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US consumer confidence up
Consumers' confidence in the state of the US economy is at its highest for five months and they are optimistic about 2005, an influential survey says.
The feel-good factor among US consumers rose in December for the first time since July according to new data. The Conference Board survey of 5,000 households pointed to renewed optimism about job creation and economic growth. US retailers have reported strong sales over the past 10 days after a slow start to the crucial festive season.
According to figures also released on Tuesday, sales in shopping malls in the week to 25 December were 4.3% higher than in 2003 following a last minute rush. Wal-Mart, the largest US retailer, has said its December sales are expected to be better than previously forecast because of strong post-Christmas sales.
It is expecting annual sales growth of between 1% and 3% for the month. Consumer confidence figures are considered a key economic indicator because consumer spending accounts for about two thirds of all economic activity in the United States. "The continuing economic expansion, combined with job growth, has consumers ending this year on a high note," said Lynn Franco, director of the Conference Board's consumer research centre. "And consumers' outlook suggests that the economy will continue to expand in the first half of next year." The overall US economy has performed strongly in recent months, prompting the Federal Reserve to increase interest rates five times since June.
| Wal-Mart, the largest US retailer, has said its December sales are expected to be better than previously forecast because of strong post-Christmas sales."The continuing economic expansion, combined with job growth, has consumers ending this year on a high note," said Lynn Franco, director of the Conference Board's consumer research centre.The feel-good factor among US consumers rose in December for the first time since July according to new data.Consumers' confidence in the state of the US economy is at its highest for five months and they are optimistic about 2005, an influential survey says.US retailers have reported strong sales over the past 10 days after a slow start to the crucial festive season. |
The 'ticking budget' facing the US
The budget proposals laid out by the administration of US President George W Bush are highly controversial. The Washington-based Economic Policy Institute, which tends to be critical of the President, looks at possible fault lines. US politicians and citizens of all political persuasions are in for a dose of shock therapy. Without major changes in current policies and political prejudices, the federal budget simply cannot hold together. News coverage of the Bush budget will be dominated by debates about spending cuts, but the fact is these will be large cuts in small programs. From the standpoint of the big fiscal trends, the cuts are gratuitous and the big budget train wreck is yet to come. Under direct threat will be the federal government's ability to make good on its debts to the Social Security Trust Fund. As soon as 2018, the fund will begin to require some cash returns on its bond holdings in order to finance all promised benefits.
The trigger for the coming shock will be rising federal debt, which will grow in 10 years, by conservative estimates, to more than half the nation's total annual output.
This upward trend will force increased borrowing by the federal government, putting upward pressure on interest rates faced by consumers and business. Even now, a growing share of US borrowing is from abroad. The US Government cannot finance its operations without heavy borrowing from the central banks of Japan and China, among other nations. This does not bode well for US influence in the world. The decline of the dollar is a warning sign that current economic trends cannot continue. The dollar is already sinking. Before too long, credit markets are likely to react, and interest rates will creep upwards. That will be the shock.
Interest-sensitive industries will feel pain immediately - sectors such as housing, automobiles, other consumer durables, agriculture, and small business. Some will recall the news footage of angry farmers driving their heavy equipment around the US Capitol in the late 1970s. There will be no need for constitutional amendments to balance the budget. The public outcry will force Congress to act. Whether it will act wisely is another matter. How did this happen?
By definition, the deficit means too little revenue and too much spending - but this neutral description doesn't adequately capture the current situation. Federal revenues are at 1950s levels, while spending remains where it has been in recent decades - much higher. In addition, the United States has two significant military missions. The Bush administration's chosen remedy is the least feasible one. Reducing domestic spending, or eliminating "waste, fraud and abuse" is toothless because this slice of the budget is too small to solve the problem. Indeed, if Congress were rash enough to balance the budget in this way, there would hardly be any such spending left. Law enforcement, space exploration, environmental clean-up, economic development, the Small Business Administration, housing, veterans' benefits, aid to state and local governments would all but disappear. It's fantasy to think these routine government functions could be slashed. The biggest spending growth areas are defence (including homeland security), and health care for the elderly and the poor. To some extent, increases in these areas are inevitable. The US population is aging, and the nation does face genuine threats in the world. But serious savings can only be found where the big money is. Savings in health care spending that do not come at the expense of health can only be achieved with wholesale reform of the entire system, public and private. Brute force budget cuts or spending caps would ill-serve the nation's elderly and indigent.
On the revenue side, the lion's share of revenue lost to tax cuts enacted since 2000 will have to be replaced.
Some rearranging could hold many people harmless and focus most of the pain on those with relatively high incomes. Finally, blind allegiance to a balanced budget will have to be abandoned. There is no good reason to fixate on it, anyway. Moderate deficits and slowly rising federal debt can be sustained indefinitely. Borrowing for investments in education and infrastructure that pay off in future years makes sense. The sooner we face that reality, the sooner workable reforms can be pursued. First on the list should be tax reform to raise revenue, simplify the tax code, and restore some fairness eroded by the Bush tax cuts. Second should be a dispassionate re-evaluation of the huge increase in defence spending over the past three years, much of it unrelated to Afghanistan, Iraq, or terrorism. Third must be the start of a serious debate on large-scale health care reform. One thing is certain - destroying the budget in order to save it is not going to equip the US economy and government for the challenges of this new century.
| Brute force budget cuts or spending caps would ill-serve the nation's elderly and indigent.News coverage of the Bush budget will be dominated by debates about spending cuts, but the fact is these will be large cuts in small programs.Without major changes in current policies and political prejudices, the federal budget simply cannot hold together.The budget proposals laid out by the administration of US President George W Bush are highly controversial.Federal revenues are at 1950s levels, while spending remains where it has been in recent decades - much higher.Indeed, if Congress were rash enough to balance the budget in this way, there would hardly be any such spending left.The US Government cannot finance its operations without heavy borrowing from the central banks of Japan and China, among other nations.One thing is certain - destroying the budget in order to save it is not going to equip the US economy and government for the challenges of this new century.This upward trend will force increased borrowing by the federal government, putting upward pressure on interest rates faced by consumers and business.Reducing domestic spending, or eliminating "waste, fraud and abuse" is toothless because this slice of the budget is too small to solve the problem.The biggest spending growth areas are defence (including homeland security), and health care for the elderly and the poor.Savings in health care spending that do not come at the expense of health can only be achieved with wholesale reform of the entire system, public and private.Even now, a growing share of US borrowing is from abroad.US politicians and citizens of all political persuasions are in for a dose of shock therapy.Under direct threat will be the federal government's ability to make good on its debts to the Social Security Trust Fund.By definition, the deficit means too little revenue and too much spending - but this neutral description doesn't adequately capture the current situation.The trigger for the coming shock will be rising federal debt, which will grow in 10 years, by conservative estimates, to more than half the nation's total annual output.From the standpoint of the big fiscal trends, the cuts are gratuitous and the big budget train wreck is yet to come.The US population is aging, and the nation does face genuine threats in the world.There will be no need for constitutional amendments to balance the budget. |
Mitsubishi in Peugeot link talks
Trouble-hit Mitsubishi Motors is in talks with French carmaker PSA Peugeot Citroen about a possible alliance.
On Tuesday Mitsubishi, the only major Japanese car firm in the red, confirmed earlier reports of negotiations. But a spokesman refused to comment on speculation that Mitsubishi could end up building cars for PSA and perhaps its Japanese rival Nissan. Mitsubishi has been hit by a recall scandal and the withdrawal of support from shareholder DaimlerChrysler. The US-German firm, once a majority shareholder, decided last April to stop providing financial backing. Mitsubishi's sales have slid 41% in the past year, catalysed by the revelation that the company had systematically been hiding records of faults and then secretly repairing vehicles. Mitsubishi is due to unveil a recovery plan later in January. Analysts said that alliances with other carmakers would be a necessary part of whatever it came up with, not least because its own slow sales have left its manufacturing capacity under-used.
| Trouble-hit Mitsubishi Motors is in talks with French carmaker PSA Peugeot Citroen about a possible alliance.On Tuesday Mitsubishi, the only major Japanese car firm in the red, confirmed earlier reports of negotiations.But a spokesman refused to comment on speculation that Mitsubishi could end up building cars for PSA and perhaps its Japanese rival Nissan.Mitsubishi has been hit by a recall scandal and the withdrawal of support from shareholder DaimlerChrysler. |
BMW reveals new models pipeline
BMW is preparing to enter the market for car-style people carriers, the firm's chief has told BBC News.
Speaking at a BMW event ahead of the Geneva motor show, Helmut Panke predicted demand for such crossover vehicles would soar in Europe. In contrast, he said, the popularity of van-style seven-seat vehicles and traditional saloon cars would fade. "Customers are moving out of the mini-van (and) traditional concepts are not as attractive anymore," he said. "We have decided that BMW will enter the [crossover] segment," he said in the clearest indication yet about the car maker's intentions.
Mr Panke praised the Honda Accura as the "best execution" yet of a crossover vehicle. "We have decided that the BMW brand will enter the segment," he said.
A decision on just how BMW will manage its entry into the new market is due in the first half of 2005. Typically it takes about three years from when a decision is taken before a new model hits the streets, Mr Panke said, implying that a BMW crossover could be on the market by 2008. The coming switch is driven in part by the need for successful carmakers to stay aware of trans-Atlantic differences in the car market, Mr Panke insisted. While in the US drivers tend to prefer sports utility vehicles (SUVs), such as the BMW X5 and its sibling X3, in Europe demand for crossover vehicles is likely to be considerable, Mr Panke said. "There's a growing market here," he said. "We are going to go that way."
| Typically it takes about three years from when a decision is taken before a new model hits the streets, Mr Panke said, implying that a BMW crossover could be on the market by 2008."We have decided that BMW will enter the [crossover] segment," he said in the clearest indication yet about the car maker's intentions."We have decided that the BMW brand will enter the segment," he said.While in the US drivers tend to prefer sports utility vehicles (SUVs), such as the BMW X5 and its sibling X3, in Europe demand for crossover vehicles is likely to be considerable, Mr Panke said."There's a growing market here," he said.Speaking at a BMW event ahead of the Geneva motor show, Helmut Panke predicted demand for such crossover vehicles would soar in Europe. |
World leaders gather to face uncertainty
More than 2,000 business and political leaders from around the globe are arriving in the Swiss mountain resort Davos for the annual World Economic Forum (WEF). For five days, they will discuss issues ranging from China's economic power to Iraq's future after this Sunday's elections. UK Prime Minister Tony Blair and South African President Thabo Mbeki are among the more than 20 government leaders and heads of state leaders attending the meeting. Unlike previous years, protests against the WEF are expected to be muted. Anti-globalisation campaigners have called off a demonstration planned for the weekend.
The Brazilian city of Porto Alegre will host the rival World Social Forum, timed to run in parallel with the WEF's ritzier event in Davos.
The organisers of the Brazilian gathering, which brings together thousands of campaigners against globalisation, for fair trade, and many other causes, have promised to set an alternative agenda to that of the Swiss summit. However, many of the issues discussed in Porto Alegre are Davos talking points as well. "Global warming" features particularly high. WEF participants are being asked to offset the carbon emissions they cause by travelling to the event. Davos itself is in deep frost. The snow is piled high across the mountain village, and at night the wind chill takes temperatures down to minus 20C and less.
Ultimately, the forum will be dominated by business issues - from outsourcing to corporate leadership - with bosses of more than a fifth of the world's 500 largest companies scheduled to attend.
But much of the media focus will be on the political leaders coming to Davos, not least because the agenda of this year's forum seems to lack an overarching theme. "Taking responsibility for tough choices" is this year's official talking point, hinting at a welter of knotty problems. One thing seems sure, though: transatlantic disagreements over how to deal with Iran, Iraq and China are set to dominate discussions. Pointedly, only one senior official from President Bush's new administration is scheduled to attend. The US government may still make a conciliatory gesture, just as happened a year ago when Vice President Dick Cheney made a surprise appearance in Davos.
Ukraine's new president, Viktor Yushchenko, is to speak, just days after his inauguration, an event that crowned the civil protests against the rigged first election that had tried to keep him from power.
The European Union's top leaders, among them German Chancellor Gerhard Schroeder and European Commission President Manuel Barosso, will be here too. Mr Blair will formally open the proceedings, although his speech will be pre-empted by French President Jacques Chirac, who announced his attendance at the last minute and secured a slot for a "special message" two hours before Mr Blair speaks. The organisers also hope that the new Palestinian leader, Mahmoud Abbas, will use the opportunity for talks with at least one of the three Israeli deputy prime ministers coming to the event, a list that includes Shimon Peres. Davos fans still hark back to 1994, when talks between Yassir Arafat and Mr Peres came close to a peace deal. Mr Blair's appearance will be keenly watched too, as political observers in the UK claim it is a calculated snub against political rival Chancellor Gordon Brown, who was supposed to lead the UK government delegation.
Microsoft founder Bill Gates, the world's richest man and a regular at Davos, will focus on campaigning for good causes, though business interests will not be wholly absent either. Having already donated billions of dollars to the fight against Aids and Malaria, Mr Gates will call on world leaders to support a global vaccination campaign to protect children in developing countries from easily preventable diseases. On Tuesday, Mr Gates pledged $750m (£400m) of his own money to support the cause. Mr Gates' company, software giant Microsoft, also hopes to use Davos to shore up its defences against open source software like Linux, which threaten Microsoft's near monopoly on computer desktops. Mr Gates is said to be trying to arrange a meeting with Brazil's President Lula da Silva. The Brazilian government has plans to switch all government computers from Microsoft to Linux. At Davos, global problem solving and networking are never far apart.
| More than 2,000 business and political leaders from around the globe are arriving in the Swiss mountain resort Davos for the annual World Economic Forum (WEF).But much of the media focus will be on the political leaders coming to Davos, not least because the agenda of this year's forum seems to lack an overarching theme.The Brazilian city of Porto Alegre will host the rival World Social Forum, timed to run in parallel with the WEF's ritzier event in Davos.Mr Gates' company, software giant Microsoft, also hopes to use Davos to shore up its defences against open source software like Linux, which threaten Microsoft's near monopoly on computer desktops.However, many of the issues discussed in Porto Alegre are Davos talking points as well.UK Prime Minister Tony Blair and South African President Thabo Mbeki are among the more than 20 government leaders and heads of state leaders attending the meeting.Davos fans still hark back to 1994, when talks between Yassir Arafat and Mr Peres came close to a peace deal.Microsoft founder Bill Gates, the world's richest man and a regular at Davos, will focus on campaigning for good causes, though business interests will not be wholly absent either.The US government may still make a conciliatory gesture, just as happened a year ago when Vice President Dick Cheney made a surprise appearance in Davos.Davos itself is in deep frost.Mr Gates is said to be trying to arrange a meeting with Brazil's President Lula da Silva.Having already donated billions of dollars to the fight against Aids and Malaria, Mr Gates will call on world leaders to support a global vaccination campaign to protect children in developing countries from easily preventable diseases.At Davos, global problem solving and networking are never far apart. |
Madagascar completes currency switch
Madagascar has completed the replacement of its Malagasy franc with a new currency, the ariary.
From Monday, all prices and contracts will have to be quoted in the ariary, which was trading at 1,893 to the US dollar. The Malagasy franc, which lost almost half its value in 2004, is no longer legal tender but will remain exchangeable at banks until 2009. The phasing out of the franc, begun in July 2003, was intended to distance the country from its past under French colonial rule and address the problem of the large amount of counterfeit francs in circulation. "It's above all a question of sovereignty," Reuters quoted a central bank official as saying. "It is symbolic of our independence from the old colonial ways. Since we left the French monetary zone in 1973 we should have our own currency with its own name." The ariary was the name of a pre-colonial currency in the Indian Ocean island state.
| Madagascar has completed the replacement of its Malagasy franc with a new currency, the ariary.The ariary was the name of a pre-colonial currency in the Indian Ocean island state.The phasing out of the franc, begun in July 2003, was intended to distance the country from its past under French colonial rule and address the problem of the large amount of counterfeit francs in circulation.From Monday, all prices and contracts will have to be quoted in the ariary, which was trading at 1,893 to the US dollar. |
Troubled Marsh under SEC scrutiny
The US stock market regulator is investigating troubled insurance broker Marsh & McLennan's shareholder transactions, the firm has said.
The Securities and Exchange Commission has asked for information about transactions involving holders of 5% or more of the firm's shares. Marsh has said it is co-operating fully with the SEC investigation. Marsh is also the focus of an inquiry the New York attorney-general into whether insurers rigged the market. Since that inquiry was launched in October, Marsh has replaced its chief executive and held a boardroom shake-out to meet criticism by lessening the number of company executives on the board. Prosecutors allege that Marsh - the world's biggest insurance broker - and other US insurance firms may have fixed bids for corporate cover. This is the issue at the heart of the inquiry by New York's top law officer, Eliot Spitzer, and a separate prosecution of five insurers by the State of California. The SEC's investigation into so-called related party transactions includes dealings in the Trident Funds, managed by MMC Capital, the company's private equity firm. Marsh's new chief executive, Michael Cherkasky, is trying to negotiate a settlement with Mr Spitzer. Mr Spitzer has built up a reputation as a fierce critic and campaigner against corporate America's misdeeds.
The uncertainty unleashed by the scandal has prompted three credit rating agencies - Standard & Poor's, Moody's and Fitch - to downgrade Marsh in recent weeks. According to the Financial Times, insurance analysts are now questioning whether Marsh will be able to maintain its strong record of earning growth as they draw up forecasts for the first quarter of next year. Doubts also exist over how much the company may have to pay regulators and lawyers to put the scandal behind.
| The US stock market regulator is investigating troubled insurance broker Marsh & McLennan's shareholder transactions, the firm has said.Marsh has said it is co-operating fully with the SEC investigation.Marsh is also the focus of an inquiry the New York attorney-general into whether insurers rigged the market.Since that inquiry was launched in October, Marsh has replaced its chief executive and held a boardroom shake-out to meet criticism by lessening the number of company executives on the board.Prosecutors allege that Marsh - the world's biggest insurance broker - and other US insurance firms may have fixed bids for corporate cover.The uncertainty unleashed by the scandal has prompted three credit rating agencies - Standard & Poor's, Moody's and Fitch - to downgrade Marsh in recent weeks. |
India power shares jump on debut
Shares in India's largest power producer, National Thermal Power Corp (NTPC) have risen 13% on their stock market debut.
The government's partial sell-off of NTPC is part of a controversial programme to privatise state-run firms. The 865 million share offer, a mix of new shares and sales by the government, raised 54bn rupees($1.2bn). It was India's second $1bn stock debut in three months, coming after the flotation by software firm Tata. The share offer was eleven times oversubscribed. "It is a good investment bet," said Suhas Naik, an investment analyst from ING Mutual Fund. "Power needs in India are set to rise and NTPC will benefit from that." Analysts say the success of the NTPC flotation would encourage the government to reduce stakes in more power companies. NTPC has said it will use the money from the share sale to feed the growing needs of the country's energy-starved economy. The firm is the largest utility company in India, and the sixth largest power producer in the world.
| Shares in India's largest power producer, National Thermal Power Corp (NTPC) have risen 13% on their stock market debut."Power needs in India are set to rise and NTPC will benefit from that."NTPC has said it will use the money from the share sale to feed the growing needs of the country's energy-starved economy.Analysts say the success of the NTPC flotation would encourage the government to reduce stakes in more power companies. |
Market unfazed by Aurora setback
As the Aurora limped back to its dock on 20 January, a blizzard of photos and interviews seemed to add up to an unambiguous tale of woe.
The ship had another slice of bad luck to add to its history of health scares and technical trouble. And its owner, P&O Cruises - now part of the huge US Carnival Corporation - was looking at a significant slice chopped off this year's profits and a potential PR fiasco. No-one, however, seems to have told the stock markets. The warning of a five-cent hit to 2005 earnings came just 24 hours after one of the world's biggest investment banks had upped its target for Carnival's share price, from £35 to £36.20. Other investors barely blinked, and by 1300 GMT Carnival's shares in London were down a single penny, or 0.03%, at £32.26.
Why the mismatch between the public perception and the market's response? "The Aurora issue had been an ongoing one for some time," says Deutsche Bank's Simon Champion. "It was clearly a source of uncertainty for the company - it was a long cruise, after all. But the stock market is very good at treating these issues as one-off events."
Despite its string of bad luck, he pointed out, Aurora is just one vessel in a large Carnival fleet, the UK's P&O Princess group having been merged into the much larger US firm in 2003. And generally speaking, Carnival has a reputation for keeping its ships pretty much on schedule. "Carnival has an incredibly strong track record," Mr Champion.
Similarly, analysts expect the impact on the rest of the cruise business to be limited. The hundreds of disappointed passengers who have now had to give up the opportunity to spend the next three months on the Aurora have got both a refund and a credit for another cruise. That should mitigate some of the PR risk, both for Carnival and its main competitor, Royal Caribbean. "While not common, cancellations for technical reasons are not entirely unusual in the industry," wrote analysts from Citigroup Smith Barney in a note to clients on Friday. "Moreover, such events typically have a limited impact on bookings and pricing for future cruises." After all, the Aurora incident may be big news in the UK - but for Carnival customers elsewhere it's unlikely to make too much of a splash.
Assuming that Citigroup is right, and demand stays solid, the structure of the industry also works in Carnival's favour. In the wake of P&O Princess's takeover by Carnival, the business is now to a great extent a duopoly. Given the expense of building, outfitting and running a cruise ship, "slowing supply growth" is a certainty, said David Anders at Merrill Lynch on Thursday. In other words, if you do want a cruise, your options are limited. And with Carnival remaining the market leader, it looks set to keep selling the tickets - no matter what happens to the ill-fated Aurora in the future.
| Despite its string of bad luck, he pointed out, Aurora is just one vessel in a large Carnival fleet, the UK's P&O Princess group having been merged into the much larger US firm in 2003.And with Carnival remaining the market leader, it looks set to keep selling the tickets - no matter what happens to the ill-fated Aurora in the future.Similarly, analysts expect the impact on the rest of the cruise business to be limited.After all, the Aurora incident may be big news in the UK - but for Carnival customers elsewhere it's unlikely to make too much of a splash.And generally speaking, Carnival has a reputation for keeping its ships pretty much on schedule.And its owner, P&O Cruises - now part of the huge US Carnival Corporation - was looking at a significant slice chopped off this year's profits and a potential PR fiasco.In the wake of P&O Princess's takeover by Carnival, the business is now to a great extent a duopoly."The Aurora issue had been an ongoing one for some time," says Deutsche Bank's Simon Champion."Carnival has an incredibly strong track record," Mr Champion.In other words, if you do want a cruise, your options are limited. |
French consumer spending rising
French consumers increased their spending by 1.5% in January, a figure which bodes well for the country's economic growth, figures revealed.
The National Statistic Institute (INSEE) added that consumer spending in January rose 3.8% on a year-on-year basis. Rising sales of household equipment were behind the increase. The INSEE also said that French consumer prices fell 0.6% in January, but were up 1.6% on an annual basis.
Despite the general increase in spending in January, French households bought fewer cars in January. According to the INSEE, car sales fell 2.8% in January, following a fall of 0.6% in December. But on a year-on-year basis, the sector still saw a sales increase of 6.5%. Consumer spending fuelled France's economic growth in the last quarter of 2004 and analysts expect that it will continue to support the economy. "It's a growth that will remain fragile and vulnerable to risks like a strong rise in long-term interest rates, tension in the oil price," Emmanuel Ferry, from Exane BNP Paribas told Reuters news agency.
Meanwhile in Italy, consumer confidence rose to its highest level since October 2004. Economic research group ISAE has said that Italian consumer confidence rose to 104.4 from 103.3, despite a slight deterioration in short-term sentiment.
| The National Statistic Institute (INSEE) added that consumer spending in January rose 3.8% on a year-on-year basis.The INSEE also said that French consumer prices fell 0.6% in January, but were up 1.6% on an annual basis.Despite the general increase in spending in January, French households bought fewer cars in January.French consumers increased their spending by 1.5% in January, a figure which bodes well for the country's economic growth, figures revealed.According to the INSEE, car sales fell 2.8% in January, following a fall of 0.6% in December. |
Mild winter drives US oil down 6%
US oil prices have fallen by 6%, driven down by forecasts of a mild winter in the densely populated northeast.
Light crude oil futures fell $2.86 to $41.32 a barrel on the New York Mercantile Exchange (Nymex), and have now lost $4 in five days. Nonetheless, US crude is still 30% more expensive than at the beginning of 2004, boosted by growing demand and bottlenecks at refineries. Traders ignored the possible effects of Asia's tidal waves on global supplies.
Instead, the focus is now on US consumption, which is heavily influenced in the short term by the weather. "With the revised milder temperatures... I'm more inclined to think we'll push lower and test the $40-40.25 range," said John Brady of ABN AMRO. "The market definitely feels to be on the defensive." Statistics released last week showed that stockpiles of oil products in the US had risen, an indication that severe supply disruptions may not arise this winter, barring any serious incident. Oil prices have broken records in 2004, topping $50 a barrel at one point, driven up by a welter of worries about unrest in Iraq and Saudi Arabia, rising demand and supply bottlenecks. London's International Petroleum Exchange remained closed for the Christmas holiday.
| US oil prices have fallen by 6%, driven down by forecasts of a mild winter in the densely populated northeast.Statistics released last week showed that stockpiles of oil products in the US had risen, an indication that severe supply disruptions may not arise this winter, barring any serious incident.Oil prices have broken records in 2004, topping $50 a barrel at one point, driven up by a welter of worries about unrest in Iraq and Saudi Arabia, rising demand and supply bottlenecks.Light crude oil futures fell $2.86 to $41.32 a barrel on the New York Mercantile Exchange (Nymex), and have now lost $4 in five days.Nonetheless, US crude is still 30% more expensive than at the beginning of 2004, boosted by growing demand and bottlenecks at refineries. |
US firm 'bids for Lacroix label'
A US firm has said it is in final negotiations with luxury goods group LVMH to buy the loss-making Christian Lacroix haute-couture house.
Paris-based LVMH has been selling non-core businesses and focusing on its most profitable labels including Moet & Chandon champagne and Louis Vuitton. Privately-held Falic Group bought two cosmetics brands, Hard Candy and Urban Decay, from LVMH in early 2003. The Florida company also own a chain of 90 duty free stores in the US. LVMH refused to comment on the reports. But one of the three brothers behind the Falic Group said the firm had also held talks with the designer Christian Lacroix, and wished to retain him. "We are buying his name," Simon Falic told the Reuters news agency. "We have plans to increase the exposure of the brand and increase the volume of business."
| A US firm has said it is in final negotiations with luxury goods group LVMH to buy the loss-making Christian Lacroix haute-couture house.But one of the three brothers behind the Falic Group said the firm had also held talks with the designer Christian Lacroix, and wished to retain him.Privately-held Falic Group bought two cosmetics brands, Hard Candy and Urban Decay, from LVMH in early 2003.Paris-based LVMH has been selling non-core businesses and focusing on its most profitable labels including Moet & Chandon champagne and Louis Vuitton. |
Wal-Mart fights back at accusers
Two big US names have launched advertising campaigns to "set the record straight" about their products and corporate behaviour.
The world's biggest retailer Wal-Mart took out more than 100 full page adverts in national newspapers. The group is trying to see off criticism over it pay deals, benefits package and promotion strategy. Meanwhile, drugs group Eli Lilly is planning a campaign against "false" claims about its product Prozac. Wal-Mart kicked off the battle with adverts in newspapers like the Wall Street Journal, using an open letter from company president Lee Scott saying it was time for the public to hear the "unfiltered truth".
"There are lots of 'urban legends' going around these days about Wal-Mart, but facts are facts. Wal-Mart is good for consumers, good for communities and good for the US economy," Mr Scott said in a separate statement.
Its adverts - and a new website - outlined the group's plans to create more than 10,000 US jobs in 2005. Wal-Mart's average pay is almost twice the national minimum wage of $5.15 (£3.90) an hour, while employees are offered health and life insurance, company stock and a retirement plan, the adverts say. Unions accuse Wal-Mart of paying staff less than its rivals do, with fewer benefits. In California, the company is fighting opposition to new stores amid allegations it forces local competitors out of business. Lawmakers in the state are also examining allegations that the firm burdens the state with an unfair proportion of employee health care costs. "I think they are going to have a tough time suddenly overcoming the perceptions of some people," said Larry Bevington, chairman of Save Our Community - a group fighting to prevent Wal-Mart opening a store in Rosemead, California. Wal-Mart is also fighting two lawsuits - one accusing it of discriminating against women and another alleging it discriminates against black employees.
Meanwhile Eli Lilly is launching a series of adverts in a dozen major newspapers, to present what is says are the true facts about its anti-depressant drug Prozac.
The move is in response to a British Medical Journal article that claimed "missing" Lilly documents linked Prozac to suicide and violent behaviour. In the averts, entitled An Open Letter from chief executive Sidney Taurel, the company says the article continues to "needlessly spread fear among patients who take Prozac". "It was simply wrong to suggest that information on Prozac was missing, or that important research data on the benefits and possible side effects of the drug were not available to doctors and regulators," the letter added. Eli Lilly's chief medical officer Alan Breier said that the article was "false and misleading" as the documents it referred to were actually created by officials at the US Food and Drug Administration (FDA) and presented to an FDA meeting in 1991. Later, FDA medical advisors agreed the claims were based on faulty data and there was no increased risk of suicide.
| Meanwhile, drugs group Eli Lilly is planning a campaign against "false" claims about its product Prozac.Meanwhile Eli Lilly is launching a series of adverts in a dozen major newspapers, to present what is says are the true facts about its anti-depressant drug Prozac.Wal-Mart kicked off the battle with adverts in newspapers like the Wall Street Journal, using an open letter from company president Lee Scott saying it was time for the public to hear the "unfiltered truth".Eli Lilly's chief medical officer Alan Breier said that the article was "false and misleading" as the documents it referred to were actually created by officials at the US Food and Drug Administration (FDA) and presented to an FDA meeting in 1991."I think they are going to have a tough time suddenly overcoming the perceptions of some people," said Larry Bevington, chairman of Save Our Community - a group fighting to prevent Wal-Mart opening a store in Rosemead, California.The world's biggest retailer Wal-Mart took out more than 100 full page adverts in national newspapers.Wal-Mart's average pay is almost twice the national minimum wage of $5.15 (£3.90) an hour, while employees are offered health and life insurance, company stock and a retirement plan, the adverts say."It was simply wrong to suggest that information on Prozac was missing, or that important research data on the benefits and possible side effects of the drug were not available to doctors and regulators," the letter added. |
Troubled Marsh under SEC scrutiny
The US stock market regulator is investigating troubled insurance broker Marsh & McLennan's shareholder transactions, the firm has said.
The Securities and Exchange Commission has asked for information about transactions involving holders of 5% or more of the firm's shares. Marsh has said it is co-operating fully with the SEC investigation. Marsh is also the focus of an inquiry the New York attorney-general into whether insurers rigged the market. Since that inquiry was launched in October, Marsh has replaced its chief executive and held a boardroom shake-out to meet criticism by lessening the number of company executives on the board. Prosecutors allege that Marsh - the world's biggest insurance broker - and other US insurance firms may have fixed bids for corporate cover. This is the issue at the heart of the inquiry by New York's top law officer, Eliot Spitzer, and a separate prosecution of five insurers by the State of California. The SEC's investigation into so-called related party transactions includes dealings in the Trident Funds, managed by MMC Capital, the company's private equity firm. Marsh's new chief executive, Michael Cherkasky, is trying to negotiate a settlement with Mr Spitzer. Mr Spitzer has built up a reputation as a fierce critic and campaigner against corporate America's misdeeds.
The uncertainty unleashed by the scandal has prompted three credit rating agencies - Standard & Poor's, Moody's and Fitch - to downgrade Marsh in recent weeks. According to the Financial Times, insurance analysts are now questioning whether Marsh will be able to maintain its strong record of earning growth as they draw up forecasts for the first quarter of next year. Doubts also exist over how much the company may have to pay regulators and lawyers to put the scandal behind.
| The US stock market regulator is investigating troubled insurance broker Marsh & McLennan's shareholder transactions, the firm has said.Marsh has said it is co-operating fully with the SEC investigation.Marsh is also the focus of an inquiry the New York attorney-general into whether insurers rigged the market.Since that inquiry was launched in October, Marsh has replaced its chief executive and held a boardroom shake-out to meet criticism by lessening the number of company executives on the board.Prosecutors allege that Marsh - the world's biggest insurance broker - and other US insurance firms may have fixed bids for corporate cover.The uncertainty unleashed by the scandal has prompted three credit rating agencies - Standard & Poor's, Moody's and Fitch - to downgrade Marsh in recent weeks. |
Russia WTO talks 'make progress'
Talks on Russia's proposed membership of the World Trade Organisation (WTO) have been "making good progress" say those behind the negotiations.
But the chairman of the working party, Ambassador Stefan Johannesson of Iceland, warned that there was "still a lot of work has to be done". His comments came as President George W Bush said the US backed Russian entry. But he said for Russia to make progress the government must "renew a commitment to democracy and the rule of law". His comments come three days before he is due to meet President Vladimir Putin.
Russia has been waiting for a decade to join the WTO and hopes to finally become a member by early 2006. A decision could be reached in December, when the WTO's 148 current members gather for a summit in Hong Kong. That would allow an earliest date for membership of January 2006, if the Hong Kong summit gave its approval. While pinpointing several areas in which there are difficulties in the bilateral and multilateral work with Russia, the US said the meeting was "much more efficient than we've seen for some time". And Australia said it was "one of the best (meetings) we can recall in terms of substance". Mr Johannesson also said progress "on the bilateral market access side is accelerating". Sticking points to membership have included limits on foreign ownership in the telecommunications and life insurance businesses, as well as issues surrounding counterfeiting, piracy, and data protection. Some WTO members also dislike Russia's energy price subsidies, which competitors say give Russian businesses an unfair advantage.
| While pinpointing several areas in which there are difficulties in the bilateral and multilateral work with Russia, the US said the meeting was "much more efficient than we've seen for some time".Mr Johannesson also said progress "on the bilateral market access side is accelerating".His comments came as President George W Bush said the US backed Russian entry.But he said for Russia to make progress the government must "renew a commitment to democracy and the rule of law".Talks on Russia's proposed membership of the World Trade Organisation (WTO) have been "making good progress" say those behind the negotiations.Some WTO members also dislike Russia's energy price subsidies, which competitors say give Russian businesses an unfair advantage. |
Novartis hits acquisition trail
Swiss drugmaker Novartis has announced 5.65bn euros ($7.4bn; £3.9bn) of purchases to make its Sandoz unit the world's biggest generic drug producer.
Novartis, which last month forecast record sales for 2005, said it had bought all of Germany's Hexal. It also acquired 67.7% of Hexal's US affiliate Eon Labs, and offered to buy the remaining shares for $31 each. Novartis said that it would be able to make cost savings of about $200m a year following the acquisitions. Novartis' shares rose 1% to 57.85 Swiss francs in early trading.
The deal will see Novartis' Sandoz business overtake Israel's Teva Pharmaceuticals as the world's biggest maker of generics. Based on 2004 figures the newly merged producer would have sales of more than $5bn, the company estimated. Novartis said that it would merge a number of departments, adding that there may be job cuts.
"The strong growth outlook for Sandoz, which will create jobs, is expected to partially compensate for necessary reductions in the work force," the firm said in a statement. Generic drugs are chemically identical to their more expensive branded rivals. Producers such as Sandoz can copy the branded products usually after their patent protection expires and can sell them more cheaply as they do not have to pay research and development cost.
There are more than 150 generic drugmakers worldwide and analysts have predicted consolidation in a market that they call fragmented. However, not all analysts were initially convinced about the deal. "This is a very expensive acquisition," Birgit Kuhlhoff, from Sal Oppenheim investment bank, told Reuters. "I find it strange that they are making acquisitions in exactly those markets where they suffered price pressure."
| Swiss drugmaker Novartis has announced 5.65bn euros ($7.4bn; £3.9bn) of purchases to make its Sandoz unit the world's biggest generic drug producer.Novartis said that it would be able to make cost savings of about $200m a year following the acquisitions.Novartis said that it would merge a number of departments, adding that there may be job cuts.The deal will see Novartis' Sandoz business overtake Israel's Teva Pharmaceuticals as the world's biggest maker of generics.Novartis, which last month forecast record sales for 2005, said it had bought all of Germany's Hexal.Novartis' shares rose 1% to 57.85 Swiss francs in early trading. |
Wall Street cool to eBay's profit
Shares in online auction house eBay fell 9.8% in after-hours trade on Wednesday, after its quarterly profits failed to meet market expectations.
Despite seeing net profits rise by 44% to $205.4m (£110m) during October to December, from $142m a year earlier, Wall Street had expected more. EBay stock fell to $92.9 in after-hours trade, from a $103.05 end on Nasdaq. EBay's net revenue for the quarter rose to $935.8m from $648.4m, boosted by growth at its PayPal payment service.
Excluding special items, eBay's profit was 33 cents a share, but analysts had expected 34 cents.
"I think Wall Street has gotten a bit ahead of eBay this quarter and for the 2005 year." said Janco Partners analyst Martin Pyykkonen. For 2004 as a whole, eBay earned $778.2m on sales of $3.27bn. EBay president and chief executive Meg Whitman called 2004 an "outstanding success" that generated "tremendous momentum" for 2005. "I'm more confident than ever that the decisions and investments we're making today will ensure a bright future for the company and our community of users around the world," she said. EBay now forecasts 2005 revenue of $4.2bn to $4.35bn and earnings excluding items of $1.48 to $1.52 per share. Analysts had previously estimated that eBay would achieve 2005 revenues of $4.37bn and earnings of $1.62 per share, excluding items.
| EBay now forecasts 2005 revenue of $4.2bn to $4.35bn and earnings excluding items of $1.48 to $1.52 per share.Analysts had previously estimated that eBay would achieve 2005 revenues of $4.37bn and earnings of $1.62 per share, excluding items.For 2004 as a whole, eBay earned $778.2m on sales of $3.27bn.Excluding special items, eBay's profit was 33 cents a share, but analysts had expected 34 cents."I think Wall Street has gotten a bit ahead of eBay this quarter and for the 2005 year." |
Worldcom boss 'left books alone'
Former Worldcom boss Bernie Ebbers, who is accused of overseeing an $11bn (£5.8bn) fraud, never made accounting decisions, a witness has told jurors.
David Myers made the comments under questioning by defence lawyers who have been arguing that Mr Ebbers was not responsible for Worldcom's problems. The phone company collapsed in 2002 and prosecutors claim that losses were hidden to protect the firm's shares. Mr Myers has already pleaded guilty to fraud and is assisting prosecutors.
On Monday, defence lawyer Reid Weingarten tried to distance his client from the allegations. During cross examination, he asked Mr Myers if he ever knew Mr Ebbers "make an accounting decision?". "Not that I am aware of," Mr Myers replied. "Did you ever know Mr Ebbers to make an accounting entry into Worldcom books?" Mr Weingarten pressed. "No," replied the witness. Mr Myers has admitted that he ordered false accounting entries at the request of former Worldcom chief financial officer Scott Sullivan. Defence lawyers have been trying to paint Mr Sullivan, who has admitted fraud and will testify later in the trial, as the mastermind behind Worldcom's accounting house of cards.
Mr Ebbers' team, meanwhile, are looking to portray him as an affable boss, who by his own admission is more PE graduate than economist. Whatever his abilities, Mr Ebbers transformed Worldcom from a relative unknown into a $160bn telecoms giant and investor darling of the late 1990s. Worldcom's problems mounted, however, as competition increased and the telecoms boom petered out. When the firm finally collapsed, shareholders lost about $180bn and 20,000 workers lost their jobs. Mr Ebbers' trial is expected to last two months and if found guilty the former CEO faces a substantial jail sentence. He has firmly declared his innocence.
| During cross examination, he asked Mr Myers if he ever knew Mr Ebbers "make an accounting decision?"."Not that I am aware of," Mr Myers replied."Did you ever know Mr Ebbers to make an accounting entry into Worldcom books?"Mr Myers has admitted that he ordered false accounting entries at the request of former Worldcom chief financial officer Scott Sullivan.David Myers made the comments under questioning by defence lawyers who have been arguing that Mr Ebbers was not responsible for Worldcom's problems.Defence lawyers have been trying to paint Mr Sullivan, who has admitted fraud and will testify later in the trial, as the mastermind behind Worldcom's accounting house of cards.Mr Myers has already pleaded guilty to fraud and is assisting prosecutors.Former Worldcom boss Bernie Ebbers, who is accused of overseeing an $11bn (£5.8bn) fraud, never made accounting decisions, a witness has told jurors. |
MCI shares climb on takeover bid
Shares in US phone company MCI have risen on speculation that it is in takeover talks.
The Wall Street Journal reported on Thursday that Qwest has bid $6.3bn (£3.4bn) for MCI. Other firms have also expressed an interest in MCI, the second-largest US long-distance phone firm, and may now table rival bids, analysts said. Shares in MCI, which changed its name from Worldcom when it emerged from bankruptcy, were up 2.4% at $20.15. Press reports suggest that Qwest and MCI may reach an agreement as early as next week, although rival bids may muddy the waters. The largest US telephone company Verizon has previously held preliminary merger discussions with MCI, Reuters quoted sources as saying.
Consolidation in the US telecommunications industry has picked up in the past few months as companies look to cut costs and boost client bases. A merger between MCI and Qwest would be the fifth billion-dollar telecoms deal since October. Last week, SBC Communications agreed to buy its former parent and phone trailblazer AT&T for about $16bn. Competition has intensified and fixed-line phone providers such as MCI and AT&T have seen themselves overtaken by rivals. Buying MCI would give Qwest, a local phone service provider, access to MCI's global network and business-based subscribers. MCI also offers internet services.
MCI was renamed after it emerged from Chapter 11 bankruptcy protection in April last year. It hit the headlines as Worldcom in 2002 after admitting it illegally booked expenses and inflated profits. The scandal was a key factor in a global slide in share prices and the reverberations are still being felt today. Shareholders lost about $180bn when the company collapsed, while 20,000 workers lost their jobs. Former Worldcom boss Bernie Ebbers is currently on trial, accused of overseeing an $11bn fraud.
| Shares in US phone company MCI have risen on speculation that it is in takeover talks.The Wall Street Journal reported on Thursday that Qwest has bid $6.3bn (£3.4bn) for MCI.Shares in MCI, which changed its name from Worldcom when it emerged from bankruptcy, were up 2.4% at $20.15.Competition has intensified and fixed-line phone providers such as MCI and AT&T have seen themselves overtaken by rivals.Buying MCI would give Qwest, a local phone service provider, access to MCI's global network and business-based subscribers.The largest US telephone company Verizon has previously held preliminary merger discussions with MCI, Reuters quoted sources as saying.Other firms have also expressed an interest in MCI, the second-largest US long-distance phone firm, and may now table rival bids, analysts said. |
US bank in $515m SEC settlement
Five Bank of America subsidiaries have agreed to pay a total of $515m (£277m) to settle an investigation into fraudulent trading share practices.
The US Securities and Exchange Commission announced the settlements, the latest in an industry-wide clean-up of US mutual funds. The SEC also said it had brought fraud charges against two ex-senior executives of Columbia Distributor. Columbia Distributor was part of FleetBoston, bought by BOA last year. Three other ex-Columbia executives agreed settlements with the SEC.
The SEC has set itself the task of stamping out the mutual funds' use of market-timing, a form of quick-fire, short-term share trading that harms the interests of small investors, with whom mutual funds are particularly popular. In the last two years, it has imposed penalties totalling nearly $2bn on 15 funds. The SEC unveiled two separate settlements, one covering BOA's direct subsidiaries, and another for businesses that were part of FleetBoston at the time. In both cases, it said there had been secret deals to engage in market timing in mutual fund shares. The SEC agreed a deal totalling $375m with Banc of America Capital Management, BACAP Distributors and Banc of America Securities. It was made up of $250m to pay back gains from market timing, and $125m in penalties. It is to be paid to the damaged funds and their shareholders. Separately, the SEC said it had reached a $140m deal - equally split between penalties and compensation - in its probe into Columbia Management Advisors (CAM) and Columbia Funds Distributor (CFD) and three ex-Columbia executives. These businesses became part of BOA when it snapped up rival bank FleetBoston in a $47bn merger last March.
The SEC filed civil fraud charges in a Boston Federal court against James Tambone, who it says headed CFD's sales operations, and his alleged second in command Robert Hussey. The SEC is pressing for the highest tier of financial penalties against the pair for "multiple violations", repayment of any personal gains, and an injunction to prevent future breaches, a spokeswoman for the SEC's Boston office told the BBC. There was no immediate comment from the men's' lawyers. The SEC's settlement with CAM and CFD included agreements with three other ex-managers, Peter Martin, Erik Gustafson and Joseph Palombo, who paid personal financial penalties of between $50-100,000.
| Separately, the SEC said it had reached a $140m deal - equally split between penalties and compensation - in its probe into Columbia Management Advisors (CAM) and Columbia Funds Distributor (CFD) and three ex-Columbia executives.The SEC also said it had brought fraud charges against two ex-senior executives of Columbia Distributor.Columbia Distributor was part of FleetBoston, bought by BOA last year.Three other ex-Columbia executives agreed settlements with the SEC.The SEC has set itself the task of stamping out the mutual funds' use of market-timing, a form of quick-fire, short-term share trading that harms the interests of small investors, with whom mutual funds are particularly popular.The SEC unveiled two separate settlements, one covering BOA's direct subsidiaries, and another for businesses that were part of FleetBoston at the time.The SEC agreed a deal totalling $375m with Banc of America Capital Management, BACAP Distributors and Banc of America Securities.In both cases, it said there had been secret deals to engage in market timing in mutual fund shares. |
S Korean credit card firm rescued
South Korea's largest credit card firm has averted liquidation following a one trillion won ($960m; £499m) bail-out.
LG Card had been threatened with collapse because of its huge debts but the firm's creditors and its former parent have stepped in to rescue it. A consortium of creditors and LG Group, a family owned conglomerate, have each put up $480m to stabilise the firm. LG Card has seven million customers and its collapse would have sent shockwaves through the country's economy.
The firm's creditors - which own 99% of LG Card - have been trying to agree a deal to secure its future for several weeks. They took control of the company in January when it avoided bankruptcy only through a $4.5bn bail-out.
They had threatened to delist the company, a move which would have triggered massive debt redemptions and forced the company into bankruptcy, unless agreement was reached on its future funding. "LG Card will not need any more financial aid after this," Laah Chong-gyu, executive director of Korea Development Bank - one of the firm's creditors - said.
The agreement will see some 12 trillion won of debt converted into equity. "The purpose of the capital injection is to avoid delisting and the goal will be met," David Kim, an analyst at Sejong Securities, told Reuters. South Korea's consumer credit market has been slowly recovering from a crisis in 2002 when a credit bubble burst and millions of consumers fell behind on their debt repayments. LG Card returned to profit in September but needed further capital to avoid being thrown off the market. South Korea's stock exchange can delist any firm if its debt exceeds its assets two years running.
| LG Card had been threatened with collapse because of its huge debts but the firm's creditors and its former parent have stepped in to rescue it.South Korea's largest credit card firm has averted liquidation following a one trillion won ($960m; £499m) bail-out.The firm's creditors - which own 99% of LG Card - have been trying to agree a deal to secure its future for several weeks.LG Card returned to profit in September but needed further capital to avoid being thrown off the market.LG Card has seven million customers and its collapse would have sent shockwaves through the country's economy."LG Card will not need any more financial aid after this," Laah Chong-gyu, executive director of Korea Development Bank - one of the firm's creditors - said. |
IMF 'cuts' German growth estimate
The International Monetary Fund is to cut its 2005 growth forecast for the German economy from 1.8% to 0.8%, the Financial Times Deutschland reported.
The IMF will also reduce its growth estimate for the 12-member eurozone economy from 2.2% to 1.6%, the newspaper reported. The German economy has been faltering, with unemployment levels rising to a seventy-year high of 5.2 million. Its sluggish performance continues to hamper the entire eurozone.
The IMF's draft World Economic Outlook - due to be published in April - would point to a marked deterioration in Germany's economy, the FT report said.
In September, the IMF had said that German growth for the current year would be 1.8%. The IMF has also revised eurozone forecasts, the paper said, taking into account high oil prices, the strength of the euro and weak demand in many of the world's leading economies. Europe's economic difficulties have been highlighted by the Organisation for Economic Co-operation and Development, which argued in a report published on Tuesday that the continent could only achieve US living standards by freeing up its labour markets. "The eurozone does not look like it has a self-sustaining recovery," James Carrick, an economist with ABN Amro, told the newspaper. "It is too dependant on the rest of the world."
| The IMF will also reduce its growth estimate for the 12-member eurozone economy from 2.2% to 1.6%, the newspaper reported.The IMF's draft World Economic Outlook - due to be published in April - would point to a marked deterioration in Germany's economy, the FT report said.In September, the IMF had said that German growth for the current year would be 1.8%.The IMF has also revised eurozone forecasts, the paper said, taking into account high oil prices, the strength of the euro and weak demand in many of the world's leading economies. |
German jobless rate at new record
More than 5.2 million Germans were out of work in February, new figures show.
The figure of 5.216 million people, or 12.6% of the working-age population, is the highest jobless rate in Europe's biggest economy since the 1930s. The news comes as the head of Germany's panel of government economic advisers predicted growth would again stagnate. Speaking on German TV, Bert Ruerup said the panel's earlier forecast of 1.4% was too optimistic and warned growth would be just 1% in 2005.
The German government is trying to tackle the stubbornly-high levels of joblessness with a range of labour market reforms. At their centre is the "Hartz-IV" programme introduced in January to shake up welfare benefits and push people back into work - even if some of the jobs are heavily subsidised. The latest unemployment figures look set to increase the pressure on the government. Widely leaked to the German newspapers a day in advance, they produced screaming headlines criticising Chancellor Gerhard Schroeder's Social Democrat-Green Party administration. Mr Schroeder had originally come into office promising to halve unemployment.
Still, some measures suggest the picture is not quite so bleak. The soaring official unemployment figure follows a change in the methodology which pushed up the jobless rate by more than 500,000 in January. Adjusted for seasonal changes, the overall unemployment rate is 4.875 million people or 11.7%, up 0.3 percentage points from the previous month. Using the most internationally-accepted methodology of the International Labour Organisation (ILO), Germany had 3.97 million people out of work in January. And ILO-based figures also suggest that 14,000 new net jobs were created that month, taking the number of people employed to 38.9 million. The ILO defines an unemployed person as someone who in the previous four weeks had actively looked for work they could take up immediately.
| And ILO-based figures also suggest that 14,000 new net jobs were created that month, taking the number of people employed to 38.9 million.Using the most internationally-accepted methodology of the International Labour Organisation (ILO), Germany had 3.97 million people out of work in January.Adjusted for seasonal changes, the overall unemployment rate is 4.875 million people or 11.7%, up 0.3 percentage points from the previous month.More than 5.2 million Germans were out of work in February, new figures show.The figure of 5.216 million people, or 12.6% of the working-age population, is the highest jobless rate in Europe's biggest economy since the 1930s.The soaring official unemployment figure follows a change in the methodology which pushed up the jobless rate by more than 500,000 in January. |
Ex-Boeing director gets jail term
An ex-chief financial officer at Boeing has received a four-month jail sentence and a fine of $250,000 (£131,961) for illegally hiring a top Air Force aide.
Michael Sears admitted his guilt in breaking conflict of interest laws by recruiting Darleen Druyun while she still handled military contracts. Ms Druyun is currently serving a nine month sentence for favouring Boeing when awarding lucrative contracts. Boeing lost a $23bn government contract after a Pentagon inquiry into the case. The contract, to provide refuelling tankers for the US Air Force, was cancelled last year.
The Pentagon revealed earlier this week that it would examine eight other contracts worth $3bn which it believes may have been tainted by Ms Druyun's role in the procurement process. Boeing sacked Mr Sears and Ms Druyun in November 2003 after allegations that they had violated company recruitment policy. Ms Druyun had talks with Mr Sears in October 2002 about working for Boeing, while she was still a top procurement official within the Pentagon. She subsequently joined the company in January 2003. Ms Druyun admitted that she had steered multi-billion dollar contracts to Boeing and other favoured companies.
In documents filed in a Virginia court ahead of Mr Sears' sentencing, prosecutors blamed Boeing's senior management for failing to ask key questions about the "legal and ethical issues" surrounding Ms Druyun's appointment. Mr Sears told prosecutors that no other Boeing officials were aware that Ms Druyun was still responsible for major procurement decisions at the time she was discussing a job with Boeing. However, analysts believe Boeing may yet face civil charges arising from the scandal. The Pentagon has investigated 400 contracts, dating back to 1993, since the allegations against Ms Druyun came to light.
Boeing's corporate ethics have come under scrutiny on several occasions in recent years. Boeing was sued by Lockheed Martin after its rival accused it of industrial espionage during a 1998 contract competition. Boeing apologised publicly for the affair - although it claimed it did not gain any unfair advantage - and pledged to improve its procedures. The Pentagon subsequently revoked $1bn worth of contracts assigned to Boeing and prohibited the Seattle-based company from future rocket work.
| Ms Druyun had talks with Mr Sears in October 2002 about working for Boeing, while she was still a top procurement official within the Pentagon.Mr Sears told prosecutors that no other Boeing officials were aware that Ms Druyun was still responsible for major procurement decisions at the time she was discussing a job with Boeing.Boeing sacked Mr Sears and Ms Druyun in November 2003 after allegations that they had violated company recruitment policy.Ms Druyun admitted that she had steered multi-billion dollar contracts to Boeing and other favoured companies.The Pentagon subsequently revoked $1bn worth of contracts assigned to Boeing and prohibited the Seattle-based company from future rocket work.Boeing lost a $23bn government contract after a Pentagon inquiry into the case.Ms Druyun is currently serving a nine month sentence for favouring Boeing when awarding lucrative contracts.Boeing was sued by Lockheed Martin after its rival accused it of industrial espionage during a 1998 contract competition. |
Ford gains from finance not cars
Ford, the US car company, reported higher fourth quarter and full-year profits on Thursday boosted by a buoyant period for its car loans unit.
Net income for 2004 was $3.5bn (£1.87bn) - up nearly $3bn from 2003 - while turnover rose $7.2bn to $170.8bn. In the fourth quarter alone Ford reported net income of $104m, compared with a loss of $793m a year ago. But its auto unit made a loss. Fourth quarter turnover was $44.7bn, compared to $45.9bn a year ago.
Though car and truck loan profits saved the day, Ford's auto unit made a pre-tax loss of $470m in the fourth quarter (compared to a profit of £13m in the year-ago period) and its US sales dipped 3.8%.
Yesterday General Motor's results also showed its finance unit was a strong contributor to profits. However, Ford is working hard to revitalise its product portfolio, unveiling the Fusion and Zephyr models at the International Motor Show in Detroit. It also brought out a number of new models in the second half of 2004. "In 2004, our company gained momentum, delivering...more new products, and more innovative breakthroughs, such as the Escape Hybrid, the industry's first full-hybrid sport utility vehicle," said chairman and chief executive officer Bill Ford."
"We also confronted operating challenges with our Jaguar brand and high industry marketing costs," he added. But Ford declined to provide guidance for first quarter 2005. It will do so at a presentation in New York on 26 January. In addition, the company said 2004 net income was affected by a fourth-quarter pre-tax charge taken to reduce the value of a receivable owed to Ford by Visteon, a former subsidiary. Recent new models introduced by Ford include the Ford Five Hundred and Mercury Montego sedans, the Ford Freestyle crossover, the Ford Mustang, the Land Rover LR3/Discovery, and Volvo S40 and V50 in North America and Europe. Total company vehicle unit sales in 2004 were 6,798,000, an increase of 62,000 units from 2003. Fourth-quarter vehicle unit sales totalled 1,751,000, a decline of 133,000 units. For the full year, Ford's worldwide automotive division earned a pre-tax profit of $850m, a $697m improvement from $153m a year ago.
| In the fourth quarter alone Ford reported net income of $104m, compared with a loss of $793m a year ago.Ford, the US car company, reported higher fourth quarter and full-year profits on Thursday boosted by a buoyant period for its car loans unit.Though car and truck loan profits saved the day, Ford's auto unit made a pre-tax loss of $470m in the fourth quarter (compared to a profit of £13m in the year-ago period) and its US sales dipped 3.8%.Fourth quarter turnover was $44.7bn, compared to $45.9bn a year ago.Total company vehicle unit sales in 2004 were 6,798,000, an increase of 62,000 units from 2003.Recent new models introduced by Ford include the Ford Five Hundred and Mercury Montego sedans, the Ford Freestyle crossover, the Ford Mustang, the Land Rover LR3/Discovery, and Volvo S40 and V50 in North America and Europe.In addition, the company said 2004 net income was affected by a fourth-quarter pre-tax charge taken to reduce the value of a receivable owed to Ford by Visteon, a former subsidiary.But Ford declined to provide guidance for first quarter 2005. |
Bush to get 'tough' on deficit
US president George W Bush has pledged to introduce a "tough" federal budget next February in a bid to halve the country's deficit in five years.
The US budget and its trade deficit are both deep in the red, helping to push the dollar to lows against the euro and fuelling fears about the economy. Mr Bush indicated there would be "strict discipline" on non-defence spending in the budget. The vow to cut the deficit had been one of his re-election declarations. The federal budget deficit hit a record $412bn (£211.6bn) in the 12 months to 30 September and $377bn in the previous year.
"We will submit a budget that fits the times," Mr Bush said. "It will provide every tool and resource to the military, will protect the homeland, and meet other priorities of the government." The US has said it is committed to a strong dollar. But the dollar's weakness has hit European and Asian exporters and lead to calls for US intervention to boost the currency. Mr Bush, however, has said the best way to halt the dollar's slide is to deal with the US deficit. "It's a budget that I think will send the right signal to the financial markets and to those concerned about our short-term deficits," Mr Bush added. "As well, we've got to deal with the long-term deficit issues."
| Mr Bush, however, has said the best way to halt the dollar's slide is to deal with the US deficit.US president George W Bush has pledged to introduce a "tough" federal budget next February in a bid to halve the country's deficit in five years."We will submit a budget that fits the times," Mr Bush said.The US budget and its trade deficit are both deep in the red, helping to push the dollar to lows against the euro and fuelling fears about the economy.Mr Bush indicated there would be "strict discipline" on non-defence spending in the budget. |
Yangtze Electric's profits double
Yangtze Electric Power, the operator of China's Three Gorges Dam, has said its profits more than doubled in 2004.
The firm has benefited from increased demand for electricity at a time when power shortages have hit cities and provinces across the country. As a hydroelectric-power generator it has not been hurt by higher coal costs. Net income jumped to 3bn yuan in 2004 ($365m; £190m), compared with 1.4bn yuan in 2003. Sales surged to 6.2bn yuan, from 3bn yuan a year earlier. The figures topped analysts expectations, even though the rate of growth has slowed from 2003. Analysts forecast that it is likely to decline further this year to a rate of expansion of closer to 20%.
Yangtze Electric has been expanding its output to meet demand driven by China's booming economy. The government has delayed the building of a number of power plants in an effort to rein in growth amid concerns that the economy may overheat. That has led to an energy crunch, with demand outstripping supply. Earlier this month, work was halted on an underground power station, and a supply unit on the Three Gorges Dam, as well as a power station on its sister Xiluodu dam because of environmental worries. A total of 30 large-scale projects have been halted across the country for similar reasons. The Three Gorges Dam project has led to more than half a million people being relocated and drawn criticism from environmental groups and overseas human rights activists. Its sister project, the Xiluodu Dam, is being built on the Jinshajiang - or "river of golden sand" as the upper reaches of the Yangtze are known.
| Yangtze Electric Power, the operator of China's Three Gorges Dam, has said its profits more than doubled in 2004.The Three Gorges Dam project has led to more than half a million people being relocated and drawn criticism from environmental groups and overseas human rights activists.Yangtze Electric has been expanding its output to meet demand driven by China's booming economy.The firm has benefited from increased demand for electricity at a time when power shortages have hit cities and provinces across the country.Earlier this month, work was halted on an underground power station, and a supply unit on the Three Gorges Dam, as well as a power station on its sister Xiluodu dam because of environmental worries.Sales surged to 6.2bn yuan, from 3bn yuan a year earlier. |
Giant waves damage S Asia economy
Governments, aid agencies, insurers and travel firms are among those counting the cost of the massive earthquake and waves that hammered southern Asia.
The worst-hit areas are Sri Lanka, India, Indonesia and Thailand, with at least 23,000 people killed. Early estimates from the World Bank put the amount of aid needed at about $5bn (£2.6bn), similar to the cash offered Central America after Hurricane Mitch. Mitch killed about 10,000 people and caused damage of about $10bn in 1998. World Bank spokesman Damien Milverton told the Wall Street Journal that he expected an aid package of financing and debt relief.
Tourism is a vital part of the economies of the stricken countries, providing jobs for 19 million people in the south east Asian region, according to the World Travel and Tourism Council (WTTC). In the Maldives islands, in the Indian ocean, two-thirds of all jobs depend on tourism.
But the damage covers fishing, farming and businesses too, with hundreds of thousands of buildings and small boats destroyed by the waves. International agencies have pledged their support; most say it is impossible to gauge the extent of the damage yet. The International Monetary Fund (IMF) has promised rapid action to help the governments of the stricken countries cope.
"The IMF stands ready to do its part to assist these nations with appropriate support in their time of need," said managing director Rodrigo Rato. Only Sri Lanka and Bangladesh currently receive IMF support, while Indonesia, the quake's epicentre, has recently graduated from IMF assistance. It is up to governments to decide if they want IMF help. Other agencies, such as the Asian Development Bank, have said that it is too early to comment on the amount of aid needed. There is no underestimating the size of the problem, however. The United Nations' emergency relief coordinator, Jan Egeland, said that "this may be the worst national disaster in recent history because it is affecting so many heavily populated coastal areas... so many vulnerable communities. "Many people will have [had] their livelihoods, their whole future destroyed in a few seconds." He warned that "the longer term effects many be as devastating as the tidal wave or the tsunami itself" because of the risks of epidemics from polluted drinking water.
Insurers are also struggling to assess the cost of the damage, but several big players believe the final bill is likely to be less than the $27bn cost of the hurricanes that battered the US earlier this year.
"The region that's affected is very big so we have to check country-by-country what the situation is", said Serge Troeber, deputy head of the natural disasters department at Swiss Re, the world's second biggest reinsurance firm. "I should assume, however, that the overall dimension of insured damages is below the storm damages of the US," he said. Munich Re, the world's biggest reinsurer, said: "This is primarily a human tragedy. It is too early for us to state what our financial burden will be." Allianz has said it sees no significant impact on its profitability. However, a low insurance bill may simply reflect the general poverty of much of the region, rather than the level of economic devastation for those who live there.
The International Federation of the Red Cross and Red Crescent Societies told the Reuters news agency that it was seeking $6.5m for emergency aid.
"The biggest health challenges we face is the spread of waterborne diseases, particularly malaria and diarrhoea," the aid agency was quoted as saying. The European Union has said it will deliver 3m euros (£2.1m; $4.1m) of aid, according to the Wall Street Journal. The EU's Humanitarian Aid Commissioner, Louis Michel, was quoted as saying that it was key to bring aid "in those vital hours and days immediately after the disaster". Other countries also are reported to have pledged cash, while the US State Department said it was examining what aid was needed in the region. Getting companies and business up and running also may play a vital role in helping communities recover from the weekend's events.
Many of the worst-hit areas, such as Sri Lanka, Thailand's Phuket island and the Maldives, are popular tourist resorts that are key to local economies.
December and January are two of the busiest months for the travel in southern Asia and the damage will be even more keenly felt as the industry was only just beginning to emerge from a post 9/11 slump. Growth has been rapid in southeast Asia, with the World Tourism Organisation figures showing a 45% increase in tourist revenues in the region during the first 10 months of 2004. In southern Asia that expansion is 23%. "India continues to post excellent results thanks to increased promotion and product development, but also to the upsurge in business travel driven by the rapid economic development of the country," the WTO said. "Arrivals to other destinations such as... Maldives and Sri Lanka also thrived." In Thailand, tourism accounts for about 6% of the country's annual gross domestic product, or about $8bn. In Singapore the figure is close to 5%. Tourism also brings in much needed foreign currency. In the short-term, however, travel companies are cancelling flights and trips. That has hit shares across Asia and Europe, with investors saying that earnings and economic growth are likely to slow.
| Other countries also are reported to have pledged cash, while the US State Department said it was examining what aid was needed in the region.Other agencies, such as the Asian Development Bank, have said that it is too early to comment on the amount of aid needed.Growth has been rapid in southeast Asia, with the World Tourism Organisation figures showing a 45% increase in tourist revenues in the region during the first 10 months of 2004."I should assume, however, that the overall dimension of insured damages is below the storm damages of the US," he said.The European Union has said it will deliver 3m euros (£2.1m; $4.1m) of aid, according to the Wall Street Journal.Early estimates from the World Bank put the amount of aid needed at about $5bn (£2.6bn), similar to the cash offered Central America after Hurricane Mitch.Tourism is a vital part of the economies of the stricken countries, providing jobs for 19 million people in the south east Asian region, according to the World Travel and Tourism Council (WTTC)."India continues to post excellent results thanks to increased promotion and product development, but also to the upsurge in business travel driven by the rapid economic development of the country," the WTO said.The EU's Humanitarian Aid Commissioner, Louis Michel, was quoted as saying that it was key to bring aid "in those vital hours and days immediately after the disaster".Governments, aid agencies, insurers and travel firms are among those counting the cost of the massive earthquake and waves that hammered southern Asia.Mitch killed about 10,000 people and caused damage of about $10bn in 1998.December and January are two of the busiest months for the travel in southern Asia and the damage will be even more keenly felt as the industry was only just beginning to emerge from a post 9/11 slump.Only Sri Lanka and Bangladesh currently receive IMF support, while Indonesia, the quake's epicentre, has recently graduated from IMF assistance.The International Monetary Fund (IMF) has promised rapid action to help the governments of the stricken countries cope.Tourism also brings in much needed foreign currency."Arrivals to other destinations such as... Maldives and Sri Lanka also thrived."Allianz has said it sees no significant impact on its profitability. |
Fed warns of more US rate rises
The US looks set for a continued boost to interest rates in 2005, according to the Federal Reserve.
Minutes of the December meeting which pushed rates up to 2.25% showed that policy-makers at the Fed are worried about accelerating inflation. The clear signal pushed the dollar up to $1.3270 to the euro by 0400 GMT on Wednesday, but depressed US shares. "The markets are starting to fear a more aggressive Fed in 2005," said Richard Yamarone of Argus Research. The Dow Jones index dropped almost 100 points on Tuesday, with the Nasdaq also falling as key tech stocks were hit by broker downgrades. The dollar also gained ground against sterling on Tuesday, reaching $1.8832 to the pound before slipping slightly on Wednesday morning.
The release of the minutes just three weeks after the 14 December meeting was much faster than usual, indicating the Fed wants to keep markets more apprised of its thinking. This, too, is being taken in some quarters as a sign of aggressive moves on interest rates to come. The key Fed funds rate has risen 1.25 percentage points during 2004 from the 46-year low of 1% reached not long after the 9/11 attacks in 2001. That long trough "might be contributing to signs of potentially excessive risk-taking in financial markets", said the Federal Open Markets Committee (FOMC), which sets interest rates. The odds now favour a further boost to rates at the next meeting in early February, economists said. But the respite for the dollar, which spent late 2003 being pushed lower against other major currencies by worries about massive US trade and budget deficits, may be short-lived. "You can't rule out a further correction... but we don't think it's a change in direction in the dollar," said Jason Daw at Merrill Lynch. "Nothing fundamental has changed."
| Minutes of the December meeting which pushed rates up to 2.25% showed that policy-makers at the Fed are worried about accelerating inflation.The key Fed funds rate has risen 1.25 percentage points during 2004 from the 46-year low of 1% reached not long after the 9/11 attacks in 2001.The US looks set for a continued boost to interest rates in 2005, according to the Federal Reserve.The odds now favour a further boost to rates at the next meeting in early February, economists said.This, too, is being taken in some quarters as a sign of aggressive moves on interest rates to come.The clear signal pushed the dollar up to $1.3270 to the euro by 0400 GMT on Wednesday, but depressed US shares. |
Minister hits out at Yukos sale
Russia's renationalisation of its energy industry needs to be reversed, a senior government figure has warned.
Economy minister German Gref told the Kommersant newspaper that direct state involvement in oil was "unjustified". His comments follow the sale of much of oil giant Yukos to cover back taxes - a deal which effectively took most of the firm's assets into public ownership. On 28 December, another senior economic adviser called the sale "the swindle of the century". Yuganskneftegaz, the unit which produced 60% of Yukos' output, had been seized and sold in December for less than $10bn to a previously unknown firm called Baikal.
Baikal promptly passed into the hands of state-controlled firm Rosneft, itself shortly to merge with state gas giant Gazprom. "We used to see street hustlers do this kind of thing," Andrei Illarionov - then economic adviser to President Vladimir Putin - told a press conference. "Now officials are doing it." Within days, he was stripped of most of his responsibilities.
Mr Gref, a well-known opponent of nationalisation in competitive parts of the market, was keen to distance himself from Mr Iliaronov's comments. The privatisation of companies such as Yukos in the 1990s had been badly handled, he said. But he stressed that the government needed to get out of oil. "I think that Rosneft and Yuganskneftegaz, should it become a state-owned company, must be privatized," he said.
"Today our government is ineffective and state companies, as a result, are for the overwhelming part ineffective as well." And he warned that using back taxes to deal with firms like Yukos - a technique now being applied by the Kremlin to several other firms - was a mistake. "If we follow that logic, we should nationalise all businesses," he said. Many large Russian companies, particularly in the energy sector, use complex webs of offshore companies to avoid taxes.
Mr Gref also poured cold water on President Putin's promises of doubled economic growth within a decade. The assault on Yukos' assets has been widely blamed for a slowdown in economic growth in recent months. "The task is not simply to double GDP; instead it is to use GDP to qualitatively improve people's lives," Mr Gref told Kommersant. "We don't need simply to increase GDP, but to improve its structure." Instead of focusing on headline growth figures, Russia needed to focus on better institutions, such as a more efficient - and less corrupt - court system.
| "The task is not simply to double GDP; instead it is to use GDP to qualitatively improve people's lives," Mr Gref told Kommersant.Economy minister German Gref told the Kommersant newspaper that direct state involvement in oil was "unjustified".And he warned that using back taxes to deal with firms like Yukos - a technique now being applied by the Kremlin to several other firms - was a mistake.The privatisation of companies such as Yukos in the 1990s had been badly handled, he said.Mr Gref also poured cold water on President Putin's promises of doubled economic growth within a decade.His comments follow the sale of much of oil giant Yukos to cover back taxes - a deal which effectively took most of the firm's assets into public ownership.The assault on Yukos' assets has been widely blamed for a slowdown in economic growth in recent months.Yuganskneftegaz, the unit which produced 60% of Yukos' output, had been seized and sold in December for less than $10bn to a previously unknown firm called Baikal.Mr Gref, a well-known opponent of nationalisation in competitive parts of the market, was keen to distance himself from Mr Iliaronov's comments. |
UK bank seals South Korean deal
UK-based bank Standard Chartered said it would spend $3.3bn (£1.8bn) to buy one of South Korea's main retail banks.
Standard Chartered said acquiring Korea First Bank (KFB) fulfilled a strategic objective of building a bigger presence in Asia's third largest economy. Its shares fell nearly 3% in London as the bank raised funds for the deal by selling new stocks worth £1bn ($1.8bn), equal to 10% of its share capital. Standard Chartered expects about 16% of future group revenue to come from KFB.
The South Korean bank will also make up 22% of the group's total assets. The move, a year after Citigroup beat Standard Chartered to buy Koram bank, would be the South Korean financial sector's biggest foreign takeover. This time around, Standard Chartered is thought to have beaten HSBC to the deal. KFB is South Korea's seventh largest bank, with 3 million retail customers, 6% of the country's banking market and an extensive branch network.
The country's banking market is three times the size of Hong Kong's with annual revenues of $44bn. Standard Chartered has its headquarters in London but does two thirds of its business in Asia, and much of the rest in Africa. "We're comfortable with the price paid...the key here has been speed and decisiveness in making sure that we won," said Standard Chartered chief executive Mervyn Davies at a London press conference. Standard Chartered said KFB was a "well-managed, conservatively run bank with a highly skilled workforce" and represented a "significant acquisition in a growth market". In London, Standard Chartered's sale of 118 million new shares to institutional investors pushed its share price down, and contributing to the FTSE 100's 0.3% decline. Standard Chartered's shares were 28 pence lower at 925p by midday. Some analysts also queried whether Standard Chartered had overpaid for KFB. The deal, which requires regulatory approval, is expected to be completed by April 2005 and to be earnings accretive in 2006, Standard Chartered said.
Rival banking giant HSBC, which is based in London and Hong Kong, was also in the running. Standard Chartered is believed to have gained the initiative by putting together a bid during the Christmas break. "They were able to move so quickly it caught HSBC by surprise," the Financial Times newspaper quoted an insider in the talks as saying. HSBC will now have to wait for the next South Korean bank in line to be sold off - thought likely to be Korea Exchange Bank, also currently in the hands of a US group. Standard Chartered said it was buying 100% of KFB, an agreement that would bring an end to the bank's complex dual ownership. The South Korean government owns 51.4% of KFB, while the remaining shareholding, and operational control, are in the hands of US private equity group Newbridge Capital. Newbridge bought its stake during the government's nationalisation of several banks in the wake of the 1997 Asia-wide currency crisis which crippled South Korea's financial institutions.
South Korea's economy is expected to grow by 4.5% this year. Although often thought of an export-driven economy, South Korea's service sector has overtaken manufacturing in the last decade or so. Services now make up roughly 40% of the economy, and consumer spending and retail banking have become increasingly important. In the aftermath of the Asian financial crisis, the government encouraged the growth of consumer credit. Bad loan problems followed; LG Card, the country's biggest credit card provider, has been struggling to avoid bankruptcy for months, for instance. But analysts believe South Korea's financial services industry is still in its infancy, offering plenty of scope for new products. Standard Chartered sees "the opportunity to create value by the introduction of more sophisticated banking products". Since 1999, KFB has been restructured from a wholesale bank into a retail bank focused on mortgage lending, which makes up 45% of its loans.
| UK-based bank Standard Chartered said it would spend $3.3bn (£1.8bn) to buy one of South Korea's main retail banks.The move, a year after Citigroup beat Standard Chartered to buy Koram bank, would be the South Korean financial sector's biggest foreign takeover.Standard Chartered said KFB was a "well-managed, conservatively run bank with a highly skilled workforce" and represented a "significant acquisition in a growth market".Some analysts also queried whether Standard Chartered had overpaid for KFB.Standard Chartered said acquiring Korea First Bank (KFB) fulfilled a strategic objective of building a bigger presence in Asia's third largest economy.Standard Chartered expects about 16% of future group revenue to come from KFB.This time around, Standard Chartered is thought to have beaten HSBC to the deal.KFB is South Korea's seventh largest bank, with 3 million retail customers, 6% of the country's banking market and an extensive branch network.Standard Chartered said it was buying 100% of KFB, an agreement that would bring an end to the bank's complex dual ownership.HSBC will now have to wait for the next South Korean bank in line to be sold off - thought likely to be Korea Exchange Bank, also currently in the hands of a US group.Standard Chartered sees "the opportunity to create value by the introduction of more sophisticated banking products".The deal, which requires regulatory approval, is expected to be completed by April 2005 and to be earnings accretive in 2006, Standard Chartered said.Standard Chartered has its headquarters in London but does two thirds of its business in Asia, and much of the rest in Africa. |
Chinese wine tempts Italy's Illva
Italy's Illva Saronno has agreed to buy 33% of Changyu, the largest wine maker in China.
Changyu said in a statement to the Shenzhen stock exchange that Illva will pay 481.42m yuan ($58.16m; £30.7m), once the government approves the deal. The Italian liqueur maker will acquire the shares from the Yantai State Asset Management Bureau. Chinese wine sales are growing, the US Agriculture Department said, with wine sales in 2003 up 25% at 61.1bn yuan.
China is encouraging state-owned companies to sell shares to foreign investors. Anheuser-Busch, Heineken and Scottish & Newcastle have all invested in the Chinese beer industry in the last two years and now Illva Saronno is betting on the Chinese wine market. Yantai State Asset Management Bureau - a government agency in the north-eastern city of Yantai - owns 55% of Changyu. The state agency will also sell 10% of its stake in Changyu to another overseas company, although it didn't say who. The remaining 12% will be retained by the Yantai city government. The consumption of wine in China is still low, at just 0.22 litres per capita, said the US Agriculture Department. This compares with 59 litres in France, 12 litres in the US and three litres in Japan.
| Yantai State Asset Management Bureau - a government agency in the north-eastern city of Yantai - owns 55% of Changyu.The consumption of wine in China is still low, at just 0.22 litres per capita, said the US Agriculture Department.Italy's Illva Saronno has agreed to buy 33% of Changyu, the largest wine maker in China.Chinese wine sales are growing, the US Agriculture Department said, with wine sales in 2003 up 25% at 61.1bn yuan.The Italian liqueur maker will acquire the shares from the Yantai State Asset Management Bureau. |
Nasdaq planning $100m-share sale
The owner of the technology-dominated Nasdaq stock index plans to sell shares to the public and list itself on the market it operates.
According to a registration document filed with the Securities and Exchange Commission, Nasdaq Stock Market plans to raise $100m (£52m) from the sale. Some observers see this as another step closer to a full public listing. However Nasdaq, an icon of the 1990s technology boom, recently poured cold water on those suggestions.
The company first sold shares in private placements during 2000 and 2001. It technically went public in 2002 when the stock started trading on the OTC Bulletin Board, which lists equities that trade only occasionally. Nasdaq will not make money from the sale, only investors who bought shares in the private placings, the filing documents said. The Nasdaq is made up shares in technology firms and other companies with high growth potential. It was the most potent symbol of the 1990s internet and telecoms boom, nose-diving after the bubble burst. A recovery in the fortunes of tech giants such as Intel, and dot.com survivors such as Amazon has helped revive its fortunes.
| The owner of the technology-dominated Nasdaq stock index plans to sell shares to the public and list itself on the market it operates.The Nasdaq is made up shares in technology firms and other companies with high growth potential.Nasdaq will not make money from the sale, only investors who bought shares in the private placings, the filing documents said.According to a registration document filed with the Securities and Exchange Commission, Nasdaq Stock Market plans to raise $100m (£52m) from the sale. |
Strong demand triggers oil rally
Crude oil prices surged back above the $47 a barrel mark on Thursday after an energy market watchdog raised its forecasts for global demand.
The International Energy Agency (IEA) warned demand for Opec's crude in the first quarter would outstrip supply. The IEA raised its estimate of 2005 oil demand growth by 80,000 barrels a day to 84 million barrels a day. US light crude rose $1.64 to $47.10, while Brent crude in London gained $1.32 to $44.45.
The Paris-based IEA watchdog, which advises industrialized nations on energy policy, said the upward revision was due to stronger demand from China and other Asian countries. The fresh rally in crude prices followed gains on Wednesday which were triggered by large falls in US crude supplies following a cold spell in North America in January. The US Department of Energy reported that crude stockpiles had fallen 1m barrels to 294.3m. On top of that, ongoing problems for beleaguered Russian oil giant Yukos have also prompted the IEA to revise its output estimates from Russia - a major non-Opec supplier. "I think that prices are now beginning to set a new range and it looks like the $40 to $50 level," said energy analyst Orin Middleton of Barclays Capital.
| Crude oil prices surged back above the $47 a barrel mark on Thursday after an energy market watchdog raised its forecasts for global demand.The US Department of Energy reported that crude stockpiles had fallen 1m barrels to 294.3m.The International Energy Agency (IEA) warned demand for Opec's crude in the first quarter would outstrip supply.The IEA raised its estimate of 2005 oil demand growth by 80,000 barrels a day to 84 million barrels a day. |
US adds more jobs than expected
The US economy added 337,000 jobs in October - a seven-month high and far more than Wall Street expectations.
In a welcome economic boost for newly re-elected President George W Bush, the Labor Department figures come after a slow summer of weak jobs gains. Jobs were created in every sector of the US economy except manufacturing. While the separate unemployment rate went up to 5.5% from 5.4% in September, this was because more people were now actively seeking work.
The 337,000 new jobs added to US payrolls in October was twice the 169,000 figure that Wall Street economists had forecast. In addition, the Labor Department revised up the number of jobs created in the two previous months - to 139,000 in September instead of 96,000, and to 198,000 in August instead of 128,000. The better than expected jobs data had an immediate upward effect on stocks in New York, with the main Dow Jones index gaining 45.4 points to 10,360 by late morning trading. "It looks like the job situation is improving and that this will support consumer spending going into the holidays, and offset some of the drag caused by high oil prices this year," said economist Gary Thayer of AG Edwards & Sons.
Other analysts said the upbeat jobs data made it more likely that the US Federal Reserve would increase interest rates by a quarter of a percentage point to 2% when it meets next week. "It should empower the Fed to clearly do something," said Robert MacIntosh, chief economist with Eaton Vance Management in Boston. Kathleen Utgoff, commissioner of the Bureau of Labor, said many of the 71,000 new construction jobs added in October were involved in rebuilding and clean-up work in Florida, and neighbouring Deep South states, following four hurricanes in August and September. The dollar rose temporarily on the job creation news before falling back to a new record low against the euro, as investors returned their attention to other economic factors, such as the US's record trade deficit. There is also speculation that President Bush will deliberately try to keep the dollar low in order to assist a growth in exports.
| The 337,000 new jobs added to US payrolls in October was twice the 169,000 figure that Wall Street economists had forecast.The US economy added 337,000 jobs in October - a seven-month high and far more than Wall Street expectations.Kathleen Utgoff, commissioner of the Bureau of Labor, said many of the 71,000 new construction jobs added in October were involved in rebuilding and clean-up work in Florida, and neighbouring Deep South states, following four hurricanes in August and September.Other analysts said the upbeat jobs data made it more likely that the US Federal Reserve would increase interest rates by a quarter of a percentage point to 2% when it meets next week.In addition, the Labor Department revised up the number of jobs created in the two previous months - to 139,000 in September instead of 96,000, and to 198,000 in August instead of 128,000.In a welcome economic boost for newly re-elected President George W Bush, the Labor Department figures come after a slow summer of weak jobs gains. |
Japan economy slides to recession
The Japanese economy has officially gone back into recession for the fourth time in a decade.
Gross domestic product fell by 0.1% in the last three months of 2004. The fall reflects weak exports and a slowdown in consumer spending, and follows similar falls in GDP in the two previous quarters. The Tokyo stock market fell after the figures were announced, but rose again on a widespread perception that the economy will recover later this year. On Wednesday, the government revised growth figures from earlier in 2004 which, when taking into account performance in the most recent period, effectively tips Japan into recession.
A previous estimate of 0.1% growth between July and September was downgraded to a 0.3% decline. A recession is commonly defined as two consecutive quarters of negative growth, although the Japanese government takes other factors into account when judging the status of its economy.
Figures released by the government's Cabinet Office showed that GDP, on an annualised basis, fell 0.5% in the last three months of 2004. However, politicians remain upbeat about prospects for an economic boost later in the year. "The economy has some soft patches but if you look at the bigger picture, it is in a recovery stage," said Economic and Fiscal Policy Minister Heizo Takenaka. Gross domestic product measures the overall value of goods and services produced in a country. "The economy must be assessed comprehensively and we cannot look at GDP alone," Mr Takenaka stressed.
Ministers pointed to the fact that consumer spending had been depressed by one-off factors such as the unseasonably mild winter. Analysts said the figures were disappointing but argued that Japan's largest companies had been recording healthy profits and capital spending was on the rise. Japan's economy grew 2.6% overall last year - fuelled by a strong performance in the first few months - and is forecast to see growth of 2.1% in 2005. However, the economy's fragile recovery remains dependent on an upturn in consumer spending, a fall in the value of the yen and an improvement in global economies. "The results came in at the lower end of expectations but we shouldn't be too pessimistic about the current state and the outlook for the economy," said Naoki Iizuka, senior economist at the Dai-ichi Life Research Institute. Japan's economy has seen stretches of moderate growth over the past decade but has periodically slipped back into recession.
| Japan's economy grew 2.6% overall last year - fuelled by a strong performance in the first few months - and is forecast to see growth of 2.1% in 2005.Japan's economy has seen stretches of moderate growth over the past decade but has periodically slipped back into recession.A recession is commonly defined as two consecutive quarters of negative growth, although the Japanese government takes other factors into account when judging the status of its economy.The Japanese economy has officially gone back into recession for the fourth time in a decade.Gross domestic product fell by 0.1% in the last three months of 2004.The Tokyo stock market fell after the figures were announced, but rose again on a widespread perception that the economy will recover later this year."The economy has some soft patches but if you look at the bigger picture, it is in a recovery stage," said Economic and Fiscal Policy Minister Heizo Takenaka.The fall reflects weak exports and a slowdown in consumer spending, and follows similar falls in GDP in the two previous quarters. |
Golden rule boost for Chancellor
Chancellor Gordon Brown has been given a £2.1bn boost in his attempts to meet his golden economic rule, which allows him to borrow only for investment.
The extra leeway came after the Office for National Statistics said it had been measuring road expenditure data wrongly over the past five years. It comes just weeks ahead of the Budget and an expected general election. Shadow chancellor Oliver Letwin said: "At best the timing of these changes is very convenient for the government."
A review by the ONS found it had made a mistake by "double counting" some spending on roads since 1998/9. Correcting the error would mean reducing current expenditure and increasing net investment, thus helping Mr Brown to meet his "golden rule" of borrowing only to invest over the economic cycle. Economists speculated that it might also allow for some vote-catching measures in the Budget.
The changes by the ONS increase the current budget measure for the past five years by £2.1bn in total. Mr Letwin said: "This is a very murky area... There will inevitably be suspicions that the figures are being fiddled." The Conservatives also said Mr Brown would still be forced to raise taxes after the general election to fill an annual £10.5bn "black hole" in the nation's coffers. But the Treasury said there would be no relaxation of economic discipline and the golden rule would be met even without the data revisions.
In January the independent Institute for Fiscal Studies (IFS) said Mr Brown would need to raise taxes to get public finances onto the track predicted in last year's Budget. It also said the government might narrowly miss its "golden rule" if the current economic cycle ended in 2005/06. After the ONS announcement, economists said there could also be a proportionate boost to the current budget in 2004/05 of about £400m. "None of this changes the big picture of a dramatic deterioration in the overall fiscal position over the last four or five years," said Jonathan Loynes, chief UK economist at Capital Economics. "Accordingly, it seems very likely that some form of fiscal consolidation will be required in due course."
| After the ONS announcement, economists said there could also be a proportionate boost to the current budget in 2004/05 of about £400m.It also said the government might narrowly miss its "golden rule" if the current economic cycle ended in 2005/06.In January the independent Institute for Fiscal Studies (IFS) said Mr Brown would need to raise taxes to get public finances onto the track predicted in last year's Budget.The Conservatives also said Mr Brown would still be forced to raise taxes after the general election to fill an annual £10.5bn "black hole" in the nation's coffers.The changes by the ONS increase the current budget measure for the past five years by £2.1bn in total.But the Treasury said there would be no relaxation of economic discipline and the golden rule would be met even without the data revisions.Correcting the error would mean reducing current expenditure and increasing net investment, thus helping Mr Brown to meet his "golden rule" of borrowing only to invest over the economic cycle. |
Hyundai to build new India plant
South Korea's Hyundai Motor has announced that it plans to build a second plant in India to meet the country's growing demand for cars.
The company didn't give details of its investment but it said the new plant would produce 150,000 cars a year. This will boost the annual production capacity of the company - India's second-largest car manufacturer - to 400,000 units. Hyundai expects its sales in India to grow 16% to 250,000 in 2005. By 2010, it expects to nearly double sales to 400,000 cars. The new plant will be built close to the existing one in Chennai, in the southern province of Tamil Nadu.
South Korea's top car maker estimates that the Indian market will grow 15% this year, to 920,000 vehicles, reaching 1.6 million vehicles by 2010. Demand in India has been driven by the poor state of public transport and the very low level of car ownership, analysts said. Figures show that currently only eight people per thousand are car owners. "We desperately need to expand our production in order to meet growing demand in the Indian auto market, which is growing over 12 percent every year, and to top our competitors," chairman Chung Mong-koo said in the statement. He said the company plans to use India as a base for exports to Europe, Latin America and the Middle East. The company - which controls half of the South Korean's market - aims to become a global top five auto maker by 2010.
| The company didn't give details of its investment but it said the new plant would produce 150,000 cars a year.South Korea's Hyundai Motor has announced that it plans to build a second plant in India to meet the country's growing demand for cars.South Korea's top car maker estimates that the Indian market will grow 15% this year, to 920,000 vehicles, reaching 1.6 million vehicles by 2010.Hyundai expects its sales in India to grow 16% to 250,000 in 2005.Demand in India has been driven by the poor state of public transport and the very low level of car ownership, analysts said. |
Cuba winds back economic clock
Fidel Castro's decision to ban all cash transactions in US dollars in Cuba has once more turned the spotlight on Cuba's ailing economy.
All conversions between the US dollar and Cuba's "convertible" peso will from 8 November be subject to a 10% tax. Cuban citizens, who receive money from overseas, and foreign visitors, who change dollars in Cuba, will be affected. Critics of the measure argue that it is a step backwards, reflecting the Cuban president's desire to increase his control of the economy and to clamp down on private enterprise. In a live television broadcast announcing the measure, President Castro's chief aide said it was necessary because of the United States' increasing "economic aggression". "The ten percent obligation applies exclusively to the dollar by virtue of the situation created by the new measures of the US government to suffocate our country," he said.
The Bush administration has taken an increasingly harsh line on Cuba in recent months. President Bush's government, which has been a strong supporter of the 40-year-old trade embargo on Cuba, introduced even tighter restrictions on Cuba in May.
Cubans living in the US are now limited to one visit to Cuba every three years and they can only send money to their immediate relatives. A leading expert on the Cuban economy says that Castro's tax plan smacks more of a desperate economic measure than a political gesture. "I think it is primarily an effort to raise some cash," says Jose Barrionuevo, head of strategy for Latin American emerging markets for Barclays Capital. "It underscores the fact that the economy is in very bad shape and the government is looking for sources of revenue."
The tax will hit the families of Cuban exiles hardest as they benefit from the money their displaced relatives send home. This money, known as remittances, can amount to as much as $1bn a year. Those remaining in Cuba will have to pay the tax. Their relatives abroad may choose to send money in other currencies which are not subject to the tax, such as euros, or increase their dollar payments to compensate. However, many of Cuban's poorest citizens could be worse off as a result. The tax will also affect the two million tourists who visit Cuba every year, particularly those Americans who continue to defy a ban on travel there.
Cuba's tourist industry has been one of its few economic success stories over the last ten years and, according to the UN Economic Commission for Latin America, is now worth $3bn to the country.
The tax is designed to provide much-needed revenue for Cuba's cash-strapped economy. Cuba badly needs dollars to pay for essential items such as food, fuel and medicine. Much of Cuba's basic infrastructure is in a state of disrepair. In recent weeks, Cuba has suffered its most serious power cuts in a decade and there have also been water shortages in parts of the island. Cuba's economy had staged a modest recovery during the mid 1990s as the collapse of the Soviet Union forced it to embrace foreign capital, decentralise trade and permit limited private enterprise. However, a decline in foreign tourism since 2002, periodic hurricanes and the increasing costs of importing oil have put a strain on the economy. It has however yet to be seen if the tax will provide a solution to the government's economic problems. The tax could fuel an active black market in currency trading, Mr Barrionuevo said. "The main impact could be that it will create a black market which you typically see in countries, like Venezuela, which have restrictions on capital," he says. Mr Barrioneuvo says the measure could be dropped if it has a damaging effect on economic activity. "It is intended to be a permanent measure but I am not sure it can last too long."
| Fidel Castro's decision to ban all cash transactions in US dollars in Cuba has once more turned the spotlight on Cuba's ailing economy.Those remaining in Cuba will have to pay the tax.A leading expert on the Cuban economy says that Castro's tax plan smacks more of a desperate economic measure than a political gesture.The tax is designed to provide much-needed revenue for Cuba's cash-strapped economy.All conversions between the US dollar and Cuba's "convertible" peso will from 8 November be subject to a 10% tax.It has however yet to be seen if the tax will provide a solution to the government's economic problems.Cubans living in the US are now limited to one visit to Cuba every three years and they can only send money to their immediate relatives.Cuban citizens, who receive money from overseas, and foreign visitors, who change dollars in Cuba, will be affected.Mr Barrioneuvo says the measure could be dropped if it has a damaging effect on economic activity.President Bush's government, which has been a strong supporter of the 40-year-old trade embargo on Cuba, introduced even tighter restrictions on Cuba in May.The tax could fuel an active black market in currency trading, Mr Barrionuevo said.Their relatives abroad may choose to send money in other currencies which are not subject to the tax, such as euros, or increase their dollar payments to compensate. |
Profits jump at China's top bank
Industrial and Commercial Bank (ICBC), China's biggest lender, has seen an 18% jump in profits during 2004.
The increase in earnings has allowed the firm to write off bad loans and pave the way for a state bailout and eventual stock-market listing. China is trying to clean up its banking system, which is weighed down by billions of dollars of unpaid loans. It has already pumped $45bn (£24bn) into two of its largest banks, and has identified ICBC as a recipient of aid. ICBC's profits were 74.7bn yuan ($9bn; £4.8bn) in 2004, the bank said in a statement. The percentage of non-performing loans dropped to 19.1%, down about 2 percentage points. ICBC was founded in 1984 and had total assets of 5.3 trillion yuan at the end of 2003. China committed to gradually opening up its banking sector when it joined the World Trade Organisation in 2002.
| It has already pumped $45bn (£24bn) into two of its largest banks, and has identified ICBC as a recipient of aid.ICBC's profits were 74.7bn yuan ($9bn; £4.8bn) in 2004, the bank said in a statement.Industrial and Commercial Bank (ICBC), China's biggest lender, has seen an 18% jump in profits during 2004.China is trying to clean up its banking system, which is weighed down by billions of dollars of unpaid loans. |
Rank 'set to sell off film unit'
Leisure group Rank could unveil plans to demerge its film services unit and sell its media business, reports claim.
Rank, formerly famous for the Carry On series, will expose the shake-up at the announcement of its results on Friday, the Sunday Telegraph reported. Advisors Goldman Sachs are understood to have valued its demerged Deluxe Film unit at £300m, the report added. Speculation of a possible shake-up has mounted since Rank announced a study into a possible demerger in September. Since Mike Smith's appointment as chief executive in 1999, the group has focused on fewer businesses and embarked on a major cost-cutting programme which has seen it dispose of a number of businesses, including the Odeon cinema chain and the Pinewood studios. The move left the group with three core divisions: gaming, Hard Rock and Deluxe Films, which provides technical services to Hollywood studios.
Rank now aims to concentrate on its gaming, bars and hotels business, including extending its Hard Rock brand to its casinos - trials of which have been a success. It also owns Deluxe Media, which makes and distributes DVDs and videos. However, that business is seen as less successful. Last year it made profits of £21.5m on a turnover of £392.1m and experts suggest its success in moving to DVDs from VHS video could make it an attractive target for a private equity buyer. A spokesman for the firm refused to comment on the reports, but said any results from the demerger study were likely to be set out when it unveiled its results on Friday. Analysts predict the firm is likely to report a slight drop in annual pre-tax profits to £170m from £194m last year. Formed in the 1940s the firm was a leading UK film producer and cinema owner for many years. It has now diversified into a range of other leisure activities - mainly in the UK - including hotels, roadside service areas and holiday centres. It now owns 34 Grosvenor casinos, the Mecca Bingo chain and more than 100 Hard Rock Cafes in 38 countries.
| Leisure group Rank could unveil plans to demerge its film services unit and sell its media business, reports claim.Rank now aims to concentrate on its gaming, bars and hotels business, including extending its Hard Rock brand to its casinos - trials of which have been a success.Since Mike Smith's appointment as chief executive in 1999, the group has focused on fewer businesses and embarked on a major cost-cutting programme which has seen it dispose of a number of businesses, including the Odeon cinema chain and the Pinewood studios.The move left the group with three core divisions: gaming, Hard Rock and Deluxe Films, which provides technical services to Hollywood studios.Speculation of a possible shake-up has mounted since Rank announced a study into a possible demerger in September.Analysts predict the firm is likely to report a slight drop in annual pre-tax profits to £170m from £194m last year. |
EU to probe Alitalia 'state aid'
The European Commission has officially launched an in-depth investigation into whether Italian airline Alitalia is receiving illegal state aid.
Commission officials are to look at Rome's provision of a 400m euro ($495m; £275m) loan to the carrier. Both the Italian government and Alitalia have repeatedly denied that the money - part of a vital restructuring plan - is state aid. The investigation could take up to 18 months. However, Transport Commissioner Jacques Barrot said he wanted it to be carried out as swiftly as possible. "The Italian authorities have presented a serious industrial plan," said Mr Barot. "We now have to verify certain aspects to confirm that this plan contains no state aid. I would like our analysis to be completed swiftly."
The matter of possible state aid was brought to the Commission's attention by eight of Alitalia's rivals, including Germany's Lufthansa, British Airways and Spain's Iberia. While Alitalia needs to restructure to bring itself back to profitability, the rival carriers say it has both violated state aid rules and threatened competition. Alitalia lost 330m euros in 2003 as it struggled to get to grips with high costs, spiralling oil prices, competition from budget carriers and reduced demand. It plans to split into AZ Fly and AZ Services, which will handle air and ground services respectively. Alitalia already enjoyed state aid in 1997. EU rules prevent that from happening again in what is known as the "one time, last time" rule for airlines. Otherwise, EU regulations on state aid stipulate that governments may help companies financially, but only on the same terms as a commercial investor. The airline declined to comment on the Commission decision.
| The European Commission has officially launched an in-depth investigation into whether Italian airline Alitalia is receiving illegal state aid.Both the Italian government and Alitalia have repeatedly denied that the money - part of a vital restructuring plan - is state aid.Alitalia already enjoyed state aid in 1997.While Alitalia needs to restructure to bring itself back to profitability, the rival carriers say it has both violated state aid rules and threatened competition."We now have to verify certain aspects to confirm that this plan contains no state aid.Otherwise, EU regulations on state aid stipulate that governments may help companies financially, but only on the same terms as a commercial investor.The matter of possible state aid was brought to the Commission's attention by eight of Alitalia's rivals, including Germany's Lufthansa, British Airways and Spain's Iberia. |
Irish duo could block Man Utd bid
Irishmen JP McManus and John Magnier, who own a 29% stake in Manchester United, will reportedly reject any formal £800m offer for the club.
The Sunday Times and The Sunday Telegraph say they will oppose any formal £800m takeover bid from US tycoon Malcom Glazer. Mr Glazer got permission to look at the club's accounts last week. Irish billionaires Mr McManus and Mr Magnier are said to believe that an £800m bid undervalues club prospects.
Mr Magnier and Mr McManus, who hold their stake through their Cubic Expression investment vehicle have the power to block a bid. Mr Glazer's financial backers, including JP Morgan, the US investment bank have said they won't back a bid unless it receives backing from the owners of at least 75% of the club's shares. However, there has been much speculation that the Irish duo simply do not think the price offered - 300p a share - is high enough. Mr Glazer has been stalking the premier league football club since 2003.
Mr Magnier and Mr McManus issued a statement late on Friday saying that they remained "long-term investors" in Man Utd. The Sunday Telegraph says the board of Manchester United also considered a management buyout at just over 300p but did not go ahead with it.
| Irish billionaires Mr McManus and Mr Magnier are said to believe that an £800m bid undervalues club prospects.Mr Magnier and Mr McManus, who hold their stake through their Cubic Expression investment vehicle have the power to block a bid.Mr Magnier and Mr McManus issued a statement late on Friday saying that they remained "long-term investors" in Man Utd.Mr Glazer has been stalking the premier league football club since 2003. |
US industrial output growth eases
US industrial production continued to rise in November, albeit at a slower pace than the previous month.
The US Federal Reserve said output from factories, mines and utilities rose 0.3% - in line with forecasts - from a revised 0.6% increase in October. Analysts added that if the carmaking sector - which saw production fall 0.5% - had been excluded the data would have been more impressive. The latest increase means industrial output has grown 4.2% in the past year. Many analysts were upbeat about the prospects for the US economy, with the increase in production coming on the heels of news of a recovery in retail sales. "This is very consistent with an economy growing at 3.5 to 4.0%. It is congruent with job growth and consumer optimism," Comerica chief economist David Littman said of the figures.
The US economy grew at a respectable annual rate of 3.7% in the three months between July and September, while jobs growth averaged 178,000 during the same period. While the employment figures are not spectacular, experts believe they are enough to whittle away at America's 5.4% jobless rate. A breakdown of the latest production figures shows mining output drove the increase, surging 2.1%, while factory output rose 0.3%. But utility output dropped 1.4%. Meanwhile, the amount of factory capacity in use during the month rose to 77.6% - its highest level since May 2001. "Many investors think that product market inflation won't be a problem until the utilisation rates are at 80% or higher," Cary Leahy, senior US economist at Deutsche Bank Securities, said. "So there is still a lot of inflation-fighting slack in the manufacturing sector," "Overall I'd say manufacturing at least away from autos continues to improve and I would bet that it improves at a faster rate in coming months given how lean inventories are," Citigroup senior economist Steven Wieting added.
| A breakdown of the latest production figures shows mining output drove the increase, surging 2.1%, while factory output rose 0.3%.The US Federal Reserve said output from factories, mines and utilities rose 0.3% - in line with forecasts - from a revised 0.6% increase in October.The US economy grew at a respectable annual rate of 3.7% in the three months between July and September, while jobs growth averaged 178,000 during the same period.Many analysts were upbeat about the prospects for the US economy, with the increase in production coming on the heels of news of a recovery in retail sales.US industrial production continued to rise in November, albeit at a slower pace than the previous month.The latest increase means industrial output has grown 4.2% in the past year. |
China suspends 26 power projects
China has ordered a halt to construction work on 26 big power stations, including two at the Three Gorges Dam, on environmental grounds.
The move is a surprising one because China is struggling to increase energy supplies for its booming economy. Last year 24 provinces suffered black outs. The State Environmental Protection Agency said the 26 projects had failed to do proper environmental assessments. Topping the list was a controversial dam on the scenic upper Yangtze River. "Construction of these projects has started without approval of the assessment of their environmental impact... they are typical illegal projects of construction first, approval next," said SEPA vice-director Pan Yue, in a statement on the agency's website.
Some of the projects may be allowed to start work again with the proper permits, but others would be cancelled, he said. Altogether, the agency ordered 30 projects halted. Other projects included a petrochemicals plant and a port in Fujian. The bulk of the list was made up of new power plants, with some extensions to existing ones. The stoppages would appear to be another step in the central government's battle to control projects licensed by local officials. However, previous crackdowns have tended to focus on projects for which the government argued there was overcapacity, such as steel and cement. The government has encouraged construction of new electricity generating capacity to solve chronic energy shortages which forced many factories onto part-time working last year. In 2004, China increased its generating capacity by 12.6%, or 440,700 megawatts (MW). The biggest single project to be halted was the Xiluodi Dam project, designed to produce 12,600 MW of electricity. It is being built on the Jinshajiang - or 'river of golden sand' as the upper reaches of the Yangtze are known. Second and third on the agency's list were two power stations being built at the $22bn Three Gorges Dam project on the central Yangtze - an underground 4,200 MW power plant and a 100 MW plant.
The Three Gorges Dam has proved controversial in China - where more than half a million people have been relocated to make way for it - and abroad. It has drawn criticism from environmental groups and overseas human rights activists. The damming of the Upper Yangtze has also begun to attract criticism from environmentalists in China. In April 2004, central government officials ordered a halt to work on the nearby Nu River, which is part of a United Nations world heritage site, the Three Parallel Rivers site which covers the Yangtze, Mekong and Nu (also known as the Salween), according to the UK-published China Review. That move reportedly followed a protest from the Thai government about the downstream impact of the dams, and a critical documentary made by Chinese journalists. China's energy shortage influenced global prices for oil, coal and shipping last year.
| The biggest single project to be halted was the Xiluodi Dam project, designed to produce 12,600 MW of electricity.China has ordered a halt to construction work on 26 big power stations, including two at the Three Gorges Dam, on environmental grounds.Second and third on the agency's list were two power stations being built at the $22bn Three Gorges Dam project on the central Yangtze - an underground 4,200 MW power plant and a 100 MW plant."Construction of these projects has started without approval of the assessment of their environmental impact... they are typical illegal projects of construction first, approval next," said SEPA vice-director Pan Yue, in a statement on the agency's website.The government has encouraged construction of new electricity generating capacity to solve chronic energy shortages which forced many factories onto part-time working last year.Topping the list was a controversial dam on the scenic upper Yangtze River.The damming of the Upper Yangtze has also begun to attract criticism from environmentalists in China.The State Environmental Protection Agency said the 26 projects had failed to do proper environmental assessments.Altogether, the agency ordered 30 projects halted.The Three Gorges Dam has proved controversial in China - where more than half a million people have been relocated to make way for it - and abroad. |
Shares rise on new Man Utd offer
Shares in Manchester United closed up 4.75% on Monday following a new offer from US tycoon Malcolm Glazer.
The board of the football club is expected to meet early this week to discuss the latest proposal, which values the club at £800m ($1.5bn). Manchester United revealed on Sunday that it had received a detailed proposal from Mr Glazer, which looks set to receive more serious scrutiny. The club has previously rejected Mr Glazer's approaches out of hand. But a senior source at the club told the BBC: "This time it's different." Supporters' group Shareholders United, however, urged the club to reject the new deal.
A spokesman for the Shareholders United said: "I can't see any difference (compared to Mr Glazer's previous proposals) other than £200m less debt. "He isn't bringing any money into the club; he'll use our money to buy it."
Mr Glazer's latest move is being led by Mr Glazer's two sons, Avi and Joel, according to the Financial Times. A proposal was received by David Gill, United's chief executive, at the end of last week, pitched at about 300p a share. David Cummings, head of UK equities for Standard Life Investments, said he believed a "well funded" 300p a share bid would be enough for Mr Glazer to take control of the club.
"I do not think there is anything that Manchester United fans can do about it," he told the BBC. "They can complain about it but it is curtains for them. They may not want him but they are going to get him." The US tycoon, who has been wooing the club for the last 12 months, has approached the United board with "detailed proposals", it has confirmed.
Mr Glazer, who owns the Tampa Bay Buccaneers team, hopes this will lead to a formal bid being accepted. He is believed to have increased the amount of equity in the new proposal, though it is not clear by how much. For his proposal to succeed, he needs the support of United's largest shareholders, the Irish horseracing tycoons JP McManus and John Magnier. They own 29% of United through their Cubic Expression investment vehicle. Mr Glazer and his family hold a stake of 28.1%. But it is not yet known whether Mr McManus and Mr Magnier would support a Glazer bid. NM Rothschild, the investment bank, is advising Mr Glazer, according to the Financial Times. His previous adviser, JPMorgan, quit last year when Mr Glazer went ahead and voted against the appointment of three United directors to the board, against its advice. But the FT said it thought JP Morgan may still have had some role in financing Mr Glazer's latest financial proposal.
| Manchester United revealed on Sunday that it had received a detailed proposal from Mr Glazer, which looks set to receive more serious scrutiny.But it is not yet known whether Mr McManus and Mr Magnier would support a Glazer bid.The club has previously rejected Mr Glazer's approaches out of hand.But the FT said it thought JP Morgan may still have had some role in financing Mr Glazer's latest financial proposal.David Cummings, head of UK equities for Standard Life Investments, said he believed a "well funded" 300p a share bid would be enough for Mr Glazer to take control of the club.Mr Glazer's latest move is being led by Mr Glazer's two sons, Avi and Joel, according to the Financial Times.Mr Glazer and his family hold a stake of 28.1%.A spokesman for the Shareholders United said: "I can't see any difference (compared to Mr Glazer's previous proposals) other than £200m less debt.His previous adviser, JPMorgan, quit last year when Mr Glazer went ahead and voted against the appointment of three United directors to the board, against its advice.NM Rothschild, the investment bank, is advising Mr Glazer, according to the Financial Times. |
Tokyo says deflation 'controlled'
The Japanese government has forecast that the country's economic growth will slow to 1.6% in the next fiscal year starting in April 2005.
While it predicts this fall from the current 2.1% level, it said it was making progress on ending deflation. The figures were given by economics minister Heizo Takenaka who said the economy would grow by 2% in 2006/07. He said the consumer price index (CPI) would rise 0.1% in the next fiscal year, the first gain since 2000/01. "We are attempting to make real economic conditions better and to overcome deflation. I think we are on track," said Mr Takenaka. Deflation - or falling consumer prices - has plagued Japan for more than five years. To ease the problem the Bank of Japan has regularly flooded the money market with excess cash to keep short term interest rates at 0% in an attempt to spur economic activity.
| He said the consumer price index (CPI) would rise 0.1% in the next fiscal year, the first gain since 2000/01.Deflation - or falling consumer prices - has plagued Japan for more than five years.The Japanese government has forecast that the country's economic growth will slow to 1.6% in the next fiscal year starting in April 2005.While it predicts this fall from the current 2.1% level, it said it was making progress on ending deflation. |
Economy 'stronger than forecast'
The UK economy probably grew at a faster rate in the third quarter than the 0.4% reported, according to Bank of England deputy governor Rachel Lomax.
Private sector business surveys suggest a stronger economy than official estimates, Ms Lomax said. Other surveys collectively show a rapid slowdown in UK house price growth, she pointed out. This means that despite a strong economic growth, base rates will probably stay on hold at 4.75%. Official data comes from the Office for National Statistics (ONS). Though reliable, ONS data takes longer to publish, so now the BoE is calling for faster delivery of data so it can make more effective policy decisions. "Recent work by the Bank has shown that private sector surveys add value, even when preliminary ONS estimates are available," Ms Lomax said in a speech to the North Wales Business Club.
The ONS is due to publish its second estimate of third quarter growth on Friday. "The MPC judges that overall growth was a little higher in the third quarter than the official data currently indicate," Ms Lomax said. The Bank said successful monetary policy depends on having good information. Rachel Lomax cited the late 1980s as an example of a time when weak economic figures were published, but substantially revised upwards years later.
"The statistical fog surrounding the true state of the economy has proved a particularly potent breeding ground for policy errors in the past," she said. Improving the quality of national statistics is the single the best way of making sure the Monetary Policy Committee (MPC) makes the right decisions, she said. The Bank of England is working in tandem with the ONS to improve the quality and speed of delivery of data. Her remarks follow criticism from the House of Lords Economic Affairs Committee, which said the MPC had held interest rates too high given that inflation was way below the 2% target.
A slowdown in the housing market and this year's surge in oil prices has made economic forecasting all the more tricky, leading to a more uncertain outlook. "This year rising oil prices and a significant slowdown in the housing market have awoken bad memories of the 1970s and 1980s," Ms Lomax said. "The MPC will be doing well if it can achieve the same stability over the next decade as we have enjoyed over the past 10 years." Decisions on interest rates are made after the MPC gathers together the range of indicators available every month. The clearest signals come when all indicators are pointing the same direction, Ms Lomax intimated. "In economic assessment, there is safety in numbers."
| "The MPC judges that overall growth was a little higher in the third quarter than the official data currently indicate," Ms Lomax said."Recent work by the Bank has shown that private sector surveys add value, even when preliminary ONS estimates are available," Ms Lomax said in a speech to the North Wales Business Club.Private sector business surveys suggest a stronger economy than official estimates, Ms Lomax said."This year rising oil prices and a significant slowdown in the housing market have awoken bad memories of the 1970s and 1980s," Ms Lomax said.The UK economy probably grew at a faster rate in the third quarter than the 0.4% reported, according to Bank of England deputy governor Rachel Lomax.Her remarks follow criticism from the House of Lords Economic Affairs Committee, which said the MPC had held interest rates too high given that inflation was way below the 2% target.Improving the quality of national statistics is the single the best way of making sure the Monetary Policy Committee (MPC) makes the right decisions, she said.Though reliable, ONS data takes longer to publish, so now the BoE is calling for faster delivery of data so it can make more effective policy decisions.The Bank said successful monetary policy depends on having good information. |
Saudi ministry to employ women
Women will be employed in Saudi Arabia's foreign ministry for the first time this year, Foreign Minister Prince Saud Al-Faisal has been reported as saying.
The move comes as the conservative country inches open the door to working women. Last year, Crown Prince Abdullah, the de-facto ruler, told government departments to put plans in place for employing women. But progress has been slow, reports from the country say.
Earlier this week, the local Arab News said Labour Minister Ghazi al-Gosaibi had "caused uproar" when he said his ministry was having difficulty hiring women because they demanded segregated offices. The newspaper said many Saudi women found his explanation "a pitiful excuse for not employing women". Women now make up more than half of all graduates from Saudi universities but only 5% of the workforce. "Our educational reforms have created a new generation of highly-educated and professionally trained Saudi women who are acquiring their rightful position in Saudi society," Arab News quoted Prince Saud as saying. "I am proud to mention here that this year we shall have women working in the Ministry of Foreign Affairs for the first time."
| Women will be employed in Saudi Arabia's foreign ministry for the first time this year, Foreign Minister Prince Saud Al-Faisal has been reported as saying.The newspaper said many Saudi women found his explanation "a pitiful excuse for not employing women"."I am proud to mention here that this year we shall have women working in the Ministry of Foreign Affairs for the first time.""Our educational reforms have created a new generation of highly-educated and professionally trained Saudi women who are acquiring their rightful position in Saudi society," Arab News quoted Prince Saud as saying. |
US crude prices surge above $53
US crude prices have soared to fresh four-month highs above $53 in the US as refinery problems propelled petrol prices to an all-time high.
US light sweet crude futures jumped to $53.09 a barrel in New York before closing at $53.03. The gains tracked a surge in US gasoline futures to a record high of $1.4850 a gallon. The jump followed a fire at Western Refining Company's refinery in Texas, which shut down petrol production. A spokesman for the group was unable to say when the production unit would be back up and running. "This market simply wants to go up," Citigroup Global Markets analyst Kyle Cooper told Reuters news agency. Ed Silliere, analyst at Energy Merchant, added: "Gasoline is up because of the refinery issues in Texas, which means there will be a scramble for product in the (US) Gulf Coast."
Elsewhere, a refinery in Houston was closed due to mechanical problems, while on Tuesday production at BP's Texas City refinery was taken down for a short time. In the approach to Spring, the market becomes much more sensitive to problems with petrol production as dealers anticipate rising demand for fuel ahead of the holiday season. The rise in prices came despite a US government report that showed domestic supplies of fuel oil and fuel were rising. Meanwhile, oil production cartel Opec's recent announcement that it was now unlikely to cut production levels has also failed to calm fears on the market. Oil prices are roughly 45% higher than a year ago and have risen sharply in recent weeks due to a combination of colder weather, the declining value of the dollar and fears that Opec could rein in production to head off a seasonal drop in demand. Instability in Iraq and underlying fears about terrorism have also played a part in the rally.
| US crude prices have soared to fresh four-month highs above $53 in the US as refinery problems propelled petrol prices to an all-time high.Meanwhile, oil production cartel Opec's recent announcement that it was now unlikely to cut production levels has also failed to calm fears on the market.Elsewhere, a refinery in Houston was closed due to mechanical problems, while on Tuesday production at BP's Texas City refinery was taken down for a short time.The jump followed a fire at Western Refining Company's refinery in Texas, which shut down petrol production.In the approach to Spring, the market becomes much more sensitive to problems with petrol production as dealers anticipate rising demand for fuel ahead of the holiday season.Ed Silliere, analyst at Energy Merchant, added: "Gasoline is up because of the refinery issues in Texas, which means there will be a scramble for product in the (US) Gulf Coast." |
Alfa Romeos 'to get GM engines'
Fiat is to stop making six-cylinder petrol engines for its sporty Alfa Romeo subsidiary, unions at the Italian carmaker have said.
The unions claim Fiat is to close the Fiat Powertrain plant at Arese near Milan and instead source six-cylinder engines from General Motors. Fiat has yet to comment on the matter, but the unions say the new engines will be made by GM in Australia. The news comes a week after GM pulled out of an agreement to buy Fiat. GM had to pay former partner Fiat 1.55bn euros ($2bn; £1.1bn) to get out of a deal which could have forced it to buy the Italian carmaker outright. Fiat and GM also ended their five-year alliance and two joint ventures in engines and purchasing, but did agree to continue buying each other's engines.
"Powertrain told us today that Alfa Romeo engines will no longer be made in Arese," said union leader Vincenzo Lilliu, as reported by the Reuters news agency. "The assembly line will be dismantled and the six-cylinder Alfa Romeo motor will be replaced with an engine GM produces in Australia." Reuters also said that Mr Lilliu and other union bosses shouted insults at Fiat chairman Luca di Montezemolo, following a meeting on Tuesday regarding the future of the Arese plant. The unions said the end of engine production at the facility would mean the loss of 800 jobs. All Alfa Romeo models can be bought with a six-cylinder engine - the 147, 156, 156 Sportwagon, 166, GTV, GT and Spider.
| Fiat is to stop making six-cylinder petrol engines for its sporty Alfa Romeo subsidiary, unions at the Italian carmaker have said.The unions claim Fiat is to close the Fiat Powertrain plant at Arese near Milan and instead source six-cylinder engines from General Motors.Fiat has yet to comment on the matter, but the unions say the new engines will be made by GM in Australia."Powertrain told us today that Alfa Romeo engines will no longer be made in Arese," said union leader Vincenzo Lilliu, as reported by the Reuters news agency."The assembly line will be dismantled and the six-cylinder Alfa Romeo motor will be replaced with an engine GM produces in Australia." |
Glaxo aims high after profit fall
GlaxoSmithKline saw its profits fall 9% last year to £6.2bn ($11.5bn), but Europe's biggest drugmaker says a recovery during 2005 is on the way.
Cheap copies of its drugs, particularly anti-depressants Paxil and Wellbutrin, and a weak dollar had hit profits, but global sales were up 1% in 2004. The firm is confident its new drug pipeline will deliver profits despite the failure of an obesity drug. Chief executive Jean-Pierre Garnier said it had been a "difficult year".
In early afternoon trade in London the company share price was down 1% at 1218 pence. Mr Garnier said the company had absorbed over £1.5bn of lost sales to generics but still managing to grow the business. "The continuing success of our key products means we can now look forward to a good performance in 2005," he said. "2005 will also be an important year in terms of research and development pipeline progress." However, the firm discontinued development of an experimental treatment for obesity, known as '771, after disappointing clinical trial results. Glaxo is relying on new treatments for conditions such as cancer, diabetes, depression, HIV/AIDS and allergies to lift the pace of sales growth after several disappointing years.
| Mr Garnier said the company had absorbed over £1.5bn of lost sales to generics but still managing to grow the business.Chief executive Jean-Pierre Garnier said it had been a "difficult year"."2005 will also be an important year in terms of research and development pipeline progress."However, the firm discontinued development of an experimental treatment for obesity, known as '771, after disappointing clinical trial results. |
UK house prices dip in November
UK house prices dipped slightly in November, the Office of the Deputy Prime Minister (ODPM) has said.
The average house price fell marginally to £180,226, from £180,444 in October. Recent evidence has suggested that the UK housing market is slowing after interest rate increases, and economists forecast a drop in prices during 2005. But while the monthly figures may hint at a cooling of the market, annual house price inflation is still strong, up 13.8% in the year to November. Economists, however, forecast that ODPM figures are likely to show a weakening in annual house price growth in coming months. "Overall, the housing market activity is slowing down and that is backed up by the mortgage lending and the mortgage approvals data," said Mark Miller, at HBOS Treasury Services. "The ODPM data is a fairly lagging indicator."
The figures come after the Bank of England said the number of mortgages approved in the UK has fallen to the lowest level for nearly a decade. The Halifax, meanwhile, said last week that house prices increased by 1.1% in December - the first monthly rise since September.
The UK's biggest mortgage lender said prices rose 15.1% over the whole of 2004, but by only 2.8% in the second half of the year. It is predicting a 2% fall in overall prices in 2005 as the market stabilises after large gains in recent years. The ODPM attributed the monthly fall of prices in November to a drop in the value of detached houses and flats. It said annual inflation rose between October and November because prices had fallen by 1.1% in the same period in 2003.
The ODPM data showed the average house price was £192,713 in England; £139,544 in Wales; £116,542 in Scotland, and £111,314 in Northern Ireland.
All areas saw a rise in annual house price inflation in November except for Northern Ireland and the West Midlands, where the rate was unchanged, the ODPM said. The North East showed the highest rate of inflation at 26.2%, followed by Yorkshire and the Humber on 21.7%, and the North West on 21.1%. The East Midlands, the West Midlands and the South West all had an annual inflation rate of more than 15%. In London, the area with the highest average house price at £262,825, annual inflation rose only slightly in November to 7.1% from 7% the previous month.
| All areas saw a rise in annual house price inflation in November except for Northern Ireland and the West Midlands, where the rate was unchanged, the ODPM said.It said annual inflation rose between October and November because prices had fallen by 1.1% in the same period in 2003.In London, the area with the highest average house price at £262,825, annual inflation rose only slightly in November to 7.1% from 7% the previous month.UK house prices dipped slightly in November, the Office of the Deputy Prime Minister (ODPM) has said.But while the monthly figures may hint at a cooling of the market, annual house price inflation is still strong, up 13.8% in the year to November.The ODPM attributed the monthly fall of prices in November to a drop in the value of detached houses and flats.The ODPM data showed the average house price was £192,713 in England; £139,544 in Wales; £116,542 in Scotland, and £111,314 in Northern Ireland.The average house price fell marginally to £180,226, from £180,444 in October. |
'Golden economic period' to end
Ten years of "golden" economic performance may come to an end in 2005 with growth slowing markedly, City consultancy Deloitte has warned.
The UK economy could suffer a backlash from the slowdown in the housing market, triggering a fall in consumer spending and a rise in unemployment. Deloitte is forecasting economic growth of 2% this year, below Chancellor Gordon Brown's forecast of 3% to 3.5%. It also believes that interest rates will fall to 4% by the end of the year.
In its quarterly economic review, Deloitte said the UK economy had enjoyed a "golden period" during the past decade with unemployment falling to a near 30 year low and inflation at its lowest since the 1960s.
But it warned that this growth had been achieved at the expense of creating major "imbalances" in the economy. Deloitte's chief economic advisor Roger Bootle said: "The biggest hit of all is set to come from the housing market which has already embarked on a major slowdown. "Whereas the main driver of the economy in recent years has been robust household spending growth, this is likely to suffer as the housing market slowdown gathers pace."
Economic growth is likely to be constrained during the next few years by increased pressure on household budgets and rising taxes, Deloitte believes. Gordon Brown will need to raise about $10bn a year in order to sustain the public finances in the short term, the firm claims. This will result in a marked slowdown in growth in 2005 and 2006 compared to last year, when the economy expanded by 3.25%. However, Deloitte stressed that the slowdown was unlikely to have any major impact on retail prices while it expected the Bank of England to respond quickly to signs of the economy faltering. It expects a series of "aggressive" interest rate cuts over the next two years, with the cost of borrowing falling from its current 4.75% mark to 3.5% by the end of 2006. "Although 2005 may not be the year when things go completely wrong, it will probably mark the start of a more difficult period for the UK economy," Mr Bootle.
| "Whereas the main driver of the economy in recent years has been robust household spending growth, this is likely to suffer as the housing market slowdown gathers pace."This will result in a marked slowdown in growth in 2005 and 2006 compared to last year, when the economy expanded by 3.25%.Ten years of "golden" economic performance may come to an end in 2005 with growth slowing markedly, City consultancy Deloitte has warned.Deloitte is forecasting economic growth of 2% this year, below Chancellor Gordon Brown's forecast of 3% to 3.5%.In its quarterly economic review, Deloitte said the UK economy had enjoyed a "golden period" during the past decade with unemployment falling to a near 30 year low and inflation at its lowest since the 1960s.Economic growth is likely to be constrained during the next few years by increased pressure on household budgets and rising taxes, Deloitte believes. |
Umbro profits lifted by Euro 2004
UK sportswear firm Umbro has posted a 222% rise in annual profit after sales of replica England football kits were boosted by the Euro 2004 tournament.
Pre-tax profit for 2004 was £15.4m ($29.4m). Umbro, which recently lost sponsorship deals with Chelsea and Celtic, said on Thursday it had signed a new four-year agreement with Scottish club Rangers. It hopes 2005 sales will benefit from the launch of a new England replica shirt ahead of the 2006 World Cup. In January, Umbro announced its sponsorship agreement with Chelsea, which gave Umbro the lucrative right to make replica shirts, would end in 2006, five years earlier than expected. The firm, which is to receive a payment from Chelsea of £24.5m, said it is "appraising a number of additional investment opportunities as a result of this compensation" . Chief executive Peter McGuigan said the firm plans to grow sales both in the UK and internationally.
The firm, reporting its first annual results since listing on the London Stock Exchange in June, said the UK market had seen sales growth of 8% last year. It said the launch of its Evolution X fashion range had boosted sales. Umbro supplies more than 150 teams across the world including the national sides of Ireland, Sweden and Norway. Shares in Umbro were up 1.76% at 115.5 pence in morning trade.
| UK sportswear firm Umbro has posted a 222% rise in annual profit after sales of replica England football kits were boosted by the Euro 2004 tournament.Umbro, which recently lost sponsorship deals with Chelsea and Celtic, said on Thursday it had signed a new four-year agreement with Scottish club Rangers.In January, Umbro announced its sponsorship agreement with Chelsea, which gave Umbro the lucrative right to make replica shirts, would end in 2006, five years earlier than expected.The firm, reporting its first annual results since listing on the London Stock Exchange in June, said the UK market had seen sales growth of 8% last year.Chief executive Peter McGuigan said the firm plans to grow sales both in the UK and internationally. |
UK economy facing 'major risks'
The UK manufacturing sector will continue to face "serious challenges" over the next two years, the British Chamber of Commerce (BCC) has said.
The group's quarterly survey of companies found exports had picked up in the last three months of 2004 to their best levels in eight years. The rise came despite exchange rates being cited as a major concern. However, the BCC found the whole UK economy still faced "major risks" and warned that growth is set to slow. It recently forecast economic growth will slow from more than 3% in 2004 to a little below 2.5% in both 2005 and 2006.
Manufacturers' domestic sales growth fell back slightly in the quarter, the survey of 5,196 firms found. Employment in manufacturing also fell and job expectations were at their lowest level for a year.
"Despite some positive news for the export sector, there are worrying signs for manufacturing," the BCC said. "These results reinforce our concern over the sector's persistent inability to sustain recovery." The outlook for the service sector was "uncertain" despite an increase in exports and orders over the quarter, the BCC noted.
The BCC found confidence increased in the quarter across both the manufacturing and service sectors although overall it failed to reach the levels at the start of 2004. The reduced threat of interest rate increases had contributed to improved confidence, it said. The Bank of England raised interest rates five times between November 2003 and August last year. But rates have been kept on hold since then amid signs of falling consumer confidence and a slowdown in output. "The pressure on costs and margins, the relentless increase in regulations, and the threat of higher taxes remain serious problems," BCC director general David Frost said. "While consumer spending is set to decelerate significantly over the next 12-18 months, it is unlikely that investment and exports will rise sufficiently strongly to pick up the slack."
| "Despite some positive news for the export sector, there are worrying signs for manufacturing," the BCC said.The BCC found confidence increased in the quarter across both the manufacturing and service sectors although overall it failed to reach the levels at the start of 2004.The outlook for the service sector was "uncertain" despite an increase in exports and orders over the quarter, the BCC noted.The UK manufacturing sector will continue to face "serious challenges" over the next two years, the British Chamber of Commerce (BCC) has said.However, the BCC found the whole UK economy still faced "major risks" and warned that growth is set to slow.The reduced threat of interest rate increases had contributed to improved confidence, it said.The rise came despite exchange rates being cited as a major concern. |
Cars pull down US retail figures
US retail sales fell 0.3% in January, the biggest monthly decline since last August, driven down by a heavy fall in car sales.
The 3.3% fall in car sales had been expected, coming after December's 4% rise in car sales, fuelled by generous pre-Christmas special offers. Excluding the car sector, US retail sales were up 0.6% in January, twice what some analysts had been expecting. US retail spending is expected to rise in 2005, but not as quickly as in 2004.
Steve Gallagher, US chief economist at SG Corporate & Investment Banking, said January's figures were "decent numbers".
"We are not seeing the numbers that we saw in the second half of 2004, but they are still pretty healthy," he added. Sales at appliance and electronic stores were down 0.6% in January, while sales at hardware stores dropped by 0.3% and furniture store sales dipped 0.1%. Sales at clothing and clothing accessory stores jumped 1.8%, while sales at general merchandise stores, a category that includes department stores, rose by 0.9%. These strong gains were in part put down to consumers spending gift vouchers they had been given for Christmas.
Sales at restaurants, bars and coffee houses rose by 0.3%, while grocery store sales were up 0.5%. In December, overall retail sales rose by 1.1%. Excluding the car sector, sales rose by just 0.3%. Parul Jain, deputy chief economist at Nomura Securities International, said consumer spending would continue to rise in 2005, only at a slower rate of growth than in 2004. "Consumers continue to retain their strength in the first quarter," he said. Van Rourke, a bond strategist at Popular Securities, agreed that the latest retail sales figures were "slightly stronger than expected".
| Excluding the car sector, US retail sales were up 0.6% in January, twice what some analysts had been expecting.Excluding the car sector, sales rose by just 0.3%.In December, overall retail sales rose by 1.1%.US retail sales fell 0.3% in January, the biggest monthly decline since last August, driven down by a heavy fall in car sales.The 3.3% fall in car sales had been expected, coming after December's 4% rise in car sales, fuelled by generous pre-Christmas special offers.US retail spending is expected to rise in 2005, but not as quickly as in 2004. |
Split-caps pay £194m compensation
Investors who lost money following the split-capital investment trust scandal are to receive £194m compensation, the UK's financial watchdog has announced.
Eighteen investment firms involved in the sale of the investments agreed the compensation package with the Financial Services Authority (FSA). Splits were marketed as a low-risk way to benefit from rising share prices. But when the stock market collapsed in 2000, the products left thousands of investors out of pocket. An estimated 50,000 people took out split-capital funds, some investing their life savings in the schemes. The paying of compensation will be overseen by an independent company, the FSA said.
Further details of how investors will be able to claim their share of the compensation package will be announced in the new year. "This should save investors from having to take their case to the Financial Ombudsman Service, something, no doubt, that will be very welcome," Rob McIvor, FSA spokesman, told BBC News. Agreeing to pay compensation did not mean that the eighteen firms involved were admitting any guilt, the FSA added. Any investor accepting the compensation will have to waive the right to take their case to the Financial Ombudsman Service.
The FSA has been investigating whether investors were misled about the risks posed by split-capital investment trusts. The FSA's 60 strong investigation team looked into whether fund managers colluded in a so-called "magic circle", in the hope of propping up one another's share prices.
Firms involved were presented with 780 files of evidence detailing 27,000 taped conversations and over 70 interviews. In May, the FSA was widely reported as having asked firms to pay up to £350m in compensation. Mr McIvor told the BBC that the final settlement figure was smaller because two unnamed firms had pulled out of the compensation negotiations. Investors in these two firms may now have to take any compensation claim to the Financial Ombudsman Service or the courts.
| Eighteen investment firms involved in the sale of the investments agreed the compensation package with the Financial Services Authority (FSA).Investors in these two firms may now have to take any compensation claim to the Financial Ombudsman Service or the courts.Any investor accepting the compensation will have to waive the right to take their case to the Financial Ombudsman Service.Agreeing to pay compensation did not mean that the eighteen firms involved were admitting any guilt, the FSA added.In May, the FSA was widely reported as having asked firms to pay up to £350m in compensation.Further details of how investors will be able to claim their share of the compensation package will be announced in the new year."This should save investors from having to take their case to the Financial Ombudsman Service, something, no doubt, that will be very welcome," Rob McIvor, FSA spokesman, told BBC News. |
Budget Aston takes on Porsche
British car maker Aston Martin has gone head-to-head with Porsche's 911 sports cars with the launch of its cheapest model yet.
With a price tag under £80,000, the V8 Vantage is tens of thousands of pounds cheaper than existing Aston models. The Vantage is "the most important car in the history of our company", said Aston's chief executive Ulrich Bez. Aston - whose cars were famously used by James Bond - will unveil the Vantage at the Geneva Motor Show on Thursday. Mr Bez - himself a former executive at rival Porsche - said the new car was the company's "most affordable car ever and makes the brand accessible". This in turn would make Aston Martin "globally visible, but still very, very exclusive", he added.
First shown as a concept car at the 2003 North American International Auto Show in Detroit, the V8 Vantage will be available in the UK in late summer. Development costs for the Vantage have been kept low by sharing a platform with Aston's DB9, which Mr Bez described as "the previous most important car for our company". There is currently an 18 months waiting list for the DB9, Mr Bez said. The Vantage will be built at the new Aston factory in Gaydon, near Warwick, and should more than double Aston's total output from about 2,000 presently.
| The Vantage is "the most important car in the history of our company", said Aston's chief executive Ulrich Bez.Development costs for the Vantage have been kept low by sharing a platform with Aston's DB9, which Mr Bez described as "the previous most important car for our company".Mr Bez - himself a former executive at rival Porsche - said the new car was the company's "most affordable car ever and makes the brand accessible".Aston - whose cars were famously used by James Bond - will unveil the Vantage at the Geneva Motor Show on Thursday. |
Dollar drops on reserves concerns
The US dollar has dropped against major currencies on concerns that central banks may cut the amount of dollars they hold in their foreign reserves.
Comments by South Korea's central bank at the end of last week have sparked the recent round of dollar declines. South Korea, which has about $200bn in foreign reserves, said it plans instead to boost holdings of currencies such as the Australian and Canadian dollar. Analysts reckon that other nations may follow suit and now ditch the dollar. At 1300 GMT, the euro was up 0.9% on the day at 1.3187 euros per US dollar. The British pound had added 0.5% to break through the $1.90 level, while the dollar had fallen by 1.3% against the Japanese yen to trade at 104.16 yen.
At the start of the year, the US currency, which had lost 7% against the euro in the final three months of 2004 and had fallen to record lows, staged something of a recovery.
Analysts, however, pointed to the dollar's inability recently to extend that rally despite positive economic and corporate data, and highlighted the fact that many of the US's economic problems had not disappeared. The focus once again has been on the country's massive trade and budget deficits, with predictions of more dollar weakness to come. "The comments from Korea came at a time when sentiment towards the dollar was already softening," said Ian Gunner, a trader at Mellon Financial. On Tuesday, traders in Asia said that both South Korea and Taiwan had withdrawn their bids to buy dollars at the start of the session. Mansoor Mohi-Uddin, chief currency strategist at UBS, said that there was a sentiment in the market that "central banks from Asia and the Middle East are buying euros". A report last month already showed that the dollar was losing its allure as a currency that offered rock-steady returns and stability. Compiled by Central Banking Publications and sponsored by the UK's Royal Bank of Scotland, the survey found 39 nations out of 65 questioned were increasing their euro holdings, with 29 cutting back on the US dollar.
| The US dollar has dropped against major currencies on concerns that central banks may cut the amount of dollars they hold in their foreign reserves.South Korea, which has about $200bn in foreign reserves, said it plans instead to boost holdings of currencies such as the Australian and Canadian dollar.At 1300 GMT, the euro was up 0.9% on the day at 1.3187 euros per US dollar.On Tuesday, traders in Asia said that both South Korea and Taiwan had withdrawn their bids to buy dollars at the start of the session.A report last month already showed that the dollar was losing its allure as a currency that offered rock-steady returns and stability.Compiled by Central Banking Publications and sponsored by the UK's Royal Bank of Scotland, the survey found 39 nations out of 65 questioned were increasing their euro holdings, with 29 cutting back on the US dollar. |
Call to overhaul UK state pension
The UK pension system has been branded inadequate and too complex by a leading retirement think-tank.
The Pensions Policy Institute (PPI) said replacing the state pension with a "citizen's pension" would help tackle inequality and complexity. The change would see pensions being calculated on length of residency in the UK rather than National Insurance (NI) contributions. Reform could reduce poverty by aiding people with broken employment records.
The PPI added that once the state system was reformed the government should look at options to overhaul private and workplace pensions. The think tank's proposals were made in response to the recent publication of the Pensions Commission's initial report into UK retirement savings. According to the Pensions Commission's report 12 million working people are not saving enough for their retirement. As a result, living standards could fall for the next generation of UK pensioners. The report added that a combination of higher taxes, higher savings and/or a higher average retirement age was needed to solve the UK pension crisis.
| The UK pension system has been branded inadequate and too complex by a leading retirement think-tank.The think tank's proposals were made in response to the recent publication of the Pensions Commission's initial report into UK retirement savings.The report added that a combination of higher taxes, higher savings and/or a higher average retirement age was needed to solve the UK pension crisis.According to the Pensions Commission's report 12 million working people are not saving enough for their retirement. |
US bank 'loses' customer details
The Bank of America has revealed it has lost computer tapes containing account details of more than one million customers who are US federal employees.
Several members of the US Senate are among those affected, who could now be vulnerable to identity theft. Senate sources say the missing tapes may have been stolen from a plane by baggage handlers. The bank gave no details of how the records disappeared, but said they had probably not been misused. Customers' accounts were being monitoring and account holders would be notified if any "unusual activity" was detected, bank officials said.
Bank of America said the tapes went missing in December while being shipped to a back-up data centre. "We, with federal law authorities, have done a very robust, thorough investigation on this and neither we nor they would make the statement lightly that we believe those tapes to be lost," Alexandra Tower, a spokeswoman for the North Carolina-based bank, told Time magazine. But although there was no evidence of criminal activity, the bank said, the Secret Service - a federal agency whose brief includes investigations of serious financial crime - is said to be looking into the loss. New York Senator Charles Schumer said he was told by the Senate Rules Committee that the tapes were probably stolen from a commercial plane. "Whether it is identity theft, terrorism, or other theft, in this new complicated world baggage handlers should have background checks and more care should be taken for who is hired for these increasingly sensitive positions," the Democrat senator said. Details of his Vermont colleague Pat Leahy's credit card account are among those missing, Senator Leahy's spokeswoman Tracy Schmaler said. About 900,000 military and civilian staff at the defence department are among the 1.2 million affected, according to a Pentagon spokesman.
| New York Senator Charles Schumer said he was told by the Senate Rules Committee that the tapes were probably stolen from a commercial plane.Bank of America said the tapes went missing in December while being shipped to a back-up data centre.But although there was no evidence of criminal activity, the bank said, the Secret Service - a federal agency whose brief includes investigations of serious financial crime - is said to be looking into the loss.Customers' accounts were being monitoring and account holders would be notified if any "unusual activity" was detected, bank officials said.The Bank of America has revealed it has lost computer tapes containing account details of more than one million customers who are US federal employees. |
Verizon 'seals takeover of MCI'
Verizon has won a takeover battle for US phone firm MCI with a bid worth $6.8bn (£3.6bn), reports say.
The two firms are expected to seal the deal on Monday morning, according to news agency reports, despite what was thought to be a higher bid from Qwest. The US telecoms market is consolidating fast, with former long-distance giant AT&T being bought by former subsidiary SBC earlier this year for $16bn. MCI exited bankruptcy in April, having gone bust under previous name WorldCom. The bankruptcy followed its admission in 2002 that it illegally booked expenses and inflated profits.
Shareholders lost about $180bn when the company collapsed, while 20,000 workers lost their jobs. Former Worldcom boss Bernie Ebbers is currently on trial, accused of overseeing an $11bn fraud. Qwest has itself come under suspicion of sub-standard behaviour, paying the Securities and Exchange Commission $250m in October to settle charges that it manipulated its results to keep Wall Street happy.
MCI is the US's second-biggest long distance firm after AT&T. Consolidation in the US telecommunications industry has picked up in the past few months as companies look to cut costs and boost client bases. A merger between MCI and Verizon would be the fifth billion-dollar telecoms deal since October. Last week, SBC Communications agreed to buy its former parent and phone trailblazer AT&T for about $16bn. Buying MCI would give either Qwest or Verizon access to MCI's global network and business-based subscribers. The rationale is similar to the one underpinning SBC's AT&T deal. Verizon is by far the bigger company and has its own successful mobile arm - factors which may have swung the board in its favour since both suitors are offering a mixture of cash and shares.
| Verizon has won a takeover battle for US phone firm MCI with a bid worth $6.8bn (£3.6bn), reports say.A merger between MCI and Verizon would be the fifth billion-dollar telecoms deal since October.The US telecoms market is consolidating fast, with former long-distance giant AT&T being bought by former subsidiary SBC earlier this year for $16bn.Last week, SBC Communications agreed to buy its former parent and phone trailblazer AT&T for about $16bn.MCI is the US's second-biggest long distance firm after AT&T.Buying MCI would give either Qwest or Verizon access to MCI's global network and business-based subscribers. |
Economy 'strong' in election year
UK businesses are set to prosper during the next few months - but this could trigger more interest rate rises, according to a report.
Optimism is at its highest since 1997 and business will reap the benefits of a continuing rise in public spending, say researchers at BDO Stoy Hayward. The Bank of England is expected to keep rates on hold this week - but they could go up later in the year. Rates are likely to rise after the anticipated general election in May. The BDO optimism index - a leading indicator of GDP growth two quarters ahead edged up in January to 102.5, from 102.2 in October. The rise is due, in part, to an increase in public spending and increased merger and acquisition activity.
The only thing blighting business optimism this year will be uncertainties associated with the general election, BDO said. Its BDO's output index - which predicts GDP movements a quarter in advance - remained at 100.8 for January, implying GDP growth at 2.9% in the second quarter of 2005. However, the output index is being held back by recent interest rate rises, sterling's strength against the dollar and high oil prices, the group noted. Its inflation index, which has risen continuously over the last 8 months, climbed to 110.0 in January from 108.0 in October last year. "The UK is looking strong going into the general election, but businesses need to prepare themselves for a jolt ahead as the Bank of England reacts to growth and inflationary pressures," said Peter Hemington, partner at BDO Stoy Hayward. "Growth will probably slow by the end of 2005 and it is likely that we will see higher interest rates or a sharp drop in demand for products and services."
| The BDO optimism index - a leading indicator of GDP growth two quarters ahead edged up in January to 102.5, from 102.2 in October.The only thing blighting business optimism this year will be uncertainties associated with the general election, BDO said."The UK is looking strong going into the general election, but businesses need to prepare themselves for a jolt ahead as the Bank of England reacts to growth and inflationary pressures," said Peter Hemington, partner at BDO Stoy Hayward.Optimism is at its highest since 1997 and business will reap the benefits of a continuing rise in public spending, say researchers at BDO Stoy Hayward.UK businesses are set to prosper during the next few months - but this could trigger more interest rate rises, according to a report. |
Air Jamaica back in state control
The Jamaican government is regaining control of Air Jamaica in an bid to help the ailing company out of its financial difficulties.
The firm has failed to make money since the state sold a majority stake to hotel tycoon Gordon Stewart in 1994. In common with many carriers, Air Jamaica, with debts of $560m (£291m), has been hit by high fuel costs and the impact of the 11 September attacks. The company will be restructured with the aim of finding a new buyer. "The administration is committed to a viable national airline that will serve as a major catalyst for our economy," said Finance Minister Omar Davies. The 35-year-old airline transports about 55% of all passengers to the island and its pilots are reportedly among the best paid in the industry, with senior members of staff earning in excess of $234,000 a year.
| The Jamaican government is regaining control of Air Jamaica in an bid to help the ailing company out of its financial difficulties.In common with many carriers, Air Jamaica, with debts of $560m (£291m), has been hit by high fuel costs and the impact of the 11 September attacks."The administration is committed to a viable national airline that will serve as a major catalyst for our economy," said Finance Minister Omar Davies. |
Crossrail link 'to get go-ahead'
The £10bn Crossrail transport plan, backed by business groups, is to get the go-ahead this month, according to The Mail on Sunday.
It says the UK Treasury has allocated £7.5bn ($13.99bn) for the project and that talks with business groups on raising the rest will begin shortly. The much delayed Crossrail Link Bill would provide for a fast cross-London rail link. The paper says it will go before the House of Commons on 23 February.
A second reading could follow on 16 or 17 March. "We've always said we are going to introduce a hybrid Bill for Crossrail in the Spring and this remains the case," the Department for Transport said on Sunday. Jeremy de Souza, a spokesman for Crossrail, said on Sunday he could not confirm whether the Treasury was planning to invest £7.5bn or when the bill would go before Parliament.
However, he said some impetus may have been provided by the proximity of an election.
The new line would go out as far as Maidenhead, Berkshire, to the west of London, and link Heathrow to Canary Wharf via the City. Heathrow to the City would take 40 minutes, dramatically cutting journey times for business travellers, and reducing overcrowding on the tube. The line has the support of the Mayor of London, Ken Livingstone, business groups and the government, but there have been three years of arguments over how it should be funded. The Mail on Sunday's Financial Mail said the £7.5bn of Treasury money was earmarked for spending in £2.5bn instalments in 2010, 2011 and 2012.
| Jeremy de Souza, a spokesman for Crossrail, said on Sunday he could not confirm whether the Treasury was planning to invest £7.5bn or when the bill would go before Parliament.The £10bn Crossrail transport plan, backed by business groups, is to get the go-ahead this month, according to The Mail on Sunday.It says the UK Treasury has allocated £7.5bn ($13.99bn) for the project and that talks with business groups on raising the rest will begin shortly.The Mail on Sunday's Financial Mail said the £7.5bn of Treasury money was earmarked for spending in £2.5bn instalments in 2010, 2011 and 2012."We've always said we are going to introduce a hybrid Bill for Crossrail in the Spring and this remains the case," the Department for Transport said on Sunday. |
Yukos owner sues Russia for $28bn
The majority owner of embattled Russian oil firm Yukos has sued the Russian government for $28.3bn (£15.2bn).
The Kremlin last year seized and sold Yukos' main production arm, Yugansk, to state-run oil group Rosneft for $9.3bn to offset a massive back tax bill. Group Menatep, the Gibraltar-based holding company which controls 51% of Yukos, says this was illegal. Menatep has already asked Rosneft to repay a $900m loan that Yugansk had secured on its assets.
The Russian government's argument for selling Yuganskneftegaz - the unit's full name - was that Yukos owed more than $27bn in back taxes for the years from 2000 onwards. It accused the firm of using a web of offshore firms to avoid its tax liabilities, and the courts sent in bailiffs to freeze Yukos accounts and seize Yugansk.
But critics say the sell-off, and the assault on Yukos' finances, are part of an attempt to bring the energy industry back under state control. According to Menatep, the government's actions were contrary to the 1994 Energy Charter Treaty, which was designed to regulate disagreements over energy investments. "We have warned the Russian government about their continuing attacks against Yukos, its personnel and its shareholders and we have warned any buyer of Yuganskneftegaz that they would face a lifetime of litigation," said Tim Osborne, a director of Group Menatep. "The time for warning is over and actions to recover the value of our losses begin in earnest today."
Menatep said the value of its Yukos shareholding had gone from $17.8bn to "virtually nothing" since 2003 as a result of the Russian government's action, as its shares have fallen 97%. According to its Paris lawyer, Emmanuel Gaillard of Shearman and Sterling, the overall claim is based on that figure, with a 60% addition for the share gains that could have accrued since then. Arbitration of the lawsuit could take place in Stockholm or The Hague, Mr Gaillard said. While Russia has signed the Charter, it has never ratified it - which some experts say could make it difficult for Menatep to press its case. But Mr Gaillard told BBC News that the Charter came into effect on signature, not ratification. "Russia has said in the past that it is bound by it, so as to attract foreign investors," he said.
Yukos is still waiting to see what will happen to its filing in a US court for bankruptcy protection. It took the action to try to prevent the forced sale of Yugansk - first to a little-known shell company, which in turn was bought by Rosneft. Yukos claims its downfall was punishment for the political ambitions of its founder Mikhail Khodorkovsky. Mr Khodorkovsky, currently facing fraud and tax evasion charges of his own, was one of the founders of Menatep. He has since signed over his shareholding to one of his fellow investors.
| Menatep said the value of its Yukos shareholding had gone from $17.8bn to "virtually nothing" since 2003 as a result of the Russian government's action, as its shares have fallen 97%.Group Menatep, the Gibraltar-based holding company which controls 51% of Yukos, says this was illegal.The Russian government's argument for selling Yuganskneftegaz - the unit's full name - was that Yukos owed more than $27bn in back taxes for the years from 2000 onwards.The majority owner of embattled Russian oil firm Yukos has sued the Russian government for $28.3bn (£15.2bn).While Russia has signed the Charter, it has never ratified it - which some experts say could make it difficult for Menatep to press its case.Mr Khodorkovsky, currently facing fraud and tax evasion charges of his own, was one of the founders of Menatep.The Kremlin last year seized and sold Yukos' main production arm, Yugansk, to state-run oil group Rosneft for $9.3bn to offset a massive back tax bill."We have warned the Russian government about their continuing attacks against Yukos, its personnel and its shareholders and we have warned any buyer of Yuganskneftegaz that they would face a lifetime of litigation," said Tim Osborne, a director of Group Menatep.According to Menatep, the government's actions were contrary to the 1994 Energy Charter Treaty, which was designed to regulate disagreements over energy investments. |
Court rejects $280bn tobacco case
A US government claim accusing the country's biggest tobacco companies of covering up the effects of smoking has been thrown out by an appeal court.
The demand for $280bn (£155bn) - filed by the Clinton administration in 1999 - was rejected in a 2-1 decision. The court in Washington found that the case could not be brought under federal anti-racketeering laws. Among the accused were Altria Group, RJ Reynolds Tobacco, Lorillard Tobacco, Liggett Group and Brown and Williamson. In its case, the government claimed tobacco firms manipulated nicotine levels to increase addiction, targeted teenagers with multi-billion dollar advertising campaigns, lied about the dangers of smoking and ignored research to the contrary.
Prosecutors wanted the cigarette firms to surrender $280bn in profits accumulated over the past 50 years and impose tougher rules on marketing their products. But the Court of Appeals for the District of Columbia ruled that the US government could not sue the firms under legislation drawn up to counteract Mafia infiltration of business. The tobacco companies deny that they illegally conspired to promote smoking and defraud the public. They also say they have already met many of the government's demands in a landmark $206bn settlement reached with 46 states in 1998. Shares of tobacco companies closed higher after the ruling, with Altria rising 5% and Reynolds showing gains of 4.5%.
| A US government claim accusing the country's biggest tobacco companies of covering up the effects of smoking has been thrown out by an appeal court.The tobacco companies deny that they illegally conspired to promote smoking and defraud the public.In its case, the government claimed tobacco firms manipulated nicotine levels to increase addiction, targeted teenagers with multi-billion dollar advertising campaigns, lied about the dangers of smoking and ignored research to the contrary.Shares of tobacco companies closed higher after the ruling, with Altria rising 5% and Reynolds showing gains of 4.5%. |
Irish markets reach all-time high
Irish shares have risen to a record high, with investors persuaded to buy into the market by low inflation and strong growth forecasts.
The ISEQ index of leading shares closed up 23 points to 6661.89 on Thursday, fuelled by strong growth in banking and financial stocks. A fall in the rate of inflation to 2.3% in January gave a fresh boost to shares which have advanced 4% this month. The economy is set for strong growth in 2005 while interest rates remain low.
Several of Ireland's biggest companies saw their market value hit recent highs on Thursday. Allied Irish Banks, Ireland's biggest company by capitalisation, touched a five year peak while Bank of Ireland shares rose to their highest level since August 2002.
Telecoms firm Eircom, which recently revealed that it would re-enter the Irish mobile phone market, hit a yearly high. Analysts said that economic conditions were benign and Irish shares were still trading at a discount to other European markets. "Ireland ticks all the boxes as far as international investors are concerned," Roy Asher, chief investment officer of Hibernian Investment Managers, told Reuters. "Buoyant economic conditions are set to continue in Ireland over the next few years and Irish equities continue to offer quality growth at a reasonable valuation."
Bernard McAlinden, head of equity research at NCB Stockbrokers, said equities represented good value compared to other investments. "It is still looking good," he told Reuters. "We have seen good economic data on Ireland which benefits the financial stocks." Ireland's economic 'miracle' is enjoying a second wind, with 5% growth forecast for 2005 and 2006. The economy cooled markedly between 2001 and 2003 after enjoying spectacular growth of more than 10% in 2000. However, it has bounced back strongly with growth of just under 5% expected in 2004.
| Irish shares have risen to a record high, with investors persuaded to buy into the market by low inflation and strong growth forecasts."Buoyant economic conditions are set to continue in Ireland over the next few years and Irish equities continue to offer quality growth at a reasonable valuation."Ireland's economic 'miracle' is enjoying a second wind, with 5% growth forecast for 2005 and 2006.The ISEQ index of leading shares closed up 23 points to 6661.89 on Thursday, fuelled by strong growth in banking and financial stocks.The economy is set for strong growth in 2005 while interest rates remain low.Analysts said that economic conditions were benign and Irish shares were still trading at a discount to other European markets.Allied Irish Banks, Ireland's biggest company by capitalisation, touched a five year peak while Bank of Ireland shares rose to their highest level since August 2002. |
Pension hitch for long-living men
Male life expectancy is much higher than originally estimated, leading pension researchers have said.
The Pensions Policy Institute (PPI) said life expectancy for unskilled and professional men has been understated. Life expectancy at birth is 71 years for a manual worker and 79 years for a professional - a gap of eight years. But if measured at age 65 instead, the PPI said, a manual worker will live to 81 years and a professional worker to 86 years - a gap of just five years. The PPI's estimate is higher because it excludes people who have died before they reach 65 years of age and also takes into account ongoing improvements in life expectancy.
The government has ruled out raising the state pension age, because it says it would penalise lower-skilled workers who generally have lower life expectancies. Chris Curry, PPI research director, said its calculations suggested there could be more pressure on state pension spending than originally envisaged. "Even people in social class V [unskilled manual workers] who are widely likely to have the lowest life expectancy can still expect to live 16 years after state pension age," he said. Researchers have not updated life expectancy projections for women, who on average live longer than men.
| "Even people in social class V [unskilled manual workers] who are widely likely to have the lowest life expectancy can still expect to live 16 years after state pension age," he said.Life expectancy at birth is 71 years for a manual worker and 79 years for a professional - a gap of eight years.But if measured at age 65 instead, the PPI said, a manual worker will live to 81 years and a professional worker to 86 years - a gap of just five years.The Pensions Policy Institute (PPI) said life expectancy for unskilled and professional men has been understated. |
S Korea spending boost to economy
South Korea will boost state spending next year in an effort to create jobs and kick start its sputtering economy.
It has earmarked 100 trillion won ($96bn) for the first six months of 2005, 60% of its total annual budget. The government's main problems are "slumping consumption and a contraction in the construction industry". It aims to create 400,000 jobs and will focus on infrastructure and home building, as well as providing public firms with money to hire new workers.
The government has set an economic growth rate target of 5% for next year and hinted that would be in danger unless it took action. "Internal and external economic conditions are likely to remain unfavourable in 2005," the Finance and Economy Ministry said in a statement.
It blamed "continuing uncertainties such as fluctuating oil prices and foreign exchange rates and stagnant domestic demand that has shown few signs of a quick rebound". In 2004, growth will be between 4.7% and 4.8%, the ministry said. Not everyone is convinced the plan will work. "Our primary worry centres on the what we believe is the government's overly optimistic view that its front loading of the budget will be enough to turn the economy around," consultancy 4Cast said in a report.
The problem facing South Korea is that many consumers are reeling from the effects of a credit bubble that only recently burst. Millions of South Koreans are defaulting on their credit card bills, and the country's biggest card lender has been hovering on the verge of bankruptcy for months. As part of its spending plans, the government said it will ask firms to "roll over mortgage loans that come due in the first half of 2005" . It also pledged to look at ways of helping families on low incomes.
The government voiced concern about the effect of redundancies in the building trade. "Given the economic spill over and employment effect in the construction sector, a sharp downturn in the construction industry could have other adverse effects," the ministry said.
As a result, South Korea will give private companies also will be given the chance to build schools, hospitals, houses and other public buildings. It also will look at real estate tax system. Other plans on the table include promoting new industries such as bio-technology and nano-technology, as well as offering increased support to small and medium sized businesses. "The focus will be on job creation and economic recovery, given that unfavourable domestic and global conditions are likely to dog the Korean economy in 2005," the ministry said.
| "The focus will be on job creation and economic recovery, given that unfavourable domestic and global conditions are likely to dog the Korean economy in 2005," the ministry said."Given the economic spill over and employment effect in the construction sector, a sharp downturn in the construction industry could have other adverse effects," the ministry said."Internal and external economic conditions are likely to remain unfavourable in 2005," the Finance and Economy Ministry said in a statement.In 2004, growth will be between 4.7% and 4.8%, the ministry said.South Korea will boost state spending next year in an effort to create jobs and kick start its sputtering economy.The government has set an economic growth rate target of 5% for next year and hinted that would be in danger unless it took action.As a result, South Korea will give private companies also will be given the chance to build schools, hospitals, houses and other public buildings.As part of its spending plans, the government said it will ask firms to "roll over mortgage loans that come due in the first half of 2005" . |
Wembley firm won't make a profit
Shares in Multiplex Group, which is building the new Wembley stadium, fell as much as 19% after it said it would not make any money on the project.
The Australian firm said it would only break even on the 1.2bn Australian dollars (£458m; $874m) rebuild, after a rise in costs on the work. Any profits would depend on the outcome of legal cases resulting from a change in steel contractor, it added. It cut A$68m from profit targets for Wembley and another UK project.
Investors were shaken by the news and the firm's shares fell to a four month low of A$4.50, before recovering to close 16% down at A$4.67. The decline came despite Multiplex reporting an 11% rise in pre-tax profits to A$67.7m for 2004 and reaffirming its 2005 profit forecasts. Increased costs at Wembley and a separate development in London's Docklands saw Multiplex's construction division report profits of A$35.1m.
The firm said the result was below expectations but stressed that the majority of its UK projects - which also include the White City redevelopment scheme in west London - were performing strongly.
To recoup any profit from Wembley, where the firm changed its steel contractor due to a legal dispute, Multiplex will have to win legal claims against subcontractors. These claims could take up to two years to resolve. "Multiplex believes its claim are sound and ultimately will exceed the level needed to support the break even position," it said. "It is expected that profits will be possible in future periods as the claims are finalised." Wembley Stadium is to due to be completed in January and will officially open for the 2006 FA Cup Final. Analysts expressed concern at the unexpected paring back in profit. "Such a big writeback on the Wembley project in such a short period has impacted on management credibility," Simon Wheatley, from Goldman Sachs, told Reuters.
| To recoup any profit from Wembley, where the firm changed its steel contractor due to a legal dispute, Multiplex will have to win legal claims against subcontractors.It cut A$68m from profit targets for Wembley and another UK project.Shares in Multiplex Group, which is building the new Wembley stadium, fell as much as 19% after it said it would not make any money on the project.The decline came despite Multiplex reporting an 11% rise in pre-tax profits to A$67.7m for 2004 and reaffirming its 2005 profit forecasts."It is expected that profits will be possible in future periods as the claims are finalised."Any profits would depend on the outcome of legal cases resulting from a change in steel contractor, it added. |
Dollar slides ahead of New Year
The US dollar has hit a new record low against the euro and analysts predict that more declines are likely in 2005.
Disappointing economic reports dented the currency, which had been rallying after European policy makers said they were worried about the euro's strength. Earlier on Thursday, the Japanese yen touched its lowest versus the euro on concerns about economic growth in Asia. Currency markets have been volatile over the past week because of technical and automated trading and light demand. This has amplified reactions, analysts said, adding that they expect markets to become less jumpy in January.
"People want to go into the weekend and the New Year positioned for a weaker buck," said Tim Mazanec, director of foreign exchange at Investors Bank and Trust. The dollar slid to a record $1.3666 versus the euro on Thursday, before bouncing back to $1.3636. Against the yen the dollar was trading down at $103.05.
The yen, meanwhile, dropped to 141.60 per euro in afternoon trading. It later strengthened to 140.55. Investors are concerned about the size of the US trade and budget deficits and are betting that George W Bush's administration will allow the dollar to weaken despite saying they favour a strong currency. Also playing on investors' minds are mixed reports about the state of the US economy. On Thursday, disappointing business figures from Chicago brought a sudden end to a rally in the value of the dollar. The National Association of Purchasing Management-Chicago said its index dropped to 61.2, more than analysts had expected. German Chancellor Gerhard Schroeder and Italian Prime Minister Silvio Berlusconi voiced concerns about the strength of the euro. Mr Berlusconi said the euro's strength was "absolutely worrying" for Italian exports. Mr Schroeder said in a newspaper article that stability in foreign exchange markets required a correction of global economic imbalances.
| Against the yen the dollar was trading down at $103.05.The US dollar has hit a new record low against the euro and analysts predict that more declines are likely in 2005.The dollar slid to a record $1.3666 versus the euro on Thursday, before bouncing back to $1.3636.Disappointing economic reports dented the currency, which had been rallying after European policy makers said they were worried about the euro's strength.The yen, meanwhile, dropped to 141.60 per euro in afternoon trading.Mr Berlusconi said the euro's strength was "absolutely worrying" for Italian exports.Earlier on Thursday, the Japanese yen touched its lowest versus the euro on concerns about economic growth in Asia. |
Egypt and Israel seal trade deal
In a sign of a thaw in relations between Egypt and Israel, the two countries have signed a trade protocol with the US, allowing Egyptian goods made in partnership with Israeli firms free access to American markets.
The protocol, signed in Cairo, will establish what are called "qualified industrial zones" in Egypt. Products from these zones will enjoy duty free access to the US, provided that 35% of their components are the product of Israeli-Egyptian cooperation. The US describes this as the most important economic agreement between Egypt and Israel in two decades.
The protocol establishing the zones has been stalled for years. There has been deep sensitivity in Egypt about any form of co-operation with Israel as long as its peace process with the Palestinians remains blocked. But in recent weeks an unusual warmth has crept into relations between the two countries. Both exchanged prisoners earlier this month, with Egypt handing back an Israeli who has served eight years in prison after being convicted for spying.
Egyptian President Hosni Mubarak has described Israeli Prime Minister Ariel Sharon as the best chance for the Palestinians to achieve peace. The government in Cairo now believes Mr Sharon is moving towards the centre and away from the positions of right wing groups. It also believes the US, pressed by Europe, is now more willing to engage seriously in the search for a settlement. But there are also pressing economic reasons for Egypt's decision to enter into the trade agreement. It will give a huge boost to Egyptian textile exports, which are about to suffer a drop after new regulations come into force in the US at the beginning of the year.
| In a sign of a thaw in relations between Egypt and Israel, the two countries have signed a trade protocol with the US, allowing Egyptian goods made in partnership with Israeli firms free access to American markets.The US describes this as the most important economic agreement between Egypt and Israel in two decades.There has been deep sensitivity in Egypt about any form of co-operation with Israel as long as its peace process with the Palestinians remains blocked.Both exchanged prisoners earlier this month, with Egypt handing back an Israeli who has served eight years in prison after being convicted for spying.The protocol establishing the zones has been stalled for years.Egyptian President Hosni Mubarak has described Israeli Prime Minister Ariel Sharon as the best chance for the Palestinians to achieve peace. |
Indonesians face fuel price rise
Indonesia's government has confirmed it is considering raising fuel prices by as much as 30%.
Millions of Indonesians use kerosene for basic cooking, and prices have been heavily subsidised for years. President Susilo Bambang Yudhoyono's government has said it wants to curb fuel subsidies and direct the money into aid programmes for the poor. But critics argue cutting subsidies will hurt the poorer families that his government says it wants to help. Millions of people were left homeless in Indonesia Aceh's region following the earthquake and tsunami disaster in late December.
Indonesia pays subsidies to importers in order to stabilise domestic fuel prices, but higher oil prices have forced the government to spend more on holding prices down. It spent 59.2 trillion rupiah ($6.58bn; £3.5bn) on fuel subsidies in 2004, a sum far in excess of its original projection of 14.5 trillion rupiah. Since President Yudhoyono's government came to power in October, it has indicated its intention of raising domestic fuel prices by cutting subsidies. "The (January to March) quarter of this year is the best time for us to increase fuel prices," said Sri Mulyani Indrawati, State Minister for National Development Planning. "We are still considering if a 30% hike is suitable at the moment. The sooner the better for the state budget." The BBC's correspondent in Jakarta, Rachel Harvey, told World Business Report that there was likely to be a strong public reaction to any price rise. "The big question is whether they go for one big, short, sharp shock and raise prices between 20% and 30% or whether they try to stagger it," she said. Indonesia's previous government, led by President Megawati Sukarnoputri, also attempted to cut subsidies in 2003, but was forced to back down in the face of public protests.
| Indonesia's government has confirmed it is considering raising fuel prices by as much as 30%.Indonesia pays subsidies to importers in order to stabilise domestic fuel prices, but higher oil prices have forced the government to spend more on holding prices down.Since President Yudhoyono's government came to power in October, it has indicated its intention of raising domestic fuel prices by cutting subsidies.President Susilo Bambang Yudhoyono's government has said it wants to curb fuel subsidies and direct the money into aid programmes for the poor.Indonesia's previous government, led by President Megawati Sukarnoputri, also attempted to cut subsidies in 2003, but was forced to back down in the face of public protests.But critics argue cutting subsidies will hurt the poorer families that his government says it wants to help. |
Bank holds interest rate at 4.75%
The Bank of England has left interest rates on hold again at 4.75%, in a widely-predicted move.
Rates went up five times from November 2003 - as the bank sought to cool the housing market and consumer debt - but have remained unchanged since August. Recent data has indicated a slowdown in manufacturing and consumer spending, as well as in mortgage approvals. And retail sales disappointed over Christmas, with analysts putting the drop down to less consumer confidence.
Rising interest rates and the accompanying slowdown in the housing market have knocked consumers' optimism, causing a sharp fall in demand for expensive goods, according to a report earlier this week from the British Retail Consortium. The BRC said Britain's retailers had endured their worst Christmas in a decade.
"Today's no change decision is correct," said David Frost, Director General of the British Chambers of Commerce (BCC). "But, if there are clear signs that the economy slows, the MPC should be ready to take quick corrective action and cut rates. "Dismal reports from the retail trade about Christmas sales are worrying, if they indicate a more general weakening in consumer spending."
Mr Frost added: "The housing market outlook remains highly uncertain. "It is widely accepted that, if house prices start falling more sharply, the risks facing the economy will worsen considerably." CBI chief economist Ian McCafferty said the economy had "slowed in recent months in response to rate rises" but that it was difficult to gauge from the Christmas period the likely pace of activity through the summer. "The Bank is having to juggle the emergence of inflationary pressures, driven by a tight labour market and buoyant commodity prices, against the risk of an over-abrupt slowdown in consumer activity," he said. "Interest rates are likely to remain on hold for some time."
On Thursday there was more gloomy news on the manufacturing front, as the Office for National (ONS) statistics revealed British manufacturing output unexpectedly fell in November - for the fifth month in the past six. The ONS said manufacturing output dropped 0.1% in November, matching a similar unrevised fall in October and confounding economists' expectations of a 0.3% rise. Manufacturers' organisation, the EEF, said it expected the hold in interest rates to continue in the near future. It also said there was evidence that manufacturers' confidence may be waning as the outlook for the world economy becomes more uncertain.
"So far the evidence suggests that last year's rate increases have helped to rebalance the economy without damaging the recovery in manufacturing," said EEF chief economist, Steve Radley. "However, should the business outlook start to deteriorate, the Bank should stand ready to cut rates." Some economists have predicted rates will drop later in the year, although others feel the Bank may still think there is a need for a rise to 5% before that happens. The Bank remains concerned about the long-term risks posed by personal debt - which is rising at 15% a year - if economic conditions worsen.
| CBI chief economist Ian McCafferty said the economy had "slowed in recent months in response to rate rises" but that it was difficult to gauge from the Christmas period the likely pace of activity through the summer.Manufacturers' organisation, the EEF, said it expected the hold in interest rates to continue in the near future."The Bank is having to juggle the emergence of inflationary pressures, driven by a tight labour market and buoyant commodity prices, against the risk of an over-abrupt slowdown in consumer activity," he said.The Bank of England has left interest rates on hold again at 4.75%, in a widely-predicted move."So far the evidence suggests that last year's rate increases have helped to rebalance the economy without damaging the recovery in manufacturing," said EEF chief economist, Steve Radley.It also said there was evidence that manufacturers' confidence may be waning as the outlook for the world economy becomes more uncertain.Rates went up five times from November 2003 - as the bank sought to cool the housing market and consumer debt - but have remained unchanged since August.Rising interest rates and the accompanying slowdown in the housing market have knocked consumers' optimism, causing a sharp fall in demand for expensive goods, according to a report earlier this week from the British Retail Consortium."Interest rates are likely to remain on hold for some time." |
Beer giant swallows Russian firm
Brewing giant Inbev has agreed to buy Alfa-Eco's stake in Sun Interbrew, Russia's second-largest brewer, for up to 259.7m euros ($353.3m; £183.75m).
Alfa-Eco, the venture capital arm of Russian conglomerate Alfa Group, has a one-fifth stake in Sun Interbrew. The deal gives Inbev, the world's biggest beermaker, near-total control over the Russian brewer. Inbev bought out another partner in August 2004. Inbev brands include Bass, Stella Artois, Hoegaarden and Staropramen. It employs 77,000 people, running operations in over 30 countries across the Americas, Europe and Asia Pacific.
The Leuven-based brewery said it would own 97.3% of the voting shares and 98.8% of the non-voting shares of Sun Interbrew. The deal is expected to be completed in the first quarter of 2005. Inbev was formed in August 2004 when Belgium's Interbrew bought Brazilian brewer Ambev. Sun Interbrew, which employs 8,000 staff, owns breweries in eight Russian cities - Klin, Ivanovo, Saransk, Kursk, Volzhsky, Omsk, Perm and Novocheboksarsk. There are also three breweries in Ukraine, in the cities of Chernigov, Nikolaev and Kharkov.
| Inbev was formed in August 2004 when Belgium's Interbrew bought Brazilian brewer Ambev.Brewing giant Inbev has agreed to buy Alfa-Eco's stake in Sun Interbrew, Russia's second-largest brewer, for up to 259.7m euros ($353.3m; £183.75m).Sun Interbrew, which employs 8,000 staff, owns breweries in eight Russian cities - Klin, Ivanovo, Saransk, Kursk, Volzhsky, Omsk, Perm and Novocheboksarsk.The deal gives Inbev, the world's biggest beermaker, near-total control over the Russian brewer.Alfa-Eco, the venture capital arm of Russian conglomerate Alfa Group, has a one-fifth stake in Sun Interbrew. |
Ailing EuroDisney vows turnaround
EuroDisney, the European home of Mickey Mouse and friends, has said it will sell 253m euros (£175m; $328m) of new shares as it looks to avoid insolvency.
The sale is the last part of a plan to restructure 2.4bn euros-worth of debts. Despite struggling since it was opened in 1992, EuroDisney has recently made progress in turning its business around and ticket sales have picked up. However, analysts still question whether it attracts enough visitors to stay open, even with the restructuring.
EuroDisney remains Europe's largest single tourist attraction, attracting some 12.4 million visitors annually. A new attraction - Walt Disney Studios - has recently opened its site near Paris. The company's currently traded stock tumbled in Paris on the latest news, shedding 15% to 22 euro cents. EuroDisney will sell the new shares priced at 9 euros cents each. The US Disney Corporation and Saudi Arabian prince Al-Walid bin Talal, the firm's two main shareholders, will buy the new stock. The restructuring deal is the second in the firm's troubled financial history; its finances were first reorganised in 1994.
| EuroDisney will sell the new shares priced at 9 euros cents each.EuroDisney, the European home of Mickey Mouse and friends, has said it will sell 253m euros (£175m; $328m) of new shares as it looks to avoid insolvency.A new attraction - Walt Disney Studios - has recently opened its site near Paris.Despite struggling since it was opened in 1992, EuroDisney has recently made progress in turning its business around and ticket sales have picked up. |
SEC to rethink post-Enron rules
The US stock market watchdog's chairman has said he is willing to soften tough new US corporate governance rules to ease the burden on foreign firms.
In a speech at the London School of Economics, William Donaldson promised "several initiatives". European firms have protested that US laws introduced after the Enron scandal make Wall Street listings too costly. The US regulator said foreign firms may get extra time to comply with a key clause in the Sarbanes-Oxley Act.
The Act comes into force in mid-2005. It obliges all firms with US stock market listings to make declarations, which, critics say, will add substantially to the cost of preparing their annual accounts.
Firms that break the new law could face huge fines, while senior executives risk jail terms of up to 20 years. Mr Donaldson said that although the Act does not provide exemptions for foreign firms, the Securities and Exchange Commission (SEC) would "continue to be sensitive to the need to accomodate foreign structures and requirements". There are few, if any, who disagree with the intentions of the Act, which obliges chief executives to sign a statement taking responsibility for the accuracy of the accounts. But European firms with secondary listings in New York have objected - arguing that the compliance costs outweigh the benefits of a dual listing. The Act also applies to firms with more than 300 US shareholders, a situation many firms without US listings could find themselves in.
The 300-shareholder threshold has drawn anger as it effectively blocks the most obvious remedy, a delisting. Mr Donaldson said the SEC would "consider whether there should be a new approach to the deregistration process" for foreign firms unwilling to meet US requirements.
"We should seek a solution that will preserve investor protections" without turning the US market into "one with no exit", he said. He revealed that his staff were already weighing up the merits of delaying the implementation of the Act's least popular measure - Section 404 - for foreign firms. Seen as particularly costly to implement, Section 404 obliges chief executives to take responsibility for the firm's internal controls by signing a compliance statement in the annual accounts. The SEC has already delayed implementation of this clause for smaller firms - including US ones - with market capitalisations below $700m (£374m).
A delegation of European firms visited the SEC in December to press for change, the Financial Times reported.
It was led by Digby Jones, director general of the UK's Confederation of British Industry (CBI) and included representatives of BASF, Siemens and Cadbury Schweppes. Compliance costs are already believed to be making firms wary of US listings. Air China picked the London Stock Exchange for its secondary listing in its $1.07bn (£558m) stock market debut last month. There are also rumours that two Chinese state-run banks - China Construction Bank and Bank of China - have abandoned plans for multi-billion dollar listings in New York later this year. Instead, the cost of Sarbanes-Oxley has persuaded them to stick to a single listing in Hong Kong, according to press reports in China.
| The Act also applies to firms with more than 300 US shareholders, a situation many firms without US listings could find themselves in.It obliges all firms with US stock market listings to make declarations, which, critics say, will add substantially to the cost of preparing their annual accounts.The US stock market watchdog's chairman has said he is willing to soften tough new US corporate governance rules to ease the burden on foreign firms.The SEC has already delayed implementation of this clause for smaller firms - including US ones - with market capitalisations below $700m (£374m).Mr Donaldson said the SEC would "consider whether there should be a new approach to the deregistration process" for foreign firms unwilling to meet US requirements.The US regulator said foreign firms may get extra time to comply with a key clause in the Sarbanes-Oxley Act.But European firms with secondary listings in New York have objected - arguing that the compliance costs outweigh the benefits of a dual listing.European firms have protested that US laws introduced after the Enron scandal make Wall Street listings too costly.Compliance costs are already believed to be making firms wary of US listings.Mr Donaldson said that although the Act does not provide exemptions for foreign firms, the Securities and Exchange Commission (SEC) would "continue to be sensitive to the need to accomodate foreign structures and requirements". |
Iraq to invite phone licence bids
Iraq is to invite bids for two telephone licences, saying it wants to significantly boost nationwide coverage over the next decade.
Bids have been invited from local, Arab and foreign companies, Iraq's Ministry of Communications said. The winner will work in partnership with the Iraqi Telecommunications and Post Company (ITPC). The firms will install and operate a fixed phone network, providing voice, fax and internet services.
The ministry said that it wanted to increase Iraq's "very low telephone service penetration rate from about 4.5% today to about 25% within 10 years." It also hopes to develop a "highly visible and changeable telecommunication sector". Details of the bidding and tender process will be published on the ministry's website on 9 February. It also is planning a road-show for investors in Amman, Jordan. The ministry said it would base its selection on criteria including the speed of implementation, tariff rates, coverage, and the firm's experience and financial strength.
| The ministry said that it wanted to increase Iraq's "very low telephone service penetration rate from about 4.5% today to about 25% within 10 years."Bids have been invited from local, Arab and foreign companies, Iraq's Ministry of Communications said.The ministry said it would base its selection on criteria including the speed of implementation, tariff rates, coverage, and the firm's experience and financial strength.It also hopes to develop a "highly visible and changeable telecommunication sector". |
US retail sales surge in December
US retail sales ended the year on a high note with solid gains in December, boosted by strong car sales.
Seasonally adjusted sales rose 1.2% in the month, compared to 0.1% a month earlier, boosted by a surge in shopping just before and after Christmas. Sales climbed 8% for the year, the best performance since an 8.5% rise in 1999, the Commerce Department added. The gains were led by a 4.3% jump in auto sales as dealers used enhanced offers to get cars out of showrooms. Dealers were forced to cut prices in December to maintain sales growth in a tough quarter when the usual end-of-year holiday sales boom was slow to get started.
The increase in sales during December pushed total spending for the month to $349.4bn (£265.9bn). Sales for the year also broke through the $4 trillion mark for the first time - with annual sales coming in at $4.06 trillion However, if automotives are excluded from December's data, retail sales rose just 0.3% on the month. Home furnishings and furniture stores also performed well, rising 2.2%. But as well as hitting the shops, more US consumers were going online or using mail order for their purchases - with non-store retailers seeing sales rise by 1.9%. However, analysts said that the strong figures were unlikely to put the Federal Reserve Bank off its current policy of measured interest rate rises. "Consumers for now remain willing to spend freely, sustaining the US expansion. Given that attitude, the Fed remains likely to continue boosting the Fed funds rate at upcoming meetings," UBS economist Maury Harris told Reuters.
Retail sales are seen as a major part of consumer spending - which in turn makes up two-thirds of economic output in the US. Consumer spending has been picking up in recent years after slumping during 2001 and 2002 as the country battled to recover from its first recession of the decade and the World Trade Centre attacks. During that time, sales grew a lacklustre 2.9% in 2001 and 2.5% a year later. Looking ahead, analysts now expect improvement in jobs growth to feed through to the High Street with consumer spending remaining strong. The belief comes despite the latest labor department report showing a surprise rise in unemployment. The number of Americans filing initial jobless claims jumped to 367,000, the highest rate since September. However, long-term claims slipped to their lowest level since 2001.
| US retail sales ended the year on a high note with solid gains in December, boosted by strong car sales.Sales for the year also broke through the $4 trillion mark for the first time - with annual sales coming in at $4.06 trillion However, if automotives are excluded from December's data, retail sales rose just 0.3% on the month.Retail sales are seen as a major part of consumer spending - which in turn makes up two-thirds of economic output in the US.During that time, sales grew a lacklustre 2.9% in 2001 and 2.5% a year later.But as well as hitting the shops, more US consumers were going online or using mail order for their purchases - with non-store retailers seeing sales rise by 1.9%.The increase in sales during December pushed total spending for the month to $349.4bn (£265.9bn).Dealers were forced to cut prices in December to maintain sales growth in a tough quarter when the usual end-of-year holiday sales boom was slow to get started.Sales climbed 8% for the year, the best performance since an 8.5% rise in 1999, the Commerce Department added. |
India's Maruti sees profits jump
India's biggest carmaker Maruti has reported a sharp increase in quarterly profit after a booming economy and low interest rates boosted demand.
Net profit surged 70% to 2.39bn rupees ($54.98m; £29.32m) in the last three months of 2004 compared with 1.41bn rupees a year earlier. Total sales were 30.1bn rupees, up 27% from the same 2004 period. Maruti accounts for half of India's domestic car sales, luring consumers with cheap, fuel-efficient vehicles.
Demand in India also has been driven by the poor state of public transport and the very low level of car ownership, analysts said.
Figures show that only eight people per thousand are car owners. Maruti beat market expectations despite an increase in raw materials costs. The company, majority-owned by Japan's Suzuki, said an increase in steel and other raw material prices was partially offset by cost cutting. Sales in the fiscal third quarter, including vans and utility vehicles, rose by 17.8% to 136.069 units. Maruti is not the only company benefiting as Indian's economic growth gives consumer greater spending power. Utility vehicle and tractor maker Mahindra has reported a 52% rise in net profit during the last three months of 2004. Profit was 1.33bn rupees compared with 874.2m rupees a year earlier.
| Net profit surged 70% to 2.39bn rupees ($54.98m; £29.32m) in the last three months of 2004 compared with 1.41bn rupees a year earlier.Profit was 1.33bn rupees compared with 874.2m rupees a year earlier.India's biggest carmaker Maruti has reported a sharp increase in quarterly profit after a booming economy and low interest rates boosted demand.Maruti accounts for half of India's domestic car sales, luring consumers with cheap, fuel-efficient vehicles.Utility vehicle and tractor maker Mahindra has reported a 52% rise in net profit during the last three months of 2004. |
Europe blames US over weak dollar
European leaders have openly blamed the US for the sharp rise in the value of the euro.
US officials were talking up the dollar, they said, but failing to take action to back up their words. Meeting in Brussels, finance ministers of the 12 eurozone countries voiced their concern that the rise of the european currency was harming exports. The dollar is within touching distance of an all-time low reached earlier in November. At 0619 GMT on Tuesday, the dollar was up slightly at just above $1.29 to the euro, and buying 105.6 yen in Tokyo. It rallied briefly on Monday amid signs that oil prices are easing.
But analysts said the respite was likely to be only temporary. The European ministers' comments, said Junya Tanase of JPMorgan Chase bank in Tokyo, were "generally too weak to produce a market reaction".
Still, by the standards of diplomacy the European ministers were forthright. Nicolas Sarkozy of France said he and his colleagues were unanimous in their worry that the decline of the dollar would hit Europe's economies by eating into their exports. "We are concerned about these developments, which are destabilising, and which are linked to the accumulation of deficits by our American friends," he said. The comments come a day after US Treasury Secretary John Snow said a strong dollar was "in America's interest".
But that was not enough for Mr Sarkozy.
"If the Americans were to change their policy, it's up to them to say so," he said. And the European Union's monetary affairs commissioner, made it clear that action was necessary. "I fully welcome the words of Mr Snow," said Joaquin Almunia, "but we will need to see decisions adopted in that direction. "If the imbalances in the US economy are not adjusted in the future, the decision in the market will be as in the past weeks." Economists point out that whatever Europe says, in the short term a weaker dollar is a boon to President George W Bush's administration. Not only does it boost US exports, but it also makes the budget deficit easier to fund. On the other hand, slower European exports would mean slower EU growth - potentially reducing the demand for US goods.
| The comments come a day after US Treasury Secretary John Snow said a strong dollar was "in America's interest".US officials were talking up the dollar, they said, but failing to take action to back up their words.But analysts said the respite was likely to be only temporary.Nicolas Sarkozy of France said he and his colleagues were unanimous in their worry that the decline of the dollar would hit Europe's economies by eating into their exports.At 0619 GMT on Tuesday, the dollar was up slightly at just above $1.29 to the euro, and buying 105.6 yen in Tokyo.Meeting in Brussels, finance ministers of the 12 eurozone countries voiced their concern that the rise of the european currency was harming exports.European leaders have openly blamed the US for the sharp rise in the value of the euro.The European ministers' comments, said Junya Tanase of JPMorgan Chase bank in Tokyo, were "generally too weak to produce a market reaction". |
Worldcom ex-boss launches defence
Lawyers defending former WorldCom chief Bernie Ebbers against a battery of fraud charges have called a company whistleblower as their first witness.
Cynthia Cooper, WorldCom's ex-head of internal accounting, alerted directors to irregular accounting practices at the US telecoms giant in 2002. Her warnings led to the collapse of the firm following the discovery of an $11bn (£5.7bn) accounting fraud. Mr Ebbers has pleaded not guilty to charges of fraud and conspiracy.
Prosecution lawyers have argued that Mr Ebbers orchestrated a series of accounting tricks at WorldCom, ordering employees to hide expenses and inflate revenues to meet Wall Street earnings estimates. But Ms Cooper, who now runs her own consulting business, told a jury in New York on Wednesday that external auditors Arthur Andersen had approved WorldCom's accounting in early 2001 and 2002. She said Andersen had given a "green light" to the procedures and practices used by WorldCom. Mr Ebber's lawyers have said he was unaware of the fraud, arguing that auditors did not alert him to any problems.
Ms Cooper also said that during shareholder meetings Mr Ebbers often passed over technical questions to the company's finance chief, giving only "brief" answers himself. The prosecution's star witness, former WorldCom financial chief Scott Sullivan, has said that Mr Ebbers ordered accounting adjustments at the firm, telling him to "hit our books". However, Ms Cooper said Mr Sullivan had not mentioned "anything uncomfortable" about WorldCom's accounting during a 2001 audit committee meeting. Mr Ebbers could face a jail sentence of 85 years if convicted of all the charges he is facing. WorldCom emerged from bankruptcy protection in 2004, and is now known as MCI. Last week, MCI agreed to a buyout by Verizon Communications in a deal valued at $6.75bn.
| The prosecution's star witness, former WorldCom financial chief Scott Sullivan, has said that Mr Ebbers ordered accounting adjustments at the firm, telling him to "hit our books".However, Ms Cooper said Mr Sullivan had not mentioned "anything uncomfortable" about WorldCom's accounting during a 2001 audit committee meeting.Mr Ebber's lawyers have said he was unaware of the fraud, arguing that auditors did not alert him to any problems.Mr Ebbers has pleaded not guilty to charges of fraud and conspiracy.Ms Cooper also said that during shareholder meetings Mr Ebbers often passed over technical questions to the company's finance chief, giving only "brief" answers himself.Prosecution lawyers have argued that Mr Ebbers orchestrated a series of accounting tricks at WorldCom, ordering employees to hide expenses and inflate revenues to meet Wall Street earnings estimates. |
Yukos unit fetches $9bn at auction
A little-known Russian company has bought the main production unit of oil giant Yukos at auction in Moscow.
Baikal Finance Group outbid favourite Gazprom, the state-controlled gas monopoly, to buy Yuganskneftegas. Baikal paid 260.75bn roubles ($9.37bn: £4.8bn) for Yugansk - nowhere near the $27bn Russia says Yukos owes in taxes. Yukos reacted immediately by repeating its view that the auction was illegal in international and Russian law, and said Baikal had bought itself trouble.
"The company considers that the victor of today's auction has bought itself a serious $9bn headache," said Yukos spokesman Alexander Shadrin. He said the company would continue to make "every lawful move" to protect tens of thousands of shareholders in Yukos from "this forcible and illegitimate removal of their property". Meanwhile, Tim Osborne, head of Yukos main shareholders' group Menatep, said that Yukos may have to declare itself bankrupt, and that legal action would be taken, outside Russia, against the auction winners. Reports from Russia say Baikal has paid a deposit of nearly $1.7bn from a Sberbank (Savings Bank) account to the Russian Federal Property Fund, for Yugansk.
The sale came despite a restraining order issued by a US court dealing with the firm's bankruptcy application for Chapter 11 protection. Yukos has always insisted the auction was state-sponsored theft but Russian authorities argued they were imposing the law, trying to recover billions in unpaid taxes. There were originally four registered bidders, and with its close ties to the Kremlin, state-backed gas monopoly Gazprom had been seen as favourite. But just two companies turned up for the auction, Gazprom and the unknown Baikal Finance Group, named after a large freshwater lake in Siberia. And, according to Tass news agency, Gazprom did not make a single bid, leaving the way open for Baikal, which paid above the auction start price of 246.75bn roubles.
Mystery firm Baikal Finance Group is officially registered in the central Russian region of Tver, but many analysts believe it may be linked to Gazprom. Kaha Kiknavelidze, analyst at Troika Dialog, said: "I think a decision that Yugansk should end up with Gazprom was taken a long time ago. So the main question was how to structure this transaction.
"I would not exclude that the structure of the deal has slightly changed and Gazprom now has a partner. "I would also not exclude that Baikal will decline to pay in 14 days, that are given by law, and Gazprom is then recognised as the winner. This would give Gazprom an extra 14 days to accumulate the needed funds. "Another surprise was that the winner paid a significant premium above the starting price." However, Gazprom has announced it is not linked to Baikal in any way. And Paul Collison, chief analyst at Brunswick UBS, said: "I see no plausible explanation for the theory that Baikal was representing competing interests. "Yugansk will most likely end up with Gazprom but could still end up with the government. There is still potential for surprises." Yugansk is at the heart of Yukos - pumping close to a million barrels of oil a day. The unit was seized by the government which claims the oil giant owes more than $27bn in taxes and fines. Yukos says those tax demands are exorbitant, and had sought refuge in US courts.
The US bankruptcy court's initial order on Thursday - to temporarily block the sale - in response to Yukos filing for Chapter 11 bankruptcy protection, was upheld in a second ruling on Saturday. The protection, if recognised by the Russian authorities, would have allowed Yukos' current management to retain control of the business and block the sale of any company assets. Yukos has said the sale amounts to expropriation - punishment for the political ambitions of its founder, Mikhail Khodorkovsky. Mr Khodorkovsky is now in jail, on separate fraud charges. But President Vladimir Putin has described the affair as a crackdown on corruption - and the BBC's Sarah Rainsford in Moscow says most Russians believe the destruction of Yukos is now inevitable. Hours before the auction lawyers for Menatep, a group through which Mr Khodorkovsky and his associates control Yukos, said they would take legal action in other countries. Menatep lawyers, who were excluded from observing the auction, said they would retaliate by seeking injunctions in foreign courts to impound Russian oil and gas exports.
| Yukos reacted immediately by repeating its view that the auction was illegal in international and Russian law, and said Baikal had bought itself trouble.A little-known Russian company has bought the main production unit of oil giant Yukos at auction in Moscow.Meanwhile, Tim Osborne, head of Yukos main shareholders' group Menatep, said that Yukos may have to declare itself bankrupt, and that legal action would be taken, outside Russia, against the auction winners.Hours before the auction lawyers for Menatep, a group through which Mr Khodorkovsky and his associates control Yukos, said they would take legal action in other countries."The company considers that the victor of today's auction has bought itself a serious $9bn headache," said Yukos spokesman Alexander Shadrin.However, Gazprom has announced it is not linked to Baikal in any way.Yukos has always insisted the auction was state-sponsored theft but Russian authorities argued they were imposing the law, trying to recover billions in unpaid taxes."I would not exclude that the structure of the deal has slightly changed and Gazprom now has a partner.Yukos has said the sale amounts to expropriation - punishment for the political ambitions of its founder, Mikhail Khodorkovsky.Baikal paid 260.75bn roubles ($9.37bn: £4.8bn) for Yugansk - nowhere near the $27bn Russia says Yukos owes in taxes.But just two companies turned up for the auction, Gazprom and the unknown Baikal Finance Group, named after a large freshwater lake in Siberia.Reports from Russia say Baikal has paid a deposit of nearly $1.7bn from a Sberbank (Savings Bank) account to the Russian Federal Property Fund, for Yugansk.And, according to Tass news agency, Gazprom did not make a single bid, leaving the way open for Baikal, which paid above the auction start price of 246.75bn roubles.The protection, if recognised by the Russian authorities, would have allowed Yukos' current management to retain control of the business and block the sale of any company assets. |
Steel firm 'to cut' 45,000 jobs
Mittal Steel, one of the world's largest steel producers, could cut up to 45,000 jobs over the next five years, its chief executive has said.
The Netherlands-based company is due to complete its $4.5bn acquisition of US firm ISG next month, making it one of the largest global firms of its kind. However, Lakshmi Mittal has told investors the combined company will have to shed thousands of jobs. The Indian-born magnate did not say where the job losses would fall.
Mr Mittal told US investors that once the acquisition of International Steel Group was completed, the company would aim to reduce its workforce by between 7,000 and 8,000 annually. This could see its workforce trimmed from 155,000 to 110,000 staff by 2010. "We are investing in modernisation so employees will go down," Mr Mittal told the conference in Chicago.
Mittal Steel was formed last year when Mr Mittal's LNM Holdings merged with Dutch firm Ispat. A combination of Mittal Steel and ISG would have annual sales of $32bn (£16.7bn; 24.1bn euros) and a production capacity of 70 million tonnes.
A Mittal Steel spokeman said that no decisions on job cuts have been made yet. "We are trying to create a sustainable steel industry and if we want to do that, we have to invest in new technology," a spokesman said. Mittal Steel has operations in 14 countries. Many of its businesses - particularly those in eastern Europe - were previously state owned and have huge workforces. It employs 50,000 staff in Kazakhstan alone, and has large operations in Romania, the Czech Republic, South Africa and the United States.
| Mittal Steel, one of the world's largest steel producers, could cut up to 45,000 jobs over the next five years, its chief executive has said.Mittal Steel has operations in 14 countries.Mr Mittal told US investors that once the acquisition of International Steel Group was completed, the company would aim to reduce its workforce by between 7,000 and 8,000 annually.A Mittal Steel spokeman said that no decisions on job cuts have been made yet.Mittal Steel was formed last year when Mr Mittal's LNM Holdings merged with Dutch firm Ispat.However, Lakshmi Mittal has told investors the combined company will have to shed thousands of jobs. |
Yukos heading back to US courts
Russian oil and gas company Yukos is due in a US court on Thursday as it continues to fight for its survival.
The firm is in the process of being broken up by Russian authorities in order to pay a $27bn (£14bn) tax bill. Yukos filed for bankruptcy in the US, hoping to use international business law to halt the forced sale of its key oil production unit, Yuganskneftegas. The unit was however sold for $9.4bn to state oil firm Rosneft but only after the state auction had been disrupted.
Yukos lawyers now say the auction violated US bankruptcy law. The company and its main shareholders have vowed to go after any company that buys its assets, using all and every legal means. The company wants damages of $20bn, claiming Yuganskneftegas was sold at less than market value. Judge Letitia Clark will hear different motions, including one from Deutsche Bank to throw out the Chapter 11 bankruptcy filing. The German lender is one of six banks that were barred from providing financing to Gazprom, the Russian state-owned company that was expected to win the auction for Yuganskneftegas. Deutsche Bank, which is also an advisor to Gazprom, has called on the US court to overturn its decision to provide Yukos with bankruptcy protection.
Lifting the injunction would remove the uncertainty that surrounds the court case and clarify Deutsche Bank's business position, analysts said.
Analysts are not optimistic about Yukos' chances in court. Russian President Vladimir Putin and the country's legal authorities have repeatedly said that the US has no jurisdiction over Yukos and its legal wranglings. On top of that, the firm only has limited assets in the US. Yukos has won small victories, however, and is bullish about its chances in court. "Do we have an ability to influence what happens? We think we do," said Mike Lake, a Yukos spokesman. "The litigation risks are real," said Credit Suisse First Boston analyst Vadim Mitroshin The dispute with the Russian authorities is partly driven by President Putin's clampdown on the political ambitions of ex-Yukos boss Mikhail Khodorkovsky. Mr Khodorkovsky is in jail on charges of fraud and tax evasion.
| Russian oil and gas company Yukos is due in a US court on Thursday as it continues to fight for its survival.Deutsche Bank, which is also an advisor to Gazprom, has called on the US court to overturn its decision to provide Yukos with bankruptcy protection.Russian President Vladimir Putin and the country's legal authorities have repeatedly said that the US has no jurisdiction over Yukos and its legal wranglings.Yukos lawyers now say the auction violated US bankruptcy law.Yukos has won small victories, however, and is bullish about its chances in court.Yukos filed for bankruptcy in the US, hoping to use international business law to halt the forced sale of its key oil production unit, Yuganskneftegas.Analysts are not optimistic about Yukos' chances in court.The German lender is one of six banks that were barred from providing financing to Gazprom, the Russian state-owned company that was expected to win the auction for Yuganskneftegas. |
Strong quarterly growth for Nike
Nike has reported its best second-quarter earnings, helped by strong demand for its athletic shoes and Converse sneakers.
The global sports giant said it posted a profit of $261.9m (£135.6m), for the three months to 30 November, up from $179.1m in the same period last year. Revenues increased 11% to $3.1bn, from $2.8bn for the same period in 2003. Nike, whose products are endorsed by Tiger Woods among other sports stars, said "demand continues to grow". The results came after a strong first quarter of the year for the firm based in Beaverton, Oregon.
Philip Knight, chairman and chief executive, said: "Nike's second-quarter revenues and earnings per share reached all-time high levels as a result of solid performance across our global portfolio. "Our businesses in the United States and emerging markets such as China, Russia and Turkey, combined with favourable European exchange rates, helped drive much of this growth." He added: "With the first half of our fiscal year in the books, we remain confident that our business strategy and consistent execution will allow us to deliver on our goals of healthy, profitable growth." The firm reported worldwide futures orders for athletic footwear and gear, scheduled for delivery from December 2004 to April 2005, of $4.9bn. That is 9.1% higher than such orders reported for the same period last year.
| That is 9.1% higher than such orders reported for the same period last year.The global sports giant said it posted a profit of $261.9m (£135.6m), for the three months to 30 November, up from $179.1m in the same period last year.Nike has reported its best second-quarter earnings, helped by strong demand for its athletic shoes and Converse sneakers.The firm reported worldwide futures orders for athletic footwear and gear, scheduled for delivery from December 2004 to April 2005, of $4.9bn. |
Dollar hovers around record lows
The US dollar hovered close to record lows against the euro on Friday as concern grows about the size of the US budget deficit.
Analysts predict that the dollar will remain weak in 2005 as investors worry about the state of the US economy. The Bush administration's apparent unwillingness to intervene to support the dollar has caused further concern. However, trading has been volatile over the past week because of technical and automated trading and light demand. This has amplified reactions to news, analysts said, adding that they expect markets to become less jumpy in January.
The dollar was trading at $1.3652 versus the euro on Friday morning after hitting a fresh record low of $1.3667 on Thursday. One dollar bought 102.55 yen.
Disappointing business figures from Chicago triggered the US currency's weakness on Thursday. The National Association of Purchasing Management-Chicago said its manufacturing index dropped to 61.2, a bigger fall than expected. "There are no dollar buyers now, especially after the Chicago data yesterday," said ABN Amro's Paul Mackel. At the same time, German Chancellor Gerhard Schroeder and Italian Prime Minister Silvio Berlusconi voiced concerns about the strength of the euro. Mr Berlusconi said the euro's strength was "absolutely worrying" for Italian exports. Mr Schroeder said in a newspaper article that stability in foreign exchange markets required a correction of global economic imbalances. Investors will now look towards February's meeting of finance ministers from the G7 industrialised nations in London for clues as to whether central banks will combine forces to stem the dollar's decline.
| The US dollar hovered close to record lows against the euro on Friday as concern grows about the size of the US budget deficit.The dollar was trading at $1.3652 versus the euro on Friday morning after hitting a fresh record low of $1.3667 on Thursday."There are no dollar buyers now, especially after the Chicago data yesterday," said ABN Amro's Paul Mackel.Mr Berlusconi said the euro's strength was "absolutely worrying" for Italian exports.The Bush administration's apparent unwillingness to intervene to support the dollar has caused further concern.At the same time, German Chancellor Gerhard Schroeder and Italian Prime Minister Silvio Berlusconi voiced concerns about the strength of the euro. |
Yukos drops banks from court bid
Russian oil company Yukos has dropped the threat of legal action against five banks it had accused of involvement in the sale of its key Yugansk unit.
State-owned Rosneft bought the unit for $9.3bn (£5bn) after Yukos was forced to sell assets to meet a $27.5bn tax bill. Yukos says the sale was illegal and is pursuing damages in a US court. Its lawyers now accept ABN Amro, BNP Paribas, Calyon, JP Morgan Chase Bank, and Dresdner Kleinwort Wasserstein were not involved in the sale financing. However, Yukos still has an outstanding complaint against Deutsche Bank, which it alleges to be the leader of a consortium that was behind a bid for Yugansk by state gas monopoly Gazprom. The company has also accused Gazprom, the Russian Federation and two other Russian firms.
Gazprom had been expected to win the December auction, but ended up not bidding. Yugansk was sold to a little-known shell company, which in turn was bought by Rosneft. Yukos claims its downfall was punishment for the political ambitions of its founder Mikhail Khodorkovsky. The firm, whose finance chief is now based in the US, filed for bankruptcy in Houston, Texas, and sought a court injunction against the sale. But Deutsche Bank has suggested Yukos artificially manufactured a legal case to stop the sale of its main asset. A hearing scheduled for February 16 and 17 will rule on whether the US court has jurisdiction in the case.
| Russian oil company Yukos has dropped the threat of legal action against five banks it had accused of involvement in the sale of its key Yugansk unit.Yukos says the sale was illegal and is pursuing damages in a US court.However, Yukos still has an outstanding complaint against Deutsche Bank, which it alleges to be the leader of a consortium that was behind a bid for Yugansk by state gas monopoly Gazprom.But Deutsche Bank has suggested Yukos artificially manufactured a legal case to stop the sale of its main asset.Yugansk was sold to a little-known shell company, which in turn was bought by Rosneft. |
Water firm Suez in Argentina row
A conflict between the Argentine State and water firm Aguas Argentinas, controlled by France's Suez, is casting doubt on the firm's future.
The firm, which serves the province of Buenos Aires, wants a tariff rise of 60% to fund water-supply improvements. The government has rejected the 60% rise and wants Aguas Argentinas to make an annual investment of 400m pesos ($136m; £72.3m) in improvements. Planning Minister Julio De Vido has offered State help but not for "free".
Mr De Vido said that the Argentine state would not make a contribution "in the form of a subsidy".
He has said a contribution could be made in return for a seat on the company's board. He added that the government is in discussions with Aguas Argentinas about what role it might take in the event that a State contribution is agreed. However, Aguas Argentinas told the Argentine newspaper Clarin it would not accept any change to its legal structure and, in practice, this rules out State participation on its board. The Planning Minister didn't rule out the possibility of cancelling Aguas Argentinas water concession. Yet he added that he didn't like to do "futurology". But last week, Argentine Economic Minister, Roberto Lavagna, told the French media in Paris that the government was considering allowing a 16% increase in tariffs and the possibility of a State contribution to Aguas Argentinas infrastructure investments. Speaking in Buenos Aires, Mr De Vido later denied the possibility of any tariff increase and insisted that the annual investment in water infrastructure was at the centre of the discussions. He added that in the coming weeks the future of Aguas Argentinas would be decided. Suez owns 40% of Aguas Argentinas (39.9%), while Spain's Aguas de Barcelona is its second biggest shareholder with 25.01%. Recently, Suez lost a water concession in Bolivia after mass protests in the city of El Alto (the poorest in the country), with citizens complaining of unfair water charges. This forced the government to cancel the contract.
In Argentina, Suez's subsidiary, which has been fined for cutting the supply of water during a recent heat wave and allegedly failing to keep up investment to meet the demand for water, has maintained a tense relationship with the Argentine government. During the last financial crisis in Argentina, the firm sued the state alleging that converting its tariffs from US dollars to pesos, and then freezing them during devaluation, had affected the company and made it difficult for it to meet its contractual obligations. When President Nestor Kirchner of Argentina arrived in power he began to negotiate a solution to the disagreements with international utilities operating in Argentina. But he has rejected any tariff increases, alleging this will impoverish citizens further. He has also asked for more investments to meet the growing demand for water. On May 2004, Aguas Argentinas and the government signed an agreement to renegotiate its Buenos Aires water-concession contract. The firm agreed to invest 242m pesos. The issue has attracted European interest. Last week in Paris, President Kirchner discussed this problem and other issues with French president Jacques Chirac. The Argentine government is also under pressure from European Union countries and the International Monetary Fund (IMF) to raise utilities tariffs, because most of the utilities operating in Argentina are European.
| The government has rejected the 60% rise and wants Aguas Argentinas to make an annual investment of 400m pesos ($136m; £72.3m) in improvements.But last week, Argentine Economic Minister, Roberto Lavagna, told the French media in Paris that the government was considering allowing a 16% increase in tariffs and the possibility of a State contribution to Aguas Argentinas infrastructure investments.He added that the government is in discussions with Aguas Argentinas about what role it might take in the event that a State contribution is agreed.A conflict between the Argentine State and water firm Aguas Argentinas, controlled by France's Suez, is casting doubt on the firm's future.The Planning Minister didn't rule out the possibility of cancelling Aguas Argentinas water concession.In Argentina, Suez's subsidiary, which has been fined for cutting the supply of water during a recent heat wave and allegedly failing to keep up investment to meet the demand for water, has maintained a tense relationship with the Argentine government.On May 2004, Aguas Argentinas and the government signed an agreement to renegotiate its Buenos Aires water-concession contract.He added that in the coming weeks the future of Aguas Argentinas would be decided.Suez owns 40% of Aguas Argentinas (39.9%), while Spain's Aguas de Barcelona is its second biggest shareholder with 25.01%.However, Aguas Argentinas told the Argentine newspaper Clarin it would not accept any change to its legal structure and, in practice, this rules out State participation on its board.He has also asked for more investments to meet the growing demand for water. |
Go-ahead for Balkan oil pipeline
Albania, Bulgaria and Macedonia has given the go ahead for the construction of a $1.2bn oil pipeline that will pass through the Balkan peninsula.
The project aims to allow alternative ports for the shipping of Russian and Caspian oil, that normally goes through Turkish ports. It aims to transport 750,000 daily barrels of oil. The pipeline will be built by the US-registered Albanian Macedonian Bulgarian Oil Corporation (AMBO). The 912km pipeline will run from the Bulgarian port of Burgas, over the Black Sea to the Albanian city of Vlore on the Adriatic coast, crossing Macedonia.
The project was conceived in 1994 but it was delayed because of the lack of political support. By signing the agreement on Tuesday, the prime ministers of Bulgaria, Albania and Macedonia have overcome the problem. "This is one of the most important infrastructure projects for regional, EU, and Euro-Atlantic integration for the western Balkans," said Albanian Prime Minister Fatos Nano. According to Pat Ferguson, President of AMBO, work on the pipeline will begin in 2005 and it is expected to be ready in three or four years. He added that the company had already raised about $900m from the Overseas Private Investment Corporation (OPIC) - a US development agency - the Eximbank and Credit Suisse First Boston, among others. The project has also the support of the European Union. Analysts have said that oil companies like ChevronTexaco, Exxon Mobil and British Petroleum would be happy to find alternative routes to the Bosphorus and Dardanelles Straits.
| The pipeline will be built by the US-registered Albanian Macedonian Bulgarian Oil Corporation (AMBO).Albania, Bulgaria and Macedonia has given the go ahead for the construction of a $1.2bn oil pipeline that will pass through the Balkan peninsula.The project aims to allow alternative ports for the shipping of Russian and Caspian oil, that normally goes through Turkish ports.The 912km pipeline will run from the Bulgarian port of Burgas, over the Black Sea to the Albanian city of Vlore on the Adriatic coast, crossing Macedonia."This is one of the most important infrastructure projects for regional, EU, and Euro-Atlantic integration for the western Balkans," said Albanian Prime Minister Fatos Nano. |
Oil rebounds from weather effect
Oil prices recovered in Asian trade on Tuesday, after falling in New York on milder winter weather across the US.
With winter temperatures staying relatively high in the northern US, a barrel of light crude ended Monday down $1.33 to $42.12. However crude prices have rebounded in Asia, rising to $42.30 a barrel for February delivery. In London, trading of Brent crude was suspended for a public holiday, but the price fell to $39.20 in the Far East.
With milder temperatures expected to continue in the northern parts of the US over the next few days at least, analysts have said the price of oil may fall further - even if the decline was only temporary. "Weather has been the Achilles' heel of this market," said ABN AMRO analyst John Brady. "But it is winter in the northeast. Eventually we'll get another cold blast." Despite a fall of more than $12 a barrel from the record highs reached in late October, the price of crude oil remains almost 30% higher than year-ago levels. Prices rose last week after militant attacks in Riyadh, the capital of Saudi Arabia, briefly renewed fears that the supply chain might be broken in the world's leading crude exporter. "The market was panicked but fears essentially evaporated... since there was no follow-up," said Deborah White, senior economist for energy at SG Securities in Paris.
| With winter temperatures staying relatively high in the northern US, a barrel of light crude ended Monday down $1.33 to $42.12.With milder temperatures expected to continue in the northern parts of the US over the next few days at least, analysts have said the price of oil may fall further - even if the decline was only temporary.Oil prices recovered in Asian trade on Tuesday, after falling in New York on milder winter weather across the US.Despite a fall of more than $12 a barrel from the record highs reached in late October, the price of crude oil remains almost 30% higher than year-ago levels.However crude prices have rebounded in Asia, rising to $42.30 a barrel for February delivery. |
Macy's owner buys rival for $11bn
US retail giant Federated Department Stores is to buy rival May Department Stores for $11bn (£5.7bn).
The deal will bring together famous stores like Macy's, Bloomingdale's and Marshall Field's, creating the largest department store chain in the US. The combined firm will operate about 1,000 stores across the US, with combined annual sales of $30bn. The two companies, facing competition from the likes of Wal-Mart, tried to merge two years ago but talks failed. Sources familiar with the deal said that negotiations between the two companies sped up after May's chairman and chief executive Gene Kahn resigned in January. As part of the deal, Federated - owner of Macy's and Bloomingdale's - will assume $6bn of May's debt, bringing the deal's total value to $17bn. Directors at both companies have approved the deal and it is expected to conclude by the third quarter of this year.
May has struggled to compete against larger department store groups such as Federated and other retailers such as Wal-Mart. Federated expects the merger to boost earnings from 2007 but the deal will cost it $1bn in one-off charges.
"We have taken the first step toward combining two of the best department store companies in America, creating a new retail company with truly national scope and presence," said Terry Lundgren, Federated's chairman. Some analysts see the merger as a rescue deal for May. "Without this deal May would have been, to put it bluntly, washed up," said Kurt Barnard, president of Barnard's Retail Consulting Group. Federated has annual sales of $15.6bn, while May's yearly sales are $14.4bn.
| US retail giant Federated Department Stores is to buy rival May Department Stores for $11bn (£5.7bn).As part of the deal, Federated - owner of Macy's and Bloomingdale's - will assume $6bn of May's debt, bringing the deal's total value to $17bn.Federated has annual sales of $15.6bn, while May's yearly sales are $14.4bn.Federated expects the merger to boost earnings from 2007 but the deal will cost it $1bn in one-off charges.May has struggled to compete against larger department store groups such as Federated and other retailers such as Wal-Mart.The deal will bring together famous stores like Macy's, Bloomingdale's and Marshall Field's, creating the largest department store chain in the US. |
Tsunami to cost Sri Lanka $1.3bn
Sri Lanka faces a $1.3bn (£691m) bill in 2005 for reconstruction after the tsunami which killed more than 30,000 of its people, its central bank says.
This estimate is preliminary, bank governor Sunil Mendis told reporters, and could rise in 2006. The island state is asking for about $320m from the International Monetary Fund to help pay for relief, he said. The bank has 5bn rupees ($50m; £27m) set aside to lend at a lower interest rate to those who lost property. According to Mr Mendis, half the IMF support could come from a freeze on debt repayments, which would free up resources immediately. The rest could come from a five-year emergency loan. Sri Lanka is hoping for a wider freeze from other creditors.
The Paris Club of 19 creditors meets on 12 January to discuss a debt moratorium for the nations hit by the tsunami, which ravaged south and east Asia on 26 December.
Some 150,000 people across the region are feared to be dead and millions have been left homeless and destitute. A full reckoning of the economic cost to Sri Lanka of the tsunami will not be clear for some time to come. But already it looks likely that growth in the first half of 2005 will slow, Mr Mendis told reporters, although he would not say by how much. One side-effect of the disaster has been that the value of the rupee has risen as foreign funds have flooded into the country. The currency has strengthened 4% since late December, coming close to 100 rupees to the US dollar for the first time in more than six months.
| Sri Lanka faces a $1.3bn (£691m) bill in 2005 for reconstruction after the tsunami which killed more than 30,000 of its people, its central bank says.A full reckoning of the economic cost to Sri Lanka of the tsunami will not be clear for some time to come.According to Mr Mendis, half the IMF support could come from a freeze on debt repayments, which would free up resources immediately.This estimate is preliminary, bank governor Sunil Mendis told reporters, and could rise in 2006.The bank has 5bn rupees ($50m; £27m) set aside to lend at a lower interest rate to those who lost property.One side-effect of the disaster has been that the value of the rupee has risen as foreign funds have flooded into the country. |
Japanese mogul arrested for fraud
One of Japan's best-known businessmen was arrested on Thursday on charges of falsifying shareholder information and selling shares based on the false data.
Yoshiaki Tsutsumi was once ranked as the world's richest man and ran a business spanning hotels, railways, construction and a baseball team. His is the latest in a series of arrests of top executives in Japan over business scandals. He was taken away in a van outside one of his Prince hotels in Tokyo.
There was a time when Mr Tsutsumi seemed untouchable. Inheriting a large property business from his father in the 1960s, he became one of Japan's most powerful industrialists, with close connections to many of the country's leading politicians. He used his wealth and influence to bring the Winter Olympic Games to Nagano in 1998. But last year, he was forced to resign from all the posts he held in his business empire, after being accused of falsifying the share-ownership structure of Seibu Railways, one of his companies. Under Japanese stock market rules, no listed company can be more than 80% owned by its 10 largest shareholders. Now Mr Tsutsumi faces criminal charges and the possibility of a prison sentence because he made it look as if the 10 biggest shareholders owned less than this amount. Seibu Railways has been delisted from the stock exchange, its share value has plunged and it is the target of a takeover bid.
Mr Tsutsumi's fall from grace follows the arrests of several other top executives in Japan as the authorities try to curb the murky business practices which were once widespread in Japanese companies. His determination to stay at the top at all costs may have had its roots in his childhood. The illegitimate third son of a rich father, who made his money buying up property as Japan rebuilt after World War II, he has described the demands his father made. "I felt enormous pressure when I dined with him and it was nothing but pain," Tsutsumi told a weekly magazine in 1987. "He scolded me for pouring too much soy sauce or told me fruit was not for children. He didn't let me use the silk futon, saying it's a luxury." There have been corporate governance issues at some other Japanese companies too. Last year, twelve managers from Mitsubishi Motors were charged with covering up safety defects in their vehicles and three executives from Japan's troubled UFJ bank were charged with concealing the extent of the bank's bad loans.
| But last year, he was forced to resign from all the posts he held in his business empire, after being accused of falsifying the share-ownership structure of Seibu Railways, one of his companies.Mr Tsutsumi's fall from grace follows the arrests of several other top executives in Japan as the authorities try to curb the murky business practices which were once widespread in Japanese companies.There was a time when Mr Tsutsumi seemed untouchable.Yoshiaki Tsutsumi was once ranked as the world's richest man and ran a business spanning hotels, railways, construction and a baseball team.His is the latest in a series of arrests of top executives in Japan over business scandals.One of Japan's best-known businessmen was arrested on Thursday on charges of falsifying shareholder information and selling shares based on the false data."I felt enormous pressure when I dined with him and it was nothing but pain," Tsutsumi told a weekly magazine in 1987.He was taken away in a van outside one of his Prince hotels in Tokyo. |
Consumer spending lifts US growth
US economic growth accelerated in the third quarter, helped by strong consumer spending, official figures have shown.
The economy expanded at an annual rate of 3.7% in the July to September period, the Commerce Department said. The figure marked an increase on the 3.3% growth recorded in the second quarter, but fell short of the 4.2% rate pencilled in by forecasters. The increase reflected the biggest jump in consumer spending in a year. "It was a little softer than the consensus, but not a real surprise," said Gary Thayer, an economist at AG Edwards & Sons. Friday's growth estimate is one of the last significant pieces of economic data before the 2 November presidential election.
Democrat challenger John Kerry has criticised President George W Bush's handling of the economy, pointing to a net loss of over 800,000 jobs since Mr Bush took office. Analysts said the economy was still not growing fast enough to stimulate large-scale job creation. "It's a pretty good growth rate, but it may not be good enough to create enough jobs," said Robert Brusca, chief economist at Fact and Opinion Economics in New York. However, President Bush is expected to point to Commerce Department figures showing that consumer spending grew at 4.6% in the third quarter, up from just 1.6% in the second, as evidence that his policies are generating solid growth. Consumer spending accounts for about two thirds of all economic activity in the US.
The weaker than expected growth figure makes it less likely that the US Federal Reserve will raise interest rates next month, economists said. "The economy regained some traction in the third quarter, but the growth is not robust," AG Edwards' Thayer. "I think that means the Fed can take its time raising rates. We'll probably see one more rate hike before the end of the year." In an effort to pre-empt rising inflation, the Federal Reserve has pushed through three quarter-point rate rises since June this year, taking borrowing costs to 1.75%. On the financial markets, the dollar fell slightly against the euro and the yen, while the Dow Jones index of leading US shares was little changed.
| US economic growth accelerated in the third quarter, helped by strong consumer spending, official figures have shown.However, President Bush is expected to point to Commerce Department figures showing that consumer spending grew at 4.6% in the third quarter, up from just 1.6% in the second, as evidence that his policies are generating solid growth.The weaker than expected growth figure makes it less likely that the US Federal Reserve will raise interest rates next month, economists said."The economy regained some traction in the third quarter, but the growth is not robust," AG Edwards' Thayer.The figure marked an increase on the 3.3% growth recorded in the second quarter, but fell short of the 4.2% rate pencilled in by forecasters.Consumer spending accounts for about two thirds of all economic activity in the US.The economy expanded at an annual rate of 3.7% in the July to September period, the Commerce Department said. |
Germany calls for EU reform
German Chancellor Gerhard Schroeder has called for radical reform of the EU's stability pact to grant countries more flexibility over their budget deficits.
Mr Schroeder said existing fiscal rules should be loosened to allow countries to run deficits above the current 3% limit if they met certain criteria. Writing in the Financial Times, Mr Schroeder also said heads of government should have a greater say in reforms. Changes to the pact are due to be agreed at an economic summit in March.
The current EU rules limit the size of a eurozone country's deficit to 3% of GDP. Countries which exceed the threshold are liable to heavy fines by the European Commission, although several countries, including Germany, have breached the rules consistently since 2002 without facing punishment. The European Commission acknowledged last month that it would not impose sanctions on countries who break the rules.
Mr Schroeder - a staunch supporter of the pact when it was set up in the 1990s - said exemptions were now needed to take into account the cost of domestic reform programmes and changing economic conditions. "The stability pact will work better if intervention by European institutions in the budgetary sovereignty of national parliaments is only permitted under very limited conditions," he wrote. "Only if their competences are respected will the member states be willing to align their policies more consistently with the economic goals of the EU."
Deficits should be allowed to rise above 3%, Mr Schroeder argued, if countries meet several "mandatory criteria". These include governments which are adopting costly structural reforms, countries which are suffering economic stagnation and nations which are shouldering "special economic burdens". The proposed changes would make it harder for the European Commission to launch infringement action against any state which breaches the pact's rules. Mr Schroeder's intervention comes ahead of a meeting of the 12 Eurozone finance ministers on Monday to discuss the pact. The issue will also be discussed at Tuesday's Ecofin meeting of the finance ministers of all 25 EU members. Mr Schroeder also called for heads of government to play a larger role in shaping reforms to the pact. A number of EU finance ministers are believed to favour only limited changes to the eurozone's rules.
| Mr Schroeder also called for heads of government to play a larger role in shaping reforms to the pact.Mr Schroeder said existing fiscal rules should be loosened to allow countries to run deficits above the current 3% limit if they met certain criteria.Mr Schroeder - a staunch supporter of the pact when it was set up in the 1990s - said exemptions were now needed to take into account the cost of domestic reform programmes and changing economic conditions.Mr Schroeder's intervention comes ahead of a meeting of the 12 Eurozone finance ministers on Monday to discuss the pact.Writing in the Financial Times, Mr Schroeder also said heads of government should have a greater say in reforms.Deficits should be allowed to rise above 3%, Mr Schroeder argued, if countries meet several "mandatory criteria".German Chancellor Gerhard Schroeder has called for radical reform of the EU's stability pact to grant countries more flexibility over their budget deficits. |
India's Deccan gets more planes
Air Deccan has signed a deal to acquire 36 planes from Avions de Transport Regional (ATR).
The value of the deal has not been revealed, because of a confidentiality clause in the agreement. But Air Deccan's managing director Gorur Gopinath has said the price agreed was less than the catalogue price of $17.6m (£9.49m) per plane. Recently, India's first low-cost airline ordered 30 Airbus A320 planes for $1.8bn.
Under the agreement, Air Deccan will buy 15 new ATR 72-500 and lease another 15. ATR will also provide six second hand airplanes. In a statement, ATR has said deliveries of the aircraft will begin in 2005 and will continue over a five-year period.
Mr Gopinath said the planes will connect regional Indian cities. "After an evaluation of both ATR and Bombardier aircraft, we have chosen the ATR aircraft as we find it most suitable for our operations and for the Indian market for short haul routes." Filippo Bagnato, ATR's chief executive, has said that his firm will also work with Air Deccan to create a training centre in Bangalore.
The potential of the Indian budget market has attracted attention from businesses at home and abroad. Air Deccan has said it will base its business model on European firms such as Ireland's Ryanair. Beer magnate Vijay Mallya recently set up Kingfisher Airlines, while UK entrepreneur Richard Branson has said he is keen to start a local operation. India's government has given its backing to cheaper and more accessible air travel.
| Air Deccan has signed a deal to acquire 36 planes from Avions de Transport Regional (ATR).Air Deccan has said it will base its business model on European firms such as Ireland's Ryanair.In a statement, ATR has said deliveries of the aircraft will begin in 2005 and will continue over a five-year period.Filippo Bagnato, ATR's chief executive, has said that his firm will also work with Air Deccan to create a training centre in Bangalore.But Air Deccan's managing director Gorur Gopinath has said the price agreed was less than the catalogue price of $17.6m (£9.49m) per plane.Under the agreement, Air Deccan will buy 15 new ATR 72-500 and lease another 15. |
Lacroix label bought by US firm
Luxury goods group LVMH has sold its loss-making Christian Lacroix clothing label to a US investment group.
The Paris-based firm has been shedding non-core businesses and focusing on its most profitable brands including Moet & Chandon champagne and Louis Vuitton. LVMH said the French designer's haute couture and ready-to-wear labels had been purchased by the Falic Group for an unspecified sum. The Falic Group bought two cosmetics labels from LVMH in 2003. The sale of the Lacroix label comes as many fashion houses are struggling to make money from their expensive haute couture ranges. The Florida-based Falic group, which also runs a chain of 90 duty free stores in the US, said it planned to expand the brand by opening new stores. Mr Lacroix said he planned to stay at the label he founded in 1987 although exact details are still to be confirmed.
| LVMH said the French designer's haute couture and ready-to-wear labels had been purchased by the Falic Group for an unspecified sum.Luxury goods group LVMH has sold its loss-making Christian Lacroix clothing label to a US investment group.The Falic Group bought two cosmetics labels from LVMH in 2003. |
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