Bach said the contract was a "significant milestone" in the Hawk programme.


Shops all over the UK reported strong sales on the last Saturday before Christmas with some claiming record-breaking numbers of festive shoppers.

A spokesman for Manchester's Trafford Centre said it was "the biggest Christmas to date" with sales up 5%.

And the Regent Street Association said shops in central London were also expecting the "best Christmas ever".

That picture comes despite reports of disappointing festive sales in the last couple of weeks.


More than 20m may have been stolen in a raid at a bank's headquarters in Belfast, police have said.

The families of two Northern Bank executives were held hostage for 24 hours.

The robbery happened at the bank's headquarters in Donegall Square West in the city.

It is believed it could be one of the biggest cash robberies in the UK. The bank said a "significant" amount of money had been stolen.


Some 4,000 chickens have either died or have been culled in southern Vietnam in a bid to halt the latest outbreak of avian flu, Vietnamese authorities say.

Farms in the Mekong Delta have been disinfected and cordoned off and preventive measures have been boosted to prevent the disease from spreading.

The epidemic reappeared earlier this year killing 32 people across Asia.

Experts have warned of the risk of a world pandemic if bird flu combines with a human flu virus.

No humans are reported to have been infected so far in the latest Vietnamese outbreak.

Farmers in Can Tho City have been urged to disinfect their farms every week, and tests are being carried out at other farms in the area.


EU fisheries ministers have reached agreement with the European Commission on national fishing quotas for 2005.

Under the compromise deal, the Commission agreed to allow more fish to be caught by fishing fleets next year than it had originally envisaged.

The Commission, which was looking for drastic reductions, had already dropped its proposals to close depleted cod grounds in parts of the North Sea.

The UK and other EU members with a North Sea coast had opposed the plan.

The ministers agreed to gentler quota cuts provided the reductions continue for several years, according to reports.

The compromise deal, reached after talks that stretched through the night, was adopted almost unanimously. Only Lithuania voted against, while Britain and France voiced reservations.


Russia's Gazprom is selling a key oil subsidiary in a move that puzzles observers and may redraw the domestic petroleum industry.

The unit, Gazpromneft, was expected to take part in a state auction on Sunday but surprisingly did not place a bid for oil company Yuganskneftegas.

Analysts blamed the threat of legal action from Yukos, the oil giant that owned Yuganskneftegas.


Air Deccan has ordered 30 Airbus A320 planes in a $1.8bn (931m) deal as India's first low-cost airline expands in the fast-growing domestic market.

Air Deccan was set up last year and wants to lure travellers away from the railway network and pricier rivals.

The potential of the Indian market has attracted attention at home and abroad.

Beer magnate Vijay Mallya recently set up Kingfisher Airlines, while UK entrepreneur Richard Branson has said he is keen to start a local operation.