INTERNATIONAL

 

Sep 05 - 11, 2005

 

1.INTERNATIONAL

2. PAKISTAN

 

KATRINA WILL SCAR US 'FOR YEARS'

US states stricken by Hurricane Katrina will take years to recover, President George W Bush said after he flew over devastated areas on the Gulf coast.
He vowed his cabinet will take over the aid operation for "one of the worst natural disasters" the US had seen.
An extra 10,000 troops are being sent to the worst-hit areas in the states of Louisiana and Mississippi.
New Orleans is to be fully evacuated, amid fears thousands may have died there as flood waters swept the city.

With most of the low-lying city now submerged, its remaining residents have no electricity and are running out of fresh water and food.

Plans have been announced to evacuate tens of thousands of people from New Orleans - including some 20,000 sheltering in its crowded Superdome stadium.

Asked how many had died in the city, Mayor Ray Nagin said "Minimum, hundreds. Most likely, thousands."

BBC correspondent Alastair Leithead says widespread looting and the failure to stop water pouring in from burst embankments have added to the panic in the city, and most people are now desperate to leave.

Hundreds of soldiers and police have been diverted from rescue work to law enforcement duties, amid reports that heavily-armed gangs are ransacking the city.

Louisiana Governor Kathleen Blanco said she was angered to see the crisis bringing out the worst in people.

President Bush's aircraft circled low over the stricken region on Wednesday as it flew him to Washington, ending his month-long break in Texas a few days earlier than scheduled.

As he passed over towns whose rooftops alone remained visible above flood waters, Mr Bush said: "It's devastating."

"It's got to be doubly devastating on the ground."

Later addressing the nation from the White House, the president said the relief effort would initially focus on restoring power, communication and transport links.

OPEC HEAD MOVES TO CALM OIL FEARS

Opec's president has said he will ask for the cartel to raise its output as oil prices surged to new records as hurricane Katrina hit US production.

In the US, crude contracts for October rose almost $5 to $70.80 in electronic trade before ending $1.07 up at $67.20.

Opec head Sheikh Ahmad al-Fahd al-Sabah vowed to call for a 500,000 barrels a day rise in output at its next meeting.

The move was a bid to calm supply fears which have risen as the hurricane shut down production in the Gulf of Mexico.

Kuwaiti oil minister Sheikh Ahmad also made clear the increase he wants will be above the amount Opec supplies to the market - as the cartel usually produces more than its stated limit.

"We are trying to do everything to stabilize the prices. It looks like the prices are not related to the production anymore. They are related to other factors, like geopolitics, the weather, the refining," he told reporters.

Concerns that supply will fail to meet demand along with political uncertainty in key supplier nations have increased fears that prices could breach the $100 a barrel mark.

At least eight refineries - equating to 2.37 million barrels a day of refining capacity - in the path of Katrina in the Gulf shut down or cut their operations by Monday, according to company and government reports.

One report from Mineral Management Services said crude oil production had been cut by about 91%, or 1.37 million barrels.

In an effort to calm supply fears the US government said it was willing to consider loaning crude oil from its emergency stockpiles to American refiners.

"It's not only the suspension of production that's causing concern, it's the fact that we could see potential damage to the platforms, which would cause longer disruptions to production," said Victor Shum, an analyst at Purvin & Gertz.

"It looks like the perfect storm to drive prices up."

SOCGEN ACQUIRES EGYPT'S MIBANK

French bank Societe Generale has bought 69.7% of shares in Misr International Bank(MIBank), giving it overall control of one of Egypt's big four banks.

SocGen outbid French rival BNP Paribas in a deal valuing MIBank at $420m (234m; 345 euros), as SocGen continues its expansion in emerging markets.

"This acquisition will strengthen the growth of our Egyptian business," said a SocGen spokeswoman.

"The enlarged business will be one of the market leaders in the sector."

Last week SocGen, France's second-biggest bank by market value, bought Russian home loans provider Delta Credit for around $100m.

MIBank said shareholders holding 69.7% of shares had agreed to sell their stakes to SocGen's Egyptian unit, National Societe Generale Bank (NSGB) at 43.20 Egyptian pounds ($7.48) a share.

And NSGB has also agreed to buy at least 75%, and up to 100%, of MIBank at the same price.

SURPRISE DROP IN JAPAN PRODUCTION

Japanese industrial output fell by more than expected in July, official figures have shown, but manufacturers remain confident it will rebound.

Official figures showed that production declined by 1.1% in July compared with June. Analysts had been expecting a fall of only 0.5%.

The bigger drop was put down to the effect of higher global oil prices.

Yet in a separate government survey, firms forecast production growth of 2.3% in both August and September.

"Many manufacturers here have turned cautious or they took a wait-and-see stance during the month as spikes in crude oil prices have raised their costs for basic materials," said Akio Yoshino, senior economist at Societe Generale Asset Management.

Mr Yoshino added that while Japan can afford to absorb oil prices at current levels, he feared that a number of manufacturers would be affected if crude costs kept rising.

Other analysts chose to focus on manufacturers' upbeat forecast for August and September.

"The industrial production data is pointing towards an output recovery, other quantitative indicators are suggesting there should be a recovery, and the companies are saying that there is a recovery," said Richard Jerram, chief economist at Macquarie Securities in Japan.

KATRINA THREATENS PETROL PRICES

Oil prices have fallen back from record levels after the US said it will release crude from its emergency stock following Hurricane Katrina.

However, the price of gasoline jumped higher on concerns that refineries will take time to get back to full output.

Analysts have been warning that high petrol prices may deter consumers from spending and slow economic growth.

New York light crude cost $68.60 a barrel in Asian trading, down from the record $70.85.

Gasoline futures jumped 3% to $2.3050 a gallon (3.8 litres).

Hurricane Katrina powered its way across the Gulf of Mexico earlier last week, damaging much of the oil infrastructure that was in its path before coming ashore and killing hundreds of people and devastating built up areas.

PALESTINIAN ASSETS IN US FROZEN

A federal court in the US has frozen all the assets held by the Palestinian Authority (PA) in the country.

The ruling by the court in Rhode Island comes after the authority failed to compensate relatives of a Jewish couple shot dead by Hamas militants in 1996.

Both the PA and Hamas were ordered to compensate the family, under a US law allowing suits against groups responsible for killing US citizens.

US-CHINA TEXTILE TRADE TALKS FAIL

US and Chinese trade officials will meet again after failing to reach agreement in talks aimed at controlling China's surging clothing exports.

US special textile negotiator David Spooner said in Beijing that "despite our best efforts we were not able to reach a broader agreement."

He said that despite the failure the US "remained optimistic that we can make progress of remaining issues."

The two sides are considering quotas until 2007 on Chinese textile imports.

The talks were taking place as China was embroiled in a wrangle with the European Union, which has led to tonnes of clothing being caught up at customs.

US trade representatives said that the problems with the EU had overshadowed and complicated their negotiations.

The US is considering tougher trade restrictions on imports from China than those already imposed by the EU.

APPLE ITUNES PHONE

Apple is poised to unveil a mobile phone that plays music just like its best-selling iPod.

Made by Motorola the handset will have Apple iTunes onboard and will be available via the US Cingular phone service.

The news was broken by analyst Roger Entner who said he had been briefed about the device and the partners producing it.

GERMAN JOBLESS TOTAL FALLS AGAIN

German unemployment has fallen for a fifth month, giving the government some good news ahead of a general election.

The number of Germans out of work fell by 12,000 to 4.796 million in August, the Federal Labour Office said. The unemployment rate was steady at 11.6%.

France's jobless rate declined to 9.9% in July as the number of people looking for work dropped by 25,600 to 2.42 million.

CHINA'S BIGGEST BANK SELLS STAKE

China's biggest lender, Industrial and Commercial Bank of China (ICBC), is selling a 10% stake to Goldman Sachs, Allianz and American Express.

The deal, said to be worth more than $3bn (1.7bn), is just the latest example of Western financial houses investing in Chinese banks.

Bank of America and Royal Bank of Scotland are two other firms who have recently bought into Chinese lenders.

China's banks are attractive due to the strong growth of the Chinese economy.

Overseas banks are also being wooed by the growing number of Chinese financial houses seeking to float on Western stock exchanges, which can offer a quick return on investments.

In return, the Chinese banks benefit from additional capital and improved management.

Analysts estimate Goldman Sach's stake in ICBC to be worth about $1.6bn, with Allianz on $1bn, and American Express between $200m and $300m.

Two weeks ago the Royal Bank of Scotland announced it was investing $1.6bn to lead a consortium buying a 10% stake in Bank of China for $3.1bn.

LOGICACMG PROFIT

Profits at computer services firm LogicaCMG have beaten forecasts, thanks to a surge in the amount of work firms are outsourcing.

Pre-tax profits surged by 46% to 37.7m ($67.2m) in the first half of 2005.

KATRINA DAMAGE 'COULD TOP $25BN'

Hurricane Katrina could cost insurers as much as $25bn (14bn), experts say, although the financial impact may be less severe than first thought.

Katrina has left a trail of destruction in its wake, with hundreds feared dead and a million homes left without power.

It has caused millions of dollars worth of damage in Louisiana and Mississippi.

Predictions of the final cost to insurers range from $9bn to $25bn, making it potentially more costly than the 2001 World Trader Center attacks.

Insurers say it could take weeks before they get a firm idea exactly how much Katrina could cost them given that large areas ravaged by the hurricane are still under water.

Much will depend on the underwater damage to ports and seaways, according to Peter Zeihan of Stratfor, an economic and political consultancy based in Austin, Texas.

SIGNET

A strong sales performance in the US helped jeweller Signet overcome mounting losses in the UK.

The world's largest speciality jewellery retailer said profits rose to 52.1m ($93.6m) in the six months to the end of July, from 50m a year ago.

US ECONOMIC GROWTH REVISED LOWER

The US economy grew at an annual rate of 3.3% in the April to June quarter, less than initial estimates but nonetheless a solid performance.

Despite large rises in energy prices the new reading showed only modestly less robust growth than the initial estimate of 3.4%.

The new figure reflected less brisk spending from consumer and businesses, the US Commerce Department said.

In the first quarter of the year, US growth was stronger at 3.8%.

The main reason behind the slowing of growth in the second quarter was that businesses were working off excess supplies of goods, analysts said.

However, growth is likely to bounce back in the third-quarter as stocks are replenished.

US POVERTY RATE ON RISE

The number of people classed as poor in the US has increased - despite strong economic growth, say official figures.

An extra 1.1 million Americans dropped below the poverty line last year, according to the US Census Bureau.

There were 37 million people living in poverty in 2004, up 12.7% from the previous year.

EU MOVES TO END TEXTILE ROW

The European Union's trade chief has begun moves to free up Chinese garments held at EU ports in a row over quotas.

As he began talks with member states, Trade Commissioner Peter Mandelson vowed to do everything in his power to end the deadlock.