"I welcome China's announcement today that it
is adopting a more flexible exchange rate regime," said US
Treasury Secretary John Snow in a statement.
"As we have said, reform of China's currency
regime is important for China and the international financial
Mr Snow said the US would watch China's
implementation of its new system, which will see the yuan float
against a basket of currencies, rather than linking it at a fixed rate
to the US dollar.
China's currency had been pegged at 8.28 against
the dollar, but the new move effectively strengthens it by 2.1%, to
8.11 to the dollar.
"The Chinese have now put in place a system to
allow their currency to move in tune with the global economy," Mr
Meanwhile the International Monetary Fund (IMF)
said it was ready to "work with the authorities on the continuing
evolution for the exchange rate system".
After the announcement the euro came under pressure
from a rallying Japanese yen, which rallied sharply across the board -
including against the US dollar.
Japanese officials welcomed the yuan's revaluation,
saying it would benefit both the economies of China and Japan.
MARKETS SHUDDER AFTER NEW BLASTS
The London stock market managed to close higher
despite a brief tumble in response to a series of incidents on the
London transport system.
The FTSE 100 index fell about 50 points as news of
the incidents filtered through, before recovering to end the day 6.4
points higher at 5,221.6.
Stock markets had feared a repeat of the deadly
bomb attacks that hit London exactly two weeks ago.
The fact that no major injuries were reported
helped markets bounce back.
Analysts said the Footsie had been "amazingly
"There is always going to be uncertainty in
the first few minutes but the market has proved resilient," said
Simon Buckingham at stockbroker Gerrard.
In New York, however, the Dow Jones index fell 60
points to 10,629 towards mid-session.
Traders on Wall Street said unease over the
possibility of new terrorist attacks in London had overshadowed
positive news of China's decision to revalue its yuan currency.
European shares were also briefly hit by the news
of the incidents before recovering in line with the London market.
The Dax index in Frankfurt closed 45.37 points
higher at 4,829.87, while the Cac-40 index in Paris closed 7.27 points
higher at 4,425.66.
CHINA'S ECONOMY KEEPS ON MOTORING
China's economy has grown more quickly than
expected in the first six months of 2005 despite efforts by the
government to put the brakes on.
The National Bureau of Statistics said the economy
grew 9.5% from a year earlier in the first half, more than the 9.3%
figure expected by analysts.
Total gross domestic product (GDP) between January
and June reached 6.7 trillion yuan (£466bn; $811bn).
Exports and investment in construction and factory
equipment drove growth.
"Fairly good overall economic performance was
recorded in the first half of this year," the statistical office
said, adding that "China's high rate of bank savings, investment,
robust market demand and abundant labour forces" helped to
In the six months through June, investment in fixed
assets climbed by 25% to 3.29 trillion yuan. The statistical office
called the rebound in investment "unreasonable".
UK FINANCIAL EXPORTS HIT RECORD
The value of UK financial services exports such as
insurance broking and investment banking hit a record $19bn in 2004, a
study has shown.
The global stock market recovery lifted sales in
the City of London and exports grew by 9%, research firm International
Financial Services London said.
Insurance was the largest foreign earner, with
exports totalling £6.3bn.
The UK enjoyed a surplus in financial services
trade with every major EU economy as well as the US and Japan.
2004 was a buoyant year for finance firms in London
and the rest of the UK, according to data compiled by International
Net exports of financial services increased to
£19.03bn from £17.48bn in 2003 and were 40% higher than in 2000.
The recovery in European and US stock markets
boosted the income of investment banks and fund managers while the
rise in trade of specialist financial instruments such as hedge funds
COMPUTER DEMAND BOOSTS MICROSOFT
Strong demand for laptops, personal computers and
servers helped push up fourth-quarter profits at Microsoft, the
The globe's largest software maker said net profits
were $3.70bn (£2.11bn) for the financial period ending 30 June. That
was compared to $2.69bn (£1.54bn) in the same period in 2004.
RICE SEEKS TO SHORE UP GAZA PLAN
US Secretary of State Condoleezza Rice had gone to
the Middle-East to push for Israeli-Palestinian co-operation over
Israel's planned Gaza pullout.
She was due to meet Israeli Prime Minister Ariel
Sharon on Friday last, before holding talks with Palestinian leader
Ms Rice's hastily arranged three-day visit follows
an upsurge in violence.
It comes as Israel has said the August pullout may
be brought forward to avoid further protests by Jewish settlers.
The visit was unlikely to offer anything new, a
But it does show America's commitment to ensure
Israel's withdrawal goes ahead as planned, the report said.
Coca Cola, the Atlanta, Georgia firm said it earned
$1.72bn in the three months to the end of June, compared to $1.58bn in
the same period a year ago.
Ericsson reported a profit of 8.5bn kronor
(£0.63bn; $1.09bn), up from 7.3bn in the same period last year.
US telecom group AT&T said profits for the
three months to June jumped to $307m (£254.5m) from $108m a year
earlier. The surge came as revenues slipped 11.5% during the period to
$6.76bn from $7.64bn during the same period in 2004.
US WARNS AFRICA ON FARM SUBSIDIES
African nations must await a global trade deal
before Washington will cut farm export subsidies, the US has said.
At the G8 summit earlier this month, President Bush
vowed to eventually lift the farm subsidies.
But failure to secure a global deal at the World
Trade Organisation meeting in December could see the subsidies
extended for years, trade chiefs said.
They were addressing member countries of the
African Growth and Opportunity Act (Agoa) at a forum in Senegal.
The forum, involving workshops and networking
events, was designed to encourage African countries to sell
efficiently in the US marketplace.
African officials had been pushing for a timetable
for the ending of farm subsidies at the meeting in Dakar.
GREENSPAN WARNS ON RISING RATES
US rates are likely to go on rising amid
expectations of further solid economic growth, US Federal Reserve
chairman Alan Greenspan has said.
However, he warned three factors could pose a risk
to growth - rising wage costs, energy prices and house prices.
"Keeping growth sustained and inflation down
will require the Fed to continue to remove monetary
accommodation," he said in testimony to Congress.
US rates have risen from 1% to 3.25% in the past
year to help control growth.
In its latest forecast the Fed said it expected the
economy to grow by 3.5% - down slightly from its estimate of 3.75% to
4% made in February.
HONG KONG PROPERTY SALE BACK ON
The world's largest property privatisation has been
given the green light after a Hong Kong court dismissed a legal case
brought by a pensioner.
Lo Siu Lan, a 67-year-old living on benefits,
wanted the Hong Kong Housing Authority to halt a $3bn (£1.7bn) sale
of shops and car parks.
Her legal action argued that the assets were
undervalued and rents for public housing tenants would rise after
sale. The government said it would now press ahead with the
BARCLAYS MOVES TECH JOBS TO INDIA
Barclays is to move its in-house technical support
centre from Cheshire, north England to India, in a move which could
see many staff lose their jobs.
A total of 140 workers are affected by the move,
but Barclays says it will try to redeploy as many as possible within
the firm before making any job cuts.
BUDGET WOES DEEPEN FOR CHANCELLOR
Government borrowing in the UK has risen to its
highest June level to date, putting more pressure on the chancellor's
The public sector net cash requirement was
£12.3bn, the highest figure for that month since records began in
The figures come a day after Chancellor Gordon
Brown announced changes in the way he will measure the budget deficit.
And they indicate that the chancellor may have a tough time meeting
his budget forecasts for the year.
The current account budget deficit of £4.7bn was
£1.2bn higher than the deficit in June 2004, while the public sector
net borrowing figure of £5.9bn (the government's preferred measure)
was £1.5bn higher on the year.
BANK VOTE POINTS TO UK RATE CUT
A cut in UK interest rates in August now appears
more likely after the Bank of England voted to freeze rates at 4.75%
this month by only a single vote.
Growth and consumer spending worries prompted four
members of the Bank's rate-setting body to vote for a cut.
However, the monetary policy committee (MPC)
minutes show that the other members argued it was still unclear how
severe the consumer slowdown was.
EUROPE MOVING IN 'R&D SLOW LANE'
The stagnating state of science and technology
investment in the European Union is laid bare by new statistics.
The figures show the bloc devoted just 1.93% of its
wealth (GDP) in 2003 to this important area - compared with 2.59% in
the US and 3.15% in Japan.
Some emerging Asian countries, such as China, are
now increasing their R&D investment to a rate where they will soon
catch and overtake Europe.
One factor in the stumbling performance is a
slow-down in business R&D funding.
Europe is now on track to miss the so-called Lisbon
objective of boosting its spend to 3% of GDP by 2010.
"We must heed this wake-up call," EU
research commissioner Janez Potocnik said at a media conference in
"If the current trends continue, Europe will
lose the opportunity to become a leading global knowledge-based
CHINA PLANS STEEL INDUSTRY REVAMP
China is planning a major overhaul of its steel
industry as it tries to meet domestic demand and cut pollution.
By 2010, China wants to have two major domestic
firms with an annual capacity of 30 million tonnes each, with a
limited number of smaller producers.
Currently China has more than 800 steel firms, with
only the biggest, Baosteel, coming close to the required output.
China plans to force mergers and closures after
supply outstripped demand and prompted a price slump.
The country is the world's biggest producer and
consumer of steel and the dip in demand has reverberated around global
Firms including Mittal Steel, Arcelor and
Thyssenkrupp have all announced production cuts. Steel mills sprung up
to meet a surge in demand as China's economy boomed.
FRANCE SET FOR MOTORWAY SELL-OFF
The French government is preparing to sell its
controlling stakes in France's three main motorway operators.
The sale would happen in the next few days,
triggering full takeover bids for the firms, La Tribune newspaper
The government said last month that it planned to
sell its stakes in the firms over the next eight to 10 months, raising
11bn euros (£7.6bn; $13.4bn).
Paris needs the cash to help cut France's public
debt below the eurozone target of 3% of gross domestic product.
La Tribune added the first invitation to tender
could be made ahead of a forthcoming initial public offering for
shares in French utility giant Electricite de France.
The three motorway operators are Autoroutes du Sud
de la France (ASF), Societe des Autoroutes du Nord et de l'Est de la
France (Sanef) and Autoroutes Paris-Rhin-Rhone (APR).
ASF could be taken over by French construction
giant Vinci, which already holds a 23% stake in the firm, La Tribune