Aug 22 - 28, 2005






US negotiators say they are close to a textile trade deal with China, despite two days of talks ending without agreement between the countries.
Officials were optimistic that a deal could be reached after one more session of talks due in China later this month.
Chinese clothing exports to the US are limited under special World Trade Organization (WTO) rules amid claims they are damaging the US textile trade.
However, retailers warn tough new limits may push up clothing costs.



Since a three-decades-old global quota system expired on 1 January, US figures show Chinese textile imports to North America have surged 54% year-on-year.

In response, the Bush administration has blocked billions of dollars' worth of shirts, trousers and other clothing under a special textile "safeguard" provision that China accepted when it joined the World Trade Organization (WTO) in 2001.

We hope we can resolve this in one more meeting, but we will take however long it takes

David Spooner, the chief US textile trade negotiator, said both sides were keen to reach an agreement following the end of the talks in San Francisco on Wednesday.

"We hope we can resolve this in one more meeting, but we will take however long it takes," he said. "Both sides say they'd rather take a little more time to reach a good deal rather than a hasty deal."

Mr Spooner said there had been no agreement as yet on the length of any deal, or the possible limits on any category of imports.

'Climate of uncertainty'

The two days of talks began as part of consultations required under WTO rules if a nation has imposed safeguard measures.

Mr Spooner said the two sides were trying to ease the "climate of uncertainty" being felt by US manufacturers, importers and retailers, and by Chinese exporters.


Oil exports to the US could stop amid growing tensions between the two countries, Venezuelan President Hugo Chavez has said.

He described recent US government actions as "aggressive" in a speech at a youth festival in Caracas.

As a result, Venezuelan oil "instead of going to the United States, could go elsewhere," he said.

Venezuela exports about 1.3 million barrels a day to the US and is the world's fifth largest oil producer.

Tensions between the two countries have escalated since President Chavez accused the US Drug Enforcement Administration (DEA) of spying on his government.

Washington denies the charge and has accused Caracas of failing to co-operate in the fight against drug-trafficking.

On Friday the Venezuelan government withdrew diplomatic immunity from DEA agents working in the country in response to a US decision to revoke the visas of six Venezuelan officials based in Washington.

Venezuela is an important transport route for cocaine from neighbouring Colombia, which produces 80% of the world's supply.


Religious rulings or fatwas from various sheikhs, at times contradicting each other, with regard to Shariah compliance status of various instruments are creating confusion in Saudi financial markets, putting potential investors in a fix.

Since most business dealings in banks are using systems that do not comply with Islamic law, potential investors, seeking Shariah compliant investment instruments, look for fatwas from religious clerics or at least get their opinions before investing money in stocks or banks, Al-Riyadh newspaper reported.

Most bank experts say the difficulty comes when the activities of companies and local banks are defined. Companies may get loans from foreign banks one day and the next day from an Islamic bank.

The next part of the problem was that some local sheikhs inexperienced in financial matters issue fatwas banning investment in some companies and permitting investment in other companies. This can have the effect of putting the brakes on private sector economic growth.


European clothing retailers face a further headache after their quota of Chinese-made women's blouses hit an EU import ceiling last week. Retailers and some governments have already expressed concern after Chinese-made sweaters and trousers were impounded at ports and warehouses as quotas for those categories were exceeded in recent weeks.

The quotas were agreed between Brussels and Beijing in June as a way to slow soaring Chinese clothing imports entering the EU. But the quotas were quickly reached as importers made huge orders ahead of the autumn-winter season.

Data from an EU imports database showed 100 percent of a 2005 quota of nearly 24.8 million Chinese blouses had been cleared for entry into the EU as of Thursday last. Two further categories - including T-shirts and brassieres - are also close to reaching 100 per cent of their 2005 quotas.


The dollar got a boost Thursday last from a surge in demand after US traders came into the market, with hedge funds among those said to be buying. The euro fell to 1.2176 dollars in late European trading from 1.2271 late Wednesday in New York. The dollar rose to 110.53 yen from 109.92 Wednesday.

The dollar's late rise pushed the euro convincingly under the 1.22-dollar level and the pound under 1.80 dollars.

"It's hard to put the finger on it but some hedge funds are buying," said Paul Bednarczyk at 4CAST.


Australia and China will hold a second round of talks in Beijing next week on a "once in a lifetime opportunity" for a free trade agreement, Trade Minister Mark Vaile said.

Australian negotiators will outline barriers faced by Australian industry in doing business with China, Mr Vaile said, as they seek a deal that could be worth more than $20 billion to the local economy.

The talks from Monday to Wednesday would follow an introductory meeting in Sydney in May and will be the first opportunity to start detailed discussions with the Chinese and the possible structure of a bilateral free trade agreement (FTA), he said.

The Australian negotiating team has consulted widely with business and other groups over the past four months and a range of interests and concerns had also been raised in more than 260 written public submissions.


The Geneva marketing arm of Brazil's Coimex Group this week sold 38,000 tons of very high polarization (VHP) Brazilian raw sugar for prompt shipment to southern India, trade sources were quoted as saying.

They said the price of the deal was $255-260 per ton Cost and Freight and Free Out (CFFO). Coimex completed other sales to Indian buyers earlier this year, the sources said.


Shares in Google have dropped after the internet search engine announced plans to sell another 14 million shares to raise $4bn (2.2bn; 3.3bn euros).

Shares in Google lost $5.09, or 1.79%, to close at $279.75 on Thursday last.


Bank of China is known as a lender with an international outlook Royal Bank of Scotland is to lead a $3.1bn (1.7bn) investment in Bank of China, giving it control of a 10% stake in China's second-biggest lender.

RBS said it would pump $1.6bn into the deal, which it will head on behalf of co-investors Merrill Lynch and Hong Kong billionaire Li Ka-shing.

Foreign investors are increasingly keen to gain a foothold in China's vast banking sector. The market alone is estimated to hold $1.5 trillion in personal savings.


The Bank of England's decision to cut interest rates to 4.5% was finely balanced, minutes of the meeting show.

The Monetary Policy Committee (MPC) voted by just five to four to cut rates by a quarter percentage point.

Bank of England Governor Mervyn King was one of the four against the cut, and those backing a drop felt the move could be reversed if needed in future.

The August cut had been widely expected, but the minutes suggest a further drop could be some way off.

According to notes of the MPC's discussions Mr King and fellow members Rachel Lomax, Andrew Large and Paul Tucker believed it was too early to conclude that inflationary pressures had eased.

Their beliefs seem somewhat borne out by inflation data released by the Office for National Statistics (ONS). In practical terms this means rates are on hold for quite some time.




Australia's biggest airline Qantas has reported an 18% jump in profits, but warned that the soaring cost of fuel will hit its future earnings.

Qantas said its full-year net profits rose to 763.6m Australian dollars (322m; $581m), from A$648m last year.


Wal-Mart's Japanese affiliate, Seiyu, has reported growing losses and revealed that it may use Wal-Mart branding for new store openings.

Japan's fourth-largest supermarket chain said first-half losses were 10.59bn yen ($96m; 53m), compared with a 2.88bn yen loss a year ago.

The US firm has the option of raising its stake in Seiyu - key to its Japan strategy - to 50.1% by the end of 2005.


Morrisons has announced the sale of nine former Safeway stores to rival supermarket group Sainsbury's.

They are the latest of 196 such outlets that Bradford-based Morrisons has now either sold or closed since it took over Safeway for 3bn in March 2004.

The stores going to Sainsbury's are mainly in town centre locations. Morrisons said they did not fit in with its business portfolio. The deal remains subject to approval by the Office of Fair Trading.


The cost of landline telephone calls could fall by up to 400m over the next four years, thanks to price changes being put in place by regulator Ofcom.

From 1 October, Ofcom is introducing new limits to the price BT charges to carry calls and dial-up internet between the UK's telephone exchanges.

Ofcom says that together with effective competition in the sector, the price savings could take place by 2008. It hopes that telephone providers will pass the savings onto consumers.


Iraq faces "daunting challenges" as it struggles to rebuild its battered economy, the International Monetary Fund has warned.

The violent insurgency and political uncertainties pose "major risks" to Iraq's economic recovery, the IMF said.

In its first review of the country in 25 years, the IMF called for reforms in Iraq's oil and finance industries.

The IMF report came as Iraqi lawmakers failed to meet a deadline to agree a new constitution for the country.

Iraq's parliament agreed last week to extend the deadline until 22 August to enable the country's disparate sides to reach agreement.

Directors at the Washington-based IMF commended Iraq's authorities for "maintaining a degree of macroeconomic stability under extremely difficult circumstances".


Transport prices drove UK consumer price inflation (CPI) to 2.3% in July from 2% in June, Office for National Statistics (ONS) figures show.

Surging crude prices drove fuel higher, taking CPI to its highest level since records began in 1997, the ONS added.

The stronger-than-expected increase is likely to reduce the chances of another cut in rates, experts said.

Headline retail price inflation (RPI) which includes housing costs, remained at 2.9% for a second month.


Fixed rate mortgages are at their most popular for nearly six years.

Figures from the Council of Mortgage Lenders (CML) show that in July fixed rate deals accounted for 50% of all new home loans, up from 47% in June.

Other figures from the CML showed that gross mortgage lending fell by 2% in July to 25bn, leaving it 13% lower than a year ago.

"The housing market has started to stabilise at a new lower level," said CML director general Michael Coogan.


Singapore's central bank has fined the owner of China Aviation Oil (CAO) for selling shares in the crisis-hit firm a month before its collapse.

Beijing's China Aviation Oil Holding Company was ordered to pay 8m Singaporean dollars ($4.8m; 2.7m).

Singapore-based CAO collapsed last year after running up losses of $550m betting on the future price of oil.

The trading scandal was the biggest to hit Singapore since the $1.2bn collapse of Barings Bank in 1995.

CAO is China's main supplier of jet fuel and is owned by state-run China Aviation Oil Holding Company.

China Aviation Oil Holding Company sold a 15% stake in CAO on 20 October, 2004.


US wholesale prices are rising at the fastest rate in nine months, fuelling concerns that inflation is returning.

The cause is rapidly increasing energy prices, with the price of gasoline at the pump now averaging $2.55 a gallon.

Prices paid by wholesalers gained 1% in July, and are now at an annual rate of 4.8%, the Labor Department said.

The price of energy rose by 4.4% in the month, with gasoline costs up by 10.4%. Analysts are warning consumers could face even higher prices at the pumps.

The news comes a day after consumer prices jumped sharply.


A sharp surge in energy prices has pushed up US inflation after gasoline prices jumped by 3.8% in July.

As a result, the US consumer price index rose by 0.5% in July, and the year-on-year inflation rate was 3.5%.

However, so-called core inflation, which excludes food and energy, rose by only 0.1% monthly and 2.2% annually.

Prices of new cars fell by 1%, the biggest drop since 1975. The price discounts boosted car sales by 6.7%, the sharpest rise since October 2001.