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  DEPARTMENTS
 

IN THE NEWS
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  INTERNATIONAL

Dec 05 - 11, 2005

FAST US GROWTH OUTSTRIPS ESTIMATE

US economic growth accelerated to an annual rate of 4.3% in the three months from July to September, according to revised Commerce Department figures.

In its first estimate, the department had said quarterly growth was 3.8%.

There had been fears that the cost of rebuilding after hurricanes Katrina and Rita, coupled with record oil prices, would slam the brakes on growth.

Separate figures from the US Federal Reserve showed that US economic activity increased during November.

"Consumer prices remained stable or experienced generally modest increases," the Fed said in its latest 'beige book' report on US economic conditions.

"Most districts reported increasing input prices, particularly of energy-related products, construction and raw materials, and transportation."

The upward revision of gross domestic product (GDP) was aided by higher spending on non-durable goods, in homes, on business equipment and on software, the Commerce Department said.

"This is a pretty good growth rate," said Patrick Fearon, senior economist at AG Edwards.

"It looks as if investment spending in the third quarter was a lot stronger than previously thought, both in terms of corporate investment and housing investment."

He said he thought that growth would slow in the fourth quarter as the housing sector softened - leading, in turn, to reduced consumer spending.

The Federal Reserve said a number of districts had reported a "slowing or cooling" in real estate markets during November.

The core price index, which excludes food and energy costs, was up just 1.2%, its lowest in two years, the Commerce Department said.

JAPAN'S NIKKEI HITS 15,000 MARK

Japan's Nikkei share index has touched the 15,000 mark for the first time in five years, as strong demand for domestic shares continued.

Investors have been inspired by signs of recovery in the economy, and a rally in US tech stocks has also helped.

Recent data shows industrial output up, improving production and household spending, and more people seeking work.

The Nikkei briefly rose as high as 15,013.24, before it slipped back to 14,872 at the end of trading.

Japan's economy has bounced back this year as a pick-up in consumer spending and capital investment has made up for a slowdown in exports, particularly to China.

This week the Paris-based Organization for Economic Cooperation and Development (OECD) upgraded Japan's economic outlook, saying its domestic demand is recovering, along with corporate profits and employment.

Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities, said the market was supported by hopes the Nikkei could rise further on optimism about continued economic recovery.

The OECD expects Japan's economy to grow at 2.4% this year and 2% in 2006, up from previous forecasts for 1.5% growth in 2005 and 1.7% next year.

Industrial production rose 0.6% in October from a month earlier. Analysts are optimistic about the outlook for output, after a period in which companies seemed to have been selling off stock rather than boosting production.

And there are signs that foreign demand is picking up after a slowdown, as is the domestic appetite for consumer spending, as wages and job prospects improve.

STRONG GROWTH FOR INDIAN ECONOMY

The Indian economy grew at 8% in the six months to September compared with a year ago, meeting the target for growth set by the finance ministry.

The economy was boosted by growth in the tourism and financial sectors, and a strong manufacturing performance.

High oil prices and sluggish exports failed to dampen the figures.

The data comes after Prime Minister Manmohan Singh said the country should aim to speed growth to 10% in a few years - if certain criteria were met.

For this to happen, the savings rate needed to increase, agricultural output had to make a "quantum leap" and infrastructure had to be substantially upgraded, Mr Singh said.

Government data showed manufacturing growth averaging 10.2% in the six month period, while services continued their strong performance.

Financial and real estate services grew at 9.1% in the first six months of the financial year, compared with the same period a year ago.

EUROZONE ECONOMY HEADS FOR MODEST GROWTH: OECD

The eurozone is heading for economic growth of 1.4 per cent this year, the OECD said, while warning the European Central Bank against raising interest rates.

The Organization for Economic Cooperation and Development said that although the eurozone economy was poised to grow further, the ECB should hold off on raising the cost of borrowing until the autumn of 2006, contradicting central bank chief Jean-Claude Trichet who has sent clear signals that the bank could announce a rate hike.

Figures given by the OECD in its six-month report pointed to growth this year that is actually less than the 1.8 per cent increase in 2004, but indicated that economic activity should pick up in 2006 with growth of 2.1 per cent.

The body was more upbeat about the eurozone's growth prospects than in its last report in July about the bloc, when it forecast growth would be 1.25 per cent this year and 2.0 per cent next year.

TURKEY EXPECTS $5BN FDI IN '05

Turkey is expecting to attract a record amount of more than $5 billion of direct foreign investment by the end of the year, Economy Minister Ali Babacan said. Speaking in parliament on the 2006 budget, Babacan explained that the value of direct foreign investment had grown from $1.7 billion in 2003 to $2.8 billion in 2004 and $3.7 billion in the first nine months of this year.

BLAIR ATTEMPTS TO BROKER EU DEAL

Tony Blair is embarking on a two-day diplomatic mission to eastern Europe to try to win support for a compromise deal on the 2007-13 EU budget.

The prime minister is due to visit Estonia and Hungary where he will meet leaders of seven new member states.

The UK - which currently holds the EU presidency - is said to be proposing a cut in aid to new members in order to reduce the overall size of the budget.

A budget deal was blocked in June after the UK refused to give up its rebate.

Britain said it would only agree to give up its 4bn annual rebate if "distortions" caused by the Common Agricultural Policy were eradicated.

But France, Europe's biggest recipient of CAP funds, has refused to budge over the issue. The suspicion is this is all to make any sacrifice of the British rebate more palatable

UN LAUNCHES BIGGEST ANNUAL APPEAL

The United Nations has launched an appeal for a record $4.7bn (2.7bn) to help more than 30 million victims of war, famine and natural disaster.

The amount is equal to global military spending in 48 hours, UN emergency relief co-ordinator Jan Egeland says.

"We can afford to clothe, to feed, to care for all of the children of this world," he told the BBC's World Today.

Ten rich countries supply 90% of UN humanitarian aid, he said, adding that oil-rich countries could give more.

"The 10 top donors are more or less the same now as a few years ago," he said.

"There are growing economies on many continents which should become bigger donors. We expect the oil-rich countries to give more."

UN Secretary-General Kofi Annan said the international community had the capacity to pay, but now had to display the will to do so. It's not going well in Darfur at all... We're hanging in there by our fingernails

EU SEES UKRAINE AS MARKET ECONOMY

The European Union has granted Ukraine market economy status - seen as a key step to boost trade ties.

"Market economy status has now been granted," UK Prime Minister Tony Blair said in the Ukrainian capital Kiev.

Mr Blair and other EU leaders also backed Ukraine's bid to join the World Trade Organization.

This is the first summit between the EU and Ukraine since the Orange Revolution a year ago, which brought pro-Western President Viktor Yushchenko to power.

Mr Blair said that despite turbulence, reform in Ukraine was on course.

He said he hoped the Ukrainian people were in no doubt about the difference the last year had made in the way in which Ukraine was perceived in the world.

Mr Yushchenko described market economy status as a "huge step" for Ukraine.

WORLD BANK BACKS $100M IRAQ LOAN

The World Bank has approved a $100m (57.8m) loan to Iraq to help reduce overcrowding in the country's schools.

The loan, the international lender's first to Iraq in more than 30 years, will finance the building of some 82 primary and secondary schools.

It will also be used to support Iraqi government educational reforms in the worn-torn country.

The World Bank evacuated its staff from Iraq in 2003 after the United Nations headquarters were bombed in Baghdad.

The World Bank said Iraq's educational system, once considered to be among the best in the Middle East, had "deteriorated over the last 20 years".

P&O AGREES BID FROM DUBAI PORTS

Ports and ferries group P&O has agreed to be bought by Dubai Ports World in a takeover deal worth 3.3bn ($5.7bn).

P&O said in a statement that Dubai Ports (DP World) had offered 443 pence per share in cash for the company.

Last month, P&O announced that it had been approached by a potential bidder and speculation mounted that Dubai Ports was behind the talks.

The takeover signals the end of 168 years of independence for the world's fourth-largest ports group.

DP World, owned by the Dubai government, said it planned to keep P&O's headquarters in London and chief executive Robert Woods would continue to head the business.

FRENCH MOBILE PHONE FIRMS FINED

Three of France's leading mobile phone firms have been fined a total of 534m euros (364m; $630m) after being deemed guilty of market collusion.

France's Competition Council concluded that Orange, SFR and Bouygues Telecom shared commercial information between themselves, distorting competition.

Orange France has been fined 256m euros while SFR and Bouygues have been handed 220m and 58m fines respectively.

The three firms have denied that they colluded together.

The fine is the largest single penalty levied by the competition watchdog.

In 2000, it fined eight banks a total of 174m euros.

DAILY MAIL LIFTED BY PROFIT RISE

Shares in Daily Mail & General Trust have leapt by 11% after the newspaper publisher reported a jump in profits.

The firm, which owns the Daily Mail and Mail on Sunday, said its pre-tax profit for the year to 2 October was 162.9m ($282m), up 31% on the previous year.

B&Q PROFIT SLUMP HITS KINGFISHER

Profits at UK DIY chain B&Q have more than halved after it cut prices during autumn in a bid to shift stock.

Retail profit at B&Q was 50.3m for the 13 weeks to 29 October, down from 106.7m in the same period last year.

HURRICANES TO HIT LLOYD'S PROFIT

Insurance market Lloyd's of London has said its chances of making a profit in 2005 are small following the costs of US hurricanes Katrina, Rita and Wilma.

Lloyd's said it estimated the net loss from Katrina would be 1.9bn ($3.4bn), up from a previous estimate of 1.4bn.

GOLD SURGES TO HIGHEST SINCE 1983

Gold prices have surged past the $500-an-ounce mark, and more gains are predicted as investors look to protect themselves against inflation fears.

Gold hit $502.70 in London, its highest level since February 1983.

Other commodity prices also have been climbing, and platinum topped the $1,000-an-ounce level.

Demand from jewellery makers is helping to boost prices, as is speculation that some central banks want to cut US dollar holdings and boost gold stores.

After hitting the high, gold fell back and stood at $496.40 an ounce in afternoon trading in London.

CHINA TO MAINTAIN 'RAPID GROWTH'

China's rapid economic expansion is set to continue with annual growth above 9%, the Organisation for Economic Co-operation and Development has said.

In a key report, the OECD said it believed domestic demand would improve in 2006-7 while China would continue to increase its share of global trade.

But it advised China to further loosen its exchange rate to curb its current account surplus and quell inflation.

China has been criticised for keeping the yuan's value artificially low.

China is likely to continue to increase its share of world trade, albeit less rapidly than in 2005

The Chinese government let the yuan appreciate slightly against the US dollar early this year but is facing widespread calls for further action to tackle growing international trade imbalances.

SHELL'S NEW NIGERIAN FIELD ON TAP

Anglo-Dutch giant Shell says it has begun pumping oil from a huge new field off the Nigerian coast, boosting the country's total production by 10%.

Production had begun at the Bonga deepwater oil and gas field, and will produce 225,000 barrels per day.

However, delays and cost overruns mean the development cost $3.6bn (2.1bn), up from original estimates of $2.7bn.

Shell's partners in Bonga include France's Total, US major ExxonMobil and Italy's Eni.

 
 

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