July 11 - 17, 2005






A massive intelligence investigation is under way to find those responsible for the bomb attacks in London which killed at least 37 and left 700 injured.
Home Secretary Charles Clarke said looking for potential bombers was like searching for "needles in haystacks".
The Queen and Prince Charles would visit casualties in hospital while Tony Blair prepares for the G8 summit's last day.
Transport operators hoped to run a near normal service on the Tube on most lines on Friday last.



But the Circle and Hammersmith and City lines would remain closed. Parts of the District line, Metropolitan line and Piccadilly line are suspended.

King's Cross station was due to re-open for suburban rail services only.

Buses were expected operate normally, except around the immediate areas where the explosions took place.

Transport officials urged passengers to remain vigilant and keep hold of their baggage at all times.

Mr Clarke said the failure to predict Thursday's bombs should not obscure past successes.

But he admitted: "It certainly was a failure of intelligence in the sense that we didn't know this was coming."

"But by definition when you're looking for needles in haystacks you can miss the needles and the tragedy is that we did miss the needles."

Mr Clarke said a claim on the website of a previously unknown group, the Secret Organisation Group of al-Qaeda of Jihad Organisation in Europe, saying it was behind the blast, was being taken seriously.


Global financial markets were badly shaken by deadly bomb attacks on London underground trains and a bus. However, in Frankfurt the president of the European Central Bank reassured people that financial markets in Europe were functioning.

World stock markets plunged while sterling slid as London's transport network was hit by fatal blasts that also sent oil prices plummeting from the dayís record peaks.

"The rapidly deteriorating news flow on the situation in London is creating the expected and justifiable response in markets," Calyon analyst Daragh Maher was quoted as saying.

London's FTSE 100 index of leading shares tumbled 1.74 per cent to 5,138.80 points after falling more than 3.0 per cent following initial news of the explosions.

The Dow Jones Industrial Average dropped 0.64 per cent to 10,204.62 points in morning deals and the tech-heavy Nasdaq composite lost 0.62 per cent to 2,055.92.

Back in Europe, the Frankfurt DAX 30 dived 1.85 per cent to 4,530.15 points in late trading and in Paris the CAC 40 dropped 1.42 per cent to 4,219.06.

The DJ Euro Stoxx 50 index of leading eurozone shares tumbled 2.01 per cent to 3,159.24 points.

Sterling fell sharply on news of the blasts, remaining under pressure after a decision from the Bank of England to keep British interest rates on hold at 4.75 per cent for the 11th month in a row.

The pound stood at $1.7424 at about 1515 GMT after falling to as low as $1.7404 in late European trading, from $1.7532 late on Wednesday in New York.

The euro had climbed to $1.1941 in late afternoon European trading from $1.1930 late on Wednesday last.


The London terror attacks will not damage the chances of leaders reaching agreements at the G8 summit, Foreign Secretary Jack Straw was quoted as saying.

The G8 heads of state are due to spend the final day of their Gleneagles meeting discussing trade, aid and debt.

They will be joined later by the leaders of seven African countries, as well as the heads of international lending agencies and the UN.

Security has been stepped up across Scotland after Thursday's blasts.

The G8 leaders were expected to announce a joint position on climate change - originally scheduled for Thursday - later in the day.

Mr Straw said the attacks had created a united front at the summit.

We were moving towards agreement on all these key issues of Africa and climate change and many other issues as well," he said in an interview .

"What it has emphasised however is that the disagreements which sometimes take place around the room, of course they do, between leaders and countries and infinitesimal compared with what it is that unites all the world leaders who are here assembled in Gleneagles."

The G8 leaders insisted much had been achieved.

"The discussions on climate change have gone very well," said Canadian Prime Minister Paul Martin, referring to talks held in the absence of UK Prime Minister Tony Blair who had temporarily travelled to London for police briefings.

"We have noticed a shift in the American position," French President Jacques Chirac said late on Thursday.


Japan's lower house of parliament has narrowly approved plans to privatise the country's huge postal system.

The move is set to create the world's largest bank, as Japan Post controls 350 trillion yen ($3.2 trillion) in savings and insurance funds.

The 233-228 vote was a victory for Prime Minister Junichiro Koizumi, who had pledged to push the reforms through before leaving office in 2006.

But it was a tight call, with members of his own party voting against him.

Under the proposed reforms, Japan Post would be split into four entities in 2007 in the hope of stimulating competition. Its savings and insurance arms would have to be sold by 2017.

Advocates of the reforms claim that privatisation will make more efficient use of the service's huge funds for investment.

But the country's 300,000 postal employees - a powerful lobbying group who are also instrumental in mobilising rural voters - opposed the bill, fearing for their jobs.

Many ministers in Mr Koizumi's own party, the Liberal Democratic Party (LDP), were also against the move, fearing it would threaten their support base.

The legislation is expected to be sent to the upper house later on Tuesday.

But even rejection by the upper house would not block the bill, since the lower house can override it with a second vote.

Mr Koizumi made privatisation one of his earliest priorities when he came into office in 2001.

He had said that if the lower house failed to pass the reform, it would be tantamount to a vote of no confidence, raising the threat of new elections.


Saudi Arabia is setting up a new industrial city that could attract investments of up to $30.6 billion and could herald a new era of industrial development in the oil rich kingdom.

Crown Prince Abdullah bin Abdul Aziz laid the cornerstone last week for this new industrial city on the Red Sea coast and launched a series of multi-billion-dollar ventures, it was reported.

The new city, to be called "Yanbu 2," is the twin of the existing Yanbu industrial city and will cover an area of 66 sq km.

Prince Saud bin Abdullah bin Thanayan, chairman of the government's Royal Commission of Jubail and Yanbu, earlier said the commission would spend 12 billion riyals on infrastructure for Yanbu 2, "which is expected to attract investments worth 115 billion riyals". Yanbu 2, which will host basic, secondary and light industries, is scheduled to be completed by 2019, he told the state SPA news agency. Saudi Arabia announced a series of mega-projects in May worth tens of billions of dollars.


Carmakers General Motors (GM) and Ford have ended a run of bad news with both firms revealing a rise in US sales.

GM said sales had surged 41% to a total of 558,092 sales compared to the same time 2004 when it sold 380,267, boosted by an aggressive discounting programme.

Ford said sales had risen a mere 0.7% to 289,449 vehicles from 287,381 sales last year - ending 12 months of falls.

But, the news was not so good for Ford once foreign brands were excluded - without these vehicle sales fell 2.5%.

Asian rivals have been eating into the US car market recently forcing US firms to cut production, prices and jobs.

The US arm of DaimlerChrysler - Chrysler, the last of the big three US automakers - also revealed a small 1% rise in June sales.


The amount of money Britons are unlocking from their property has fallen to its lowest level for nearly four years, official figures show.

During the first three months of 2005, Britons withdrew £6.42bn of equity from their homes, the Bank of England said.

This compares with £8.28bn for the final quarter of 2004 and £15.93bn for the same period last year.

The fall in withdrawals, also called equity release, adds to signs that mortgage borrowing is slowing.

Equity release allows homeowners to unlock capital from their home's value.

The money is commonly used to consolidate debts or borrow money to finance home improvements, or even to provide a retirement income.


US cotton subsidies which have fuelled a long-running trade dispute with other countries are to be scrapped, the Bush administration has revealed.

The US government will ask Congress to pass legislation to repeal subsidy programmes after the World Trade Organization ruled they were illegal.

The move came on the same day that Brazil threatened to raise tariffs on US imports in retaliation.

Poorer countries say US subsidies distort prices and harm competition.

The WTO ruled in March that US support for cotton farmers - which critics claim totalled $2.7bn between 1999 and 2003 - was unfair and gave it until June 30 to take action.


The Russian central bank said it expected the capital flight from Russia to get worse in the second half of 2005, with $5.5 billion (4.6 billion euros) set to leave the country, according to preliminary statistics.

The figure is a sharp increase on the first half, when $900 million were transferred out by international investors.

Nevertheless, the $5.5 billion projected figure represents an improvement compared with the $6.2 billion lost in the second half of 2004.

Total capital transfers out of Russia increased five-fold during 2004 as the Yukos affair and a banking crisis made international investors wary of the risks to business in the former Soviet Republic.


WTO leader Supachai Panitchpakdi has warned there was "no agreement in sight" for removing the Western farm subsidies that present trade barriers to African and developing countries.

Supachai, the director general of the World Trade Organization who was speaking ahead of the Group of Eight summit in Gleneagles, Scotland, said a "serious formula" for reducing agricultural subsidies ìis still far ahead of us.


European steel manufacturers have reduced their production levels in 2005 in response to a global slowdown in demand and an increase of production capacity in China, the main export market during the record year of 2004. One by one last week, Europe's largest manufacturers announced cuts in production for the third quarter of 2005, following on from reductions in the second quarter.

The world's largest producer Mittal Steel said it would reduce production by a million tonnes in the third quarter in order to 're-establish a balance between global offer and demand' and 'help reduce stocks'.


Not a single Thai rice futures contract was traded on Monday last as investors waited for the government to decide what to do with its huge stocks, brokers said. There was no factor to move the market and no one wanted to take any positions until they know what the government will do with its stocks, said one broker

Most supplies were drained into government stocks and the rest kept by millers and neither has said what they would do with it, said another broker.

The government is sitting on 5 million tons of paddy, equivalent to 3 million tons of milled rice, bought from farmers since November to keep domestic prices up in the worldís largest exporter of rice.


The Central Bank of Kuwait said it is hiking the key dinar discount rate by a quarter of a percentage point to 5.50 per cent effective Sunday last, the eighth hike since last summer in lockstep with the US Federal Reserve.

The Bank raised its discount rate by 25 basis points so it becomes 5.50 pc instead of 5.25 pc, as of Sunday, July 3, 2005, Bank Governor Sheikh Salem Abdulaziz al-Sabah told state news agency KUNA in a statement.




The World Bank is set to begin talks with China on a new five-year loan programme that will encourage the Asian powerhouse to focus on economic inequality and environmental problems, a top official was quoted as saying.

In a interview, the World Bank's chief of mission to China, David Dollar, said the new programme should see lending to Beijing of between $1 billion to $1.5 billion a year.


The Philippines has discovered its first case of bird flu with infected ducks being found in a town north of the capital, Manila.

The trading of poultry has been banned for a week around the town of Calumpit in Bulcan province.

It is not yet clear if it is the H5N1 strain which has killed more than 50 people across Asia since 2003.

He said samples had been sent to Australia to see whether the Philippine bird flu strain was the same as that which caused human fatalities elsewhere in the region.


Former enemies Iran and Iraq say they will launch broad military co-operation including training Iraqi armed forces.

"It's a new chapter in our relations with Iraq," said Iranian Defence Minister Admiral Ali Shamkhani.

He was speaking at a joint news conference in Tehran with his Iraqi counterpart Saadoun al-Dulaimi.

Relations between the neighbours - who fought a bitter war from 1980 to 1988 - have improved greatly since the overthrow of Saddam Hussein in 2003.

This is the first visit to Iran by an Iraqi military delegation since the war, in which a million people died, started.


Oil prices have bounced back from the early heavy falls triggered by the series of bomb attacks in London.

US light sweet crude recovered from a low of $57.20 a barrel, rising to $60.73, down 55 cents on the day.

In London, Brent crude fell to a session low of $55.55, before recovering to $59.28, down 57 cents.


US consumers, the main drivers of the world's largest economy, have returned to the shopping malls after a heatwave generated better-than-expected sales.

The arrival of summer gave US retailers their best showing in months in June, with retailers such as Target Corp and JC Penney raising earnings forecasts.

Consumers snapped up summer clothing and air conditioners as retailers kept discounts to a minimum.

Retail giant Wal-Mart reported its biggest sales leap in 13 months.

Wal-Mart said sales at stores open at least a year were up 4.5%, ahead of forecasts for a gain of between 2% and 4%.


The European Central Bank (ECB) has kept the cost of borrowing within the 12-nation eurozone on hold at 2%.

The Frankfurt-based bank's decision comes despite growing pressure in some quarters for a cut in interest rates.

Analysts said the weaker euro and signs of improved business confidence in some eurozone countries had dented the case for a cut in rates from current lows.

Government officials in Germany, Italy and Austria had been pushing for a cut to boost their flagging economies.


UK interest rates have been kept on hold at 4.75% following the latest meeting of the Bank of England's monetary policy committee (MPC).

Pressure for a cut had been rising, and analysts said it was unclear whether the decision had been influenced by explosions in London.

However, expectations have now grown that rates will be cut in August.


General Motors has reported record sales in China, moving the US giant closer to German rival Volkswagen in the world's third-biggest car market.

GM said it sold 308,722 vehicles in the first six months of 2005, up 18.9% on the previous year.

The carmaker expanded its share of the Chinese market - GM's second biggest after the US - to 10.9% in June.

Volkswagen has seen its dominance in China slip from about a quarter of the market to an estimated 13% to 20%.

The company made profits of $417m in China last year, just $3m higher than in 2003.


Chinese oil giant CNOOC has asked a key US panel to review its proposed $18.5bn (£10bn) merger with oil and gas producer Unocal.

The bid is politically controversial and the firm hopes a review by the Committee on Foreign Investments in the US (CFIUS) will advance its cause.

CNOOC, which has always said it wanted a review, said its voluntary request was aimed at clearing up doubts.

Some US politicians oppose CNOOC's bid on national security grounds. 


The United Arab Emirates has passed a law tightening a ban on children taking part in camel racing.

Under-18s are not to take part in camel racing "in any form", says a decree signed by the president.

Gulf states have been under fire over the sport, in which young children, many of them trafficked from South Asia, have been trained as jockeys.


A strong performance from the US services sector last month has raised hopes that the economy may be strengthening.

Services businesses, which account for two thirds of US economic activity, showed increased growth in June, the Institute of Supply Management said.

The figures, which were stronger than expected, raised hopes of a strong increase in new jobs during the month.


The Bank of Italy has defended its actions in the cross-border battle for Banca Antonveneta amid criticism that it is biased against foreign investors.

Dutch bank ABN Amro has been locked in a bid tussle with Italian suitor Banca Popolare Italiana to buy Antonveneta.

The Bank of Italy has come under fire for allowing Pop Italiana to raise its stake in Antonveneta to nearly 30%, while delaying similar attempts by ABN.

This has led to an inquiry into Bank of Italy chief inspector Franceso Frasca.

Mr Frasca is being investigated by prosecutors in Rome over possible abuses of office.


Sibneft, the Russian oil firm in which Chelsea football club owner Roman Abramovich owns a majority stake, is to pay a $2.29bn (£1.3bn) dividend.

The payout has triggered speculation that Sibneft could be sold.

Russian newspaper Kommersant said two state-owned firms - gas giant Gazprom and oil firm Rosneft - were interested in buying the company.


Faster-than-expected growth in the manufacturing sector and a surge in consumer confidence in June are boosting hopes of US economic strength.

The Institute for Supply Management's (ISM) manufacturing index surged to 53.8% in June, thanks to rising orders.

Analysts had forecast 51.5% - a figure above 50% indicates growth.


New car sales in the UK fell in June as high interest rates and more expensive petrol dented demand.

According to the Society of Motor Manufacturers and Traders (SMMT), 227,623 new cars were sold in June, 4.8% less than a year earlier.

Another factor that may have deterred buyers and hit supplies was the collapse of MG Rover, the SMMT said.

Ford's Focus remained the best-selling car in June, with Vauxhall's Astra in second place and its Corsa in third.

Total sales in the first six months of 2005 were 1.23m, down almost 6% from a year ago.


UK manufacturing output was flat in May, official figures have shown, despite expectations of a small fall.

The Office for National Statistics (ONS) said factory production was unchanged in May, compared with forecasts for a 0.2% decline.

However, manufacturing output in the three months to May was down 1.9% against the previous three months, the weakest performance since August 2002.

Analysts said the data may put pressure on the Bank of England to cut rates.


Sri Lanka's economic growth has started to recover from the tsunami which hit the island state in December.

Expansion for the year to March was 4.8%, up from the 4.4% recorded three months earlier.

But the central bank warned that the after-effects of the tsunami which killed thousands and devastated tourism and fishing could still depress growth.

It also said instability within the government could pose a threat to continued recovery.

It is predicting growth of 5.3% for 2005, down from 5.4% in 2004 and 5.9% the year before that.


Microsoft is to pay $775m (£438.4m) to computer giant IBM to settle an anti-trust claim.

Under the settlement, the software maker will also give IBM a $75m credit for its computer programs.

Microsoft said the settlement resolves discriminatory pricing and overcharging allegations made by IBM.


Paul Wolfowitz has said action is urgently needed on boosting trade and cutting subsidies if Africa is to meet the UN's Millennium Development Goals.

The World Bank director told a conference in London that the achievement of key targets on poverty reduction required action on trade in addition to increased aid and reduced debt.

He pointed out that Africa's share of global trade has dropped from 3.5% in 1970 to around 1.4% in 2005.


Companies need to work alongside governments to fight poverty in Africa, Prime Minister Tony Blair has told business leaders.

"The private sector is the the engine for growth," Mr Blair said in a videolink to the G8 business summit on Africa in London.

Summit chairman Sir Mark Moody-Stuart said business is committed to promote a "successful and prosperous Africa".

"The business community stands ready to play its full part," Sir Mark said.

Mr Blair used his opening address at the summit, which is held ahead of the main Gleneagles G8 summit, to encourage improved public private partnerships.

Business Action for Africa is already fostering vigorously the private sector engagement needed to create wealth, jobs and the momentum for growth," Mr Blair said.