INTERNATIONAL

 

Jan 10 - 16, 2005

 

1.INTERNATIONAL

2. PAKISTAN

3. GULF

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FED WARNS OF MORE US RATE RISES

The US looks set for a continued boost to interest rates in 2005, according to the Federal Reserve.
Minutes of the December meeting which pushed rates up to 2.25% showed that policy-makers at the Fed are worried about accelerating inflation.
The clear signal pushed the dollar up to $1.3270 to the euro but depressed US shares.
"The markets are starting to fear a more aggressive Fed in 2005," said Richard Yamarone of Argus Research.
The Dow Jones index dropped almost 100 points, with the Nasdaq also falling as key tech stocks were hit by broker downgrades.

 

 

The dollar also gained ground against sterling, reaching $1.8832 to the pound before slipping slightly.

The release of the minutes just three weeks after the 14 December meeting was much faster than usual, indicating the Fed wants to keep markets more apprised of its thinking.

This, too, is being taken in some quarters as a sign of aggressive moves on interest rates to come.

The key Fed funds rate has risen 1.25 percentage points during 2004 from the 46-year low of 1% reached not long after the 9/11 attacks in 2001.

That long trough "might be contributing to signs of potentially excessive risk-taking in financial markets", said the Federal Open Markets Committee (FOMC), which sets interest rates.

The odds now favour a further boost to rates at the next meeting in early February, economists said.

UK SHARES END YEAR ON HIGH NOTE

The FTSE 100 has ended the year with a 7.5% gain despite battling against high oil prices and rising interest rates.

The leading index closed at 4,814, a gain of 337 points since last year, but 5.8 points down on the day, city analysts said.

Most analysts do not expect a dramatic change in the coming months.

Experts tip the FTSE to make "slow and steady" gains in 2005, breaking through the 5,000 mark, possibly reaching as high as the 5,500 mark.

Rocketing oil prices and rate hikes on both sides on the Atlantic saw the FTSE 100 index plunge as low as 4,287 in July its lowest for nine months.

Five rate rises from the Bank of England since November 2003 took the steam out of the market for much of the year.

But strong fourth-quarter profits lifted spirits in the latter part of the year, taking the FTSE to 30-month highs.

The outcome of the US presidential election also boosted investor confidence as did evidence of robust economic growth in the UK.

And crude oil's retreat from record highs also helped drag the market out of the doldrums.

Nevertheless, the outlook for 2005 could be "pretty dull", according to economists.

The absence of a US presidential election and the lack of a global sporting event which terrorists could target - should keep the market subdued, economists believe.

Even the prospect of a general election in the UK is not expected to make much of an impact on the stock market.

Germany's DAX index closed the year with a 7.34% gain while France's CAC 40 ended 7.39% higher.

US MANUFACTURING KEEPS EXPANDING

US industrial production increased in December, according to the latest survey from the Institute for Supply Management (ISM).

Its index of national manufacturing activity rose to 58.6 last month from 57.8 in November. A reading above 50 indicates a level of growth.

The result for December was slightly better than analysts' expectations and the 19th consecutive expansion.

The ISM said the growth was driven by a "significant" rise in the new orders.

"This completes a strong year for manufacturing based on the ISM data," said chairman of the ISM's survey committee.

"While there is continuing upward pressure on prices, the rate of increase is slowing and definitely trending in the right direction."

SINGAPORE GROWTH AT 8.1% IN 2004

Singapore's economy grew by 8.1% in 2004, its best performance since 2000, figures from the trade ministry show.

The advance, the second-fastest in Asia after China, was led by growth of 13.1% in the key manufacturing sector.

However, a slower-than-expected fourth quarter points to more modest growth for the trade-driven economy in 2005 as global technology demand falls back.

Slowdowns in the US and China could hit electronics exports, while the tsunami disaster may effect the service sector.

Economic growth is set to halve in Singapore this year to between 3% and 5%.

In the fourth quarter, the city state's gross domestic product (GDP) rose at an annual rate of 2.4%.

That was up from the third quarter, when it fell 3.0%, but was well below analyst forecasts.

DOLLAR HOVERS AROUND RECORD LOWS

The US dollar hovered close to record lows against the euro last week as concern grows about the size of the US budget deficit.

Analysts predict that the dollar will remain weak in 2005 as investors worry about the state of the US economy.

The Bush administration's apparent unwillingness to intervene to support the dollar has caused further concern.

However, trading has been volatile over the past week because of technical and automated trading and light demand.

This has amplified reactions to news, analysts said, adding that they expect markets to become less jumpy in January.

The dollar was trading at $1.3652 versus the euro after hitting a fresh record low of $1.3667. One dollar bought 102.55 yen.

UN SEEKS IMMEDIATE TSUNAMI CASH

UN Secretary General Kofi Annan has urged international donors to convert pledges of aid for the tsunami victims into $1bn cash for immediate use.

At the Indonesia aid conference, Mr Annan said there was "a race against time" to prevent another sharp rise in the death toll, now over 140,000.

Global pledges exceed $3bn but promises have not always come good in the past.

The EU is the latest international body to offer increased aid, pledging 100m euros ($132m) to the immediate effort.

Secretary of State Colin Powell said the group which includes India, Australia and Japan had served its purpose and would now work with the UN.

Commission President Jose Manuel Barroso said in Jakarta he would also seek the European Parliament's approval for an additional 350m euros ($464m) for long-term reconstruction.

Meanwhile, the US said it was disbanding what it called the core group of nations formed to tackle the crisis.

MONSANTO FINED $1.5M FOR BRIBERY

The US agrochemical giant Monsanto has agreed to pay a $1.5m (799,000) fine for bribing an Indonesian official.

Monsanto admitted one of its employees paid the senior official two years ago in a bid to avoid environmental impact studies being conducted on its cotton.

INDIAN OIL FIRM EYES YUKOS ASSETS

 

 

India's biggest oil exploration firm, Oil & Natural Gas Corp. (ONGC), says it is in talks to buy the former assets of troubled Russian crude producer Yukos.

"We are in touch with the concerned Russian entities about the Yukos assets and other opportunities in Russia," said ONGC chairman Subir Raha.

Local press had reported that ONGC was looking to buy 15% of Yukos' former key oil production unit for $2bn (1bn).

GERMAN BIDDER IN TALKS WITH LSE

Deutsche Boerse bosses have held "constructive, professional and friendly" talks with the London Stock Exchange (LSE), its chief has said.

Werner Seifert met LSE chief executive Clara Furse amid rumours the German group may raise its bid to 1.5bn ($2.9bn) from its initial 1.3bn offer.

DAMAGE TO INDIA 'MORE THAN $1BN'

The financial cost to the Indian mainland from December's devastating tsunami is more than $1bn, the government says.

Costs to the remote Andaman and Nicobar Islands are still being assessed.

The southern state of Tamil Nadu on the mainland has suffered the worst damage, incurring losses at some $580m, officials say.

The government has defended its relief efforts. It says its response to the disaster was "extremely prompt".

WORLDCOM BOSSES AGREE $54M PAYOUT

Ten former directors at WorldCom have agreed to pay $54m (28.85m), including $18m from their own pockets, to settle a class action lawsuit, reports say.

James Wareham, a lawyer representing one of the directors, told Reuters the 10 had agreed to pay those who lost billions when the firm collapsed. The remaining $36m will be paid by the directors' insurers.

SOUTH AFRICAN CAR DEMAND SURGES

Car manufacturers with plants in South Africa, including BMW, General Motors, Toyota and Volkswagen, have seen a surge in demand during 2004.

New vehicle sales jumped 22% to 449,603 from a year earlier, the National Association of Automobile Manufacturers of South Africa (NAAMSA) said.

Strong economic growth and low interest rates have driven demand, and analysts expect the trend to continue.

IMF IN TSUNAMI ASSISTANCE PLEDGE

The International Monetary Fund (IMF) has offered up to $1bn (530m) in financial assistance to nations affected by the Asian tsunami.

A statement from IMF director general Rodrigo Rato came ahead of a donor meeting in Jakarta. The United Nations said earlier that aid pledges have topped $3bn.

BROWN SETS OUT ANTI-POVERTY AIMS

Gordon Brown will seek to harness worldwide horror over the fate of Asia's tsunami victims to drive forward the agenda for ending global poverty.

In a long-planned speech Mr Brown will restate his goals for doubling aid and eliminating the poorest nations' debt.

At the same time Tony Blair will now conduct his monthly news conference.

Mr Blair denied the timing of his event, at which he will also talk about Africa, was "bizarre". Mr Brown said it showed they had a shared agenda.

But the chancellor's former spin doctor Charlie Whelan said news of the press conference was "astonishing".

TSUNAMI TO COST SRI LANKA $1.3BN

Sri Lanka faces a $1.3bn (691m) bill in 2005 for reconstruction after the tsunami which killed more than 30,000 of its people, its central bank says.

This estimate is preliminary, bank governor Sunil Mendis told reporters, and could rise in 2006.

The island state is asking for about $320m from the International Monetary Fund to help pay for relief, he said.

The bank has 5bn rupees ($50m; 27m) set aside to lend at a lower interest rate to those who lost property.

GATES OPENS BIGGEST GADGET FAIR

Bill Gates has opened the Consumer Electronics Show (CES) in Las Vegas, saying that gadgets are working together more to help people manage multimedia content around the home and on the move.

Mr Gates made no announcement about the next generation Xbox games console, which many gadget lovers had been hoping for.

About 120,000 people are expected to attend the trade show which stretches over more than 1.5 million square feet and runs from 6 to 9 January.

COMMODORE FINDS NEW LEASE OF LIFE

The once-famous Commodore computer brand could be resurrected after being bought by a US-based digital music distributor.

New owner Yeahronimo Media Ventures has not ruled out the possibility of a new breed of Commodore computers.

It also plans to develop a "worldwide entertainment concept" with the brand, although details are not yet known.

PROFITS JUMP AT CHINA'S TOP BANK

Industrial and Commercial Bank (ICBC), China's biggest lender, has seen an 18% jump in profits during 2004.

The increase in earnings has allowed the firm to write off bad loans and pave the way for a state bailout and eventual stock-market listing.

China is trying to clean up its banking system, which is weighed down by billions of dollars of unpaid loans.

It has already pumped $45bn (24bn) into two of its largest banks, and has identified ICBC as a recipient of aid.

ICBC's profits were 74.7bn yuan ($9bn; 4.8bn) in 2004, the bank said in a statement.

The percentage of non-performing loans dropped to 19.1%, down about 2 percentage points. ICBC was founded in 1984 and had total assets of 5.3 trillion yuan at the end of 2003.