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Absa and Barclays talks continue..South Africa biggest retail bank Absa has said it is still in talks with UK bank Barclays over the sale of majority stake in the group...In November, Absa said it was close to striking a deal with Barclays. But the group said Barclays is still waiting for the approval of South Africa's banking and competition authorities to make a formal offer. Absa also announced that it expects to see earnings grow by 20-25% in its current financial year..."Discussions with Barclays are continuing, but shareholders are advised that no agreement has been reached as to any offer being made by Barclays to acquire a majority stake in Absa," Absa said in a statement. If Barclays buys a stake in Absa it will be one of the largest foreign investments in South Africa in recent years. Absa currently has a market value of about $8.5bn (£4.4bn). Analysts said Absa's earnings forecast was better than expected. However, the company warned that headline earnings growth would be trimmed by about four percentage points because of share options for a black economic empowerment transaction and a staff share incentive scheme. The South African group will release its results for the year to 31 March on 30 May.

South Africa biggest retail bank Absa has said it is still in talks with UK bank Barclays over the sale of majority stake in the group."Discussions with Barclays are continuing, but shareholders are advised that no agreement has been reached as to any offer being made by Barclays to acquire a majority stake in Absa," Absa said in a statement.In November, Absa said it was close to striking a deal with Barclays.If Barclays buys a stake in Absa it will be one of the largest foreign investments in South Africa in recent years.

business

Lesotho textile workers lose jobs..Six foreign-owned textile factories have closed in Lesotho, leaving 6,650 garment workers jobless, union officers told the AP news agency...Factory Workers Union secretary general Billy Macaefa blamed the closures on the end of worldwide textile quotas. The quotas for developing nations, ended on 1 January, gave them a set share of the rich countries' markets. They also limited the amount countries like China could export to the big markets of the United States and EU..."We understand that some (owners)... were complaining that the South African rand was strong against the US dollar, and they were losing when exporting textiles and clothing to the United States," Mr Macaefa said at a news briefing in the capital, Maseru. Lesotho's currency, the maloti, is fixed to the rand. "But we suspect that they left the country unceremoniously because of the end of quotas introduced by the World Trade Organization." He said the six factories were Leisure Garments, Modern Garments, Precious Six Garments, TW Garments, Lesotho Hats and Vogue Landmark. The owners - two from Taiwan, two from China, one from Mauritius and one from Malaysia - left over the December holiday period without informing or paying their employees, he said...Union leaders and trade campaigners have been warning that developing nations such as Lesotho, Sri Lanka, and Bangaldesh could lose thousands of jobs once the quotas were lifted. In the mountainous country surrounded by South Africa, it is feared as many as 50,000 textile workers could lose their jobs, and Mr Mafeca said he expected more companies to leave. The assistance of a US law had given Lesotho's textiles duty-free access to North American markets. The African Growth and Opportunity Act (AGOA), gave sub-Saharan countries preferential access to the US market for apparel and textile products as well as a wide range of other goods. A Lesotho government news briefing is expected on Wednesday.

"We understand that some (owners)... were complaining that the South African rand was strong against the US dollar, and they were losing when exporting textiles and clothing to the United States," Mr Macaefa said at a news briefing in the capital, Maseru.In the mountainous country surrounded by South Africa, it is feared as many as 50,000 textile workers could lose their jobs, and Mr Mafeca said he expected more companies to leave.Six foreign-owned textile factories have closed in Lesotho, leaving 6,650 garment workers jobless, union officers told the AP news agency.The African Growth and Opportunity Act (AGOA), gave sub-Saharan countries preferential access to the US market for apparel and textile products as well as a wide range of other goods.Union leaders and trade campaigners have been warning that developing nations such as Lesotho, Sri Lanka, and Bangaldesh could lose thousands of jobs once the quotas were lifted.The assistance of a US law had given Lesotho's textiles duty-free access to North American markets.

business

Australia rates at four year high..Australia is raising its benchmark interest rate to its highest level in four years despite signs of a slowdown in the country's economy...The Reserve Bank of Australia lifted interest rates 0.25% to 5.5%, their first upwards move in more than a year. However, shortly after the Bank made its decision, new figures showed a fall in economic growth in the last quarter. The Bank said it had acted to curb inflation but the move was criticised by some analysts...The rate hike was the first since December 2003 and had been well-flagged in advance. However, opposition parties and some analysts said the move was ill-timed given data showing the Australian economy grew just 0.1% between October and December and 1.5% on an annual basis...The figures, representing a decline from the 0.2% growth in GDP seen between July and September, were below market expectations. Consumer spending remains strong, however, and the Bank is concerned about growing inflationary pressures. "Over recent months it has become increasingly clear that remaining spare capacity in the labour and goods markets is becoming rather limited," said Ian Macfarlane, Governor of the Reserve Bank...At 2.6%, inflation remains within the Bank's 2-3% target range. However, exports declined in the second half of 2004, fuelling a rise in the country's current account deficit - the difference in the value of imports compared to exports - to a record Australian dollar 29.4bn. The Australian government said the economy remained strong with unemployment at a near 30 year low. "The economy has been strong and it is properly moderating but it doesn't look to me like it's slowing in any unreasonable way," said Treasurer Peter Costello. Stock markets had factored in the likelihood of a rate rise but analysts still expressed concern about the strength of the economy. "That 1.5% annual growth rate is the lowest we have seen since the post-election slump we saw back in 2000-1," said Michael Blythe, chief economist at the Commonwealth Bank of Australia. "This suggests the economy really did slow very sharply in the second half of 2004."

The Reserve Bank of Australia lifted interest rates 0.25% to 5.5%, their first upwards move in more than a year.However, opposition parties and some analysts said the move was ill-timed given data showing the Australian economy grew just 0.1% between October and December and 1.5% on an annual basis."That 1.5% annual growth rate is the lowest we have seen since the post-election slump we saw back in 2000-1," said Michael Blythe, chief economist at the Commonwealth Bank of Australia.The Bank said it had acted to curb inflation but the move was criticised by some analysts.The Australian government said the economy remained strong with unemployment at a near 30 year low.Australia is raising its benchmark interest rate to its highest level in four years despite signs of a slowdown in the country's economy.Stock markets had factored in the likelihood of a rate rise but analysts still expressed concern about the strength of the economy.

business

BMW to recall faulty diesel cars..BMW is to recall all cars equipped with a faulty diesel fuel-injection pump supplied by parts maker Robert Bosch...The faulty part does not represent a safety risk and the recall only affects pumps made in December and January. BMW said that it was too early to say how many cars were affected or how much the recall would cost. The German company is to extend a planned production break at one of its plants due to the faulty Bosch part. The Dingolfing site will now be closed all next week instead of for just two days. The additional three-day stoppage will mean a production loss of up to 3,600 vehicles, BMW said, adding that it was confident it could make up the numbers later...Bosch has stopped production of the part but expects to restart by 2 February. The faulty component does not represent a safety risk but causes the motor to stall after a significant amount of mileage. When asked if BMW would be seeking compensation from Bosch, the carmaker's chief executive Helmut Panke said: "we will first solve the problem before talking about who will pay". Audi and Mercedes Benz were also supplied with the defective diesel fuel-injection pumps but neither of them have to recall any vehicles. A spokesman for DaimlerChrysler, parent company of Mercedes Benz, said it will however have to halt some production. It is to close the Mercedes factory in Sindelfingen on Monday and Tuesday. Audi said it had been hit by production bottlenecks, due to a shortage of unaffected Bosch parts.

BMW is to recall all cars equipped with a faulty diesel fuel-injection pump supplied by parts maker Robert Bosch.The German company is to extend a planned production break at one of its plants due to the faulty Bosch part.The faulty part does not represent a safety risk and the recall only affects pumps made in December and January.Audi said it had been hit by production bottlenecks, due to a shortage of unaffected Bosch parts.A spokesman for DaimlerChrysler, parent company of Mercedes Benz, said it will however have to halt some production.Audi and Mercedes Benz were also supplied with the defective diesel fuel-injection pumps but neither of them have to recall any vehicles.

business

Steady job growth continues in US..The US created fewer jobs than expected in December, but analysts said that the dip in hiring was not enough to derail the world's biggest economy...According to Labor Department figures, 157,000 new jobs were added last month. That took 2004's total to 2.2 million, the best showing in five years. Job creation was one of last year's main concerns for the US economy. While worries still remain, the conditions are set for steady growth in 2005, analysts said. The unemployment rate stayed at 5.4% in December, and about 200,000 jobs will need to be created each month if that figure is to drop..."It was a respectable report," said Michael Moran, analyst at Daiwa Securities..."Payroll growth in December was a little lighter than the consensus forecast, but we had upward revisions to the prior two months and an increase in manufacturing employment." "Manufacturing is a cyclical area of the economy and if it's showing job growth, it's a good indication that the economy is on a solid growth track." That means that the Federal Reserve is likely to continue its policy of raising interest rates. The Fed lifted borrowing costs five times last year to 2.25%, citing evidence the US economic recovery was becoming more robust...Job creation was one of last year's main concerns for the US economy, and proved to be a main topic of debate in the US presidential election. While demand for workers is far from booming, the conditions are set for steady growth. "Overall, compared to the previous year it looks great, it just keeps going stronger and stronger and I expect that to be the case" in 2005, said Kurt Karl, economist at Swiss Re in New York. Meanwhile, economists cautioned against reading too much into data from the Federal Reserve showing an unexpected $8.7bn drop in consumer debt in November. A fall in consumer spending, which makes up about two-thirds of all US economic activity, could help limit the extent of any future interest rate rises. But economists said there could be a number of reasons for a fall in the borrowing, which include credit cards and personal loans, while noting that such figures can vary on a month-to-month basis.

Job creation was one of last year's main concerns for the US economy.Job creation was one of last year's main concerns for the US economy, and proved to be a main topic of debate in the US presidential election.The US created fewer jobs than expected in December, but analysts said that the dip in hiring was not enough to derail the world's biggest economy."Manufacturing is a cyclical area of the economy and if it's showing job growth, it's a good indication that the economy is on a solid growth track."While worries still remain, the conditions are set for steady growth in 2005, analysts said.The Fed lifted borrowing costs five times last year to 2.25%, citing evidence the US economic recovery was becoming more robust.The unemployment rate stayed at 5.4% in December, and about 200,000 jobs will need to be created each month if that figure is to drop.

business

French suitor holds LSE meeting..European stock market Euronext has met with the London Stock Exchange (LSE) amid speculation that it may be ready to launch a cash bid...Euronext chief Jean-Francois Theodore held talks with LSE boss Clara Furse the day after rival Deutsche Boerse put forward its own bid case. The German exchange said it had held "constructive, professional and friendly" talks with the LSE. But Euronext declined to comment after the talks ended on Friday. Speculation is mounting that the Germans may raise their bid to £1.5bn. Deutsche Boerse previously offered £1.3bn, which was rejected by the LSE, while Euronext is rumoured to have facilities in place to fund a £1.4bn cash bid. So far, however, neither have tabled a formal bid. But a deal with either bidder would create the biggest stock market operator in Europe and the second biggest in the world after the New York Stock Exchange...There was speculation Euronext would use Friday's meeting as an opportunity to take advantage of growing disquiet over Deutsche Boerse's own plans for dominance over the London market. Unions for Deutsche Boerse staff in Frankfurt has reportedly expressed fears that up to 300 jobs would be moved to London if the takeover is successful. "The works council has expressed concerns that the equities and derivatives trade could be managed from London in the future," Reuters news agency reports a union source as saying. German politicians are also said to be angry over the market operator's promise to move its headquarters to London if a bid were successful...Meanwhile, LSE shareholders fear that Deutsche Boerse's control over its Clearstream unit - the clearing house that processes securities transactions - would create a monopoly situation. This would weaken the position of shareholders when negotiating lower transaction fees for share dealings. LSE and Euronext do not have control over their clearing and settlement operations, a situation which critics say is more transparent and competitive. The German group's ownership of Clearstream has been seen as the main stumbling block to a London-Frankfurt merger. Commentators believe Deutsche Boerse, which has now formally asked German authorities to approve its plan to buy the LSE, may offer to sell Clearstream to gain shareholder approval. Euronext, so far, has given little away as to what sweeteners it will offer the LSE - Europe's biggest equity market - into a deal.

European stock market Euronext has met with the London Stock Exchange (LSE) amid speculation that it may be ready to launch a cash bid.Euronext, so far, has given little away as to what sweeteners it will offer the LSE - Europe's biggest equity market - into a deal.Deutsche Boerse previously offered £1.3bn, which was rejected by the LSE, while Euronext is rumoured to have facilities in place to fund a £1.4bn cash bid.Euronext chief Jean-Francois Theodore held talks with LSE boss Clara Furse the day after rival Deutsche Boerse put forward its own bid case.Commentators believe Deutsche Boerse, which has now formally asked German authorities to approve its plan to buy the LSE, may offer to sell Clearstream to gain shareholder approval.There was speculation Euronext would use Friday's meeting as an opportunity to take advantage of growing disquiet over Deutsche Boerse's own plans for dominance over the London market.Meanwhile, LSE shareholders fear that Deutsche Boerse's control over its Clearstream unit - the clearing house that processes securities transactions - would create a monopoly situation.Unions for Deutsche Boerse staff in Frankfurt has reportedly expressed fears that up to 300 jobs would be moved to London if the takeover is successful.

business

Fresh hope after Argentine crisis..Three years after Argentina was hit by a deadly economic crisis, there is fresh hope...The country's economy is set to grow about 8% this year after seeing 9% growth last year, a sharp turnaround from 2002 when output fell 11%. The unemployment rate is improving, too: It is set to slip below 13% by the end of the year, down from 20% in May 2002. True, problems remain, but the overall picture is one of vast improvement. Even the International Monetary Fund (IMF) admits this. "The Argentine authorities are proud, should be proud, of the strong performance of the economy," Thomas Dawson, an IMF director, said earlier this month...Argentina has made a remarkable recovery from a hideous and lengthy recession which in 2001 culminated in the government halting debt repayments to its private creditors. The debt default sparked a deep and prolonged economic crisis which, at least initially, was made worse by the government's decisions. Pension payments were halted and bank accounts frozen as part of austerity measures introduced by the government to deal with the country's massive debts. In response, angry crowds of ordinary Argentines took to the streets where dozens of lives were lost in clashes with the police. Two presidents and at least three finance minister resigned in less than a month. Argentina was on the brink of collapse. The fix was found in the currency markets with the abandonment of the peso's decade-long peg to the US dollar in February 2002. The subsequent devaluation saw thousands of people's life savings disappear. Scathes of companies went bust. "Three years ago, every sector [of the economy] was hit by the crisis," said entrepreneur Drayton Valentine. It really was dire...But since then, the general mood on the ground has improved dramatically, in part because the devaluation helped attract fresh direct investment from abroad and stimulate business within Brazil. "Agriculture and tourism are helping," said entrepreneur Drayton Valentine...Mr Valentine, who was born in the United States but grew up in Argentina, was fortunate: At the time of the crisis, his savings were held in dollar accounts abroad. But now he is using his money to help with the start-up a trading company. He explained that initially, his firm is going to export building materials to Spain and United States. Then, he would like to diversify to other areas, depending on the market. "Locally there is a sense of recovery, many companies are exporting now," he said, noting that a lot of firms, which were closed during the crisis, are re-opening...But not all that shines is gold. Argentina is still burdened by its failure to pay private creditors at the end of 2001. President Nestor Kirchner's administration is still trying to hammer out an agreement with the creditors, but with the debts' nominal value standing at around $100bn it is not proving easy. Debt defaults make further lending agreements both difficult and expensive to negotiate. Argentina's current offer implies that the creditors would get just 25 cents for each dollar they are owed, according to the creditors. Understandably, they want more and until they do, both they and others are loath to continue lending. For President Kirchner, this proves a hopeless challenge. Real losses have been suffered and somebody has to pay, observed Jack Boorman, adviser to IMF's managing director, Rodrigo Rato. "Everyone needs to keep in mind the enormous cost on the part of both creditors and the Argentine society and people that will have been endured by the time a settlement is reached," he said. "The cost is enormous, and continues to be paid, and will not be reversed by any restructuring."..With the international negotiations being troubled, it is of little help to President Kirchner that the domestic situation remains strained as well...This is partly because there are still bank account holders who are waiting to recover some of their deposits. "The situation is bad for those who had previously chosen to save in Argentina, " said Carlos Baez Silva, president of AARA, an association that represents bank account and bond holders. Few people have recovered more than about half their savings, Mr Baez Silva estimated, pointing out that many of the savers who have lost out are pensioners or others who once trusted the government, people who set aside money for the future in the belief that their investment would be safe. "A lot of them invested in good faith," he said. "The Argentine state responded by taking most of their investments." The affair has made Mr Baez Silva disillusioned with the country's legal system. On occasion, the Supreme Court has ruled against the interests of the people he represents, he says, insisting that the system cannot be trusted. "People have to deposit their money in the banks, not necessarily because they trust them but because crime is so high that people cannot have their money in their homes beneath their mattresses." Mr Valentine, who was born in the United States but grew up in Argentina, agreed. "If I have to save pesos [the local currency] there is not much problem, but I will think twice before I deposit dollars in a bank".

Mr Valentine, who was born in the United States but grew up in Argentina, was fortunate: At the time of the crisis, his savings were held in dollar accounts abroad."Three years ago, every sector [of the economy] was hit by the crisis," said entrepreneur Drayton Valentine.Three years after Argentina was hit by a deadly economic crisis, there is fresh hope.Mr Valentine, who was born in the United States but grew up in Argentina, agreed."The situation is bad for those who had previously chosen to save in Argentina, " said Carlos Baez Silva, president of AARA, an association that represents bank account and bond holders.Argentina was on the brink of collapse.Few people have recovered more than about half their savings, Mr Baez Silva estimated, pointing out that many of the savers who have lost out are pensioners or others who once trusted the government, people who set aside money for the future in the belief that their investment would be safe."Everyone needs to keep in mind the enormous cost on the part of both creditors and the Argentine society and people that will have been endured by the time a settlement is reached," he said.The debt default sparked a deep and prolonged economic crisis which, at least initially, was made worse by the government's decisions.Argentina has made a remarkable recovery from a hideous and lengthy recession which in 2001 culminated in the government halting debt repayments to its private creditors."Locally there is a sense of recovery, many companies are exporting now," he said, noting that a lot of firms, which were closed during the crisis, are re-opening.Argentina is still burdened by its failure to pay private creditors at the end of 2001.The affair has made Mr Baez Silva disillusioned with the country's legal system.It really was dire.The fix was found in the currency markets with the abandonment of the peso's decade-long peg to the US dollar in February 2002."The Argentine authorities are proud, should be proud, of the strong performance of the economy," Thomas Dawson, an IMF director, said earlier this month."Agriculture and tourism are helping," said entrepreneur Drayton Valentine."If I have to save pesos [the local currency] there is not much problem, but I will think twice before I deposit dollars in a bank".

business

'Post-Christmas lull' in lending..UK mortgage lending showed a "post-Christmas lull" in January, indicating a slowing housing market, lenders have said...Both the Council of Mortgage Lenders (CML) and Building Society Association (BSA) said lending was down sharply. The CML said gross mortgage lending stood at £17.9bn, compared with £21.8bn in January last year. The BSA said mortgage approvals - loans approved but not yet made - were £2bn, down from £2.6bn in January 2004...At the same time, the British Bankers' Association (BBA) said lending was "weaker". Overall, the BBA said mortgage lending rose by £4bn in January, a far smaller increase than the £5.1bn seen in December. This was a return to the "weaker pattern" of lending seen in the last months of 2004, the BBA added. However, it is the year-on-year lending comparisons which are the most striking. The CML said lending for house purchases and gross mortgage lending were 29% and 18% lower year-on-year respectively. "These figures show beyond doubt the recent slowdown in the housing market," Peter Williams, CML deputy director, said.

The CML said gross mortgage lending stood at £17.9bn, compared with £21.8bn in January last year.The CML said lending for house purchases and gross mortgage lending were 29% and 18% lower year-on-year respectively.Overall, the BBA said mortgage lending rose by £4bn in January, a far smaller increase than the £5.1bn seen in December.Both the Council of Mortgage Lenders (CML) and Building Society Association (BSA) said lending was down sharply.

business

Air passengers win new EU rights..Air passengers who are unable to board their flights because of overbooking, cancellations or flight delays can now demand greater compensation...New EU rules set compensation at between 250 euros (£173) and 600 euros, depending on the length of the flight. The new rules will apply to all scheduled and charter flights, including budget airlines. Airlines have attacked the legislation saying they could be forced to push prices higher to cover the extra cost. The European Commission is facing two legal challenges - one from the European Low-fare Airlines Association (ELAA) and the other from the International Air Transport Association (IATA), which has attacked the package as a "bad piece of legislation". Previously, passengers could claim between 150 euros and 300 euros if they had been stopped from boarding...However, only scheduled flight operators were obliged to offer compensation in cases of overbooking and they did not have to offer compensation for flight cancellations...The EU decided to increase passenger compensation in a bid to deter airlines from deliberately overbooking flights. Overbooking can often lead to 'bumping' - when a passenger is moved to a later flight. When this happens against a passenger's will, airlines will now have to offer compensation. In addition, if a flight is cancelled or delayed for more than two hours through the fault of the airline, all passengers must be paid compensation...However, airlines do not have to offer compensation if flights are cancelled or delayed due to "extraordinary circumstances". Airlines fear that "extraordinary circumstances" may not include bad weather, security alerts or strikes - events which are outside of their control. All EU-based airlines and operators of flights which take off from the EU will have to adhere to the new compensation regime which came into force on Thursday. Low-cost airlines have criticised the new compensation levels, arguing that the pay-out could be worth more than the ticket. "It's a preposterous piece of legislation, we among all airlines are fighting this," Ryanair deputy chief executive Michael Cawley told Radio 4's Today programme...The European Regions Airline Association (ERAA) claims that neither airlines nor consumers were consulted over the changes. Andy Clarke, ERAA director of air transport, said that the EC advice misleads customers as it leads them to believe that airlines could be liable for payouts if flights are delayed because of bad weather...EC spokeswoman Marja Quillinan-Meiland conceded there were "grey areas" but said "these are not as big as the airlines are making out". In cases of dispute, national enforcement bodies would decide whether the passenger had a case, she said. New technology means it is easier for airlines to take off and land in bad weather, she added. The ERAA's Mr Clarke also warned that while airlines would comply with the new rules, the extra costs would be passed onto passengers. "We reckon it's going to cost European air passengers - not the airlines, the airlines have no money, it has to be paid by passengers - 1.5bn euros, that's over £1bn a year loaded onto European passengers," Mr Clarke said. "That's basically a transfer of money from passengers whose journeys are not disrupted to passengers whose journeys are disrupted."..On Wednesday, Jacques Barrot, vice president of the European Commission and also Commissioner for Transport, said that the changes were necessary. "The boom in air travel needs to be accompanied by proper protection of passengers' right." "This is a concrete example of how the Union benefits people's daily lives," he added. The EC has launched an information campaign in airports and travel agencies to inform airline passengers of their new rights.

In addition, if a flight is cancelled or delayed for more than two hours through the fault of the airline, all passengers must be paid compensation.However, airlines do not have to offer compensation if flights are cancelled or delayed due to "extraordinary circumstances"."We reckon it's going to cost European air passengers - not the airlines, the airlines have no money, it has to be paid by passengers - 1.5bn euros, that's over £1bn a year loaded onto European passengers," Mr Clarke said.When this happens against a passenger's will, airlines will now have to offer compensation.All EU-based airlines and operators of flights which take off from the EU will have to adhere to the new compensation regime which came into force on Thursday.The EU decided to increase passenger compensation in a bid to deter airlines from deliberately overbooking flights.Andy Clarke, ERAA director of air transport, said that the EC advice misleads customers as it leads them to believe that airlines could be liable for payouts if flights are delayed because of bad weather.Air passengers who are unable to board their flights because of overbooking, cancellations or flight delays can now demand greater compensation.However, only scheduled flight operators were obliged to offer compensation in cases of overbooking and they did not have to offer compensation for flight cancellations.Low-cost airlines have criticised the new compensation levels, arguing that the pay-out could be worth more than the ticket.The EC has launched an information campaign in airports and travel agencies to inform airline passengers of their new rights.New technology means it is easier for airlines to take off and land in bad weather, she added.

business

$1m payoff for former Shell boss..Shell is to pay $1m (£522,000) to the ex-finance chief who stepped down from her post in April 2004 after the firm over-stated its reserves...Judy Boynton finally left the firm on 31 December, having spent the intervening time as a special advisor to chief executive Jeroen van der Veer. In January 2004, Shell told shocked investors that its reserves were 20% smaller than previously thought. Shell said the pay-off was in line with Ms Boynton's contract. She was leaving "by mutual agreement to pursue other career opportunities", the firm said in a statement. The severance package means she keeps long-term share options, but fails to collect on a 2003 incentive plan since the firm has failed to meet the targets included in it...The revelation that Shell had inflated its reserves led to the resignation of its chairman, Sir Phil Watts, and production chief Walter van der Vijver...An investigation commissioned by Shell found that Ms Boynton had to share responsibility for the company's behaviour. Despite receiving an email from Mr Van de Vijver which said the firm had "fooled" the market about its reserves, the investigation said, she did nothing to inquire further. In all, Shell restated its reserves four times during 2003. In September, it paid £82.7m in fines to regulators on both sides of the Atlantic for violating market rules in its reporting of its reserves.

Shell is to pay $1m (£522,000) to the ex-finance chief who stepped down from her post in April 2004 after the firm over-stated its reserves.Despite receiving an email from Mr Van de Vijver which said the firm had "fooled" the market about its reserves, the investigation said, she did nothing to inquire further.Shell said the pay-off was in line with Ms Boynton's contract.In all, Shell restated its reserves four times during 2003.The revelation that Shell had inflated its reserves led to the resignation of its chairman, Sir Phil Watts, and production chief Walter van der Vijver.

business

Bargain calls widen Softbank loss..Japanese communications firm Softbank has widened losses after heavy spending on a new cut-rate phone service...The service, launched in December and dubbed "Otoku" or "bargain", has had almost 900,000 orders, Softbank said. The firm, a market leader in high-speed internet, had an operating loss for the three months to December of 7.5bn yen ($71.5m; £38.4m). But without the Otoku marketing spend it would have made a profit - and expects to move into the black in 2006. The firm did not give a figure for the extent of profits it expected to make next year. It was born in the 1990s tech boom, investing widely and becoming a fast-rising star, till the end of the tech bubble hit it hard. Its recent return to a high profile came with the purchase of Japan Telecom, the country's third-biggest fixed-line telecoms firm. The acquisition spurred its broadband internet division to pole position in the Japanese market, with more than 5.1 million subscribers at the end of December.

The firm, a market leader in high-speed internet, had an operating loss for the three months to December of 7.5bn yen ($71.5m; £38.4m).Japanese communications firm Softbank has widened losses after heavy spending on a new cut-rate phone service.The service, launched in December and dubbed "Otoku" or "bargain", has had almost 900,000 orders, Softbank said.The acquisition spurred its broadband internet division to pole position in the Japanese market, with more than 5.1 million subscribers at the end of December.

business

Yukos loses US bankruptcy battle..A judge has dismissed an attempt by Russian oil giant Yukos to gain bankruptcy protection in the US...Yukos filed for Chapter 11 protection in Houston in an unsuccessful attempt to halt the auction of its Yugansk division by the Russian authorities. The court ruling is a blow to efforts to get damages for the sale of Yugansk, which Yukos claims was illegally sold. Separately, former Yukos boss Mikhail Khodorkovsky began testimony on Friday in his trial for fraud and tax evasion...Mr Khodorkovsky - who has been in jail for more than a year - pleaded not guilty to the charges brought against him and denied involvement in any criminal activities. "I pride myself on heading for 15 years a number of successful companies and helping other enterprises rise from their knees," he told a Russian court...Yugansk was auctioned to help pay off $27.5bn (£14.5bn) in unpaid taxes. It was bought for $9.4bn by a previously-unknown group, which was in turn bought up almost immediately by state-controlled oil company Rosneft...Texas Judge Letitia Clark said Yukos did not have enough of a US presence to establish US jurisdiction. "The vast majority of the business and financial activities of Yukos continue to occur in Russia," Judge Clark said in her ruling. "Such activities require the continued participation of the Russian government." Yukos had argued that a US court was entitled to declare it bankrupt before its Yugansk unit was sold, since it has local bank accounts and its chief finance officer Bruce Misamore lives in Houston. Yukos claimed it sought help in the US because other forums - Russian courts and the European Court of Human Rights - were either unfriendly or offered less protection. Russia had indicated it would in any case not abide by the rulings of the US courts...In her ruling, the judge acknowledged that "it appears likely that agencies of the Russian government have acted in a manner that would be considered confiscatory under United States law". But she said her role was simply to decide on jurisdiction. The US court's jurisdiction had been challenged by Deutsche Bank and Gazpromneft, a former unit of Russian gas monopoly Gazprom which is due to merge with Rosneft. Analysts said the ability of Gazprom and Rosneft to trade freely overseas had been stifled while the ownership of Yugansk remained unclear...Yukos said it would consider its options in light of the ruling. However, it claimed that the court had backed its argument in four out of five key issues. "We believe the merits of our case are strong and simple," said chief executive Steven Theede. "Our assets were illegally seized. We want them back or damages paid."

The court ruling is a blow to efforts to get damages for the sale of Yugansk, which Yukos claims was illegally sold.Yukos had argued that a US court was entitled to declare it bankrupt before its Yugansk unit was sold, since it has local bank accounts and its chief finance officer Bruce Misamore lives in Houston.A judge has dismissed an attempt by Russian oil giant Yukos to gain bankruptcy protection in the US.Texas Judge Letitia Clark said Yukos did not have enough of a US presence to establish US jurisdiction.Yukos claimed it sought help in the US because other forums - Russian courts and the European Court of Human Rights - were either unfriendly or offered less protection.Yukos said it would consider its options in light of the ruling."The vast majority of the business and financial activities of Yukos continue to occur in Russia," Judge Clark said in her ruling.Yukos filed for Chapter 11 protection in Houston in an unsuccessful attempt to halt the auction of its Yugansk division by the Russian authorities.The US court's jurisdiction had been challenged by Deutsche Bank and Gazpromneft, a former unit of Russian gas monopoly Gazprom which is due to merge with Rosneft.Russia had indicated it would in any case not abide by the rulings of the US courts.

business

House prices rebound says Halifax..UK house prices increased by 1.1% in December, the first monthly rise since September, the Halifax has said...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. The average price of a house in the UK now stands at £162,086, Halifax said. The survey seems to fly in the face of recent evidence that the UK housing market has been slowing substantially in response to interest rate rises...Last week, the Nationwide said that house prices fell 0.2% in December, with annual inflation running at a three year low...On Tuesday, figures from the Bank of England showed that the number of mortgages approved in the UK has fallen to the lowest level for nearly a decade. New loans in November fell to 77,000, from 85,000 in October, the lowest rate since September 1995, the Bank of England said. Growth in unsecured lending, such as personal loans and credit cards, also slowed last month. Capital Economics, which has in the past predicted a sharp fall in UK house prices, branded Halifax's findings a "temporary surprise," which would be reversed over the coming months. "The month by month volatility of the Halifax house price data should not distract from the fact that there is a clear downward trend in house prices," a Capital Economics statement said...Experts believe five interest rate rises since November 2003 are cutting borrowers' appetite for debt...Despite recording a price rise in December, the Halifax survey concluded that there was "continuing signs of a genuine slowdown in the housing market." Martin Ellis, Halifax chief economist, said that there was no need to revise the bank's prediction, made last month, that prices would fall by 2% in 2005. "Sound housing market fundamentals will continue to underpin the market in 2005, ensuring that the market remains healthy and that house prices fall only slightly," Mr Ellis said. If the bank's prediction of a 2% price drop comes true, it will be the first annual fall in nine years...The bank said that the recent pattern of house prices rising the fastest in the north of England continued in December. In the North West and Yorkshire and the Humber, Halifax said prices rose by 3% and 1.2% in the two regions respectively during the month. At the other send of the scale, prices in the South East and London fell by 1.6% and 0.5% respectively. The biggest decline was seen in Wales where prices fell by 6.2%, an area that had experienced strong house price growth during most of 2004. Overall, Halifax said prices in the final quarter of 2004 were 0.1% higher than in the previous quarter. This was the smallest quarterly rise since the second quarter of 2000, the bank said. As a result, annual house price inflation dipped below 20% during the final few months of 2004.

UK house prices increased by 1.1% in December, the first monthly rise since September, the Halifax has said.The average price of a house in the UK now stands at £162,086, Halifax said.The bank said that the recent pattern of house prices rising the fastest in the north of England continued in December."The month by month volatility of the Halifax house price data should not distract from the fact that there is a clear downward trend in house prices," a Capital Economics statement said.Last week, the Nationwide said that house prices fell 0.2% in December, with annual inflation running at a three year low.Martin Ellis, Halifax chief economist, said that there was no need to revise the bank's prediction, made last month, that prices would fall by 2% in 2005.The biggest decline was seen in Wales where prices fell by 6.2%, an area that had experienced strong house price growth during most of 2004.In the North West and Yorkshire and the Humber, Halifax said prices rose by 3% and 1.2% in the two regions respectively during the month.As a result, annual house price inflation dipped below 20% during the final few months of 2004.

business

Continental 'may run out of cash'..Shares in Continental Airlines have tumbled after the firm warned it could run out of cash...In a filing to US regulators the airline warned of "inadequate liquidity" if it fails to reduce wage costs by $500m by the end of February. Continental also said that, if it did not make any cuts, it expects to lose "hundreds of millions of dollars" in 2005 in current market conditions. Failure to make cutbacks may also push it to reduce its fleet, the group said. Shares in the fifth biggest US carrier had fallen 6.87% on the news to $10.44 by 1830 GMT. "Without the reduction in wage and benefit costs and a reasonable prospect of future profitability, we believe that our ability to raise additional money through financings would be uncertain," Continental said in its filing to the US Securities and Exchange Commission (SEC)...Airlines have faced tough conditions in recent years, amid terrorism fears since the 11 September World Trade Centre attack in 2001. But despite passengers returning to the skies, record-high fuel costs and fare wars prompted by competition from low cost carriers have taken their toll. Houston-based Continental now has debt and pension payments of nearly $984m which it must pay off this year. The company has been working to streamline its operations - and has managed to save $1.1bn in costs without cutting jobs. Two weeks' ago the group also announced it would be able to shave a further $48m a year from its costs with changes to wage and benefits for most of its US-based management and clerical staff.

"Without the reduction in wage and benefit costs and a reasonable prospect of future profitability, we believe that our ability to raise additional money through financings would be uncertain," Continental said in its filing to the US Securities and Exchange Commission (SEC).In a filing to US regulators the airline warned of "inadequate liquidity" if it fails to reduce wage costs by $500m by the end of February.Two weeks' ago the group also announced it would be able to shave a further $48m a year from its costs with changes to wage and benefits for most of its US-based management and clerical staff.Shares in Continental Airlines have tumbled after the firm warned it could run out of cash.Continental also said that, if it did not make any cuts, it expects to lose "hundreds of millions of dollars" in 2005 in current market conditions.

business

Turkey turns on the economic charm..Three years after a gruelling economic crisis, Turkey has dressed its economy to impress...As part of a charm offensive - ahead of 17 December, when the European Union will decide whether to start entry talks - Turkey's economic leaders have been banging the drum to draw attention to recent achievements. The economy is growing fast, they insist. Education levels among its young and large population are rising. Unemployment levels, in percentage terms, are heading fast towards single digits. Inflation is under control. A new law to govern its turbulent banking system is on the cards. The tourism industry is booming and revenues from visitors should more than double to $21bn (£10.8bn) in three years...Moreover, government spending is set to be frozen and a burdensome social security deficit is being tackled. Income and corporate taxes will be cut next year in order to attract $15bn of foreign investment over the next three years. A loan restructuring deal with the International Monetary Fund (IMF) is pretty much in the can. And following recent macroeconomic restructuring efforts, its currency is floating freely and its central bank is independent...The point of all this has been to convince Europe's decision makers that rather than being a phenomenally costly exercise for the EU, allowing Turkey in would in fact bring masses of economic benefits..."The cake will be bigger for everybody," said Deputy Prime Minister Abdullatif Sener earlier this month. "Turkey will not be a burden for the EU budget." If admitted into the EU, Turkey would contribute almost 6bn euros ($8bn; £6bn) to its budget by 2014, according to a recent impact study by the country's State Planning Organisation. As Turkey's gross domestic output (GDP) is set to grow by 6% per year on average, its contribution would rise from less than 5bn euros in 2014 to almost 9bn euros by 2020. Turkey could also help alleviate a labour shortage in "Old Europe" once its population comes of age. By 2014, one in four Turks - or about 18 million people - will be aged 14 or less. "A literate and qualified Turkish population," insisted Mr Sener, "will make a positive impact on the EU."..This runs contrary to the popular view that Turkey is getting ready to dig deep into EU taxpayers' wallets. However, Turkey's assertions are confirmed by Brussels' own impact studies, which indeed say that Turkish membership would be good news for the EU economy. But only over time. Costs are projected to be vast during the early years of Turkey's membership, with subsidies alone estimated to exceed 16.5bn euros and, according to some predictions, balloon to 33.5bn euros. This would include vast agricultural subsidies and regional aid, though such payments should decline as the country's farm sector, which currently employs one in three Turks, would employ just one in five by 2020...Such high initial expenses would be coupled with risks that the benefits flagged up by Turkey's government would never be delivered, say those who feel the Turkish project should be shunned...Some fear that rather than providing an educated, sophisticated labour force for Europe at large, the people who will leave Turkey to seek work abroad will be poor, uneducated - and plentiful. More recently, less palatable concerns - at least in liberal European circles - have been voiced, with senior EU or member state officials talking darkly of a "river of Islam", an "oriental" culture and a threat to Europe's "cultural richness". Of course, many opponents are politically motivated - their views ranging from xenophobic prejudices about the country's Muslim traditions to well-documented concerns about the government's human rights record. Yet their economic arguments should not be dismissed out of hand...Critics insist that much of the optimism about Turkey's economic roadmap has been over-egged - an argument amplified by a 134% rise in the country's current account deficit to $10.7bn during the first 10 months of this year...The country's massive debt - which includes $23bn owed to the IMF and billions borrowed via the international bond markets - also remains a major obstacle to its ambition of joining the EU. "In the new member states of the European Union, gross public debt is typically about 40% of gross domestic product," says Reza Moghadam, assistant director of the IMF's European Department. "At about 80% of GDP, Turkey's gross debt is double that figure." Turkey's debts have largely arisen from its efforts to push through banking reform after a run on the banks in 2001 caused the country's devastating recession. "There is no question that although Turkey is doing much better than in the past, it remains quite vulnerable," says Michael Deppler, director of the IMF's European Department. "Its debt is far too high for an emerging economy." A key factor for EU decision makers should be whether or not Turkey has met its economic criteria. But economics is not a science. And although the state of Turkey's economy is important, as is its pace of reform, the final decision on 17 December will be taken by politicians who will, of course, be guided by their political instincts.

If admitted into the EU, Turkey would contribute almost 6bn euros ($8bn; £6bn) to its budget by 2014, according to a recent impact study by the country's State Planning Organisation.Critics insist that much of the optimism about Turkey's economic roadmap has been over-egged - an argument amplified by a 134% rise in the country's current account deficit to $10.7bn during the first 10 months of this year.As Turkey's gross domestic output (GDP) is set to grow by 6% per year on average, its contribution would rise from less than 5bn euros in 2014 to almost 9bn euros by 2020.Three years after a gruelling economic crisis, Turkey has dressed its economy to impress.However, Turkey's assertions are confirmed by Brussels' own impact studies, which indeed say that Turkish membership would be good news for the EU economy.A key factor for EU decision makers should be whether or not Turkey has met its economic criteria.The point of all this has been to convince Europe's decision makers that rather than being a phenomenally costly exercise for the EU, allowing Turkey in would in fact bring masses of economic benefits."Turkey will not be a burden for the EU budget."The country's massive debt - which includes $23bn owed to the IMF and billions borrowed via the international bond markets - also remains a major obstacle to its ambition of joining the EU.Costs are projected to be vast during the early years of Turkey's membership, with subsidies alone estimated to exceed 16.5bn euros and, according to some predictions, balloon to 33.5bn euros."At about 80% of GDP, Turkey's gross debt is double that figure."Turkey's debts have largely arisen from its efforts to push through banking reform after a run on the banks in 2001 caused the country's devastating recession.The tourism industry is booming and revenues from visitors should more than double to $21bn (£10.8bn) in three years."In the new member states of the European Union, gross public debt is typically about 40% of gross domestic product," says Reza Moghadam, assistant director of the IMF's European Department.Such high initial expenses would be coupled with risks that the benefits flagged up by Turkey's government would never be delivered, say those who feel the Turkish project should be shunned.And although the state of Turkey's economy is important, as is its pace of reform, the final decision on 17 December will be taken by politicians who will, of course, be guided by their political instincts.

business

High fuel costs hit US airlines..Two of the largest airlines in the US - American and Southwest - have blamed record fuel prices for their disappointing quarterly results...American Airlines' parent AMR reported a loss of $387m (£206m) for the fourth quarter of 2004, against a $111m loss for the same period a year earlier. Meanwhile, Southwest Airlines saw its fourth-quarter 2004 profits fall 15% to $56m, against $66m a year earlier. Both said high fuel bills would continue to pressure revenues in 2005. American, the world's biggest airline by some measures, said it expected to report a loss for the first quarter of 2005. Southwest, which has the highest market value of any US carrier, said it would remain profitable despite high fuel prices...AMR's shares were flat in Wednesday morning trading on the New York Stock Exchange, as the results were slightly better than analysts had anticipated. AMR's chief executive Gerard Arpey said the airline's difficulties reflected the situation within the industry. "AMR's results for the fourth quarter of 2004 reflect the economic woes that plagued the airline industry throughout 2004 - in particular, high fuel prices and a tough revenue environment," he said. For the full year, AMR posted a loss of $761m, lower than 2003's $1.2bn loss and an indication that the airline has successfully cut costs. AMR added that as part of its cost cutting measures, it is postponing the delivery of 54 Boeing jets. Shares in Southwest fell 65 cents to $14.35 as analysts voiced their disappointment. "The results came in below our already conservative estimate for the quarter," said Ray Neidl, an analyst at Calyon Securities. Both American and Southwest have been squeezed by cut-throat competition in the US airline industry, as a glut of available seats has led to fierce price reductions.

"AMR's results for the fourth quarter of 2004 reflect the economic woes that plagued the airline industry throughout 2004 - in particular, high fuel prices and a tough revenue environment," he said.American, the world's biggest airline by some measures, said it expected to report a loss for the first quarter of 2005.American Airlines' parent AMR reported a loss of $387m (£206m) for the fourth quarter of 2004, against a $111m loss for the same period a year earlier.Southwest, which has the highest market value of any US carrier, said it would remain profitable despite high fuel prices.Two of the largest airlines in the US - American and Southwest - have blamed record fuel prices for their disappointing quarterly results.Both American and Southwest have been squeezed by cut-throat competition in the US airline industry, as a glut of available seats has led to fierce price reductions.

business

German economy rebounds..Germany's economy, the biggest among the 12 countries sharing the euro, grew at its fastest rate in four years during 2004, driven by strong exports...Gross domestic product (GDP) rose by 1.7% last year, the statistical office said. The economy contracted in 2003. Foreign sales increased by 8.2% last year, compared with a 0.3% slide in private consumption. Concerns remain, however, over the strength of the euro, weak domestic demand and a sluggish labour market. The European Central Bank (ECB) left its benchmark interest rate unchanged at 2% on Thursday. It is the nineteenth month in a row that the ECB has not moved borrowing costs. Economists predict that an increase is unlikely to come until the second half of 2005, with growth set to sputter rather than ignite..."During 2004 we profited from the fact that the world economy was strong," said Stefan Schilbe, analyst at HSBC Trinkaus & Burkhardt. "If exports weaken and domestic growth remains poor, we cannot expect much from 2005." Many German consumers have been spooked and unsettled by government attempts to reform the welfare state and corporate environment. Major companies including Volkswagen, DaimlerChrysler and Siemens have spent much of 2004 in tough talks with unions about trimming jobs and costs. They have also warned there are more cost cutting measures on the horizon.

Germany's economy, the biggest among the 12 countries sharing the euro, grew at its fastest rate in four years during 2004, driven by strong exports.Gross domestic product (GDP) rose by 1.7% last year, the statistical office said."If exports weaken and domestic growth remains poor, we cannot expect much from 2005.""During 2004 we profited from the fact that the world economy was strong," said Stefan Schilbe, analyst at HSBC Trinkaus & Burkhardt.The economy contracted in 2003.Concerns remain, however, over the strength of the euro, weak domestic demand and a sluggish labour market.

business

Takeover offer for Sunderland FC..Bob Murray, chairman of Sunderland FC, has launched a £1.5m ($2.8m) bid for the club after buying broadcaster BSkyB's stake in the business...Mr Murray is already Sunderland's leading shareholder, holding a 37.6% stake, and now hopes to take full control of the Championship side. Mr Murray said the club would find it easier to attract more investment by having a single majority owner. Sunderland delisted its shares from the stock market in August...A lifetime Sunderland supporter and board director since 1984, Mr Murray agreed to buy BSkyB's 4.76% holding in the Wearside club on Tuesday - taking his stake to 42.3%. Under stock market rules, Mr Murray is required to make an offer for the remaining shares that he does not already own at the same price paid for the BSkyB holding of 31p a share...Should the offer be fully accepted, Mr Murray said he expected to pay a maximum of £1.53m for the remaining shares. He also stressed that fans who wanted to keep in touch with the club's financial affairs could retain a small number of shares, enabling them to attend annual meetings. "The football sector is experiencing significant changes and uncertainty," Mr Murray said in a statement. "The recent speculation surrounding Malcolm Glazer and Manchester United has shown the unsettling effect possible where there are a number of disparate interests," he added. "I believe that this offer will strengthen the company and remove the potential for that type of uncertainty."..Sunderland were relegated from the Premiership in 2003 but are currently pushing for promotion. The club managed to reduce its losses last year from £20.6m to £1.2m after selling a host of leading players. However, the club's turnover dropped sharply from £42.5m to £28.5m over the same period, because of a fall in broadcast revenues. BSkyB bought its stake in Sunderland in 1999 as part of a five year media partnership deal. The deal expired last month.

A lifetime Sunderland supporter and board director since 1984, Mr Murray agreed to buy BSkyB's 4.76% holding in the Wearside club on Tuesday - taking his stake to 42.3%.Under stock market rules, Mr Murray is required to make an offer for the remaining shares that he does not already own at the same price paid for the BSkyB holding of 31p a share.Should the offer be fully accepted, Mr Murray said he expected to pay a maximum of £1.53m for the remaining shares.Bob Murray, chairman of Sunderland FC, has launched a £1.5m ($2.8m) bid for the club after buying broadcaster BSkyB's stake in the business.Mr Murray is already Sunderland's leading shareholder, holding a 37.6% stake, and now hopes to take full control of the Championship side.Mr Murray said the club would find it easier to attract more investment by having a single majority owner."The football sector is experiencing significant changes and uncertainty," Mr Murray said in a statement.

business

House prices drop as sales slow..House prices fell further in November and property sale times lengthened as rate rises took their toll, the Royal Institute of Chartered Surveyors found...A total of 48% of chartered surveyor estate agents reported lower prices in the three months to November - the highest level in 12 years. Meanwhile the number of sales dropped 32% to an average of 22 per surveyor. The amount of unsold properties on their books rose for the sixth month in a row to an average of 67 properties. "The slowdown occurring in the market has given buyers more power to negotiate, but this time of year is traditionally a quiet one," RICS housing spokesman Ian Perry said. "The decision by the Bank of England not to increase interest rates further and the healthy economy is allowing confidence to consolidate."..The figures support recent data from the government and other bodies which all point to a slowdown in the housing market. On Monday, the Council of Mortgage Lenders, British Bankers Association and Building Societies Association all said mortgage lending was slowing. The figures were published as another survey by property website Rightmove said the average asking price of a home fell by more than £600 from £190,329 in November to £189,733 in December. Around the UK, the Midlands and South saw the biggest price falls, while London prices fell but at less than the national rate. In Scotland, where prices have remained on an upward path, increases were more "moderate", RICS added. But the news failed to dent confidence that sales will recover in future, with surveyors at their most optimistic in a year - as new purchase inquiries stabilised despite holding at lower levels. "Sales usually pick up in the New Year and I am confident this year will be no exception," Mr Perry added. Looking ahead, the group is anticipating a quiet start to 2005 with the market picking up in the second half - prompting a 3% rise in prices over the coming 12 months.

House prices fell further in November and property sale times lengthened as rate rises took their toll, the Royal Institute of Chartered Surveyors found.The figures were published as another survey by property website Rightmove said the average asking price of a home fell by more than £600 from £190,329 in November to £189,733 in December.A total of 48% of chartered surveyor estate agents reported lower prices in the three months to November - the highest level in 12 years.Around the UK, the Midlands and South saw the biggest price falls, while London prices fell but at less than the national rate."The slowdown occurring in the market has given buyers more power to negotiate, but this time of year is traditionally a quiet one," RICS housing spokesman Ian Perry said.In Scotland, where prices have remained on an upward path, increases were more "moderate", RICS added.

business

Firms pump billions into pensions..Employers have spent billions of pounds propping up their final salary pensions over the past year, research suggests...A survey of 280 schemes by Incomes Data Services' (IDS) said employer contributions had increased from £5.5bn to £8.2bn a year, a rise of 49.7%. Companies facing the biggest deficits had raised their pension contributions by 100% or more, IDS said. Many firms are struggling to keep this type of scheme open, because of rising costs and increased liabilities. A final salary scheme, also known as a defined benefit scheme, promises to pay a pension related to the salary the scheme member is earning when they retire...The rising cost of maintaining such schemes has led many employers to replace final salary schemes with money purchase, or defined contribution, schemes. These are less risky for employers. Under money purchase schemes, employees pay into a pension fund which is used to buy an annuity - a policy which pays out an income until death - on retirement...IDS said there were some schemes in good health...But, in many cases, firms had been forced to top up funds to tackle "yawning deficits". The level of contributions paid by employers has increased gradually since the late 1990s. In 1998/99, for example, contributions rose by 4.7% and in 2002/03 by 8.6%. In contrast, between 1996 and 1998, some employers cut their contribution levels. Helen Sudell, editor of the IDS Pensions Service, said the rise in contributions was "staggering" and the highest ever recorded by IDS. "We have warned before that the widespread closure of final salary schemes to new entrants is just the beginning of a much bigger movement away from paternalistic provision," said Ms Sudell. "With figures like this there can be little doubt that many employers will have to reduce future benefits at some point for those staff still in these schemes."

The rising cost of maintaining such schemes has led many employers to replace final salary schemes with money purchase, or defined contribution, schemes.A survey of 280 schemes by Incomes Data Services' (IDS) said employer contributions had increased from £5.5bn to £8.2bn a year, a rise of 49.7%.A final salary scheme, also known as a defined benefit scheme, promises to pay a pension related to the salary the scheme member is earning when they retire.IDS said there were some schemes in good health.Companies facing the biggest deficits had raised their pension contributions by 100% or more, IDS said.Helen Sudell, editor of the IDS Pensions Service, said the rise in contributions was "staggering" and the highest ever recorded by IDS.In contrast, between 1996 and 1998, some employers cut their contribution levels.

business

Algeria hit by further gas riots..Algeria suffered a weekend of violent protests against government plans to raise gas prices, local press reports...Demonstrators in a number of regions blocked roads, attacked public buildings and overturned vehicles, newspapers including El Watan reported. The price of butane gas, a vital fuel for cooking, has risen to 200 dinars ($2.77) per canister from 170 dinars. Even before the hike, failing economic conditions had been fanning resentment in some of Algeria's poorest regions...Demonstrators took to the streets last week when the cost change was first announced, but police seemed to have restored order. According to local press reports, trouble flared up again on Saturday and carried on into Sunday. El Watan said that a number of hot spots centred on the villages and towns close to Bouira, about 100 kilometres (60 miles) south of the capital Algiers. Among the other main areas affected were the western Tiaret region and Sidi Ammar in the east of the country, Agence France Presse (AFP) reported. Riots also flared up in the Maghnia region close to the border with Morocco in the west, AFP said. Butane gas and fuel oil are used as the main source of fuel to heat homes and cook food in Algeria's remote mountain areas.

Butane gas and fuel oil are used as the main source of fuel to heat homes and cook food in Algeria's remote mountain areas.Demonstrators in a number of regions blocked roads, attacked public buildings and overturned vehicles, newspapers including El Watan reported.Riots also flared up in the Maghnia region close to the border with Morocco in the west, AFP said.Algeria suffered a weekend of violent protests against government plans to raise gas prices, local press reports.

business

Small firms 'hit by rising costs'..Rising fuel and materials costs are hitting confidence among the UK's small manufacturers despite a rise in output, business lobby group the CBI says...A CBI quarterly survey found output had risen by the fastest rate in seven years but many firms were seeing the benefits offset by increasing expenses. The CBI also found spending on innovation, training and retraining is forecast to go up over the next year. However, firms continue to scale back investment in buildings and machinery...The CBI said companies are looking to the government to lessen the regulatory load and are hoping interest rates will be kept on hold. "Smaller manufacturers are facing an uphill struggle," said Hugh Morgan Williams, chair of the CBI's SME Council. "The manufacturing sector needs a period of long-term stability in the economy." The CBI found some firms managed to increase prices for the first time in nine years - but many said increases failed to keep up the rise in costs. Of the companies surveyed, 30% saw orders rise and 27% saw them fall. The positive balance of plus 3 compared with minus 10 in the previous survey. When firms were questioned on output volume, the survey returned a balance of plus 8 - the highest rate of increase for seven years - and rose to plus 11 when looking ahead to the next three months.

A CBI quarterly survey found output had risen by the fastest rate in seven years but many firms were seeing the benefits offset by increasing expenses.When firms were questioned on output volume, the survey returned a balance of plus 8 - the highest rate of increase for seven years - and rose to plus 11 when looking ahead to the next three months.The CBI found some firms managed to increase prices for the first time in nine years - but many said increases failed to keep up the rise in costs.The CBI said companies are looking to the government to lessen the regulatory load and are hoping interest rates will be kept on hold.The CBI also found spending on innovation, training and retraining is forecast to go up over the next year.

business

Wal-Mart to pay $14m in gun suit..The world's largest retailer, Wal-Mart, has agreed to pay a total of $14.5m (£7.74m) to settle a lawsuit over gun sales violations in California...The lawsuit alleged Wal-Mart committed thousands of gun sales violations in California between 2000 and 2003. The total payment includes $5m in fines and more than $4m to fund state compliance checks with gun laws and prevent ammunition sales to minors. Wal-Mart agreed to suspend firearms sales in its California stores in 2003,..The alleged violations included the sale of guns to 23 people who were not allowed to possess them, and delivering 36 guns to customers who acquired them for people not allowed to own firearms. Although Wal-Mart has suspended firearms sales in the state, California attorney general Bill Lockyer said he wanted to be sure the giant supermarket chain would follow state rules in future. "Wal-Mart's failure to comply with gun safety laws put the lives of all Californians at risk by placing guns in the hands of criminals and other prohibited persons," said Mr Lockyer. "Although Wal-Mart has suspended gun sales in California, this settlement will ensure that it follows state law if it renews sales and will also provide valuable public education about the importance of gun safety." The world's largest retailer has not yet decided whether to resume firearms sales in California, company spokesman Gus Whitcomb said.

"Although Wal-Mart has suspended gun sales in California, this settlement will ensure that it follows state law if it renews sales and will also provide valuable public education about the importance of gun safety."The world's largest retailer, Wal-Mart, has agreed to pay a total of $14.5m (£7.74m) to settle a lawsuit over gun sales violations in California.The lawsuit alleged Wal-Mart committed thousands of gun sales violations in California between 2000 and 2003.Wal-Mart agreed to suspend firearms sales in its California stores in 2003, The alleged violations included the sale of guns to 23 people who were not allowed to possess them, and delivering 36 guns to customers who acquired them for people not allowed to own firearms.

business

Saudi NCCI's shares soar..Shares in Saudi Arabia's National Company for Cooperative Insurance (NCCI) soared on their first day of trading in Riyadh...They were trading 84% above the offer price on Monday, changing hands at 372 riyals ($99; £53) after topping 400 early in the day. Demand for the insurer's debut shares was strong - 12 times what was on sale. The listing was part of the country's plans to open up its insurance market and boost demand in the sector. Deregulation is expected to boost demand for accident and damage cover...Previously, only NCCI has been legally allowed to offer insurance products within Saudi Arabia. However, the authorities have turned a blind eye to the many other firms selling insurance. Saudi Arabia now wants a fully functioning insurance industry and is introducing legislation that will clamp down on unauthorised companies. Policy-makers also want to make having insurance more of a requirement, but first have to take steps to boost public confidence in the system, analysts said. As a result, NCCI is being developed as the industry's flagship firm - publicly-listed, with audited accounts. Saudi Arabia sold 7 million NCCI shares, or about 70% of the company's total capital last month. More than 800,000 applicants got 9 shares each for 205 riyals apiece.

Shares in Saudi Arabia's National Company for Cooperative Insurance (NCCI) soared on their first day of trading in Riyadh.Previously, only NCCI has been legally allowed to offer insurance products within Saudi Arabia.The listing was part of the country's plans to open up its insurance market and boost demand in the sector.Saudi Arabia now wants a fully functioning insurance industry and is introducing legislation that will clamp down on unauthorised companies.Saudi Arabia sold 7 million NCCI shares, or about 70% of the company's total capital last month.

business

US in EU tariff chaos trade row..The US has asked the World Trade Organisation to investigate European Union customs tariffs, which it says are inconsistent and hamper trade...The EU's own institutions have noted the uneven way EU customs rules are applied but failed to act, the US Trade Representative's Office said. Small and mid-sized US firms were worst-hit, it added. The EU expanded from 15 to 25 member states in May. The US said it filed the complaint after talks failed to find a solution...The move came in the same week that the US and EU stepped back from confrontation in a tense dispute over aircraft subsidies to European manufacturer Airbus and US firm Boeing. New EU trade commissioner Peter Mandelson said on Tuesday that the two sides had agreed to reopen talks in the aircraft subsidies row, which led to tit-for-tat WTO filings in last autumn...Explaining why it has asked the WTO to set up a dispute settlement panel on customs barriers, the US Trade Representative's Office said that it wants to tackle the issue "early in the EU's process of dealing with the problems of enlargement". Ten countries, mostly in Eastern Europe, joined the EU in May. The US said its trade with the 25 EU member countries was worth $155.2bn (£82.8bn) in 2003. "Although the EU is a customs union, there is no single EU customs administration," a statement issued on behalf of Robert Zoellick, US Trade Representative, said. Lack of uniformity, coupled with lack of procedures for prompt EU-wide review can hinder US exports, especially for small to mid-sized businesses", An EU spokesman in Washington dismissed the US complaint. "We think the US case is very weak. They haven't come up with any evidence that US companies are being harmed," said Anthony Gooch. It could take several months for the WTO's dispute settlement panel to report its findings.

"Although the EU is a customs union, there is no single EU customs administration," a statement issued on behalf of Robert Zoellick, US Trade Representative, said.The EU's own institutions have noted the uneven way EU customs rules are applied but failed to act, the US Trade Representative's Office said.The US said its trade with the 25 EU member countries was worth $155.2bn (£82.8bn) in 2003.The move came in the same week that the US and EU stepped back from confrontation in a tense dispute over aircraft subsidies to European manufacturer Airbus and US firm Boeing.Explaining why it has asked the WTO to set up a dispute settlement panel on customs barriers, the US Trade Representative's Office said that it wants to tackle the issue "early in the EU's process of dealing with the problems of enlargement".Lack of uniformity, coupled with lack of procedures for prompt EU-wide review can hinder US exports, especially for small to mid-sized businesses", An EU spokesman in Washington dismissed the US complaint.

business

Deutsche Boerse set to 'woo' LSE..Bosses of Deutsche Boerse and the London Stock Exchange are to meet amid talk that a takeover bid for the LSE will be raised to £1.5bn ($2.9bn)...Last month, the German exchange tabled a 530 pence-per-share offer for LSE, valuing it at £1.3bn. Paris-based Euronext, owner of Liffe in London, has also said it is interested in bidding for LSE. Euronext is due to hold talks with LSE this week and it is reported to be ready to raise £1.4bn to fund a bid. Euronext chief Jean-Francois Theodore is scheduled to meet his LSE counterpart Clara Furse on Friday. Deutsche Boerse chief Werner Seifert is meeting Ms Furse on Thursday, in the third meeting between the two exchanges since the bid approach in December...The LSE rejected Deutsche Boerse's proposed £1.3bn offer in December, saying it undervalued the business...But it agreed to leave the door open for talks to find out whether a "significantly-improved proposal" would be in the interests of LSE's shareholders and customers. In the meantime, Euronext, which combines the Paris, Amsterdam and Lisbon stock exchanges, also began talks with the LSE. In a statement on Thursday, Euronext said any offer was likely to be solely in cash, but added that: "There can be no assurances at this stage that any offer will be made." A deal with either bidder would create the biggest stock market operator in Europe and the second biggest in the world after the New York Stock Exchange...According to the FT, in its latest meeting Deutsche Boerse will adopt a charm offensive to woo the London exchange. The newspaper said the German suitor will offer to manage a combined cash and equities market out of London and let Ms Furse take the helm. Other reports this week said the Deutsche Boerse might even consider selling its Luxembourg-based Clearstream unit - the clearing house that processes securities transactions. Its ownership of Clearstream was seen as the main stumbling block to a London-Frankfurt merger. LSE shareholders feared a Deutsche Boerse takeover would force them to use Clearstream, making it difficult for them to negotiate for lower transaction fees.

Bosses of Deutsche Boerse and the London Stock Exchange are to meet amid talk that a takeover bid for the LSE will be raised to £1.5bn ($2.9bn).The LSE rejected Deutsche Boerse's proposed £1.3bn offer in December, saying it undervalued the business.Last month, the German exchange tabled a 530 pence-per-share offer for LSE, valuing it at £1.3bn.Euronext is due to hold talks with LSE this week and it is reported to be ready to raise £1.4bn to fund a bid.LSE shareholders feared a Deutsche Boerse takeover would force them to use Clearstream, making it difficult for them to negotiate for lower transaction fees.Paris-based Euronext, owner of Liffe in London, has also said it is interested in bidding for LSE.In the meantime, Euronext, which combines the Paris, Amsterdam and Lisbon stock exchanges, also began talks with the LSE.

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Tobacco giants hail court ruling..US tobacco companies have welcomed an appeal court's decision to reject the government's $280bn (£155bn) claim for alleged deceit about smoking dangers...Tobacco stocks rose sharply on Wall Street after the 2-1 decision. The court in Washington found the case - filed by the Clinton administration in 1999 - could not be brought under federal anti-racketeering laws. Anti-smoking groups urge the government to fight on, but the Justice Department has not said if it will appeal. Among the accused were Altria Group, RJ Reynolds Tobacco, Lorillard Tobacco, Liggett Group and Brown and Williamson. They were delighted by the decision, which sent Reynolds shares up 4.5% and Altria shares up 5.11%...Charles A Blixt, executive vice-president of RJ Reynolds Tobacco, said the ruling "dramatically transforms" the government's lawsuit. Altria Group said, in a statement, the government now "must not only prove that the companies have engaged in fraudulent behaviour in the past, but that they are likely to do so in the future."..The government had 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 "disgorge" $280bn in profits accumulated over the past 50 years and impose tougher rules on marketing their products. They brought the case under racketeering laws, which were passed to deny mafia gangs the profits of their crimes. But the tobacco companies denied that they illegally conspired to promote smoking and defraud the public. They also said they had already met many of the government's demands in a landmark $206bn settlement reached with 46 states in 1998. The three-judge panel in the District of Columbia's Court of Appeals ruled on Friday that the US government could not sue the firms under the anti-racketeering laws. Judge David Sentelle, in his ruling, said such laws were aimed at putting an end to illegal conduct going forward. "We hold that the language of (the law) and the comprehensive remedial scheme of (the law) preclude disgorgement as a possible remedy in this case," he wrote. The Justice Department refused to say if it would appeal. "All we're saying today is that we have received the ruling and are reviewing it," a spokeswoman said on Friday. But William Corr of the Campaign for Tobacco-Free Kids urged the government to continue pressing its case. "Today's ruling should not be an excuse for this administration to seek a weak settlement that lets the tobacco industry off the hook," he said.

Anti-smoking groups urge the government to fight on, but the Justice Department has not said if it will appeal.Charles A Blixt, executive vice-president of RJ Reynolds Tobacco, said the ruling "dramatically transforms" the government's lawsuit.US tobacco companies have welcomed an appeal court's decision to reject the government's $280bn (£155bn) claim for alleged deceit about smoking dangers."Today's ruling should not be an excuse for this administration to seek a weak settlement that lets the tobacco industry off the hook," he said.Among the accused were Altria Group, RJ Reynolds Tobacco, Lorillard Tobacco, Liggett Group and Brown and Williamson.Altria Group said, in a statement, the government now "must not only prove that the companies have engaged in fraudulent behaviour in the past, but that they are likely to do so in the future."The three-judge panel in the District of Columbia's Court of Appeals ruled on Friday that the US government could not sue the firms under the anti-racketeering laws.The government had 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.

business

GE sees 'excellent' world economy..US behemoth General Electric has posted an 18% jump in quarterly sales, and in profits, and declared itself "in great shape"..."We are benefiting from our growth initiatives and an excellent global economy," said GE's chief executive Jeff Immelt. GE is the US' biggest firm based on stock market valuation. GE's net profits were $5.37bn (£2.86bn) for the final three months of 2004, while sales came in at $43.7bn. The group, whose businesses range from jet engines to the NBC television channel, forecast sustained growth at between 10-15% for this year and next. GE's shares rose 1% on the news before ending Friday 0.24% lower..."The industries GE is in are doing very well. The materials, financial and industrial sectors are all picking up," said Steve Roukis, an analyst at fund manager Matrix Asset Advisors, which has shares in GE. GE said orders in the fourth quarter were 15% higher than in the same period of 2003, "with growth across the board". "In the fourth quarter, nine of our 11 businesses delivered at least double-digit earnings growth," said Mr Immelt. Full year 2004 gains were less spectacular, but still respectable. Net profit was up 6% at $16.6bn. Last year, GE bought Vivendi Universal, merging it with NBC to form NBC Universal. The success of Universal Studio's film 'Ray', a portrait of jazz musician Ray Charles, has helped boost earnings at the unit.

GE said orders in the fourth quarter were 15% higher than in the same period of 2003, "with growth across the board"."In the fourth quarter, nine of our 11 businesses delivered at least double-digit earnings growth," said Mr Immelt.Last year, GE bought Vivendi Universal, merging it with NBC to form NBC Universal.The materials, financial and industrial sectors are all picking up," said Steve Roukis, an analyst at fund manager Matrix Asset Advisors, which has shares in GE.GE's net profits were $5.37bn (£2.86bn) for the final three months of 2004, while sales came in at $43.7bn."We are benefiting from our growth initiatives and an excellent global economy," said GE's chief executive Jeff Immelt.

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Yukos seeks court action on sale..Yukos will return to a US court on Wednesday to seek sanctions against Baikal Finance Group, the little-known firm which has bought its main asset...Yukos has said it will sue Baikal and others involved in the sale of Yuganskneftegas for $20bn in damages. Yukos' US lawyers will attempt to have Baikal assets frozen after the Russian government ignored a US court order last week blocking the sale. Baikal's background and its motives for buying the unit are still unclear...Russian newspapers have claimed that Baikal - which bought the Yuganskneftegas production unit for $9.4bn (261bn roubles, £4.8bn) on Sunday at a state provoked auction - has strong links with Surgutneftegas, Russia's fourth-biggest oil producer. Many observers believe that the unit, which produces 60% of Yukos' oil output, could ultimately fall into the hands of Surgutneftegas or even Gazprom, the state gas firm which opted out of the auction...The Russian government forced the sale of Yukos' most lucrative asset as part of its action to enforce a $27bn back tax bill it says the company owes. Yukos' US lawyers claim the auction was illegal because the firm had filed for bankruptcy and therefore its assets were now under the protection of US bankruptcy law which has worldwide jurisdiction. On Wednesday, Yukos will also seek further legal remedies to prevent the break-up of the group. "We believe the auction was illegal and we intend to pursue all legal recourses available to us," Yukos spokesman Mike Lake told Agence France Press. "If it exports that oil, it will be marketing a stolen product," he added. The future ownership of Yuganksneftegas remains unclear amid widespread suggestions that Baikal was established as a front for other interests...Speaking on Tuesday, President Putin said Baikal was owned by individual investors who planned to build relationships with other Russian energy firms interested in the development of Yuganskneftegas. President Putin also suggested that China's National Petroleum Corporation could play a role in the unit's future after signing a commercial agreement with Gazprom to work on joint energy projects. Yukos has claimed that the sale of its main asset will lead to the collapse of the company. Commentators and Yukos itself claim the firm is the target of a government campaign to destroy it because of the political ambitions of its founder, Mikhail Khodorkovsky.

Yukos will return to a US court on Wednesday to seek sanctions against Baikal Finance Group, the little-known firm which has bought its main asset.Yukos has said it will sue Baikal and others involved in the sale of Yuganskneftegas for $20bn in damages.Yukos' US lawyers will attempt to have Baikal assets frozen after the Russian government ignored a US court order last week blocking the sale.Yukos' US lawyers claim the auction was illegal because the firm had filed for bankruptcy and therefore its assets were now under the protection of US bankruptcy law which has worldwide jurisdiction.Yukos has claimed that the sale of its main asset will lead to the collapse of the company.Russian newspapers have claimed that Baikal - which bought the Yuganskneftegas production unit for $9.4bn (261bn roubles, £4.8bn) on Sunday at a state provoked auction - has strong links with Surgutneftegas, Russia's fourth-biggest oil producer.Many observers believe that the unit, which produces 60% of Yukos' oil output, could ultimately fall into the hands of Surgutneftegas or even Gazprom, the state gas firm which opted out of the auction.

business

Pernod takeover talk lifts Domecq..Shares in UK drinks and food firm Allied Domecq have risen on speculation that it could be the target of a takeover by France's Pernod Ricard...Reports in the Wall Street Journal and the Financial Times suggested that the French spirits firm is considering a bid, but has yet to contact its target. Allied Domecq shares in London rose 4% by 1200 GMT, while Pernod shares in Paris slipped 1.2%. Pernod said it was seeking acquisitions but refused to comment on specifics...Pernod's last major purchase was a third of US giant Seagram in 2000, the move which propelled it into the global top three of drinks firms. The other two-thirds of Seagram was bought by market leader Diageo. In terms of market value, Pernod - at 7.5bn euros ($9.7bn) - is about 9% smaller than Allied Domecq, which has a capitalisation of £5.7bn ($10.7bn; 8.2bn euros). Last year Pernod tried to buy Glenmorangie, one of Scotland's premier whisky firms, but lost out to luxury goods firm LVMH. Pernod is home to brands including Chivas Regal Scotch whisky, Havana Club rum and Jacob's Creek wine. Allied Domecq's big names include Malibu rum, Courvoisier brandy, Stolichnaya vodka and Ballantine's whisky - as well as snack food chains such as Dunkin' Donuts and Baskin-Robbins ice cream. The WSJ said that the two were ripe for consolidation, having each dealt with problematic parts of their portfolio. Pernod has reduced the debt it took on to fund the Seagram purchase to just 1.8bn euros, while Allied has improved the performance of its fast-food chains.

Pernod has reduced the debt it took on to fund the Seagram purchase to just 1.8bn euros, while Allied has improved the performance of its fast-food chains.Shares in UK drinks and food firm Allied Domecq have risen on speculation that it could be the target of a takeover by France's Pernod Ricard.Pernod said it was seeking acquisitions but refused to comment on specifics.In terms of market value, Pernod - at 7.5bn euros ($9.7bn) - is about 9% smaller than Allied Domecq, which has a capitalisation of £5.7bn ($10.7bn; 8.2bn euros).Allied Domecq shares in London rose 4% by 1200 GMT, while Pernod shares in Paris slipped 1.2%.

business

Euro firms miss out on optimism..More than 90% of large companies around the world are highly optimistic about their economic prospects, a survey of 1,300 bosses suggests...Their biggest worries are not terror threats, but over-regulation, low-cost competition and the wild ups and downs of oil prices. There is one exception: Firms in Western Europe - but not the UK - are lacking confidence after years of slow growth. When business advisers PricewaterhouseCoopers (PwC) conducted the same survey two years ago, nearly 30% of bosses were gloomy about their prospects...Global business leaders say that they are facing a two-pronged regulatory assault. After a string of corporate scandals in the United States - from Enron to WorldCom - the Sarbanes-Oxley act forces companies to be much more transparent, but doing all the paperwork costs a lot of time and money. Across Europe, meanwhile, all stock exchange-listed companies are currently in the process of moving to new and complex accounting standards called IFRS. Hacking through the red tape can hardly be avoided, but many chief executives around the world appear to have decided on how to deal with low-cost competitors...Already, about 28% of the bosses polled for the survey say that they have moved parts of their business into low-wage countries, and another 11% plan to do so in the future. Possibly as a result, the worry about low-cost competition has slightly fallen from last year, with just 54% of companies calling it a "significant threat" or "one of the biggest threats". But PwC's global chief executive, Samuel DiPiazza, said a growing number of companies were also concerned that moves to outsource work to cheaper countries could both hurt their reputation in their home markets and harm the quality of service they provide to their customers...According to Frank Brown, global advisory leader at PwC , the trend of large companies to have global operations has one clear upside: "One risk in one region - for example the Middle East - won't kill your business anymore." Surprisingly, the survey suggests that the rapid decline of the US dollar is not seen as a huge threat anymore, unlike even a year ago, when it was cited as the third-largest problem. Mr DiPiazza said the interviews with chief executives suggested that companies had "adjusted" to the new reality of a euro that buys $1.30 and more, while others had successfully hedged their positions and locked in more favourable exchange rates.... - For the survey, PricewaterhouseCoopers interviewed 1,324 chief executives throughout the world during the last three months of 2004.

Possibly as a result, the worry about low-cost competition has slightly fallen from last year, with just 54% of companies calling it a "significant threat" or "one of the biggest threats".More than 90% of large companies around the world are highly optimistic about their economic prospects, a survey of 1,300 bosses suggests.When business advisers PricewaterhouseCoopers (PwC) conducted the same survey two years ago, nearly 30% of bosses were gloomy about their prospects.According to Frank Brown, global advisory leader at PwC , the trend of large companies to have global operations has one clear upside: "One risk in one region - for example the Middle East - won't kill your business anymore."- For the survey, PricewaterhouseCoopers interviewed 1,324 chief executives throughout the world during the last three months of 2004.But PwC's global chief executive, Samuel DiPiazza, said a growing number of companies were also concerned that moves to outsource work to cheaper countries could both hurt their reputation in their home markets and harm the quality of service they provide to their customers.

business

Quake's economic costs emerging..Asian governments and international agencies are reeling at the potential economic devastation left by the Asian tsunami and floods...World Bank president James Wolfensohn has said his agency is "only beginning to grasp the magnitude of the disaster" and its economic impact. The tragedy has left at least 25,000 people dead, with Sri Lanka, Thailand, India and Indonesia worst hit. Some early estimates of reconstruction costs are starting to emerge. Millions have been left homeless, while businesses and infrastructure have been washed away...Economists believe several of the 10 countries hit by the giant waves could see a slowdown in growth...In Sri Lanka, some observers have said that as much as 1% of annual growth may be lost. For Thailand, that figure is much lower at 0.1%. Governments are expected to take steps, such as cutting taxes and increasing spending, to facilitate a recovery..."With the enormous displacement of people...there will be a serious relaxation of fiscal policy," Glenn Maguire, chief economist for the region at Societe Generale, told Agence France Presse. "The economic impact of it will certainly be large, but it should not be enough to derail the momentum of the region in 2005," he said. "First and foremost this is a human tragedy." India's economy, however, is less likely to slow because the areas hit are some of the least developed. The regional giant has enjoyed strong growth in 2004. But India now faces other problems, with aid workers under pressure to ensure a clean supply of water and sanitation to prevent an outbreak of disease...Thailand's Prime Minister Thaksin Shinawatra has estimated the destruction at 20bn baht ($510m). Analysts said that figure is likely to rise and the country's tourist industry is likely to be hardest hit. Thailand's fishing and real estate sectors also will be affected by Sunday's 9.0 magnitude earthquake, which sent huge waves from Malaysia to Africa. Malaysia said as many as 1,000 fishermen will be affected and that damage to the industry will be "significant", Agence France Presse reported. Rapid rebuilding will be key to limiting the impact of the tragedy. "In three months, we should rebuild 70% of the damage in the three worst hit provinces," said Juthamas Siriwan, governor of the Tourism Authority of Thailand. The outlook for Sri Lanka is less optimistic, with analysts predicting that the country's tourist industry will struggle to recovery quickly. Tourism is a vital to many developing countries, providing jobs for 19 million people in the south east Asian region, according to the World Travel and Tourism Council (WTTC).

The tragedy has left at least 25,000 people dead, with Sri Lanka, Thailand, India and Indonesia worst hit.Analysts said that figure is likely to rise and the country's tourist industry is likely to be hardest hit.World Bank president James Wolfensohn has said his agency is "only beginning to grasp the magnitude of the disaster" and its economic impact.In Sri Lanka, some observers have said that as much as 1% of annual growth may be lost.Malaysia said as many as 1,000 fishermen will be affected and that damage to the industry will be "significant", Agence France Presse reported."In three months, we should rebuild 70% of the damage in the three worst hit provinces," said Juthamas Siriwan, governor of the Tourism Authority of Thailand."The economic impact of it will certainly be large, but it should not be enough to derail the momentum of the region in 2005," he said.The outlook for Sri Lanka is less optimistic, with analysts predicting that the country's tourist industry will struggle to recovery quickly.Economists believe several of the 10 countries hit by the giant waves could see a slowdown in growth.The regional giant has enjoyed strong growth in 2004.

business

Malaysia lifts Islamic bank limit..Malaysia's central bank is to relax restrictions on foreign ownership to encourage Islamic banking...Banks in Malaysia will now be able to sell up to 49% of their Islamic banking units, while the limit on other kinds of bank remains at 30%. RHB, Malaysia's third-biggest lender, is already scouting for a foreign partner for its new Islamic banking unit, the firm told Reuters. The moves put Malaysia ahead of a 2007 deadline to open up the sector. The country's deal to join the World Trade Organisation set that year as a deadline for liberalisation of Islamic banking. Also on Tuesday, the central bank released growth figures showing Malaysia's economy expanded 7.1% in 2004. But growth slowed sharply in the fourth quarter to 5.6%, and the central bank said it expected 6% expansion in 2005...Malaysia changed the law to allow Islamic banking in 1983. It has granted licences to three Middle Eastern groups, which - along with local players - mean there are eight fully-operational Islamic banking groups in the country. Islamic banks offer services which permit modern banking principles while sticking to Islamic law's ban on the payment of interest. Most of the Malays which make up half the country's population are Muslims.

Malaysia's central bank is to relax restrictions on foreign ownership to encourage Islamic banking.Malaysia changed the law to allow Islamic banking in 1983.Banks in Malaysia will now be able to sell up to 49% of their Islamic banking units, while the limit on other kinds of bank remains at 30%.Islamic banks offer services which permit modern banking principles while sticking to Islamic law's ban on the payment of interest.The country's deal to join the World Trade Organisation set that year as a deadline for liberalisation of Islamic banking.

business

Business confidence dips in Japan..Business confidence among Japanese manufacturers has weakened for the first time since March 2003, the quarterly Tankan survey has found...Slower economic growth, rising oil prices, a stronger yen and weaker exports were blamed for the fall. December's confidence level was below that seen in September, the Bank of Japan said. However, September's reading was the strongest for 13 years. "The economy is at a pause but unlikely to fall", the economy minister said. "It will feel a bit slower (next year) than this year, and growth may be a bit more gentle but the situation is that the recovery will continue," said economy minister Heizo Takenaka. In the Bank of Japan's December survey, the balance of big manufacturers saying business conditions are better, minus those saying they are worse, was 22, down from 26 in September...Japan's economy grew by just 0.1% in the three months to September, according revised data issued this month. With the recovery slowing, the world's second biggest economy is now expected grow by 0.2% in 2004. The Tankan index is based on a survey of 10,227 firms. Big manufacturers were even more pessimistic about the first quarter of 2005; their views suggest the March reading could go as low as 15 - still in positive territory, but weaker. The dollar's decline has strengthened the yen, making Japanese exports more expensive in the US. China's attempts to cool down its fast-growing economy have also hit Japanese industry's sales abroad. Confidence among non-manufacturers was unchanged in the final quarter of 2004, but it is forecast to drop one point in the March survey. Nonetheless, Japanese firms have been stepping up capital investment, and the survey found the pace is quickening. Companies reported they expect to invest 7.7% more in the year to March 2005 than the previous year - up from expectations of 6.1% increase in the September Tankan.

Business confidence among Japanese manufacturers has weakened for the first time since March 2003, the quarterly Tankan survey has found."The economy is at a pause but unlikely to fall", the economy minister said.In the Bank of Japan's December survey, the balance of big manufacturers saying business conditions are better, minus those saying they are worse, was 22, down from 26 in September.Confidence among non-manufacturers was unchanged in the final quarter of 2004, but it is forecast to drop one point in the March survey."It will feel a bit slower (next year) than this year, and growth may be a bit more gentle but the situation is that the recovery will continue," said economy minister Heizo Takenaka.December's confidence level was below that seen in September, the Bank of Japan said.Companies reported they expect to invest 7.7% more in the year to March 2005 than the previous year - up from expectations of 6.1% increase in the September Tankan.

business

House prices show slight increase..Prices of homes in the UK rose a seasonally adjusted 0.5% in February, says the Nationwide building society...The figure means the annual rate of increase in the UK is down to 10.2%, the lowest rate since June 2001. The annual rate has halved since August last year, as interest rises have cooled the housing market. At the same time, the number of mortgage approvals fell in January to a near 10-year low, official Bank of England figures have shown...Nationwide said that in January house prices went up by 0.4% on the month and by 12.6% on a year earlier. "We are not seeing the market collapsing in the way some had feared," said Nationwide economist Alex Bannister. There have been a number of warnings that the UK housing market may be heading for a downturn after four years of strong growth to 2004. In November, Barclays, which owns former building society the Woolwich, forecast an 8% fall in property prices in 2005, followed by further declines in 2006 and 2007. And last summer, economists at PricewaterhouseCoopers (PWC) warned house prices were overvalued and could fall by between 10% and 15% by 2009...The price of an average UK property now stands at £152,879. Homeowners now expect house prices to rise by 1% over the next six months, Mr Bannister said. He said if the growth continued at this level then the Bank of England may increase interest rates from their current 4.75%..."I think the key is what the Bank expects to happen to the housing market. We always thought we would see a small rise, they thought they would see a small decline." House prices have risen 0.9% this year, Nationwide said, and if this pace of increase persists, prices would rise by just under 6% in the year to December. This is slightly above the 0-5% range Nationwide predicts...Further evidence of a slowdown in the housing market emerged from Bank of England lending figures released on Tuesday. New mortgage loans in January fell to 79,000 from 82,000 in December, the bank said. The past few months have seen approvals fall to levels last seen in 1995. The Bank revealed that 48,000 fewer mortgages were approved in January than for the same month in 2004. Overall, mortgage lending rose by £7.2bn in January, marginally up on the £7.1bn rise in December.

House prices have risen 0.9% this year, Nationwide said, and if this pace of increase persists, prices would rise by just under 6% in the year to December.Nationwide said that in January house prices went up by 0.4% on the month and by 12.6% on a year earlier.New mortgage loans in January fell to 79,000 from 82,000 in December, the bank said.At the same time, the number of mortgage approvals fell in January to a near 10-year low, official Bank of England figures have shown.The annual rate has halved since August last year, as interest rises have cooled the housing market.He said if the growth continued at this level then the Bank of England may increase interest rates from their current 4.75%.Homeowners now expect house prices to rise by 1% over the next six months, Mr Bannister said.The Bank revealed that 48,000 fewer mortgages were approved in January than for the same month in 2004.There have been a number of warnings that the UK housing market may be heading for a downturn after four years of strong growth to 2004.

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Parmalat founder offers apology..The founder and former boss of Parmalat has apologised to investors who lost money as a result of the Italian dairy firm's collapse...Calisto Tanzi said he would co-operate fully with prosecutors investigating the background to one of Europe's largest financial scandals. Parmalat was placed into bankruptcy protection in 2003 after a 14bn euro black hole was found in its accounts. More than 130,000 people lost money following the firm's collapse. Mr Tanzi, 66, issued a statement through his lawyer after five hours of questioning by prosecutors in Parma on 15 January...Prosecutors are seeking indictments against Mr Tanzi and 28 others - including several members of his family and former Parmalat chief financial officer Fausto Tonna - for alleged manipulation of stock market prices and making misleading statements to accountants and Italy's financial watchdog. Two former Parmalat auditors will stand trial later this month for their role in the firm's collapse..."I apologise to all who have suffered so much damage as a result of my schemes to make my dream of an industrial project come true," Mr Tanzi's statement said. "It is my duty to collaborate fully with prosecutors to reconstruct the causes of Parmalat's sudden default and who is responsible." Mr Tanzi spent several months in jail in the wake of Parmalat's collapse and was kept under house arrest until last September. Parmalat is now being run by a state appointed administrator, Enrico Bondi, who has launched lawsuits against 80 banks in an effort to recover money for the bankrupt company and its shareholders. He has alleged that these companies were aware of the true state of Parmalat's finances but continued to lend money to the company. The companies insist they were the victims of fraudulent book-keeping. Parmalat was declared insolvent after it emerged that 4 billion euros (£2.8bn; $4.8bn) it supposedly held in an offshore account did not in fact exist. The firm's demise sent shock waves through Italy, where its portfolio of top-selling food brands and its position as the owner of leading football club Parma had turned it into a household name.

The founder and former boss of Parmalat has apologised to investors who lost money as a result of the Italian dairy firm's collapse.Mr Tanzi spent several months in jail in the wake of Parmalat's collapse and was kept under house arrest until last September.He has alleged that these companies were aware of the true state of Parmalat's finances but continued to lend money to the company.Two former Parmalat auditors will stand trial later this month for their role in the firm's collapse.More than 130,000 people lost money following the firm's collapse.Parmalat is now being run by a state appointed administrator, Enrico Bondi, who has launched lawsuits against 80 banks in an effort to recover money for the bankrupt company and its shareholders.

business

Electronics firms eye plasma deal..Consumer electronics giants Hitachi and Matshushita Electric are joining forces to share and develop technology for flat screen televisions...The tie-up comes as the world's top producers are having to contend with falling prices and intense competition. The two Japanese companies will collaborate in research & development, production, marketing and licensing. They said the agreement would enable the two companies to expand the plasma display TV market globally...Plasma display panels are used for large, thin TVs which are replacing old-style televisions. The display market for high-definition televisions is split between models using plasma display panels and others - manufactured by the likes of Sony and Samsung - using liquid-crystal displays (LCDs). The deal will enable Hitachi and Matsushita, which makes Panasonic brand products, to develop new technology and improve their competitiveness. Hitachi recently announced a deal to buy plasma display technology from rival Fujitsu in an effort to strengthen its presence in the market...Separately, Fujitsu announced on Monday that it is quitting the LCD panel market by transferring its operations in the area to Japanese manufacturer Sharp. Sharp will inherit staff, manufacturing facilities and intellectual property from Fujitsu. The plasma panel market has seen rapid consolidation in recent months as the price of consumer electronic goods and components has fallen. Samsung Electronics and Sony are among other companies working together to reduce costs and speed up new product development.

Hitachi recently announced a deal to buy plasma display technology from rival Fujitsu in an effort to strengthen its presence in the market.They said the agreement would enable the two companies to expand the plasma display TV market globally.The display market for high-definition televisions is split between models using plasma display panels and others - manufactured by the likes of Sony and Samsung - using liquid-crystal displays (LCDs).Plasma display panels are used for large, thin TVs which are replacing old-style televisions.Separately, Fujitsu announced on Monday that it is quitting the LCD panel market by transferring its operations in the area to Japanese manufacturer Sharp.

business

Orange colour clash set for court..A row over the colour orange could hit the courts after mobile phone giant Orange launched action against a new mobile venture from Easyjet's founder...Orange said it was starting proceedings against the Easymobile service for trademark infringement. Easymobile uses Easygroup's orange branding. Founder Stelios Haji-Ioannou has pledged to contest the action. The move comes after the two sides failed to come to an agreement after six months of talks. Orange claims the new low-cost mobile service has infringed its rights regarding the use of the colour orange and could confuse customers - known as "passing off"..."Our brand, and the rights associated with it are extremely important to us," Orange said in a statement. "In the absence of any firm commitment from Easy, we have been left with no choice but to start an action for trademark infringement and passing off." However, Mr Haji-Ioannou, who plans to launch Easymobile next month, vowed to fight back, saying: "We have nothing to be afraid of in this court case. "It is our right to use our own corporate colour for which we have become famous during the last 10 years." The Easyjet founder also said he planned to add a disclaimer to the Easygroup website to ensure customers are aware the Easymobile brand has no connection to Orange. The new service is the latest venture from Easygroup, which includes a chain of internet cafes, budget car rentals and an intercity bus service. Easymobile will allow customers to go online to order SIM cards and airtime - which will be rented from T-Mobile - for their existing handsets.

Orange claims the new low-cost mobile service has infringed its rights regarding the use of the colour orange and could confuse customers - known as "passing off".Orange said it was starting proceedings against the Easymobile service for trademark infringement.A row over the colour orange could hit the courts after mobile phone giant Orange launched action against a new mobile venture from Easyjet's founder.The Easyjet founder also said he planned to add a disclaimer to the Easygroup website to ensure customers are aware the Easymobile brand has no connection to Orange.Easymobile uses Easygroup's orange branding."Our brand, and the rights associated with it are extremely important to us," Orange said in a statement.

business

Weak end-of-year sales hit Next..Next has said its annual profit will be £5m lower than previously expected because its end-of-year clearance sale has proved disappointing..."Clearance rates in our end-of-season sale have been below our expectations," the company said. The High Street retailer said it now expected to report annual profits of between £415m and £425m ($779m-798m). Next's shares fell more than 3% following the release of the trading statement...Next chief executive Simon Wolfson admitted that festive sales were "below where we would expect a normal Christmas to be", but said sales should still top analyst expectations...Among areas where Next could have done better, Mr Wolfson said menswear ranges were "a little bit too similar to the previous year". Mr Wolfson also said that disappointing pre-Christmas sales were "more to do with the fact that we went in with too much stock rather than (the fact that) demand wasn't there for the stock". Next's like-for-like store sales in the five months from 3 August to 24 December were up 2.9% on a year earlier. This figure is for existing Next stores, which were unaffected by new Next store openings. Like-for-like sales growth at the 49 Next stores directly affected by new store openings in their locality was 0.5%...Overall sales across both its retail and mail order divisions were up 12.4%, Next said. Its Next Directory mail order division saw sales rise 13.4% during the five-month period. "In terms of all the worries about their trading pre-Christmas, it's a result," said Nick Bubb, an analyst at Evolution Securities. "Profits of around £420m would be well within the comfort zone." However, one dealer, who asked not to be named, told Reuters the seasonal sales performance was "not what people had hoped for". "Christmas has been tough for the whole sector, and this is one of the best retailers," he said. Next's trading statement comes a day after House of Fraser and Woolworths disappointed investors with their figures.

Next chief executive Simon Wolfson admitted that festive sales were "below where we would expect a normal Christmas to be", but said sales should still top analyst expectations.Overall sales across both its retail and mail order divisions were up 12.4%, Next said.Next has said its annual profit will be £5m lower than previously expected because its end-of-year clearance sale has proved disappointing."Clearance rates in our end-of-season sale have been below our expectations," the company said.Like-for-like sales growth at the 49 Next stores directly affected by new store openings in their locality was 0.5%.Its Next Directory mail order division saw sales rise 13.4% during the five-month period.Next's like-for-like store sales in the five months from 3 August to 24 December were up 2.9% on a year earlier.

business

GM, Ford cut output as sales fall..US car firms General Motors (GM) and Ford have been forced to cut production in the face of falling car sales...US sales at GM sank 12.7% in February compared to a year ago while Ford sales dropped 3% as foreign rivals took a bigger share of the market. Meanwhile, Asian carmakers fared well - Toyota sales jumped 11% while rival Nissan notched up a 10% increase. Overall. sales across the industry also fell to 1.25 million vehicles from 1.27 million a year earlier...GM and Ford blamed high fuel prices for low sales of big trucks and gas-guzzling sports utility vehicles (SUVs) - the vehicles that provide the biggest profits...GM added that US truck sales fell 9% in February while car business tumbled 17%, however it did acknowledge that some new products - such as the Pontiac G6 and Chevrolet Cobalt - had put in solid performances. "The calendar year is starting off slower than expected, both for GM and the industry," said Mark LaNeve, GM's vice president for North American sales, service and marketing. The slump in sales prompted the group to cut production in North America by 3% - it has already reduced output by around 9% in the face of growing stockpiles. Meanwhile, Ford which posted its ninth consecutive drop in monthly US sales, said it was cutting first-quarter North American production by another 10,000 vehicles, or 1.2%. Chrysler, the US unit of Germany's DaimlerChrysler, was the only Detroit based automaker to boast an increase in market share during the month - with sales rising 8%...But America's loss was its foreign rivals' gain as they continued to nibble away at the US market. While Japan's top car maker Toyota and Nissan saw sales accelerate, even the smaller Suzuki Motor Corp snapped up a more business with sales improving 17.6% on a year ago. In 2003, the firm launched an ambitious plan to triple US sales by 2007 as it seeks to become a bigger player in the Asian assault on the US market. Korea's Hyundai was another big gainer, turning in a 19% surge in February sales. Toyota put its rise in sales down to strong results for its redesigned Avalon sedan and a 120% surge in sales of its gas-electric Prius hybrid mid-size sedan as petrol-price conscious consumers looked to vehicles that were cheaper to run. "As gas prices continue their upward march, fuel efficiency catches the public eye," Jim Press, vice president and chief operating officer of Toyota's US sales arm, said in a statement.

US sales at GM sank 12.7% in February compared to a year ago while Ford sales dropped 3% as foreign rivals took a bigger share of the market.In 2003, the firm launched an ambitious plan to triple US sales by 2007 as it seeks to become a bigger player in the Asian assault on the US market.Chrysler, the US unit of Germany's DaimlerChrysler, was the only Detroit based automaker to boast an increase in market share during the month - with sales rising 8%.GM added that US truck sales fell 9% in February while car business tumbled 17%, however it did acknowledge that some new products - such as the Pontiac G6 and Chevrolet Cobalt - had put in solid performances.While Japan's top car maker Toyota and Nissan saw sales accelerate, even the smaller Suzuki Motor Corp snapped up a more business with sales improving 17.6% on a year ago.US car firms General Motors (GM) and Ford have been forced to cut production in the face of falling car sales.Meanwhile, Ford which posted its ninth consecutive drop in monthly US sales, said it was cutting first-quarter North American production by another 10,000 vehicles, or 1.2%.

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Ukraine steel sell-off 'illegal'..The controversial sell-off of a Ukrainian steel mill to a relative of the former president was illegal, a court has ruled...The mill, Krivorizhstal, was sold in June 2004 for $800m (£424m) - well below other offers. President Viktor Yushchenko, elected in December, is planning to revisit many of Ukraine's recent privatisations. Krivorizhstal is one of dozens of firms which he says were sold cheaply to friends of the previous administration...On Wednesday, Prime Minister Yulia Tymoshenko said as many as 3,000 firms could be included on the list of firms whose sale was being reviewed...Mr Yushchenko had previously said the list would be limited to 30-40 enterprises. More than 90,000 businesses in all, from massive corporations to tiny shopfronts, have been sold off since 1992, as the command economy built up when Ukraine was part of the Soviet Union was dismantled. Analysts have suggested that the government needs to avoid the impression of an open-ended list, so as to preserve investor confidence...Thursday's ruling by a district court in Perchesk overturned a previous decision in a lower court permitting the sale. The consortium which won the auction for the mill was created by Viktor Pinchuk, son-in-law of former-President Leonid Kuchma, and Rinat Akhmetov, the country's richest man. The next step is for the supreme court to annul the sale altogether, opening the way for Krivorizhstal to be resold. Mr Yushchenko has suggested a fair valuation could be as much as $3bn. One of the foreign bidders who lost out, steel giant LNM, told BBC News that it would be interested in any renewed sale.

On Wednesday, Prime Minister Yulia Tymoshenko said as many as 3,000 firms could be included on the list of firms whose sale was being reviewed.The mill, Krivorizhstal, was sold in June 2004 for $800m (£424m) - well below other offers.The controversial sell-off of a Ukrainian steel mill to a relative of the former president was illegal, a court has ruled.Mr Yushchenko had previously said the list would be limited to 30-40 enterprises.Krivorizhstal is one of dozens of firms which he says were sold cheaply to friends of the previous administration.The next step is for the supreme court to annul the sale altogether, opening the way for Krivorizhstal to be resold.

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Axa Sun Life cuts bonus payments..Life insurer Axa Sun Life has lowered annual bonus payouts for up to 50,000 with-profits investors...Regular annual bonus rates on former Axa Equity & Law with-profits policies are to be cut from 2% to 1% for 2004. Axa blamed a poor stock market performance for the cut, adding that recent gains have not yet offset the market falls seen in 2001 and 2002. The cut will hit an estimated 3% of Axa's policyholders. The rest will know their fate in March...The cuts on Axa's policies will mean a policyholder who had invested £50 a month into an endowment policy for the past 25 years would see a final maturity payout of £46,998. This equated to a annual investment growth rate of 8% Axa said. With-profits policies are designed to smooth out the peaks and troughs of stock market volatility. However, heavy stock market falls throughout 2001 and 2002 forced most firms to trim bonus rates on their policies. "The stock market has grown over the past 18 months, however not enough to undo the damage that occurred during 2001 and 2002," Axa spokesman Mark Hamilton, Axa spokesman, told BBC News. Axa cut payouts for the same investors last January.

Regular annual bonus rates on former Axa Equity & Law with-profits policies are to be cut from 2% to 1% for 2004.Axa blamed a poor stock market performance for the cut, adding that recent gains have not yet offset the market falls seen in 2001 and 2002.Axa cut payouts for the same investors last January."The stock market has grown over the past 18 months, however not enough to undo the damage that occurred during 2001 and 2002," Axa spokesman Mark Hamilton, Axa spokesman, told BBC News.Life insurer Axa Sun Life has lowered annual bonus payouts for up to 50,000 with-profits investors.

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Senior Fannie Mae bosses resign..The two most senior executives at US mortgage giant Fannie Mae have resigned after accounting irregularities were uncovered at the company...Chief executive Franklin Raines, a former senior official in the Clinton administration, and chief financial officer Tim Howard have left the firm. Fannie Mae was criticised by financial regulators and could have to restate its earnings by up to $9bn (£4.6bn). It is America's second largest financial institution...Recent investigations have exposed extensive accounting errors at Fannie Mae, which supplies funds to America's $8 trillion mortgage market. Last week, the firm was admonished by the Securities and Exchange Commission which said it had made major errors in its financial reporting...The financial regulator said Fannie Mae would have to raise substantial new capital to restore its balance sheet. Analysts said the SEC's criticism made it impossible for Fannie Mae's senior executives to remain. Mr Raines, head of the Office of Management and Budget under President Clinton, has taken early retirement while Mr Howard has also stepped down, the company said on Tuesday. KPMG, Fannie Mae's independent auditor, will also be replaced. "By my early retirement, I have held myself accountable," Mr Raines said in a statement...Fannie Mae was found to have violated accounting rules relating to derivatives - financial instruments used to hedge against fluctuations in interest rates - and some pre-paid loans. As a result, it could be forced to restate $9bn in earnings over the past four years, effectively wiping out a third of the company's profits since 2001. Although not making loans directly to buyers, Fannie Mae is the largest single player in the mortgage market, underwriting half of all US house purchases. The firm operates under charter from the US Congress. It has faced stinging criticism from Congressional leaders who held hearings into its finances earlier this year and from government regulator, the Office of Federal Housing Enterprise Oversight (OFHEO). "We are encouraged that the board's announcement signals a new culture and a new direction for Fannie Mae," Armando Falcon, OFHEO director said. The problems afflicting Fannie Mae are just the latest to hit the US mortgage industry. Freddie Mac, the country's other largest mortgage firm, was forced to restate its earnings by $4.4bn last year and pay a $125m fine after an investigation of its books.

Fannie Mae was criticised by financial regulators and could have to restate its earnings by up to $9bn (£4.6bn).The financial regulator said Fannie Mae would have to raise substantial new capital to restore its balance sheet.The two most senior executives at US mortgage giant Fannie Mae have resigned after accounting irregularities were uncovered at the company.The problems afflicting Fannie Mae are just the latest to hit the US mortgage industry.Recent investigations have exposed extensive accounting errors at Fannie Mae, which supplies funds to America's $8 trillion mortgage market.Although not making loans directly to buyers, Fannie Mae is the largest single player in the mortgage market, underwriting half of all US house purchases.Analysts said the SEC's criticism made it impossible for Fannie Mae's senior executives to remain.Fannie Mae was found to have violated accounting rules relating to derivatives - financial instruments used to hedge against fluctuations in interest rates - and some pre-paid loans.

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Car giant hit by Mercedes slump..A slump in profitability at luxury car maker Mercedes has prompted a big drop in profits at parent DaimlerChrysler...The German-US carmaker saw fourth quarter operating profits fall to 785m euros ($1bn) from 2.4bn euros in 2003. Mercedes-Benz's woes - its profits slid to just 20m euros - obscured a strong performance from the Chrysler group whose returns met market expectations. Mercedes faces fierce competition in the luxury car sector from BMW and but hopes to revive its fortunes by 2006...Mercedes' profits over the period compared unfavourably with 2003's 784m euro figure and were well below analyst expectations of 374m euros. For the year as a whole, its operating profits fell 46% to 1.6bn euros. Sales of Mercedes' brands fell 2% as demand cooled, while revenues were affected by the weakness of the US dollar...The carmaker blamed the fall in profits on high launch costs for new models and losses from its Mercedes Smart mini-car range. Mercedes is hoping to increase productivity by 3bn euros, having negotiated 500m euros in annual savings with German workers last year. The firm said it was determined to retain Mercedes' position as the world's most successful luxury brand. However, DaimlerChrysler's shares fell 1.5% on the news. "While all these divisions are doing well the big worries continue to surround Mercedes-Benz," Michael Rabb, an analyst with Bank Sal Oppenheim, told Reuters...In contrast, Chrysler enjoyed a 5% annual increase in unit sales while revenues - calculated in US dollars - rose 10%. The US division - whose marques include Dodge and Jeep - transformed a full year operating loss of 506m euros in 2003 into a 1.4bn euros profit last year...Overall, DaimlerChrysler saw worldwide vehicle sales rise 8% to 4.7 million in 2004 while total revenues added 4% to 142bn euros. Chrysler's strong performance helped the world's fifth largest carmaker boost net income by 400m euros to 2.5bn euros..."The year 2004 shows that our strategy works well - even in such a challenging competitive environment," said Jurgen Schrempp, DaimlerChrysler's chairman. DaimlerChrysler took a 475m euro hit in costs stemming from a defects scandal at its joint venture, Japanese subsidiary Fuso. DaimlerChrysler last week agreed a compensation package with partner Mitsubishi Motors which will see it buy out its stake in Fuso. Looking forward, DaimerChrysler's profits are expected to be slightly higher in 2005. However, it is expecting "significant improvements" in profitability in 2006 as a result of a major investment in the Mercedes product range.

For the year as a whole, its operating profits fell 46% to 1.6bn euros.The US division - whose marques include Dodge and Jeep - transformed a full year operating loss of 506m euros in 2003 into a 1.4bn euros profit last year.Mercedes' profits over the period compared unfavourably with 2003's 784m euro figure and were well below analyst expectations of 374m euros.The German-US carmaker saw fourth quarter operating profits fall to 785m euros ($1bn) from 2.4bn euros in 2003.Mercedes is hoping to increase productivity by 3bn euros, having negotiated 500m euros in annual savings with German workers last year.A slump in profitability at luxury car maker Mercedes has prompted a big drop in profits at parent DaimlerChrysler.Chrysler's strong performance helped the world's fifth largest carmaker boost net income by 400m euros to 2.5bn euros.The carmaker blamed the fall in profits on high launch costs for new models and losses from its Mercedes Smart mini-car range.Sales of Mercedes' brands fell 2% as demand cooled, while revenues were affected by the weakness of the US dollar.

business

US interest rates increased to 2%..US interest rates are to rise for the fourth time in five months, in a widely anticipated move...The Federal Reserve has raised its key federal funds rate by a quarter percentage point to 2% in light of mounting evidence that the US economy is regaining steam. US companies created twice as many jobs as expected in October while exports hit record levels in September. Analysts said a clear-cut victory for President Bush in last week's election paved the way for a rise. Another rise could be in store for December, some economists warned...The Fed's Open Market Committee - which sets interest rate policy in the US - voted unanimously in favour of a quarter point rise. The Fed has been gradually easing rates up since the summer, with quarter percentage point rises in June, August and September...The Central Bank has been acting to restrain inflationary pressures while being careful not to obstruct economic growth. The Fed did not rule out raising rates once again in December but noted that any future increases would take place at a "measured" pace. In a statement, the Fed said that long-term inflation pressures remained "well contained" while the US economy appeared to be "growing at a moderate pace despite the rise in energy prices". Financial analysts broadly welcomed the Fed's move and shares traded largely flat. The Dow Jones Industrial average closed down 0.89 points, or 0.01%, at 10,385.48...Recent evidence has pointed to an upturn in the US economy. US firms created 337,000 jobs last month, twice the amount expected, while exports reached record levels in September. The economy grew 3.7% in the third quarter, slower than forecast, but an improvement on the 3.3% growth seen in the second quarter. Analysts claimed the Fed's assessment of future economic growth was a positive one but stressed that the jury was still out on the prospect of a further rise in December..."Let's wait until we see how growth and employment bear up under the fourth quarter's energy price drag before concluding that the Fed has more work to do in 2005," said Avery Shenfeld, senior economist at CIBC World Markets..."I think the Federal Reserve does not want to rock the boat and is using a gradual approach in raising the interest rate," said Sung Won Sohn, chief US economist for Wells Fargo Bank. "The economy is doing a bit better right now but there are still some concerns about geopolitics, employment and the price of oil," he added. The further rise in US rates is unlikely to have a direct bearing on UK monetary policy. The Bank of England (BoE) has kept interest rates on hold at 4.75% for the past three months, leading some commentators to argue that rates may have peaked. In a report published on Wednesday, the Bank said that with rates at their current level, inflation would rise to its 2% target within two years. However, BoE governor Mervyn King warned only last month that the era of consistently low inflation and low unemployment may be coming to an end.

The Fed's Open Market Committee - which sets interest rate policy in the US - voted unanimously in favour of a quarter point rise.US interest rates are to rise for the fourth time in five months, in a widely anticipated move.The Fed has been gradually easing rates up since the summer, with quarter percentage point rises in June, August and September.The further rise in US rates is unlikely to have a direct bearing on UK monetary policy.The Federal Reserve has raised its key federal funds rate by a quarter percentage point to 2% in light of mounting evidence that the US economy is regaining steam.In a statement, the Fed said that long-term inflation pressures remained "well contained" while the US economy appeared to be "growing at a moderate pace despite the rise in energy prices".In a report published on Wednesday, the Bank said that with rates at their current level, inflation would rise to its 2% target within two years."I think the Federal Reserve does not want to rock the boat and is using a gradual approach in raising the interest rate," said Sung Won Sohn, chief US economist for Wells Fargo Bank.The Bank of England (BoE) has kept interest rates on hold at 4.75% for the past three months, leading some commentators to argue that rates may have peaked.Recent evidence has pointed to an upturn in the US economy.

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US data sparks inflation worries..Wholesale prices in the US rose at the fastest rate in more than six years in January, according to government data...New figures show the Labor Department producer price index (PPI) rose by 0.3% - in line with forecasts. But core producer prices, which exclude food and energy costs, surged by 0.8%, the biggest rise since December 1998, increasing inflationary concerns. In contrast, the University of Michigan barometer of US retail consumer confidence showed a slight dip. The university's index of consumer spending fell to 94.2 in early February from 95.5 in January, which could indicate a fall in retail spending by the US public. The mixed set of data on Friday led to volatile early Wall Street trade, as the Dow Jones, Standard and Poor's 500, and Nasdaq swung between positive and negative territory...The economic figures come on the back of increased fears that the Federal Reserve chairman may be about to raise interest rates in order to stifle any inflationary pressures. The Fed has been raising interest rates at a gradual pace since June 2004, in an attempt to make sure inflation does not get out of control...Mr Greenspan told Congress this week that the central bank was on guard against the possibility that a rebounding economy could trigger stronger inflation pressures. "The PPI would argue for Greenspan to continue to raise rates at a measured pace," said Joe Quinlan, chief market stategist at Bank of America Capital Management. "But this Michigan survey tells you that the consumer might be downshifting a little bit in terms of their confidence and their spending; this could be an indication of that."..Consumer spending accounts for 66% of US economic activity and is viewed as a gauge of the health of the economy, which is why the Michigan data is closely observed. However on Friday, it was overshadowed by the core PPI core figure, which surged 2.7% during the past 12 months, the biggest year-on-year gain in nine years. "The concern is that traders might interpret this big jump in the core PPI as an impetus for the Fed to be more aggressive than a measured move in moving rates," said Paul Cherney, chief market analyst at Standard & Poor's. But Ian Shepherdson, chief US economist at High Frequency Economics, said the PPI report was "much less alarming" than at first glance. One-time increases in alcohol and tobacco prices, which "are no indication of broad PPI pressure", were responsible for the increase, he said. Prices for autos and trucks also jumped in January, but Shepherdson said "it is a good bet these increases won't stick".

The university's index of consumer spending fell to 94.2 in early February from 95.5 in January, which could indicate a fall in retail spending by the US public."The PPI would argue for Greenspan to continue to raise rates at a measured pace," said Joe Quinlan, chief market stategist at Bank of America Capital Management.Consumer spending accounts for 66% of US economic activity and is viewed as a gauge of the health of the economy, which is why the Michigan data is closely observed.But Ian Shepherdson, chief US economist at High Frequency Economics, said the PPI report was "much less alarming" than at first glance."The concern is that traders might interpret this big jump in the core PPI as an impetus for the Fed to be more aggressive than a measured move in moving rates," said Paul Cherney, chief market analyst at Standard & Poor's.Wholesale prices in the US rose at the fastest rate in more than six years in January, according to government data.However on Friday, it was overshadowed by the core PPI core figure, which surged 2.7% during the past 12 months, the biggest year-on-year gain in nine years.

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Retail sales show festive fervour..UK retail sales were better than expected in November as Christmas shoppers began their seasonal flock to the High Street, figures show...The Office for National Statistics (ONS) said retail sales rose 0.6% on the month and 6.1% on the year. But the figures, along with this week's inflation report, could trigger another interest rate rise in the New Year. However, recent data from the British Retail Consortium showed a 0.2% slip in High Street sales during November...The ONS data confounded analyst expectations. Many had expected sales to fall slightly in November as shoppers put off buying Christmas presents until December. However, retailers' attempts to draw in the crowds may be behind November's unexpected rise in sales, they say. Aggressive tactics, such as one-day discount sales adopted by stores such as Marks & Spencer, appear to have paid off. "Price discounting has certainly accounted for much of this because the value of retail sales hasn't grown as much as volumes," said Investec economist David Page. The figures sparked a rally for sterling as the data supported the view that it is too early to assume that base rates have peaked.

However, recent data from the British Retail Consortium showed a 0.2% slip in High Street sales during November.UK retail sales were better than expected in November as Christmas shoppers began their seasonal flock to the High Street, figures show.The Office for National Statistics (ONS) said retail sales rose 0.6% on the month and 6.1% on the year.Many had expected sales to fall slightly in November as shoppers put off buying Christmas presents until December.

business

Bank payout to Pinochet victims..A US bank has said it will donate more than $8m to victims of former Chilean military ruler Augusto Pinochet's regime under a Madrid court settlement...Riggs Bank will put money in a special fund to be managed by a Madrid-based charity, the Salvador Allende Foundation, which helps abused victims. The bank had been accused of illegally concealing Gen Pinochet's assets. More than 3,000 people were killed for political reasons under Gen Pinochet's regime, an official report says. Last month in a US court, Riggs Bank pleaded guilty to failing to report suspicious activity relating to accounts held by Gen Pinochet and the government of Equatorial Guinea. On that occasion, it was ordered to pay a fine of $16m. Gen Pinochet himself has never been put on trial for human rights violations under his 1973-90 rule, despite several high-profile cases against him. He is now facing charges relating to the murder of one Chilean and the disappearance of nine others. He is also being investigated for tax evasion, tax fraud and embezzlement of state funds...The general's opponents rejoiced at the settlement, which was agreed in a court in the Spanish capital, Madrid. A lawyer for the victims, Eduardo Contreras, told Reuters news agency: "This demonstrates that the horrors of the Pinochet dictatorship are not a mystery to anyone and that the whole world knows his victims deserve reparations." Riggs spokesman Mark Hendrix said the settlement, details of which will be announced next week, was an opportunity to move on. "This enables the institution to put the matter behind us," he told Reuters. The settlement follows a legal complaint filed against the bank by Spanish Judge Baltasar Garzon alleging that it had illegally concealed assets. The bank agreed to create a fund for the victims, but the charges were dropped.

A US bank has said it will donate more than $8m to victims of former Chilean military ruler Augusto Pinochet's regime under a Madrid court settlement.The bank had been accused of illegally concealing Gen Pinochet's assets.Last month in a US court, Riggs Bank pleaded guilty to failing to report suspicious activity relating to accounts held by Gen Pinochet and the government of Equatorial Guinea.The bank agreed to create a fund for the victims, but the charges were dropped.The general's opponents rejoiced at the settlement, which was agreed in a court in the Spanish capital, Madrid.Riggs Bank will put money in a special fund to be managed by a Madrid-based charity, the Salvador Allende Foundation, which helps abused victims.

business

BT offers equal access to rivals..BT has moved to pre-empt a possible break-up of its business by offering to cut wholesale broadband prices and open its network to rivals...The move comes after telecom regulator Ofcom said in November that the firm must offer competitors "real equality of access to its phone lines". At the time, Ofcom offered BT the choice of change or splitting into two. Ofcom is carrying out a strategic review aimed at promoting greater competition in the UK telecom sector. BT's competitors have frequently accused it of misusing its status as the former telecoms monopoly and controller of access to many customers to favour its own retail arm...This latest submission was delivered to the watchdog ahead of a deadline for the second phase of its review..."Central to the proposals are plans by BT to offer operators lower wholesale prices, faster broadband services and transparent, highly-regulated access to BT's local network," the former monopoly said in a statement. "The United Kingdom has the opportunity to create the most exciting and innovative telecoms market in the world," BT chief executive Ben Verwaayen said. "BT has a critical role to play, and today we are making a set of far-reaching proposals towards that framework," he said. BT wants lighter regulation in exchange for the changes, as well as the removal of the break-up threat...The group is to set up a new Access Services division - with a separate board which would include independent members - to ensure equal access for rivals to the "local loop", the copper wires that run between telephone exchanges and households. The company also unveiled plans to cut the wholesale prices of its most popular broadband product by about 8% from April in areas of high customer demand...It added that it plans to invest £10bn in the next five years to create a "21st Century network". To meet the growing demand for greater bandwidth, BT said it would begin trials in April with a view to launching higher-speed services nationally from the autumn...Telecom analysts Ovum welcomed the move, saying BT had "given a lot of ground"..."The big question now is whether the industry, and particularly Ofcom feels BT's proposals go far enough ...Now the real negotiation begins," director of telecoms research Tony Lavender said. Internet service provider (ISP) Plus.net also backed the proposals saying "we will be entirely happy if Ofcom accepts them". "BT has been challenged to play fair and its plans will introduce a level playing field. The scenario now is how well people execute their business plans as a service provider," chief executive Lee Strafford said. Chris Panayis, managing director of ISP Freedom2surf said that it would make the situation clearer for business. "I think it's the first productive thing we've had from BT," he said...AOL backed the price cuts but said regulation was still needed to ensure a level playing field. "This is a reminder to Ofcom that as long as BT can change the dynamics of the whole broadband market at will, the process of opening up the UK's local telephone network to infrastructure investment and competition remains fragile," a spokesman said. "Ofcom needs to return to regulation of the wholesale broadband service [IPStream] and provide more robust rules for local loop unbundling if consumers are to see the benefits of increased competition and infrastructure investment." More than 100 telecom firms, consumer groups and other interested parties are expected to make submissions to the regulator during this consultation phase. Ofcom is expected to spend the next few weeks examining the proposals before making an announcement within the next few months.

"Central to the proposals are plans by BT to offer operators lower wholesale prices, faster broadband services and transparent, highly-regulated access to BT's local network," the former monopoly said in a statement."This is a reminder to Ofcom that as long as BT can change the dynamics of the whole broadband market at will, the process of opening up the UK's local telephone network to infrastructure investment and competition remains fragile," a spokesman said."The United Kingdom has the opportunity to create the most exciting and innovative telecoms market in the world," BT chief executive Ben Verwaayen said."BT has a critical role to play, and today we are making a set of far-reaching proposals towards that framework," he said.The move comes after telecom regulator Ofcom said in November that the firm must offer competitors "real equality of access to its phone lines".BT has moved to pre-empt a possible break-up of its business by offering to cut wholesale broadband prices and open its network to rivals."I think it's the first productive thing we've had from BT," he said.To meet the growing demand for greater bandwidth, BT said it would begin trials in April with a view to launching higher-speed services nationally from the autumn."The big question now is whether the industry, and particularly Ofcom feels BT's proposals go far enough ...Now the real negotiation begins," director of telecoms research Tony Lavender said."BT has been challenged to play fair and its plans will introduce a level playing field.The scenario now is how well people execute their business plans as a service provider," chief executive Lee Strafford said.

business

Share boost for feud-hit Reliance..The board of Indian conglomerate Reliance has agreed a share buy-back, to counter the effects of a power struggle in the controlling family...The buy-back is a victory for chairman Mukesh Ambani, whose idea it was. His brother Anil, the vice-chairman, said had not been consulted and that the buy-back was "completely inappropriate and unnecessary". The board hopes the move will reverse a 13% fall in Reliance's shares since the feud became public last month. The company has been fractious since founder Dhirubhai Ambani died in 2002, leaving no will. "Today's round has gone to [Mukesh], there is no doubt about it," said Nanik Rupani, president of the Indian Merchants Chamber, a Bombay-based traders' body. The company plans to buy back 52 million shares at 570 rupees (£6.80; $13) apiece, a premium of more than 10% to its current market price.

The board of Indian conglomerate Reliance has agreed a share buy-back, to counter the effects of a power struggle in the controlling family.The company has been fractious since founder Dhirubhai Ambani died in 2002, leaving no will.The buy-back is a victory for chairman Mukesh Ambani, whose idea it was.

business

Weak data buffets French economy..A batch of downbeat government data has cast doubt over the French economy's future prospects...Official figures showed on Friday that unemployment was unchanged at 9.9% last month, while consumer confidence fell unexpectedly in October. At the same time, finance minister Nicolas Sarkozy warned that high oil prices posed a threat to French growth. "[Oil prices] will weigh on consumer spending in the short term, and potentially on confidence," he said. World oil prices have risen by more than 60% since the start of the year as production struggles to keep pace with soaring demand...Analysts said French companies, keen to protect their profit margins at a time of rising energy costs, were reluctant to take on extra staff. "[The unemployment figures] show the main problem of the French economy: we have growth but without an improvement in employment," said Marc Touati, an economist at Natexis Banques Populaires. "Politicians must have the will and guts to solve structural unemployment with thorough reforms, otherwise in five or ten years, it will be too late." Obligatory employer contributions to worker welfare programmes mean that it costs more to hire staff in France than in many other European economies. Many economists have urged the government to stimulate employment by reducing non-wage payroll costs, and by scrapping restrictions on working hours. The French statistics agency, INSEE, expects the economy to grow by about 2.4% this year, buoyed by strong consumer spending and business investment. That is above the projected eurozone average of just above 2%.

"[The unemployment figures] show the main problem of the French economy: we have growth but without an improvement in employment," said Marc Touati, an economist at Natexis Banques Populaires."[Oil prices] will weigh on consumer spending in the short term, and potentially on confidence," he said.At the same time, finance minister Nicolas Sarkozy warned that high oil prices posed a threat to French growth.The French statistics agency, INSEE, expects the economy to grow by about 2.4% this year, buoyed by strong consumer spending and business investment.Analysts said French companies, keen to protect their profit margins at a time of rising energy costs, were reluctant to take on extra staff.

business

Israeli economy picking up pace..Israel's economy is forecast to grow by 4.2% in 2004 as it continues to emerge from a three-year recession...The main driver of the faster-than-expected expansion has been exports, with tourism seeing a strong rebound, the statistical office said. The economy is benefiting from a quieter period in Palestinian-Israeli violence and a pick-up in global demand for technology products. The outlook is better than it has been for a number of years, analysts said...Many companies have focused on cost cutting and greater efficiency, while the government has been trying to trim public spending and push through reforms. The growth figures come about despite a strike earlier this year by about 400,000 public sector worker which closed banks, hospitals, postal services and transport facilities. Growth did slow in the second half, but only slightly. Exports for the year rose by 14%, while tourist revenues were up by 30%. Imports gained by 13%, signalling that domestic demand has picked up again. In 2003, imports declined by 1.8%. In 2003, the economy expanded by 1.3%

The main driver of the faster-than-expected expansion has been exports, with tourism seeing a strong rebound, the statistical office said.Imports gained by 13%, signalling that domestic demand has picked up again.The outlook is better than it has been for a number of years, analysts said.In 2003, the economy expanded by 1.3%The economy is benefiting from a quieter period in Palestinian-Israeli violence and a pick-up in global demand for technology products.

business

Tsunami cost hits Jakarta shares..The stock market in Jakarta has seen its biggest slide in a month, after the country doubled the likely cost of rebuilding from the Asian tsunami...The fall came as Indonesia said it expected debt repayments of up to 30 trillion rupiah ($3.2bn; £1.7bn) to be frozen to help pay for the recovery. By Monday's close, the Jakarta Stock Exchange was down 2.1% at 1,011.15. Bar a slight dip at the New Year, The JSE had risen steadily by 4.7% since the tsunami hit on 26 December. Construction and property companies in particular have gained ground, although banks were among the main fallers on Monday...So far, more than 100,000 people are believed to have been killed in Indonesia, the country closest to the earthquake which triggered the great wave...On Friday, the government said its five-year estimate of rebuilding costs for Banda Aceh province - much of which was flattened by the quake and the tsunami - was 20 trillion rupiah ($2.2bn; £1.1bn), twice what it had previously estimated. That cost could be defrayed by temporary debt relief. On Monday, Indonesian economy minister Aburizal Bakrie told reporters that the Paris Club group of creditor countries was expected to freeze 20-30bn rupiah in payments due in 2005 and 2006. "We hope we can resume the repayments at least from 2007," Mr Bakrie said. French finance minister Herve Gaymard said on Sunday that the Paris Club had already agreed to a moratorium on repayments for tsunami-hit countries ahead of its meeting on 12 January.

On Friday, the government said its five-year estimate of rebuilding costs for Banda Aceh province - much of which was flattened by the quake and the tsunami - was 20 trillion rupiah ($2.2bn; £1.1bn), twice what it had previously estimated.On Monday, Indonesian economy minister Aburizal Bakrie told reporters that the Paris Club group of creditor countries was expected to freeze 20-30bn rupiah in payments due in 2005 and 2006.The fall came as Indonesia said it expected debt repayments of up to 30 trillion rupiah ($3.2bn; £1.7bn) to be frozen to help pay for the recovery.The stock market in Jakarta has seen its biggest slide in a month, after the country doubled the likely cost of rebuilding from the Asian tsunami.French finance minister Herve Gaymard said on Sunday that the Paris Club had already agreed to a moratorium on repayments for tsunami-hit countries ahead of its meeting on 12 January.

business

Egypt to sell off state-owned bank..The Egyptian government is reportedly planning to privatise one of the country's big public banks...An Investment Ministry official has told the Reuters news agency that the Bank of Alexandria will be sold sometime in 2005. The move is seen as evidence of a new commitment by the government to reduce the size of public sector. The official said the government has not yet decided whether the sale will take the form of a public flotation. "The most important thing to decide now is the method - whether by selling shares to the public or to a strategic investor from abroad," he said...Analysts say the public-sector banks have suited the government's monetary, credit and exchange policies. Nevertheless, the Egyptian government has spoken for years about privatising one of the big four state banks - Banque Misr, National Bank of Egypt, Banque du Caire and Bank of Alexandria. It had been expected one of the smallest of the four big public banks - Bank of Alexandria or Banque du Caire - would be sold first. The announcement reinforces the hopes of investors and international financial bodies for a revival of Egypt's privatisation programme. About 190 state-run companies and facilities were sold off from the early 1990s to 1997. The appointment of Mahmoud Mohieldin, a reform-minded technocrat, to the new post of investment minister in July was taken as a sign that more sell-offs were on the way. Both the IMF and World Bank have urged Egypt to remove obstacles to the development of the private sector which they say has a vital role to play in reducing poverty by expanding the economy.

It had been expected one of the smallest of the four big public banks - Bank of Alexandria or Banque du Caire - would be sold first.Nevertheless, the Egyptian government has spoken for years about privatising one of the big four state banks - Banque Misr, National Bank of Egypt, Banque du Caire and Bank of Alexandria.An Investment Ministry official has told the Reuters news agency that the Bank of Alexandria will be sold sometime in 2005.The official said the government has not yet decided whether the sale will take the form of a public flotation.The Egyptian government is reportedly planning to privatise one of the country's big public banks.

business

Bank set to leave rates on hold..UK interest rates are set to remain on hold at 4.75% following the latest meeting of the Bank of England...The Bank's rate-setting committee has put up rates five times in the past year but rates have been on hold since September amid signs of a slowdown. Economic growth slowed in the previous quarter, as manufacturing output fell, while consumer confidence has slipped. There is also growing evidence that the previously booming UK housing market is now cooling...House prices fell 0.4% in October, according to the Nationwide, their biggest monthly fall since February 2001. Last month, Bank of England governor Mervyn King said that the economy had hit a "softer patch" after rapid economic growth in the first half of 2004. Richard Jeffrey, chief economist at Bridgewell Securities, said it was very unlikely that the Bank of England would put rates up again this time around. "There have been sufficient signs in the economy of a slowdown to stay the Bank of England's hand," he told BBC Radio 4's Today programme. However, Mr Jeffrey said he believed the slowdown in economic activity was temporary and it was dangerous to assume that rates had peaked. "I still think interest rates are going up," he said. "We are not out of the woods."

Richard Jeffrey, chief economist at Bridgewell Securities, said it was very unlikely that the Bank of England would put rates up again this time around.UK interest rates are set to remain on hold at 4.75% following the latest meeting of the Bank of England.The Bank's rate-setting committee has put up rates five times in the past year but rates have been on hold since September amid signs of a slowdown.However, Mr Jeffrey said he believed the slowdown in economic activity was temporary and it was dangerous to assume that rates had peaked."I still think interest rates are going up," he said.

business

Safety alert as GM recalls cars..The world's biggest carmaker General Motors (GM) is recalling nearly 200,000 vehicles in the US on safety grounds, according to federal regulators...The National Highway Traffic Safety Administration (NHTSA) said the largest recall involves 155,465 pickups, vans and sports utility vehicles (SUVs). This is because of possible malfunctions with the braking systems. The affected vehicles in the product recall are from the 2004 and 2005 model years, GM said. Those vehicles with potential faults are the Chevrolet Avalanche, Express, Kodiak, Silverade and Suburban; the GMC Savana, Sierra and Yukon...The NHTSA said a pressure accumulator in the braking system could crack during normal driving and fragments could injure people if the hood was open. This could allow hydraulic fluid to leak, which could make it harder to brake or steer and could cause a crash, it warned. GM is also recalling 19,924 Cadillac XLR coupes, SRX SUVs and Pontiac Grand Prix sedans from the 2004 model year. This is because the accelerator pedal may not work properly in extremely cold temperatures, requiring more braking. In addition, the car giant is calling back 17,815 Buick Raniers, Chevrolet Trailblazers, GMC Envoys and Isuzu Ascenders from the 2005 model years because the windshield is not properly fitted and could fall out in a crash. However, GM stressed that it did not know of any injuries related to the problems. News of the recall follows an announcement last month that GM expects earnings this year be lower than in 2004. The world's biggest car maker is grappling with losses in its European business, weak US sales and now a product recall. In January, GM said higher healthcare costs in North America, and lower profits at its financial services subsidiary would hurt its performance in 2005.

The affected vehicles in the product recall are from the 2004 and 2005 model years, GM said.The NHTSA said a pressure accumulator in the braking system could crack during normal driving and fragments could injure people if the hood was open.The world's biggest carmaker General Motors (GM) is recalling nearly 200,000 vehicles in the US on safety grounds, according to federal regulators.News of the recall follows an announcement last month that GM expects earnings this year be lower than in 2004.In addition, the car giant is calling back 17,815 Buick Raniers, Chevrolet Trailblazers, GMC Envoys and Isuzu Ascenders from the 2005 model years because the windshield is not properly fitted and could fall out in a crash.The National Highway Traffic Safety Administration (NHTSA) said the largest recall involves 155,465 pickups, vans and sports utility vehicles (SUVs).

business

Brazil plays down Varig rescue..The Brazilian government has played down claims that it could step in to save the country's biggest airline...Brazil's airport authority chief Carlos Wilson had claimed the government was on the brink of stepping in to save Varig, Brazil's flagship airline. However, the country's vice president Jose Alencar has said the government still is looking for a solution. Varig is struggling under a huge debt burden of an estimated debt of 6.5 billion reais ($2.3bn or £1.2bn). Asked whether a rescue was on the cards following a meeting of the country's Congress to discuss the airline's crisis, Mr Alencar replied: "No, I don't think so. We will see."..Earlier, Mr Wilson had said that president Luiz Inacio Lula da Silva has decided to step in and a decree of some kind of intervention could be signed this week. "In practice, it will be an intervention, although this is not the technical name used", he said. An intervention means that the government would take administrative control of the company and its finances. For that to happen Varig's main shareholder, the non-profit Ruben Berta Foundation which represents the airline's employees, would have to be removed, Mr Wilson said. However, no jobs would be lost and the airline would keep on flying, he added. Varig, which operates in 18 countries apart from Brazil, has been driven to the brink of collapse because of the country's economic downturn...The depreciation of Brazil's currency has had a direct impact on the airline's dollar debt as well as some of its costs. Business has improved recently with demand for air travel increasing and a recovery in the Brazilian economy. The airline could also win a sizeable windfall from a compensation claim against the government. On Tuesday the courts awarded Varig 2bn reais ($725m), after ruling in favour of its compensation claim against the government for freezing tariffs from 1985 to 1992. But the government can appeal the decision.

The Brazilian government has played down claims that it could step in to save the country's biggest airline.However, the country's vice president Jose Alencar has said the government still is looking for a solution.The airline could also win a sizeable windfall from a compensation claim against the government.Brazil's airport authority chief Carlos Wilson had claimed the government was on the brink of stepping in to save Varig, Brazil's flagship airline.On Tuesday the courts awarded Varig 2bn reais ($725m), after ruling in favour of its compensation claim against the government for freezing tariffs from 1985 to 1992.Earlier, Mr Wilson had said that president Luiz Inacio Lula da Silva has decided to step in and a decree of some kind of intervention could be signed this week.An intervention means that the government would take administrative control of the company and its finances.

business

UK interest rates held 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."

business

EU aiming to fuel development aid..European Union finance ministers meet on Thursday to discuss proposals, including a tax on jet fuel, to boost development aid for poorer nations...The policy makers are to ask for a report into how more development money can be raised, the EU said. The world's richest countries have said they want to increase the amount of aid they give to 0.7% of their annual gross national income by 2015. Airlines have reacted strongly against the proposed fuel levy...Profits have been under pressure in the airline industry, with low-cost firms driving down prices and demand dipping after the 11 September terrorist attacks and the outbreak of the killer SARS virus...Things have picked up, but some European and US companies are teetering on the brink of bankruptcy. At present, the fuel used by airlines enjoys either a very low tax rate or is untaxed in EU member states. "Of course we applaud humanitarian initiatives, but why target the airlines?" said Ulrich Schulte-Strathaus, secretary general of the Association of European Airlines. "Our industry is in the midst of a fundamental crisis...only to be once again confronted with a measure designed to increase our costs," he continued...The EU sought to allay the airlines' fears, stressing that Thursday's meeting was only a first step and that other proposals were also under consideration. It added that any plan to levy taxes on jet fuel "should not hinder the competitiveness of the airlines and that they themselves will not be solely funding development". Any tax would only be implemented after full consultation with the airlines, the EU said. There is thought to be widespread support for the plan - tabled by France and Germany following the recent G7 meeting of the world's richest nations - from EU ministers. The issue of poverty in Africa and South Asia has forced itself to the top of the politicial agenda, with politicians and campaigners calling for more to be done. At their meeting in London, G7 finance ministers backed plans to write off up to 100% of the debts of some of the world's poorest countries.

Any tax would only be implemented after full consultation with the airlines, the EU said.It added that any plan to levy taxes on jet fuel "should not hinder the competitiveness of the airlines and that they themselves will not be solely funding development".said Ulrich Schulte-Strathaus, secretary general of the Association of European Airlines.European Union finance ministers meet on Thursday to discuss proposals, including a tax on jet fuel, to boost development aid for poorer nations.At present, the fuel used by airlines enjoys either a very low tax rate or is untaxed in EU member states.Airlines have reacted strongly against the proposed fuel levy.There is thought to be widespread support for the plan - tabled by France and Germany following the recent G7 meeting of the world's richest nations - from EU ministers.

business

US seeks new $280bn smoker ruling..The US Justice Department is to try to overturn a court ruling that threw out its claim for $280bn (£149bn) in damages from tobacco firms...Earlier this month, a three-judge appeal court panel rejected the claim - filed in 1999 by the administration of Bill Clinton - in a 2-1 decision. Government lawyers said they would ask the full US Court of Appeals for the District of Columbia to hear the case. The court room battle is seen as key in government attempts to fight smoking. "It's pretty clear that they've suffered a severe setback," said Anthony Sebok, a professor at Brooklyn Law School, adding that the appeal was what the government "would be expected to ask for"...Prosecutors had argued that tobacco firms lied about the dangers of smoking, ignored research that highlighted problems, looked to increase addiction by manipulating nicotine levels and targeted the young with their adverts. Among the firms accused were Altria Group, RJ Reynolds Tobacco, Lorillard Tobacco, Liggett Group and Brown and Williamson. Prosecutors went after the companies using legislation put in place to fight organised crime, and accused the firms of conspiring and running "Racketeer Influenced and Corrupt Organisations". The tobacco companies denied the charges, saying that they never illegally conspired to promote smoking and fool the public. They also said that they have met many of the government's demands laid out in a landmark $206bn settlement hammered out in 1998 with 46 states. A three-judge panel agreed with the companies, finding that the case could not be brought under federal anti-racketeering laws...Central to the government's case was a meeting in the Plaza Hotel, New York, on 15 December, 1953. Prosecutors contend that executives from the major tobacco firms met and agreed to present a unified strategy denying the harmful effects of smoking. Despite denying for decades that smoking could be linked to illness, the companies have modified their stances in recent years. Altria's Philip Morris now accepts that nicotine is harmful, and the company's main lawyer William Ohlemeyer told the BBC last year that earlier statements may have been wrong but they were not dishonest. Government lawyers have until 21 March to file their appeal.

Government lawyers said they would ask the full US Court of Appeals for the District of Columbia to hear the case.Prosecutors contend that executives from the major tobacco firms met and agreed to present a unified strategy denying the harmful effects of smoking.The court room battle is seen as key in government attempts to fight smoking.Prosecutors had argued that tobacco firms lied about the dangers of smoking, ignored research that highlighted problems, looked to increase addiction by manipulating nicotine levels and targeted the young with their adverts.Government lawyers have until 21 March to file their appeal.The US Justice Department is to try to overturn a court ruling that threw out its claim for $280bn (£149bn) in damages from tobacco firms.The tobacco companies denied the charges, saying that they never illegally conspired to promote smoking and fool the public.

business

Mixed Christmas for US retailers..US retailers posted mixed results for December - with luxury retailers faring well while many others were forced to slash prices to lift sales...Upscale department store Nordstrom said same store sales were 9.3% higher than during the same period last year. Trendy youth labels also sold well, with sales jumping 28% at young women's clothing retailer Bebe Stores and 32.2% at American Eagle Outfitters. But Wal-Mart only saw its sales rise after it cut prices. The company saw a 3% rise in December sales, less than the 4.3% rise seen a year earlier...Customers at the world's biggest retailer are generally seen to be the most vulnerable to America's economic woes...Commentators claim many have cut back on spending amid uncertainty over job security, while low and middle-income Americans have reined in spending in the face of higher gasoline prices. Analysts said Wal-Mart faced a "stand-off" with shoppers, stepping up its discounts as the festive season wore on, as consumers waited longer to get the best bargains. However, experts added that if prices had not been cut across the sector, Christmas sales - which account for nearly 23% of annual retail sales - would have been far worse. "So far, we are faring better than expected, but the results are still split," Ken Perkins, an analyst at research firm RetailMetrics LLC, told Associated Press. "Stores that have been struggling over the last couple of months appear to be continuing that trend. And for stores that have been doing well over the last several months, December was a good month." Overall, December sales are forecast to rise by 4.5% to $220bn - less than the 5.1% increase seen a year earlier...One discount retailer to fare well in December was Costco Wholesale, which continued a recent run of upbeat results with a better-than-expected 8% jump in same store sales. However, the losers were many and varied. Home furnishings store Pier 1 Imports saw its same store sales sink by a larger-than-forecast 8.8% as it battled fierce competition. Leading electronics chain Best Buy, meanwhile, missed its sales target of a 3-5% rise in sales, turning in a 2.5% increase over the Christmas period. Accessory vendor Claire's Stores also suffered as an expected last minute shopping rush never materialised, leaving its same store sales 5% higher, compared to a 6% rise last year. Jeweller Zale also felt little Christmas cheer with December sales down 0.7% on the same month last year. "This was not a good period for retailers or shoppers. We saw a dearth of exciting, new items," Kurt Barnard, president of industry forecaster Retail Consulting Group, said. However, one beneficiary of the desertion of the High Street is expected to be online stores. According to a survey by Goldman Sachs & Co, Harris Interactive and Neilsen/Net Ratings sales surged 25% over the holiday season to $23.2bn.

Upscale department store Nordstrom said same store sales were 9.3% higher than during the same period last year.Accessory vendor Claire's Stores also suffered as an expected last minute shopping rush never materialised, leaving its same store sales 5% higher, compared to a 6% rise last year.Overall, December sales are forecast to rise by 4.5% to $220bn - less than the 5.1% increase seen a year earlier.But Wal-Mart only saw its sales rise after it cut prices.Jeweller Zale also felt little Christmas cheer with December sales down 0.7% on the same month last year.And for stores that have been doing well over the last several months, December was a good month."The company saw a 3% rise in December sales, less than the 4.3% rise seen a year earlier.One discount retailer to fare well in December was Costco Wholesale, which continued a recent run of upbeat results with a better-than-expected 8% jump in same store sales.However, experts added that if prices had not been cut across the sector, Christmas sales - which account for nearly 23% of annual retail sales - would have been far worse.US retailers posted mixed results for December - with luxury retailers faring well while many others were forced to slash prices to lift sales.

business

Fiat mulls Ferrari market listing..Ferrari could be listed on the stock market as part of an overhaul of Fiat's carmaking operations, the Financial Times has reported...It said Fiat was set to restructure its business after reaching a $2bn (1.53bn euros; £1.05bn) settlement with GM about Fiat's ownership. Steps being considered include listing Ferrari and bringing Maserati and Alfa Romeo closer together, it said. Despite strong sales of Alfa Romeo, Fiat's car business is making a loss...Under the proposals - which the paper said could be announced within days - the iconic sportscar maker could be listed separately on the market. Fiat owns a 56% stake in Ferrari -best known for its dominant Formula One motor racing team - having first bought into the business in 1969. It considered floating Ferrari in 2002 but opted to sell a minority stake to Italian bank Mediobanca for 775m euros ($1bn). That sale valued Ferrari - which owns the Maserati brand - at 2.3bn euros. The price tag would change if Maserati was stripped out. The Financial Times said Fiat may transfer Maserati within its wholly- owned Alfa Romeo division in an effort to exploit commercial synergies. Such a move would help Alfa Romeo and Maserati to share marketing, distribution and research & development costs. Maserati and Ferrari sell about 10,000 cars between them and both companies broke even in 2003...Fiat, Italy's largest private sector employer, did not comment on the reported changes. Fiat recently negotiated an end to its alliance with General Motors. The US firm agreed to pay $2bn to exit an agreement under which it could have been liable to buy Fiat outright. Analysts said the reported restructuring was evidence of the greater flexibility which Fiat now had to develop the business.

It said Fiat was set to restructure its business after reaching a $2bn (1.53bn euros; £1.05bn) settlement with GM about Fiat's ownership.That sale valued Ferrari - which owns the Maserati brand - at 2.3bn euros.Steps being considered include listing Ferrari and bringing Maserati and Alfa Romeo closer together, it said.The Financial Times said Fiat may transfer Maserati within its wholly- owned Alfa Romeo division in an effort to exploit commercial synergies.Analysts said the reported restructuring was evidence of the greater flexibility which Fiat now had to develop the business.Maserati and Ferrari sell about 10,000 cars between them and both companies broke even in 2003.Fiat owns a 56% stake in Ferrari -best known for its dominant Formula One motor racing team - having first bought into the business in 1969.

business

Indy buys into India paper..Irish publishing group Independent News & Media is buying up a 26% stake in Indian newspaper company Jagran in a deal worth 25m euros ($34.1m)...Jagran publishes India's top-selling daily newspaper, the Hindi-language Dainik Jagran, which has been in circulation for 62 years. News of the deal came as the group announced that its results would meet market forecasts. The company reported strong revenue growth across all its major markets...Group advertising revenues were up over 10% year-on-year, the group said, with overall circulation revenues are expected to increase almost 10% year-on-year. This was helped by the positive impact of "compact" newspaper editions in Ireland and the UK, it said. "2004 has proven to be an important year for Independent News & Media," said chief executive Sir Anthony O'Reilly. "Our simple aim at Independent is to be the low cost producer in every region in which we operate. I am confident that we will show a meaningful increase in earnings for 2005."..Meanwhile, the group made no comment about the future of the Independent newspaper despite recent speculation that Sir Anthony had held talks with potential buyers over a stake in the daily publication. He has consistently denied suggestions that the Independent and the Independent on Sunday are up for sale. Buy it is understood that the recent success of the smaller edition of the Independent, which has pushed circulation up by 20% to 260,000, has prompted interest from industry rivals, with Daily Mail & General Trust tipped as the most likely suitor. The loss-making newspaper is not expected to reach break-even until 2006.

Irish publishing group Independent News & Media is buying up a 26% stake in Indian newspaper company Jagran in a deal worth 25m euros ($34.1m).Meanwhile, the group made no comment about the future of the Independent newspaper despite recent speculation that Sir Anthony had held talks with potential buyers over a stake in the daily publication."2004 has proven to be an important year for Independent News & Media," said chief executive Sir Anthony O'Reilly.Group advertising revenues were up over 10% year-on-year, the group said, with overall circulation revenues are expected to increase almost 10% year-on-year.He has consistently denied suggestions that the Independent and the Independent on Sunday are up for sale.Buy it is understood that the recent success of the smaller edition of the Independent, which has pushed circulation up by 20% to 260,000, has prompted interest from industry rivals, with Daily Mail & General Trust tipped as the most likely suitor.

business

EU-US seeking deal on air dispute..The EU and US have agreed to begin talks on ending subsidies given to aircraft makers, EU Trade Commissioner Peter Mandelson has announced...Both sides hope to reach a negotiated deal over state aid received by European aircraft maker Airbus and its US rival Boeing, Mr Mandelson said. Airbus and Boeing accuse each other of benefiting from illegal subsidies. Mr Mandelson said the EU and US hoped to avoid having to resolve the dispute at the World Trade Organisation (WTO)..."With this agreement the EU and US have confirmed their willingness to resolve the dispute which has arisen between them," Mr Mandelson said. "I hope our negotiations in the next three months will lead to an agreement ending subsidies to development and production of large civil aircraft." Last year, the US terminated an agreement with the EU, reached in 1992, which limits the subsidies countries can hand over to civil aircraft makers. The US filed a complaint against Brussels with the WTO over state aid to Airbus, prompting a retaliatory EU complaint over US support for Boeing. However, both sides agreed to suspend their requests for WTO arbitration at the beginning of December, to allow bilateral talks to continue. EADS and BAE Systems, the European defence and aerospace firms which own Airbus, welcomed Mr Mandelson's announcement. "It has always been preferable that any differences between the US and Europe on this matter be overcome through constructive discussion rather than through legal recourse," the companies said in a joint statement...Separately, the world's largest package delivery company, UPS, said it had placed an order for 10 Airbus A380 superjumbo freight-carrying jets, with an option to buy 10 more of the triple-decker aircraft. The US company said it needed to expand its air freight capacity following strong international growth, and would begin receiving deliveries of the A380s from 2009. However, UPS said it was cutting a previous order for smaller Airbus A300s from 90 planes to 53. So far, Airbus has delivered 40 A300s to UPS. Airbus overtook Boeing as the world's largest manufacturer of commercial airliners in 2003.

Both sides hope to reach a negotiated deal over state aid received by European aircraft maker Airbus and its US rival Boeing, Mr Mandelson said."With this agreement the EU and US have confirmed their willingness to resolve the dispute which has arisen between them," Mr Mandelson said.The US filed a complaint against Brussels with the WTO over state aid to Airbus, prompting a retaliatory EU complaint over US support for Boeing.The EU and US have agreed to begin talks on ending subsidies given to aircraft makers, EU Trade Commissioner Peter Mandelson has announced.Mr Mandelson said the EU and US hoped to avoid having to resolve the dispute at the World Trade Organisation (WTO).Separately, the world's largest package delivery company, UPS, said it had placed an order for 10 Airbus A380 superjumbo freight-carrying jets, with an option to buy 10 more of the triple-decker aircraft.However, UPS said it was cutting a previous order for smaller Airbus A300s from 90 planes to 53.

business

UK firm faces Venezuelan land row..Venezuelan authorities have said they will seize land owned by a British company as part of President Chavez's agrarian reform programme...Officials in Cojedes state said on Friday that farmland owned by a subsidiary of the Vestey Group would be taken and used to settle poor farmers. The government is cracking down on so-called latifundios, or large rural estates, which it says are lying idle. The Vestey Group said it had not been informed of any planned seizure...The firm, whose Agroflora subsidiary operates 13 farms in Venezuela, insisted that it had complied fully with Venezuelan law. Prosecutors in the south of the country have targeted Hato El Charcote, a beef cattle ranch owned by Agroflora. According to Reuters, they plan to seize 12,900 acres (5,200 hectares) from the 32,000 acre (13,000 hectare) farm...Officials claim that Agroflora does not possess valid documents proving its ownership of the land in question. They also allege that areas of the ranch are not being used for any form of active production. "The legal boundaries did not match up with the actual boundaries and there is surplus," state prosecutor Alexis Ortiz told Reuters. "As a consequence the government has taken action."..Controversial reforms passed in 2001 give the government the right to take control of private property if it is declared idle or ownership cannot be traced back to the 19th Century...Critics say the powers - which President Chavez argues are needed to help the country's poorest citizens and develop the Venezuelan economy - trample all over private property rights. The Vestey Group said it had owned the land since 1920 and would co-operate fully with the authorities. But a spokesman added: "Agroflora is absolutely confident that what it has submitted will demonstrate the legality of its title to the land." The company pointed out that the farm, which employs 300 workers, provides meat solely for the Venezuelan market...Last month, the government said it had identified more than 500 idle farms and had yet to consider the status of a further 40,000. The authorities said landowners whose titles were in order and whose farms were productive had "nothing to fear". Under President Chavez, the Venezuelan government has steadily expanded the state's involvement in the country's economy. It recently said all mining contracts involving foreign firms would be examined to ensure they provided sufficient economic benefits to the state.

The Vestey Group said it had owned the land since 1920 and would co-operate fully with the authorities.Officials in Cojedes state said on Friday that farmland owned by a subsidiary of the Vestey Group would be taken and used to settle poor farmers.Venezuelan authorities have said they will seize land owned by a British company as part of President Chavez's agrarian reform programme.Last month, the government said it had identified more than 500 idle farms and had yet to consider the status of a further 40,000.The firm, whose Agroflora subsidiary operates 13 farms in Venezuela, insisted that it had complied fully with Venezuelan law.Under President Chavez, the Venezuelan government has steadily expanded the state's involvement in the country's economy.The authorities said landowners whose titles were in order and whose farms were productive had "nothing to fear".The Vestey Group said it had not been informed of any planned seizure.

business

Asia shares defy post-quake gloom..Thailand has become the first of the 10 southern Asian nations battered by giant waves at the weekend to cut its economic forecast...Thailand's economy is now expected to grow by 5.7% in 2005, rather than 6% as forecast before tsunamis hit six tourist provinces. The full economic costs of the disaster remain unclear. In part, this is because of its scale, and because delivering aid and recovering the dead remain priorities. But Indonesian, Indian and Hong Kong stock markets reached record highs on Wednesday, suggesting that investors do not fear a major economic impact...The highs showed the gap in outlook between investors in large firms and individuals who have lost their livelihoods...Investors seemed to feel that some of the worst-affected areas - such as Aceh in Indonesia - were so under-developed that the tragedy would little impact on Asia's listed companies, according to analysts. "Obviously with a lot of loss of life, a lot of time is needed to clean up the mess, bury the people and find the missing. But it's not necessarily a really big thing in the economic sense," said ABN Amro chief Asian strategist Eddie Wong. India's Bombay Stock Exchange inched slightly above its previous record close on Wednesday. Expectations of strong corporate earnings in 2005 drove the Indonesian stock exchange in Jakarta to a record high on Wednesday. In Hong Kong, the Hang Seng index may be benefiting in part from the potential for its listed property companies to gain from rebuilding contracts in the tsunami-affected regions of South East Asia. In Sri Lanka, some economists have said that as much as 1% of annual growth may be lost. Sri Lanka's stock market has fallen about 5% since the weekend, but it is still 40% higher than at the start of 2004...Thailand may lose 30bn baht (£398m; $768m) in earnings from tourism over the next three months, according to tourism minister Sontaya Kunplome...In the affected provinces, he expects the loss of tourism revenue to be offset by government reconstruction spending. Thailand intends to spend a similar sum - around 30bn baht - on the rebuilding work. "It will take until the fourth quarter of next year before tourist visitors in Phuket and five other provinces return to their normal level," said Naris Chaiyasoot, director general at the ministry's fiscal policy office. In the Maldives the cost of reconstruction could wipe out economic growth, according to a government spokesman. "Our nation is in peril here," said Ahmed Shaheed, the chief government spokesman. He estimated the economic cost of the disaster at hundreds of millions of dollars. The Maldives has gross domestic product of $660m. "It won't be surprising if the cost exceeds our GDP," he said. "In the last few years, we made great progress in our standard of living - the United Nations recognised this. Now we see this can disappear in a few days, a few minutes." Shaheed noted that investment in a single tourist resort - the economic mainstay - could run to $40m. Between 10 and 12 of the 80-odd resorts have been severely damaged, and a similar number have suffered significant damage. However, many experts, including the World Bank, have pointed out that it is still difficult to assess the magnitude of the disaster and its likely economic impact.

In the Maldives the cost of reconstruction could wipe out economic growth, according to a government spokesman.But Indonesian, Indian and Hong Kong stock markets reached record highs on Wednesday, suggesting that investors do not fear a major economic impact.The full economic costs of the disaster remain unclear.He estimated the economic cost of the disaster at hundreds of millions of dollars.Thailand has become the first of the 10 southern Asian nations battered by giant waves at the weekend to cut its economic forecast.Shaheed noted that investment in a single tourist resort - the economic mainstay - could run to $40m."Our nation is in peril here," said Ahmed Shaheed, the chief government spokesman.But it's not necessarily a really big thing in the economic sense," said ABN Amro chief Asian strategist Eddie Wong.Expectations of strong corporate earnings in 2005 drove the Indonesian stock exchange in Jakarta to a record high on Wednesday.Thailand may lose 30bn baht (£398m; $768m) in earnings from tourism over the next three months, according to tourism minister Sontaya Kunplome.However, many experts, including the World Bank, have pointed out that it is still difficult to assess the magnitude of the disaster and its likely economic impact.In Sri Lanka, some economists have said that as much as 1% of annual growth may be lost.

business

EMI shares hit by profit warning..Shares in music giant EMI have sunk by more than 16% after the firm issued a profit warning following disappointing sales and delays to two album releases...EMI said music sales for the year to March will fall 8-9% from the year before, with profits set to be 15% lower than analysts had expected. It blamed poor sales since Christmas and delays to the releases of new albums by Coldplay and Gorillaz. By 1200 GMT on Monday, EMI shares were down 16.2% at 235.75 pence...EMI said two major albums scheduled for release before the end of the financial year in March - one by Coldplay and one by Gorillaz - have now had their release dates put back..."EMI Music's sales, particularly re-orders, in January have also been lower than anticipated and this is expected to continue through February and March," the company added. "Therefore, for the full year, at constant currency, EMI Music's sales are now expected to be 8% to 9% lower than the prior year." The company said it expected profits to be about £138m ($259.8m). Alain Levy, chairman and chief executive of EMI Music, described the performance as "disappointing", but added that he remained optimistic over future trends in the industry. "The physical music market is showing signs of stabilisation in many parts of the world and digital music, in all its forms, continues to develop at a rapid pace," he said...Commenting on the delay to the release of the Coldplay and Gorillaz albums, Mr Levy said that "creating and marketing music is not an exact science and cannot always coincide with our reporting periods". "While this rescheduling and recent softness is disappointing, it does not change my views of the improving health of the global recorded music industry," he added. Paul Richards, an analyst at Numis Securities, said the market would be focusing on the slump in music sales rather than the timing of the two albums. "It's unusual to see this much of a downgrade just because of phasing," he said.

EMI said music sales for the year to March will fall 8-9% from the year before, with profits set to be 15% lower than analysts had expected.Shares in music giant EMI have sunk by more than 16% after the firm issued a profit warning following disappointing sales and delays to two album releases.EMI said two major albums scheduled for release before the end of the financial year in March - one by Coldplay and one by Gorillaz - have now had their release dates put back."Therefore, for the full year, at constant currency, EMI Music's sales are now expected to be 8% to 9% lower than the prior year."The company said it expected profits to be about £138m ($259.8m).Commenting on the delay to the release of the Coldplay and Gorillaz albums, Mr Levy said that "creating and marketing music is not an exact science and cannot always coincide with our reporting periods".

business

Enron bosses in $168m payout..Eighteen former Enron directors have agreed a $168m (£89m) settlement deal in a shareholder lawsuit over the collapse of the energy firm...Leading plaintiff, the University of California, announced the news, adding that 10 of the former directors will pay $13m from their own pockets. The settlement will be put to the courts for approval next week. Enron went bankrupt in 2001 after it emerged it had hidden hundreds of millions of dollars in debt...Before its collapse, the firm was the seventh biggest public US company by revenue. Its demise sent shockwaves through financial markets and dented investor confidence in corporate America..."The settlement is very significant in holding these outside directors at least partially personally responsible," William Lerach, the lawyer leading the class action suit against Enron, said. "Hopefully, this will help send a message to corporate boardrooms of the importance of directors performing their legal duties," he added. Under the terms of the $168m settlement - $155m of which will be covered by insurance - none of the 18 former directors will admit any wrongdoing. The deal is the fourth major settlement negotiated by lawyers who filed a class action on behalf of Enron's shareholders almost three years ago. So far, including the latest deal, just under $500m (£378.8m) has been retrieved for investors...However, the latest deal does not include former Enron chief executives Ken Lay and Jeff Skilling. Both men are facing criminal charges for their alleged misconduct in the run up to the firm's collapse. Neither does it cover Andrew Fastow, who has pleaded guilty to taking part in an illegal conspiracy while he was chief financial officer at the group. Enron's shareholders are still seeking damages from a long list of other big name defendants including the financial institutions JP Morgan Chase, Citigroup, Merrill Lynch and Credit Suisse First Boston. The University of California said the trial in the case is scheduled to begin in October 2006. It joined the lawsuit in December 2001alleging "massive insider trading" and fraud, claiming it had lost $145m on its investments in the company.

Eighteen former Enron directors have agreed a $168m (£89m) settlement deal in a shareholder lawsuit over the collapse of the energy firm."The settlement is very significant in holding these outside directors at least partially personally responsible," William Lerach, the lawyer leading the class action suit against Enron, said.Under the terms of the $168m settlement - $155m of which will be covered by insurance - none of the 18 former directors will admit any wrongdoing.However, the latest deal does not include former Enron chief executives Ken Lay and Jeff Skilling.Leading plaintiff, the University of California, announced the news, adding that 10 of the former directors will pay $13m from their own pockets.The deal is the fourth major settlement negotiated by lawyers who filed a class action on behalf of Enron's shareholders almost three years ago.So far, including the latest deal, just under $500m (£378.8m) has been retrieved for investors.

business

US regulator to rule on pain drug..US food and drug regulators will decide on Friday whether to recommend the sale of painkillers that have been linked to a high risk of heart attack and stroke...The Food and Drug Administration (FDA) advisory panel will give its verdict after hearing evidence for three days. The painkillers - called COX-2 inhibitors - are sold under brand names such as Celebrex and Vioxx. Vioxx was withdrawn from shops last year but Merck said it would consider selling it if it gets FDA approval. The FDA has been asked to decide if the benefits to patients justify the increased risks...Putting Vioxx back on the shelves is likely to boost profits at Merck and make easier any legal battles with people who claim to have been injured by the drug, analysts said...Merck voluntarily stopped sales of Vioxx on 30 September, a move which caused the firm's fourth-quarter earnings to slide to $1.1bn (£581m), from $1.4bn a year earlier. Merck's shares tumbled more than 10% on the news and the company has had to set aside millions of dollars to cover the cost of Vioxx-related litigation. Alarm bells were rung by a research note called Approve which showed that the risk of heart attack and stroke doubled in patients who had been taking the drug for at least 18 months. The Cox-2 inhibitors were developed by drug companies, including Merck and Pfizer, because they cause users fewer stomach problems than other painkillers...Pfizer is still selling its Celebrex and Bextra products, though investigations have suggested that they may also be harmful to the heart. Merck's announcement of a possible reintroduction of Vioxx caught analysts by surprise. Merck's head of research Peter Kim said that it withdrew Vioxx "based on the information that was available to us at the time, knowing there were alternative therapies". He went on to say that things have since changed in the light of new reports. "Given this new information, its is not clear that the cardiovascular risk observed in Approve makes Vioxx unique in the class of similar drugs marketed in the US," Mr Kim explained...On Thursday, David Graham from the FDA's Office of Drug Safety told the advisory panel that "there really doesn't appear to be a need for Cox-2" inhibitors. According to calculations presented to the US Senate by Dr Graham in November, Vioxx may be linked to as many as to 56,000 American deaths. Facing stem criticism for its handling of the Vioxx case, the FDA said on Tuesday that it will create an independent body to oversee the safety of drugs already in the market place. European regulators, meanwhile, ruled on Thursday that patients who have had heart disease or a stroke should not take Cox-2 inhibitors. The European Medicines Agency also said doctors should be "cautious" about giving the drugs to patients who have risk factors for heart disease.

The European Medicines Agency also said doctors should be "cautious" about giving the drugs to patients who have risk factors for heart disease."Given this new information, its is not clear that the cardiovascular risk observed in Approve makes Vioxx unique in the class of similar drugs marketed in the US," Mr Kim explained.US food and drug regulators will decide on Friday whether to recommend the sale of painkillers that have been linked to a high risk of heart attack and stroke.Putting Vioxx back on the shelves is likely to boost profits at Merck and make easier any legal battles with people who claim to have been injured by the drug, analysts said.Facing stem criticism for its handling of the Vioxx case, the FDA said on Tuesday that it will create an independent body to oversee the safety of drugs already in the market place.Vioxx was withdrawn from shops last year but Merck said it would consider selling it if it gets FDA approval.Alarm bells were rung by a research note called Approve which showed that the risk of heart attack and stroke doubled in patients who had been taking the drug for at least 18 months.The painkillers - called COX-2 inhibitors - are sold under brand names such as Celebrex and Vioxx.

business

Russia gets investment blessing..Soaring oil sales and a budget surplus mean Russian debt is no longer a risky investment, one of the world's leading credit rating agencies says...Standard & Poor's has classed Russian bonds as "investment grade", up from their former "speculative" rating. Russia's reputation among investors has been hurt in recent months by the heavy tax bills and asset seizures imposed on companies such as oil giant Yukos. S&P said the solidity of government finances outweighed the risk. Russia is now a net creditor rather than a debtor. Gold and foreign currency reserves of $119bn beat its foreign public debt of some $113bn...The other two major ratings agencies - Fitch and Moody's have long since upped their rating of Russia's sovereign debt. S&P had held back through fear that the government was dragging its feet on economic and legal reforms. Now, though, it has finally followed suit. But the agency made it clear that the improved rating did not mean that the risks were a thing of the past. Instead, with Russian government coffers brimming with tax revenues from energy sales, S&P said the government's own debt is looking a good bet. "These improvements are so significant that they now outweight the serious and growing political risk that continues to be a key ratings constraint on Russia," wrote S&P credit analyst Helena Hessel...The Yukos saga is the most high-profile of the political risks to which Ms Hessel alludes. The company's founder and ex-chief executive, Mikhail Khodorkovsky, is in jail on trial for tax evasion and fraud. Many believe the real motive for his prosecution is that he threatened to use his wealth to set up a political alternative to President Vladimir Putin. His company, meanwhile, is widely believed to have fallen victim to the Kremlin's wish to get Russian energy resources as far as possible back under state control.

"These improvements are so significant that they now outweight the serious and growing political risk that continues to be a key ratings constraint on Russia," wrote S&P credit analyst Helena Hessel.Instead, with Russian government coffers brimming with tax revenues from energy sales, S&P said the government's own debt is looking a good bet.Soaring oil sales and a budget surplus mean Russian debt is no longer a risky investment, one of the world's leading credit rating agencies says.The other two major ratings agencies - Fitch and Moody's have long since upped their rating of Russia's sovereign debt.But the agency made it clear that the improved rating did not mean that the risks were a thing of the past.S&P said the solidity of government finances outweighed the risk.Standard & Poor's has classed Russian bonds as "investment grade", up from their former "speculative" rating.

business

Lufthansa flies back to profit..German airline Lufthansa has returned to profit in 2004 after posting huge losses in 2003...In a preliminary report, the airline announced net profits of 400m euros ($527.61m; £274.73m), compared with a loss of 984m euros in 2003. Operating profits were at 380m euros, ten times more than in 2003. Lufthansa was hit in 2003 by tough competition and a dip in demand following the Iraq war and the killer SARS virus. It was also hit by troubles at its US catering business. Last year, Lufthansa showed signs of recovery even as some European and US airlines were teetering on the brink of bankruptcy. The board of Lufthansa has recommended paying a 2004 dividend of 0.30 euros per share. In 2003, shareholders did not get a dividend. The company said that it will give all the details of its 2004 results on 23 March.

German airline Lufthansa has returned to profit in 2004 after posting huge losses in 2003.The board of Lufthansa has recommended paying a 2004 dividend of 0.30 euros per share.In a preliminary report, the airline announced net profits of 400m euros ($527.61m; £274.73m), compared with a loss of 984m euros in 2003.Last year, Lufthansa showed signs of recovery even as some European and US airlines were teetering on the brink of bankruptcy.

business

Rich grab half Colombia poor fund..Half of the money put aside by the Colombian government to help the country's poor is benefiting people who do not need it, a study has found...A total of 24.2 trillion pesos ($10.2bn; £5.5bn) is earmarked for subsidies for the poor, the government department for planning said. But it also found 12.1 trillion pesos was going to the richest part of the population, rather than to those in need. Sound distribution of the cash could cut poverty levels to 36% from 53%, the government believes. "Resources are more than enough to reduce poverty and there is no need for more tax reforms but a better distribution," deputy planning director Jose Leibovich said...Colombia has a population of about 44 million and half lives below poverty line. However, some large properties are paying less in tax as they are situated inside poor areas, which benefit from cheaper utilities such as electricity and water, government research found. Government expenditure in areas such as pensions, public services, education, property and health should be revised, Mr Leibovich said. He added that the government is now examining the report, but warned there would be no easy solution to the problem. With a good distribution of such subsidies and economic growth of just 2%, by 2019 poverty could fall as low as 15.3%, he said.

A total of 24.2 trillion pesos ($10.2bn; £5.5bn) is earmarked for subsidies for the poor, the government department for planning said.Sound distribution of the cash could cut poverty levels to 36% from 53%, the government believes.Half of the money put aside by the Colombian government to help the country's poor is benefiting people who do not need it, a study has found."Resources are more than enough to reduce poverty and there is no need for more tax reforms but a better distribution," deputy planning director Jose Leibovich said.

business

SA unveils 'more for all' budget..The South African government has put tax cuts and increased social spending at the centre of its latest budget...Aiming to both stir economic growth and aid the country's poor, finance minister Trevor Manuel said the focus of the 2005 budget was "more for all". The tax cuts target firms and individuals, cutting corporate tax from 30% to 29% and offering income tax cuts worth 6.8bn rand ($1.2bn; £910m). Spending on health and education will rise by 9.4% and 8.1% respectively. Spending on housing and sanitation will rise by 12%. All the spending increases will run over the next three years...Unveiling the 418bn-rand budget to parliament, Mr Manuel said the South African economy had grown by an average of 3.2% over the past four years, slightly below the African average of 4%...He predicted that the South African economy would grow by 4.3% in 2005 and 4.2% in 2006. Mr Manuel added that inflation fell to 4.3% in 2004 and is expected to remain at between 3% and 6% from now until at least 2008, helped by interest rates which are at their lowest level in 24 years. Given that both corporate and personal taxes are being cut - under the new measures, those earning less than 35,000 rand a year will be exempt from income tax - the extra 22.3bn rand in social spending will be partly met by higher fuel, tobacco and alcohol taxes..."In this budget, the focus is on more for all, not more for some, and not a hell of a lot more for a few, but spread across all of South Africa," said Mr Manuel. He said that the economic situation was a "marked improvement" on the position at the end of apartheid, but acknowledged that more needed to be done to improve the lives and livelihoods of the disadvantaged. About 280,000 jobs a year have been created in South Africa since 2000 but unemployment remains high, currently close to 30%. Economist Colen Garrow said the budget looked as if it would stimulate economic growth. "It's pleasant to see the cut in company taxes, it's a good incentive for business," he said.

The South African government has put tax cuts and increased social spending at the centre of its latest budget.Unveiling the 418bn-rand budget to parliament, Mr Manuel said the South African economy had grown by an average of 3.2% over the past four years, slightly below the African average of 4%."In this budget, the focus is on more for all, not more for some, and not a hell of a lot more for a few, but spread across all of South Africa," said Mr Manuel.Aiming to both stir economic growth and aid the country's poor, finance minister Trevor Manuel said the focus of the 2005 budget was "more for all".Given that both corporate and personal taxes are being cut - under the new measures, those earning less than 35,000 rand a year will be exempt from income tax - the extra 22.3bn rand in social spending will be partly met by higher fuel, tobacco and alcohol taxes.Economist Colen Garrow said the budget looked as if it would stimulate economic growth.

business

IMF agrees fresh Turkey funding..Turkey has agreed a draft proposal with the International Monetary Fund to borrow $10bn (£5.19bn), extending its ongoing financial support until 2007...Turkey's current $18.6bn loan agreement with the IMF expires in February and the new deal would see it receive added support between 2005 and 2007. In return for the funding, Turkey would be expected to keep inflation under control and introduce market reforms. Turkey's economy has steadily recovered from a severe crisis in 2001...Economic growth has average 6-7% in the past three years, ahead of IMF forecasts, while inflation fell below 10% this year for the first time in 30 years. However, Turkey has a huge debt burden - already owing $23bn to the IMF - while its current account deficit has swelled to $10.7bn this year...The Turkish economics minister, Ali Babacan, said the two sides had reached general agreement on a new three year funding program. Rodrigo de Rato, the IMF's managing director, said the loan agreement would help to improve Turkish economic prospects by cutting its debt and stimulating growth. "I believe the new programme, if implemented successfully, will help Turkey create the conditions for sustained growth and employment creation, reduce inflation toward European level and enhance the economy's resilience," he said. The agreement must still be ratified by IMF directors at a meeting expected to take place next month...The agreement would also enable Turkey to defer payments on previous loans worth $3.7m until 2006...As part of the draft agreement, Turkey has signed a "letter of intent" stating its determination to push through far-reaching reforms to its tax and benefits system and its banking sector. Such reforms are considered vital for Turkey if it is to fulfil its ambition of joining the European Union. The EU will decide on 17 December whether to begin entry talks with Turkey. The US, the largest of the IMF's 184 members, is a strong supporter of continued financial support for Turkey.

However, Turkey has a huge debt burden - already owing $23bn to the IMF - while its current account deficit has swelled to $10.7bn this year.Turkey's current $18.6bn loan agreement with the IMF expires in February and the new deal would see it receive added support between 2005 and 2007.The agreement would also enable Turkey to defer payments on previous loans worth $3.7m until 2006.Turkey has agreed a draft proposal with the International Monetary Fund to borrow $10bn (£5.19bn), extending its ongoing financial support until 2007.As part of the draft agreement, Turkey has signed a "letter of intent" stating its determination to push through far-reaching reforms to its tax and benefits system and its banking sector.In return for the funding, Turkey would be expected to keep inflation under control and introduce market reforms.

business

Ukraine revisits state sell-offs..Ukraine is preparing what could be a wholesale review of the privatisation of thousands of businesses by the previous administration...The new President, Viktor Yushchenko, has said a "limited" list of companies is being drawn up. But on Wednesday Prime Minister Yulia Tymoshenko said the government was planning to renationalise 3,000 firms. The government says many privatised firms were sold to allies of the last administration at rock-bottom prices. More than 90,000 businesses in all, from massive corporations to tiny shopfronts, have been sold off since 1992, as the command economy built up when Ukraine was part of the Soviet Union was dismantled...Ms Tymoshenko said prosecutors had drawn up a list of more than 3,000 businesses which were to be reviewed. "We will return to the state that which was illegally put into private hands."..A day earlier, Mr Yushchenko - keen to reassure potential investors - had said only 30 to 40 top firms would be targeted. The list "will be limited and final, and will not be extended after its completion", he said. An open-ended list could further damage outside investors' fragile faith in Ukraine, said Stuart Hensel of the Economist Intelligence Unit. But the government seemed keen not to make the review look like the kind of wholesale renationalisation which many fear in Russia, Mr Hensel said. As a result, it was planning to resell rather than keep firms in state hands. "They're aware of the need not to scare investors, and to be careful of internal divides within Ukraine," he said. "They don't want to be seen to be transferring assets from one set of oligarchs to a new set." Foreign investment in Ukraine, at about $40 a head in 2004, is one of the lowest among ex-Soviet states...Mr Yushchenko became president after two elections in December, the first of which was annulled amid allegations of voting irregularities and massive street protests...His opponent, Viktor Yanukovich, still has huge support in the country's eastern industrial heartland. Mr Yushchenko's administration has accused its predecessor, led by ex-President Leonid Kuchma, of corruption. The privatisation review's number one target is a steel mill sold to a consortium which included Viktor Pinchuk, Mr Kuchma's son-in-law, for $800m (£424m) despite higher bids from several foreign groups. The mill, Krivorizhstal, is one of the world's most profitable. "We say Krivorizhstal was stolen, and at any cost we will return it to the state," Mr Yushchenko told an investors' conference in Kiev...One of the jilted bidders, Netherlands-based group LNM, said it welcomed the possibility that the mill might be back on the market..."If the original privatisation is annulled and a new tender issued, then we would look at it with great interest," a spokesman told BBC News. A resale of Krivorizhstal could potentially triple the price, according to the Economist Intelligence Unit's Mr Hensel. But he warned that the government could decide to take the easy route of revaluing the company and charging the existing owners the revised price rather than undertaking a fresh sale. "That way, Mr Yushchenko can go to the public and say he has forced the oligarchs to play by the rules," he told BBC News.

The new President, Viktor Yushchenko, has said a "limited" list of companies is being drawn up."We say Krivorizhstal was stolen, and at any cost we will return it to the state," Mr Yushchenko told an investors' conference in Kiev.An open-ended list could further damage outside investors' fragile faith in Ukraine, said Stuart Hensel of the Economist Intelligence Unit.But the government seemed keen not to make the review look like the kind of wholesale renationalisation which many fear in Russia, Mr Hensel said.A day earlier, Mr Yushchenko - keen to reassure potential investors - had said only 30 to 40 top firms would be targeted.But on Wednesday Prime Minister Yulia Tymoshenko said the government was planning to renationalise 3,000 firms."That way, Mr Yushchenko can go to the public and say he has forced the oligarchs to play by the rules," he told BBC News.Ms Tymoshenko said prosecutors had drawn up a list of more than 3,000 businesses which were to be reviewed.The list "will be limited and final, and will not be extended after its completion", he said.The privatisation review's number one target is a steel mill sold to a consortium which included Viktor Pinchuk, Mr Kuchma's son-in-law, for $800m (£424m) despite higher bids from several foreign groups.A resale of Krivorizhstal could potentially triple the price, according to the Economist Intelligence Unit's Mr Hensel.

business

GSK aims to stop Aids profiteers..One of the world's largest manufacturers of HIV/Aids drugs has launched an initiative to combat the smuggling of cheaper pills - supplied to poorer African countries - back into Europe for resale at far higher price...The company, GlaxoSmithKline, is to alter the packaging and change the colour of the pills, currently provided to developing nations under a humanitarian agreement. It is estimated that drugs companies are losing hundreds of millions of dollars each year as a result of the diversion of their products in this way. This is a very sensitive area for the big drugs companies. They want to maintain their profits, but have been put under tremendous pressure to provide cheap anti-Aids drugs to the world's poorest nations...The result is that drugs supplied to Africa are now more than thirty times cheaper than those sold in Europe; bringing these medicines within the reach of millions of HIV-positive Africans through their government's health care systems...But the wide difference in price also means that there are big gains to be made from illegally diverting these cheaper drugs back into wealthier countries and re-selling them at a higher price. GlaxoSmithKline believes that by coating the pills destined for Africa in a red dye and adding new identification codes both onto the pills and on the packaging, then this trade can be substantially reduced. The company says that it will then be possible to identify specific distributors in Africa who have re-sold humanitarian drugs for profit, as well as those suppliers in Europe that have also been involved in the trade. Glaxo says distribution of the new-look drugs has already begun and that their chemical content is identical to those currently being sold in Europe.

The company says that it will then be possible to identify specific distributors in Africa who have re-sold humanitarian drugs for profit, as well as those suppliers in Europe that have also been involved in the trade.One of the world's largest manufacturers of HIV/Aids drugs has launched an initiative to combat the smuggling of cheaper pills - supplied to poorer African countries - back into Europe for resale at far higher price.The result is that drugs supplied to Africa are now more than thirty times cheaper than those sold in Europe; bringing these medicines within the reach of millions of HIV-positive Africans through their government's health care systems.Glaxo says distribution of the new-look drugs has already begun and that their chemical content is identical to those currently being sold in Europe.

business

HealthSouth ex-boss goes on trial..The former head of US medical services firm HealthSouth overstated earnings and assets to boost the company's share price, it was claimed in court...Richard Scrushy, 52, is accused of "directing" a $2.7bn (£1.4bn) accounting fraud at the company he co-founded in Alabama in 1984. Prosecutors said he was motivated by wealth - spending about $200m between 1996 and 2002 while earning much less. Defence lawyers said Mr Scrushy had been deceived by other executives. Several former HealthSouth employees have already pleaded guilty to fraud and are expected to give evidence against Mr Scrushy..."We will present evidence that Richard Scrushy knew about the conspiracy, that he participated in the conspiracy and that he profited," prosecutor Alice Martin told the court. Mr Scrushy is the first chief executive to be tried for breaching the Sarbanes Oxley Act - a law introduced in the wake of the Enron and WorldCom frauds which obliges corporate bosses to vouch for the accuracy of their companies' results. Among the charges he faces are conspiracy to commit fraud, filing false statements and money laundering. After federal agents raided HealthSouth's offices in March 2003, the company said none of its past financial statements could be relied on. The firm has since reorganised its board and management team and currently operates about 1,400 health clinics.

Several former HealthSouth employees have already pleaded guilty to fraud and are expected to give evidence against Mr Scrushy.Defence lawyers said Mr Scrushy had been deceived by other executives.Richard Scrushy, 52, is accused of "directing" a $2.7bn (£1.4bn) accounting fraud at the company he co-founded in Alabama in 1984."We will present evidence that Richard Scrushy knew about the conspiracy, that he participated in the conspiracy and that he profited," prosecutor Alice Martin told the court.

business

Weak dollar hits Reuters..Revenues at media group Reuters slipped 11% during 2004, mainly due to the weakness of the dollar, the group said...The company said it was optimistic about growth even as revenues slipped 11% from £3.24bn ($6.13bn) in 2003 to £2.89bn in 2004. Reuters beat profit forecasts, posting a 52% rise in profits for the year to £198m from the £130m seen a year earlier. Reuters also beat its savings target for 2004, delivering £234m of cuts. Under its three-year Fast Forward turnaround plan it had aimed to save £220m during the 12 months to 31 December...Reuters also managed to slow a decline in underlying revenues to 5.4% from 10.2% in 2003 and cut its debt back to £160m from £610m a year earlier. The news and financial data seller said the year had begun well, adding it expected "further gradual improvement" in the second quarter of the year after good January sales. It added it was planning to deliver a further £105m of savings over the coming year - but said it expects to be hit with an £80m restructuring charge to pay for the cost of moving from Fleet Street to new headquarters in London at Canary Wharf. "Improving customer relationships, more competitive products and continued strong cost discipline position us well for 2005," chief executive Tom Glocer said, adding the company was beginning "to look beyond recovery to growth".

Reuters beat profit forecasts, posting a 52% rise in profits for the year to £198m from the £130m seen a year earlier.Reuters also managed to slow a decline in underlying revenues to 5.4% from 10.2% in 2003 and cut its debt back to £160m from £610m a year earlier.The news and financial data seller said the year had begun well, adding it expected "further gradual improvement" in the second quarter of the year after good January sales.It added it was planning to deliver a further £105m of savings over the coming year - but said it expects to be hit with an £80m restructuring charge to pay for the cost of moving from Fleet Street to new headquarters in London at Canary Wharf.

business

Iranian MPs threaten mobile deal..Turkey's biggest private mobile firm could bail out of a $3bn ($1.6bn) deal to build a network in Iran after MPs there slashed its stake in the project...Conservatives in parliament say Turkcell's stake in Irancell, the new network, should be cut from 70% to 49%. They have already given themselves a veto over all foreign investment deals, following allegations about Turkish firms' involvement in Israel. Turkcell now says it may give up on the deal altogether...Iran currently has only one heavily congested mobile network, with long waiting lists for new subscribers. Turkcell signed a contract for the new network in September. The new operator planned to offer subscriptions for about $180, well below the existing firm's $500 price tag. But a parliamentary commission has now ruled that Turkcell's 70% controlling stake is too high. They say that Turkcell is a security risk because of alleged business ties with Israel. Parliament as a whole - dominated by religious conservatives - will vote on the ruling on Tuesday...Turkcell said the ruling would "make more difficult... Turkcell's financial consolidation of Irancell" because its stake would be reduced to less than 50%. "If management control and financial consolidation of Irancell cannot be achieved... the realisation of the project will become risky," it warned in a statement. The firm has refused to comment on whether it has business dealings in Israel, although like almost all GSM operators worldwide it has an interconnection deal with Israeli networks so that its customers can use their phones there. The two countries strengthened ties in both defence and economic issues in 2004. Israeli industry minister Ehud Olmert was reported in June to have attended a meeting between Ruhi Dogusoy, Turkcell's chief operating officer, and executives from Israeli telecoms firms. Telecoms is one of two areas specifically targeted by the new veto law on foreign investments, passed earlier in September. The other is airports, a source of controversy after the army closed Tehran's new Imam Khomeini International Airport on its opening day in May 2004. Again, the allegation was that the part-Turkish TAV consortium which built and ran it had links with Israel.

Conservatives in parliament say Turkcell's stake in Irancell, the new network, should be cut from 70% to 49%.Turkcell signed a contract for the new network in September.Iran currently has only one heavily congested mobile network, with long waiting lists for new subscribers.They say that Turkcell is a security risk because of alleged business ties with Israel.Turkcell said the ruling would "make more difficult... Turkcell's financial consolidation of Irancell" because its stake would be reduced to less than 50%.The firm has refused to comment on whether it has business dealings in Israel, although like almost all GSM operators worldwide it has an interconnection deal with Israeli networks so that its customers can use their phones there.Turkcell now says it may give up on the deal altogether.Telecoms is one of two areas specifically targeted by the new veto law on foreign investments, passed earlier in September.

business

Gazprom 'in $36m back-tax claim'..The nuclear unit of Russian energy giant Gazprom is reportedly facing a 1bn rouble ($35.7m; £19.1m) back-tax claim for the 2001-2003 period...Vedomosti newspaper reported that Russian authorities made the demand at the end of last year. The paper added that most of the taxes claimed are linked to the company's export activity. Gazprom, the biggest gas company in the world, took over nuclear fuel giant Atomstroieksport in October 2004. The main project of Atomstroieksport is the building of a nuclear plant in Iran, which has been a source of tension between Russia and the US...Gazprom is one of the key players in the complex Russian energy market, where the government of Vladimir Putin has made moves to regain state influence over the sector. Gazprom is set to merge with state oil firm Rosneft, the company that eventually acquired Yuganskneftegas, the main unit of embattled oil giant Yukos. Claims for back-taxes was a tool used against Yukos, and led to the enforced sale Yuganskneftegas. Some analysts fear the Kremlin will continue to use these sort of moves to boost the efforts of the state to regain control over strategically important sectors such as oil.

Gazprom is set to merge with state oil firm Rosneft, the company that eventually acquired Yuganskneftegas, the main unit of embattled oil giant Yukos.Gazprom is one of the key players in the complex Russian energy market, where the government of Vladimir Putin has made moves to regain state influence over the sector.The nuclear unit of Russian energy giant Gazprom is reportedly facing a 1bn rouble ($35.7m; £19.1m) back-tax claim for the 2001-2003 period.Gazprom, the biggest gas company in the world, took over nuclear fuel giant Atomstroieksport in October 2004.

business

German growth goes into reverse..Germany's economy shrank 0.2% in the last three months of 2004, upsetting hopes of a sustained recovery...The figures confounded hopes of a 0.2% expansion in the fourth quarter in Europe's biggest economy. The Federal Statistics Office said growth for the whole of 2004 was 1.6%, after a year of contraction in 2003, down from an earlier estimate of 1.7%. It said growth in the third quarter had been zero, putting the economy at a standstill from July onward. Germany has been reliant on exports to get its economy back on track, as unemployment of more than five million and impending cuts to welfare mean German consumers have kept their money to themselves. Major companies including Volkswagen, DaimlerChrysler and Siemens have spent much of 2004 in tough talks with unions about trimming jobs and costs. According to the statistics office, Destatis, rising exports were outweighed in the fourth quarter by the continuing weakness of domestic demand...But the relentless rise in the value of the euro last year has also hit the competitiveness of German products overseas. The effect has been to depress prospects for the 12-nation eurozone as a whole, as well as Germany. Eurozone interest rates are at 2%, but senior officials at the rate-setting European Central Bank are beginning to talk about the threat of inflation, prompting fears that interest rates may rise. The ECB's mandate is to fight rising prices by boosting interest rates - and that could further threaten Germany's hopes of recovery.

The figures confounded hopes of a 0.2% expansion in the fourth quarter in Europe's biggest economy.Germany's economy shrank 0.2% in the last three months of 2004, upsetting hopes of a sustained recovery.The ECB's mandate is to fight rising prices by boosting interest rates - and that could further threaten Germany's hopes of recovery.It said growth in the third quarter had been zero, putting the economy at a standstill from July onward.Germany has been reliant on exports to get its economy back on track, as unemployment of more than five million and impending cuts to welfare mean German consumers have kept their money to themselves.

business

Ebbers 'aware' of WorldCom fraud..Former WorldCom boss Bernie Ebbers was directly involved in the $11bn financial fraud at the firm, his closest associate has told a US court...Giving evidence in the criminal trial of Mr Ebbers, ex-finance chief Scott Sullivan implicated his colleague in the accounting scandal at the firm. Mr Sullivan, WorldCom's former number two, is the government's chief witness in its case against Mr Ebbers. Mr Ebbers has denied multiple charges of conspiracy and fraud...Senior WorldCom executives are accused of orchestrating a huge fraud at the former telecoms company in which they exaggerated revenues and hid the cost of expenses. The firm was forced into bankruptcy, the largest in US history. Mr Sullivan, 42, pleaded guilty to fraud last year and agreed to assist the government with its case against Mr Ebbers...Prosecutors have alleged that Mr Ebbers, 63, directed Mr Sullivan to hide the true state of the company's finances by providing false information to the firm's accountants. Mr Ebbers has denied all the charges, saying he was unaware of the fraud. His lawyers claim that their client was unfamiliar with detailed accounting practices and left that side of the business to Mr Sullivan...However, on Monday Mr Sullivan named Mr Ebbers as one of five executives who participated in the accounting fraud. "He [Ebbers] has got a hands-on grasp of financial information," Mr Sullivan told a New York court. On his first day of questioning, Mr Sullivan admitted to falsifying the company's financial statements..."We did not disclose these adjustments," he said. "We did not talk about these adjustments and the information was false." Mr Sullivan said his former boss knew more about accounting matters than many chief financial officers and described him as "detail-oriented"...He portrayed Mr Ebbers, a charismatic businessman who built up WorldCom from a small regional operator into one of America's largest telecoms firms, as obsessed with costs. "He would talk about that there were more coffee filters than coffee bags and that means employees are taking coffee home," he said. "We needed to cut expenses. We needed to cut a lot more than coffee expenses." Mr Sullivan is at the centre of the government's case against Mr Ebbers. Mr Ebbers could face a sentence of 85 years if convicted of all the charges he is facing.

Mr Sullivan is at the centre of the government's case against Mr Ebbers.However, on Monday Mr Sullivan named Mr Ebbers as one of five executives who participated in the accounting fraud.Mr Sullivan, WorldCom's former number two, is the government's chief witness in its case against Mr Ebbers.Mr Sullivan, 42, pleaded guilty to fraud last year and agreed to assist the government with its case against Mr Ebbers.Mr Ebbers has denied all the charges, saying he was unaware of the fraud.Prosecutors have alleged that Mr Ebbers, 63, directed Mr Sullivan to hide the true state of the company's finances by providing false information to the firm's accountants.Mr Ebbers has denied multiple charges of conspiracy and fraud."He [Ebbers] has got a hands-on grasp of financial information," Mr Sullivan told a New York court.Mr Sullivan said his former boss knew more about accounting matters than many chief financial officers and described him as "detail-oriented".

business

India widens access to telecoms..India has raised the limit for foreign direct investment in telecoms companies from 49% to 74%...Communications Minister Dayanidhi Maran said that there is a need to fund the fast-growing mobile market. The government hopes to increase the number of mobile users from 95 million to between 200 and 250 million by 2007. "We need at least $20bn (£10.6bn) in investment and part of this has to come as foreign direct investment," said Mr Maran. The decision to raise the limit for foreign investors faced considerable opposition from the communist parties, which give crucial support to the coalition headed by Prime Minister Manmohan Singh. Potential foreign investors will however need government approval before they increase their stake beyond 49%, Mr Maran said. Key positions, such as those of chief executive, chief technology officer and chief financial officer are to be held by Indians, he added...Analysts and investors have welcomed the government decision. "It is a positive development for carriers and the investment community, looking to take a longer-term view of the huge growth in the Indian telecoms market," said Gartner's principal analyst Kobita Desai. "The FDI relaxation coupled with rapid local market growth could really ignite interest in the Indian telecommunication industry," added Ernst and Young's Sanjay Mehta. Investment bank Morgan Stanley has forecast that India's mobile market is likely to grow by about 40% a year until 2007. The Indian mobile market is currently dominated by four companies, Bharti Televentures which has allied itself with Singapore Telecom, Essar which is linked with Hong Kong-based Hutchison Whampoa, the Sterling group and the Tata group.

"We need at least $20bn (£10.6bn) in investment and part of this has to come as foreign direct investment," said Mr Maran.Potential foreign investors will however need government approval before they increase their stake beyond 49%, Mr Maran said.Communications Minister Dayanidhi Maran said that there is a need to fund the fast-growing mobile market.India has raised the limit for foreign direct investment in telecoms companies from 49% to 74%.Investment bank Morgan Stanley has forecast that India's mobile market is likely to grow by about 40% a year until 2007.

business

Ukraine trims privatisation check..Ukraine is to review "dozens" of state asset sales as the country's new administration tackles corruption...The figure announced by President Viktor Yushchenko is less than the 3,000 cases mentioned last week, but will cover many of the biggest deals. Ukraine recently ousted long-serving leader Leonid Kuchma and has said it wants closer European Union links. In a separate statement, the EU said that the US should back Ukraine's entry into the World Trade Organisation. The comments came as Viktor Yushchenko prepared to head to Brussels to meet with US President George W Bush and other North Atlantic Treaty Organisation (Nato) leaders. He is the only non-Nato member leader invited to attend the summit...Mr Yushchenko recently defeated Moscow-backed presidential candidate and Prime Minister Viktor Yanukovych at the polls, and has made no secret of his wish to fight corruption and make Ukraine more transparent...Earlier this month, new Prime Minister Yulia Tymoshenko said as many as 3,000 firms may have their privatisations put under the spotlight. Her comments raised concerns among a number of investors and Mr Yushchenko was seen on Monday as trying to soothe their frayed nerves. "We acknowledge that business in Ukraine is now shaped and 98% of privatisations were carried out according to the law," Mr Yushchenko said on Monday. "We have trust in this business and want to defend it by law," he continued, adding that any review would focus on "dozens of companies, not hundreds or thousands". He cited last year's sale of Ukrainian steel producer Krivorizhstal as one that had raised concerns. It was sold in June 2004 to a consortium that included Viktor Pinchuk, son-in-law of former-President Kuchma, and Rinat Akhmetov, the country's richest man, for $800m (£424m) - despite other higher offers...Vice-Prime Minister Oleg Rybachuk called on the EU to recognise the steps that Ukraine was taking, fearing that should the country not be rewarded for its efforts there may be a backlash against closer relations with Brussels. He said that while he understood that Ukraine was not ready for EU membership, the country needed to see progress on topics such as trade and visa requirements. "We deserve an honest response," Mr Rybachuk told the Associated Press in an interview. "We understand the difficulties. We refuse to understand double standards." Ukraine may find it has a sympathetic ear in Brussels "The EU has reiterated that we support (Ukraine's) fast accession to the WTO and if possible we would like that to happen some time during the year," said Claude Veron-Reville, a spokesman for EU trade commissioner Peter Mandelson. "We have said as much to the Americans. We feel that it is important for us all to pull together for Ukraine to be allowed into the WTO. Mr Yushchenko was careful not to turn his back on Russia, which borders the country to the east, saying it was important to maintain 'pragmatic' ties with Moscow. "Russia is Ukraine's eternal strategic partner," Mr Yushchenko said.

"We acknowledge that business in Ukraine is now shaped and 98% of privatisations were carried out according to the law," Mr Yushchenko said on Monday."Russia is Ukraine's eternal strategic partner," Mr Yushchenko said.He said that while he understood that Ukraine was not ready for EU membership, the country needed to see progress on topics such as trade and visa requirements.Ukraine recently ousted long-serving leader Leonid Kuchma and has said it wants closer European Union links.Mr Yushchenko recently defeated Moscow-backed presidential candidate and Prime Minister Viktor Yanukovych at the polls, and has made no secret of his wish to fight corruption and make Ukraine more transparent.Ukraine may find it has a sympathetic ear in Brussels "The EU has reiterated that we support (Ukraine's) fast accession to the WTO and if possible we would like that to happen some time during the year," said Claude Veron-Reville, a spokesman for EU trade commissioner Peter Mandelson.Mr Yushchenko was careful not to turn his back on Russia, which borders the country to the east, saying it was important to maintain 'pragmatic' ties with Moscow.Vice-Prime Minister Oleg Rybachuk called on the EU to recognise the steps that Ukraine was taking, fearing that should the country not be rewarded for its efforts there may be a backlash against closer relations with Brussels.In a separate statement, the EU said that the US should back Ukraine's entry into the World Trade Organisation.Her comments raised concerns among a number of investors and Mr Yushchenko was seen on Monday as trying to soothe their frayed nerves.

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US to probe airline travel chaos..The US government is to investigate two airlines- US Airways and Delta Air Lines' Comair subsidiary - after travel chaos over the Christmas weekend...Staff calling in sick at US Airways and computer failures at Comair left 30,000 passengers stranded and 10,000 pieces of baggage undelivered. US Airways is in Chapter 11 bankruptcy protection for the second time in two years, and battling to cut costs. It is currently trying to negotiate pay cuts with flight and baggage staff...Transportation Secretary Norman Mineta said he was "deeply concerned" at the disruption to passengers, and ordered a thorough investigation. Comair's computer breakdown plunged its flight-crew scheduling system into disarray. Altogether, some 1,100 flights were cancelled over the holiday long weekend. Mr Mineta said it was important to understand "what happened, why it happened and whether the carriers properly planned for the holiday travel period and responded appropriately to consumer needs in the aftermath"...Adding to the atmosphere of chaos were mountains of luggage left to pile up when a third of US Airways' baggage handling staff called in sick. There was also a shortage of US Airways flight attendants, with nearly a fifth saying they were too sick to work, leading to many flight cancellations. However, union officials denied there had been a deliberate "sickout". They said that many people have flu at this time of year and that the airline is chronically understaffed...US Airways ended up cancelling over 100 flights on Christmas Day, stranding passengers in as many as 119 airports. Ground crews at US Airways, the seventh-largest US airline, which is now in Chapter 11 bankruptcy protection, face a court-imposed pay cut next month. The airline needs to negotiate other paycuts if it is to find a route out of bankruptcy. It is looking for paycuts totalling $800m..."US Airways has a full-scale employee mutiny on its hands," commented Michael Boyd, an industry consultant. Disruptions to flight schedules could discourage customers from flying with US Airways, reducing revenues. US Airways had to cancel approximately 65 flights on Thursday, 180 on Friday, 140 on Saturday, 43 on Sunday and 15 on Monday, said industry officials. The airline said it was "embarrassed by the situation" and "deeply regrets any inconvenience caused to customers," The probe will focus on the industry's compliance with a 1999 agreement aimed at improving the quality of passenger service that has so far allowed airlines to avoid congressionally-mandated standards. Analysts said the Christmas chaos cast doubt on US Airway's ability to emerge from bankruptcy - and was likely to worsen the finances of troubled Delta, parent of Comair. Comair "deeply regrets the inconvenience to all of our customers caused by the severe winter storm in the Ohio River Valley during the busy holiday season, exacerbated by problems with the airline's crew scheduling system, causing additional flight delays and cancellations," the Delta subsidiary said in a statement.

Ground crews at US Airways, the seventh-largest US airline, which is now in Chapter 11 bankruptcy protection, face a court-imposed pay cut next month.There was also a shortage of US Airways flight attendants, with nearly a fifth saying they were too sick to work, leading to many flight cancellations.The US government is to investigate two airlines- US Airways and Delta Air Lines' Comair subsidiary - after travel chaos over the Christmas weekend.US Airways ended up cancelling over 100 flights on Christmas Day, stranding passengers in as many as 119 airports.Analysts said the Christmas chaos cast doubt on US Airway's ability to emerge from bankruptcy - and was likely to worsen the finances of troubled Delta, parent of Comair.US Airways had to cancel approximately 65 flights on Thursday, 180 on Friday, 140 on Saturday, 43 on Sunday and 15 on Monday, said industry officials.Staff calling in sick at US Airways and computer failures at Comair left 30,000 passengers stranded and 10,000 pieces of baggage undelivered.US Airways is in Chapter 11 bankruptcy protection for the second time in two years, and battling to cut costs.Disruptions to flight schedules could discourage customers from flying with US Airways, reducing revenues.

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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".

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Bank opts to leave rates on hold..The Bank of England has left interest rates on hold at 4.75% for a sixth month in a row...The Bank's Monetary Policy Committee (MPC) decided to take no action amid mixed signals from the economy. But some economists predict a further rise in the cost of borrowing will come later this year. Interest rates rose five times between November 2003 and August 2004 as soaring house prices and buoyant consumer data sparked inflation fears. Bank of England governor Mervyn King has recently warned against placing too much weight on one month's economic data, suggesting the MPC is waiting for a clearer picture to emerge. Economists see next week's inflation report from the MPC as key in assessing whether a further interest rate rise is necessary to keep the economy in check...Slower consumer spending and a quieter housing market are likely to have convinced the MPC that rates should be left unchanged in recent months. Inflation, however, has been rising faster than expected, hitting an annual rate of 1.6% in December - its highest level in six months. Data on Wednesday also showed manufacturing output rose at its fastest rate since May last month, reinforcing a view that economic growth was stronger than forecasts...And recent house surveys from the Halifax and Nationwide have indicated prices are still rising, albeit at a slower pace than in recent years. Philip Shaw, chief economist at Investec Securities, said he believed rates would remain at 4.75% for the rest of the year although strong economic data could lead to a further hike. "The economic landscape has changed quite considerably over the last couple of months, " he said. "Growth appears stronger and the MPC may become more concerned about inflation trends." Howard Archer, economist at Global Insight said the MPC "may well consider that the balance of risks to the growth and inflation outlook have moved from the downside to the upside"...Business groups welcomed the MPC's widely-expected move to leave rates on hold and cautioned against further rises. The British Chambers of Commerce (BCC) said it was "concerned by the clamour in some quarters" for early interest rate increases. "We believe that these demands should be firmly resisted," said David Frost, BCC director general. "Manufacturing still faces extremely serious problems and is performing poorly, in spite of the recent revised figures." Ian McCafferty, chief economist at the CBI, said the MPC faced an "interesting" challenge. "Consumers appear to have pulled in their horns over the holiday period, and exporters are struggling with the strength of sterling," he said. "However, the broader economy continues to show healthy growth, and the tight labour market and buoyant commodity prices are nudging inflation higher."

Slower consumer spending and a quieter housing market are likely to have convinced the MPC that rates should be left unchanged in recent months.Howard Archer, economist at Global Insight said the MPC "may well consider that the balance of risks to the growth and inflation outlook have moved from the downside to the upside".Economists see next week's inflation report from the MPC as key in assessing whether a further interest rate rise is necessary to keep the economy in check.Interest rates rose five times between November 2003 and August 2004 as soaring house prices and buoyant consumer data sparked inflation fears.Philip Shaw, chief economist at Investec Securities, said he believed rates would remain at 4.75% for the rest of the year although strong economic data could lead to a further hike.The British Chambers of Commerce (BCC) said it was "concerned by the clamour in some quarters" for early interest rate increases.The Bank of England has left interest rates on hold at 4.75% for a sixth month in a row.Data on Wednesday also showed manufacturing output rose at its fastest rate since May last month, reinforcing a view that economic growth was stronger than forecasts."Growth appears stronger and the MPC may become more concerned about inflation trends."

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UK Coal plunges into deeper loss..Shares in UK Coal have fallen after the mining group reported losses had deepened to £51.6m in 2004 from £1.2m...The UK's biggest coal producer blamed geological problems, industrial action and "operating flaws" at its deep mines for its worsening fortunes. The South Yorkshire company, led by new chief executive Gerry Spindler, said it hoped to return to profit in 2006. In early trade on Thursday, its shares were down 10% at 119 pence. UK Coal said it was making "significant progress" in shaking up the business. It had introduced new wage structures, a new daily maintenance regime for machinery at its mines and methods to continue mining in adverse conditions. The company said these actions should "significantly uplift earnings". It expected 2005 to be a "transitional year" and to return to profitability in 2006...The recent rise in coal prices has failed to benefit the company as most of its output had already been sold, it said. Total production costs were £1.30 per gigajoule, UK Coal said, but the average selling price was just £1.18 per gigajoule. "We have a long journey ahead to fix these issues. We continue to make progress and great strides have already been made," said Mr Spindler. UK Coal operates 15 deep and surface mines across Nottinghamshire, Derbyshire, Leicestershire, Yorkshire, the West Midlands, Northumberland and Durham.

UK Coal said it was making "significant progress" in shaking up the business.The recent rise in coal prices has failed to benefit the company as most of its output had already been sold, it said.The South Yorkshire company, led by new chief executive Gerry Spindler, said it hoped to return to profit in 2006.Total production costs were £1.30 per gigajoule, UK Coal said, but the average selling price was just £1.18 per gigajoule.The company said these actions should "significantly uplift earnings".UK Coal operates 15 deep and surface mines across Nottinghamshire, Derbyshire, Leicestershire, Yorkshire, the West Midlands, Northumberland and Durham.

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Jobs go at Oracle after takeover..Oracle has announced it is cutting about 5,000 jobs following the completion of its $10.3bn takeover of its smaller rival Peoplesoft last week...The company said it would retain more than 90% of Peoplesoft product development and product support staff. The cuts will affect about 9% of the 55,000 staff of the combined companies. Oracle's 18-month fight to acquire Peoplesoft was one of the most drawn-out and hard-fought US takeover battles of recent times. The merged companies are set to be a major force in the enterprise software market, second only in size to Germany's SAP...In a statement, Oracle said it began notifying staff of redundancies on Friday and the process would continue over the next 10 days. "By retaining the vast majority of Peoplesoft technical staff, Oracle will have the resources to deliver on the development and support commitments we have made to Peoplesoft customers over the last 18 months," Oracle's chief executive Larry Ellison said in a statement...Correspondents say 6,000 job losses had been expected - and some suggest more cuts may be announced in future. They say Mr Ellison may be trying to placate Peoplesoft customers riled by Oracle's determined takeover strategy. Hours before Friday's announcement, there was a funereal air at Peoplesoft's headquarters, reported AP news agency. A Peoplesoft sign had been turned into shrine to the company, with flowers, candles and company memorabilia. "We're mourning the passing of a great company," the agency quoted Peoplesoft worker David Ogden as saying. Other employees said they would rather be sacked than work for Oracle. "The new company is going to be totally different," said Anil Aggarwal, Peoplesoft's director of database markets. "Peoplesoft had an easygoing, relaxed atmosphere. Oracle has an edgy, aggressive atmosphere that's not conducive to innovative production." On the news, Oracle shares rose 15 cents - 1.1% - on Nasdaq. In after-hours trading the shares did not move.

"By retaining the vast majority of Peoplesoft technical staff, Oracle will have the resources to deliver on the development and support commitments we have made to Peoplesoft customers over the last 18 months," Oracle's chief executive Larry Ellison said in a statement.The company said it would retain more than 90% of Peoplesoft product development and product support staff.Oracle has announced it is cutting about 5,000 jobs following the completion of its $10.3bn takeover of its smaller rival Peoplesoft last week.A Peoplesoft sign had been turned into shrine to the company, with flowers, candles and company memorabilia.In a statement, Oracle said it began notifying staff of redundancies on Friday and the process would continue over the next 10 days."We're mourning the passing of a great company," the agency quoted Peoplesoft worker David Ogden as saying.They say Mr Ellison may be trying to placate Peoplesoft customers riled by Oracle's determined takeover strategy."Peoplesoft had an easygoing, relaxed atmosphere.

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US economy still growing says Fed..Most areas of the US saw their economy continue to expand in December and early January, the US Federal Reserve said in its latest Beige Book report...Of the 12 US regions it identifies for the study, 11 showed stronger economic growth, with only the Cleveland area falling behind with a "mixed" rating. Consumer spending was higher in December than November, and festive sales were also up on 2003. The employment picture also improved, the Fed said..."Labour markets firmed in a number of districts, but wage pressures generally remained modest," the Beige Book said. "Several districts reported higher prices for building materials and manufacturing inputs, but most reported steady or only slightly higher overall price levels." The report added that residential real estate activity remained strong and that commercial real estate activity strengthened in most districts. "Office leasing was especially brisk in Washington DC, and New York City, two of the nation's strongest commercial markets," the Fed said.

Most areas of the US saw their economy continue to expand in December and early January, the US Federal Reserve said in its latest Beige Book report.The employment picture also improved, the Fed said."Labour markets firmed in a number of districts, but wage pressures generally remained modest," the Beige Book said.Consumer spending was higher in December than November, and festive sales were also up on 2003.

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China bans new tobacco factories..The world's biggest tobacco consumer, China, has said it will not allow any new tobacco factories to be built...China already has more than enough cigarette-making capacity, according to a spokesman for the tobacco industry regulator quoted in China Daily. The ban threatens to reignite tensions between the regulator and British American Tobacco, which plans to become China's first foreign cigarette maker. A spokeswoman for Bat declined to comment on the report..."China won't allow any new tobacco factories to be built, including joint ventures", said Xing Wangli, a spokesman for the State Tobacco Administration Monopoly quoted in China Daily. He also said that the state would retain its monopoly on cigarette distribution. China has 350 million smokers who consumer 1.7 trillion cigarettes a year. Smoking is fashionable in China, where it is seen as an essential - and manly - sociable touch for some jobs, such as salesmen. More young, urban woman are taking up smoking too. In July 2004, Bat announced it had won approval for to build a $1.5bn (£800m) joint venture factory in China which would make it the first foreign cigarette maker to manufacture there...The State Tobacco Monopoly Administration said a week later that it had not approved the deal, leading to an embarrassing public row. Bat told the BBC at that time that it had not negotiated with the STMC, and secured approval from "the highest levels of government". Since then, the row has flared occasionally, most recently at a forum in November. Bat consistently declines to comment. "Xing's statement comes as especially bad news for British American Tobacco", the China Daily newspaper said of the latest development. The Bat spokeswoman said: "There is nothing for us to add...since our announcement in July last year. The central government of China is the authority that approved our strategic investment." The decision to ban further tobacco factories does not apply to deals made before 2005, according to the French news agency AFP. The joint venture factory was expected to take till 2006 to build. The Bat spokeswoman would not comment on its progress. However, if the STMA continues to take a tough stance, expansion opportunities could be limited...China's tobacco market is increasingly valuable as anti-smoking campaigners target public smoking in the West. China Daily said the market was currently enjoying steady growth, making more than 210bn yuan ($25.4bn) in pre-tax profits last year, almost double the figure in 2000. The paper made no mention of health concerns. The STMA is trying to restructure the domestic tobacco industry, closing some factories, though such moves can be unpopular with local governments.

"China won't allow any new tobacco factories to be built, including joint ventures", said Xing Wangli, a spokesman for the State Tobacco Administration Monopoly quoted in China Daily.The world's biggest tobacco consumer, China, has said it will not allow any new tobacco factories to be built.In July 2004, Bat announced it had won approval for to build a $1.5bn (£800m) joint venture factory in China which would make it the first foreign cigarette maker to manufacture there.China already has more than enough cigarette-making capacity, according to a spokesman for the tobacco industry regulator quoted in China Daily."Xing's statement comes as especially bad news for British American Tobacco", the China Daily newspaper said of the latest development.The State Tobacco Monopoly Administration said a week later that it had not approved the deal, leading to an embarrassing public row.The Bat spokeswoman would not comment on its progress.China has 350 million smokers who consumer 1.7 trillion cigarettes a year.The Bat spokeswoman said: "There is nothing for us to add...since our announcement in July last year.The decision to ban further tobacco factories does not apply to deals made before 2005, according to the French news agency AFP.

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Japan bank shares up on link talk..Shares of Sumitomo Mitsui Financial (SMFG), and Daiwa Securities jumped amid speculation that two of Japan's biggest financial companies will merge...Financial newspaper Nihon Keizai Shimbun claimed that the firms will join up next year and already have held discussions with Japanese regulators. The firms denied that they are about to link up, but said they are examining ways of working more closely together. SMFG shares climbed by 2.7% to 717,000, and Daiwa added 5.3% to 740 yen...Combining SMFG, Japan's third-biggest lender, and Daiwa, the country's second-largest brokerage firm, would create a company with assets of more than $1,000bn (£537bn). SMFG President Yoshifumi Nishikawa said that the companies needed to bolster their businesses. "Both companies need to strengthen retail and other operations," he said, adding that "it's an issue we have in common". Daiwa said that "although it is true that the two groups have been engaging in various discussions to enhance cooperation, there are no plans to enter into negotiations to consolidate the two businesses". Analysts said that consolidation in Japan's financial sector was likely to continue and that it was likely to have a positive impact on earnings. "Cross-selling opportunities between banks and brokers are increasing thanks to deregulation, so we can expect the relationship to get even stronger," said Heronry Nozaki, an analyst at NikkoCitigroup. The merger "would be a good move," he added.

Shares of Sumitomo Mitsui Financial (SMFG), and Daiwa Securities jumped amid speculation that two of Japan's biggest financial companies will merge.SMFG President Yoshifumi Nishikawa said that the companies needed to bolster their businesses.Combining SMFG, Japan's third-biggest lender, and Daiwa, the country's second-largest brokerage firm, would create a company with assets of more than $1,000bn (£537bn).SMFG shares climbed by 2.7% to 717,000, and Daiwa added 5.3% to 740 yen.Daiwa said that "although it is true that the two groups have been engaging in various discussions to enhance cooperation, there are no plans to enter into negotiations to consolidate the two businesses".

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Peugeot deal boosts Mitsubishi..Struggling Japanese car maker Mitsubishi Motors has struck a deal to supply French car maker Peugeot with 30,000 sports utility vehicles (SUV)...The two firms signed a Memorandum of Understanding, and say they expect to seal a final agreement by Spring 2005. The alliance comes as a badly-needed boost for loss-making Mitsubishi, after several profit warnings and poor sales. The SUVs will be built in Japan using Peugeot's diesel engines and sold mainly in the European market. Falling sales have left Mitsubishi Motors with underused capacity, and the production deal with Peugeot gives it a chance to utilise some of it...In January, Mitsubishi Motors issued its third profits warning in nine months, and cut its sales forecasts for the year to March 2005. Its 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. As a result, the Japanese car maker has sought a series of financial bailouts. Last month it said it was looking for a further 540bn yen ($5.2bn; £2.77bn) in fresh financial backing, half of it from other companies in the Mitsubishi group. US-German carmaker DaimlerChrylser, a 30% shareholder in Mitsubishi Motors, decided in April 2004 not to pump in any more money. The deal with Peugeot was celebrated by Mitsubishi's newly-appointed chief executive Takashi Nishioka, who took over after three top bosses stood down last month to shoulder responsibility for the firm's troubles. Mitsubishi Motors has forecast a net loss of 472bn yen in its current financial year to March 2005. Last month, it signed a production agreement with Japanese rival Nissan Motor to supply it with 36,000 small cars for sale in Japan. It has been making cars for Nissan since 2003.

Struggling Japanese car maker Mitsubishi Motors has struck a deal to supply French car maker Peugeot with 30,000 sports utility vehicles (SUV).Mitsubishi Motors has forecast a net loss of 472bn yen in its current financial year to March 2005.Last month, it signed a production agreement with Japanese rival Nissan Motor to supply it with 36,000 small cars for sale in Japan.In January, Mitsubishi Motors issued its third profits warning in nine months, and cut its sales forecasts for the year to March 2005.Falling sales have left Mitsubishi Motors with underused capacity, and the production deal with Peugeot gives it a chance to utilise some of it.As a result, the Japanese car maker has sought a series of financial bailouts.

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Venezuela reviews foreign deals..Venezuela is to review all foreign investment in its mining industries in an effort to strengthen its indigenous industrial output...President Hugo Chavez has ordered all existing contracts with foreign firms to be examined to see if they provide maximum benefits to the country. The review will cover production of gold, aluminium and iron ore although it excludes the country's oil sector. Chavez has sought to extend the state's role in all sectors of the economy...The left-wing president is conducting a controversial review of land ownership in the country while also seeking to create a state-run telecoms firm to compete with foreign-owned businesses...He has argued that major economic reforms are vital to improve the lives of Venezuela's poorest citizens. Announcing the review of raw material production, minister Victor Alvarez said the government would seek to transfer technology, training capability and content from projects with foreign partners. "We are defending our national sovereignty over the use of our national resources which must serve the endogenous development of the nation," Mr Alvarez said. "For this reason we are reviewing all memorandums of understanding, all letters of intent, all agreements that have been signed, all contracts, to check which of these comply with these directives. "Everything, absolutely everything, has to be reviewed."..Venezuela has previously assured foreign companies with operations in the mineral rich country that it respects existing contracts. However, the government insisted that it needed to develop its own industrial infrastructure in order to create new jobs and lessen its reliance on foreign partners. "If we don't do this, we are just going to carry on being slaves, suppliers of raw materials, all our lives and we will never develop our own productive capacity," Mr Alvarez added. Companies from the United States, Canada, France and Switzerland all have substantial investments in Venezuela's mining sector.

Venezuela has previously assured foreign companies with operations in the mineral rich country that it respects existing contracts.President Hugo Chavez has ordered all existing contracts with foreign firms to be examined to see if they provide maximum benefits to the country.Announcing the review of raw material production, minister Victor Alvarez said the government would seek to transfer technology, training capability and content from projects with foreign partners.Venezuela is to review all foreign investment in its mining industries in an effort to strengthen its indigenous industrial output.Chavez has sought to extend the state's role in all sectors of the economy.However, the government insisted that it needed to develop its own industrial infrastructure in order to create new jobs and lessen its reliance on foreign partners.

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Khodorkovsky quits Yukos shares..Jailed tycoon Mikhail Khodorkovsky has transferred his controlling stake in oil giant Yukos to a business partner...Mr Khodorkovsky handed over his entire 59.5% stake in holding company Group Menatep - which controls Yukos - to Leonid Nevzlin. A close ally of the ex-Yukos boss, Mr Nevzlin is currently based in Israel. Mr Khodorkovsky handed over his stake after the forced sale of Yukos' core oil production unit, Yuganskneftegaz to pay a giant tax bill...Yuganskneftegaz was sold off at auction in December last year, eventually falling into the hands of state oil firm Rosneft in a deal worth $9.4bn (£5bn). "Since the sale of Yuganskneftegaz, I have been delivered of (all) responsibility for the business that remains and the group's money as a whole," Mr Khodorkovsky said. "It is all over. As before, I see my future in public activity to build a civil society in Russia." Mr Nevzlin is Yukos' largest shareholder but is living in self-imposed exile in Israel. Yuganskneftegaz pumps around 1 million barrels of oil a day. It was sold by the Russian authorities to recover government tax claims against Yukos totalling over $27bn. Previously considered to be Russia's richest man, with an estimated fortune of $15bn, Mr Khodorkovsky is currently on trial for fraud and tax evasion following his arrest in October 2003. However, the charges are widely seen as politically motivated and part of a drive by Russian President Vladimir Putin to rein in the country's super-rich business leaders, the so-called oligarchs. It is also believed that Mr Khodorkovsky was particularly targeted because he had started to bankroll political opponents of Mr Putin.

Mr Khodorkovsky handed over his stake after the forced sale of Yukos' core oil production unit, Yuganskneftegaz to pay a giant tax bill.Mr Khodorkovsky handed over his entire 59.5% stake in holding company Group Menatep - which controls Yukos - to Leonid Nevzlin.It is also believed that Mr Khodorkovsky was particularly targeted because he had started to bankroll political opponents of Mr Putin."Since the sale of Yuganskneftegaz, I have been delivered of (all) responsibility for the business that remains and the group's money as a whole," Mr Khodorkovsky said.Jailed tycoon Mikhail Khodorkovsky has transferred his controlling stake in oil giant Yukos to a business partner.Mr Nevzlin is Yukos' largest shareholder but is living in self-imposed exile in Israel.

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VW considers opening Indian plant..Volkswagen is considering building a car factory in India, but said it had yet to make a final decision...The German giant said it was studying the possibility of opening an assembly plant in the country, but that it remained only a "potential" idea. Its comments came after the industry minister of India's Andhra Pradesh state said a team of VW officials were due to visit to discuss the plans. B. Satyanarayana said he expected VW to co-sign a memorandum of agreement. Several foreign carmakers, including Hyundai, Toyota, Suzuki and Ford, already have Indian production facilities to meet demand for automobiles in Asia's fourth-largest economy. VW's proposed plant would be set up in the port city of Visakhapatnam on India's eastern coast. An Andhra Pradesh official added that VW had already approved a factory site measuring 250 acres.

Its comments came after the industry minister of India's Andhra Pradesh state said a team of VW officials were due to visit to discuss the plans.An Andhra Pradesh official added that VW had already approved a factory site measuring 250 acres.B. Satyanarayana said he expected VW to co-sign a memorandum of agreement.

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UK young top Euro earnings league..British children enjoy the highest average annual income in Europe - more than double that of Spanish or Italian youngsters, a report suggests...Children in the UK between the ages of 10 and 17 had an annual income of £775, said market analyst Datamonitor. They use "pester power" to get their parents to stump up nearly a third of this income, the report said. As for how they spend their cash, the bulk goes on personal care, soft drinks and food, Datamonitor said...Datamonitor adds that British teenagers are keen on personal care because it helps them combine two seemingly contradictory emotional needs - the desire to fit in and the desire to express their individuality...British teenage girls, compared to their counterparts in seven European countries, are the most keen to use make-up products. Nearly three out of four girls said they used make-up. According to the Datamonitor report the trend marked British teenagers out as "particularly important to cosmetics manufacturers as they are likely to experiment more with brands and products and form long-term beauty routines". And the good times are likely to keep rolling for British children, as the report predicts that they will still be topping the earnings table in 2008.

Children in the UK between the ages of 10 and 17 had an annual income of £775, said market analyst Datamonitor.They use "pester power" to get their parents to stump up nearly a third of this income, the report said.According to the Datamonitor report the trend marked British teenagers out as "particularly important to cosmetics manufacturers as they are likely to experiment more with brands and products and form long-term beauty routines".British children enjoy the highest average annual income in Europe - more than double that of Spanish or Italian youngsters, a report suggests.

business

Chinese dam firm 'defies Beijing'..The China Three Gorges Project Corp is refusing to obey a government order to stop construction of one of its giant dams, the Chinese state press has said...The builder of the Three Gorges Dam is continuing work on the sister Xiluodu dam, said the Beijing News. The Xiluodu dam is one of 30 such large-scale construction projects called to a halt because of a lack of proper environmental checks. The Beijing News said the company may instead choose to pay a fine. The firm has also ignored orders to stop construction at two of its other projects - the Three Gorges Underground Power Plant and the Three Gorges Project Electrical Power Supply Plant...So far, only 22 of the 30 construction projects targeted by China's State Environmental Protection Agency (Sepa) for having not carried out mandatory environmental impact assessments have complied with its shutdown order. The China Three Gorges Project Corp could now face a fine up to 200,000 yuan ($24,000; £12,700). Last week, it denied that its projects violated regulations. "The Three Gorges Corporation has all along abided by the law and have built our projects in accordance with the law," it said...The Sepa order comes as the Chinese government appears to be trying to cool the country's booming economy. Previously it has encouraged construction of new electricity generating capacity to solve chronic energy shortages, which forced many factories into part-time working last year. In 2004, China increased its generating capacity by 12.6% to 440,700 megawatts (MW). The Xiluodu Dam is designed to produce 12,600 MW of electricity, and is being built on the Jinshajiang - or "river of golden sand" as the upper reaches of the Yangtze are known. It is a sister project to the main Three Gorges Dam downstream where more than half a million people have had to be relocated, drawing criticism from environmental groups and overseas human rights activists.

The China Three Gorges Project Corp is refusing to obey a government order to stop construction of one of its giant dams, the Chinese state press has said.The firm has also ignored orders to stop construction at two of its other projects - the Three Gorges Underground Power Plant and the Three Gorges Project Electrical Power Supply Plant.The China Three Gorges Project Corp could now face a fine up to 200,000 yuan ($24,000; £12,700).The builder of the Three Gorges Dam is continuing work on the sister Xiluodu dam, said the Beijing News."The Three Gorges Corporation has all along abided by the law and have built our projects in accordance with the law," it said.It is a sister project to the main Three Gorges Dam downstream where more than half a million people have had to be relocated, drawing criticism from environmental groups and overseas human rights activists.

business

Battered dollar hits another low..The dollar has fallen to a new record low against the euro after data fuelled fresh concerns about the US economy...The greenback hit $1.3516 in thin New York trade, before rallying to $1.3509. The dollar has weakened sharply since September when it traded about $1.20, amid continuing worries over the levels of the US trade and budget deficits. Meanwhile, France's finance minister has said the world faced "economic catastrophe" unless the US worked with Europe and Asia on currency controls. Herve Gaymard said he would seek action on the issue at the next meeting of G7 countries in February. Ministers from European and Asian governments have recently called on the US to strengthen the dollar, saying the excessively high value of the euro was starting to hurt their export-driven economies. "It's absolutely essential that at the meeting of the G7 our American friends understand that we need coordinated management at the world level," said Mr Gaymard...Thursday's new low for the dollar came after data was released showing year-on-year sales of new homes in the US had fallen 12% in November - with some analysts saying this could indicate problems ahead for consumer activity...Commerce Department data also showed consumer spending - which drives two thirds of the US economy - grew just 0.2% last month. The figure was weaker than forecast - and fell short of the 0.8% rise in October. The official US policy is that it supports a strong dollar but many market observers believe it is happy to let the dollar fall because of the boost to its exporters...The US government has faced pressure from exporter organisations which have publicly stated the currency still has further to fall from "abnormal and dangerous heights" set in 2002. The US says it will let market forces determine the dollar's strength rather than intervene directly. Statements from President Bush in recent weeks highlighting his aim to cut the twin US deficits have prompted slight upturns in the currency. But while some observers said the quiet trade on Thursday had exacerbated small moves in the market, most agree the underlying trend remains downwards. The dollar has now fallen for a third consecutive year and analysts are forecasting a further, albeit less dramatic weakening, in 2005. "I can see it finishing the year around $1.35 and we can see that it's going to be a steady track upward for the euro/dollar in 2005, finishing the year around $1.40," said Adrian Hughes, currency strategist with HSBC in London.

The dollar has fallen to a new record low against the euro after data fuelled fresh concerns about the US economy.Thursday's new low for the dollar came after data was released showing year-on-year sales of new homes in the US had fallen 12% in November - with some analysts saying this could indicate problems ahead for consumer activity.The dollar has weakened sharply since September when it traded about $1.20, amid continuing worries over the levels of the US trade and budget deficits.Meanwhile, France's finance minister has said the world faced "economic catastrophe" unless the US worked with Europe and Asia on currency controls.The official US policy is that it supports a strong dollar but many market observers believe it is happy to let the dollar fall because of the boost to its exporters.The US government has faced pressure from exporter organisations which have publicly stated the currency still has further to fall from "abnormal and dangerous heights" set in 2002.Ministers from European and Asian governments have recently called on the US to strengthen the dollar, saying the excessively high value of the euro was starting to hurt their export-driven economies.

business

Euronext joins bid battle for LSE..Pan-European stock market Euronext has approached the London Stock Exchange (LSE) about a possible takeover bid..."The approach is at an early stage and therefore does not require a response at this point," LSE said. Talks with the European stock market and with rival bidder Deutsche Boerse will continue, the LSE said. Last week, the group rejected a £1.3bn ($2.5bn) takeover offer from Deutsche Boerse, claiming that it undervalued the business. LSE saw its shares surge 4.9% to a new high of 583p in early trade, following the announcement on Monday...The offer follows widespread media speculation that Euronext would make an offer for LSE. Experts now widely expect a bidding war for Europe's biggest stock market, which lists stocks with a total capitalisation of £1.4 trillion, to break out. Commentators say that a deal with Euronext, which owns the Liffe derivatives exchange in London and combines the Paris, Amsterdam and Lisbon stock exchanges, could potentially offer the LSE more cost savings than a deal with Deutsche Boerse...A weekend report in the Telegraph had quoted an unnamed executive at Euronext as saying the group would make a cash bid to trump Deutsche Boerse's offer. "Because we already own Liffe in London, the cost savings available to us from a merger are far greater than for Deutsche Boerse," the newspaper quoted the executive as saying. Euronext chief executive Jean-Francois Theodore is reported to have already held private talks with LSE's chief executive Clara Furse. Further reports had suggested that Euronext could make an offer in excess of the LSE's 533p a share closing price on Friday. However, Euronext said it could not guarantee "at this stage" that a firm offer would be made for LSE. There has been extensive speculation about a possible takeover of the company since an attempted merger with Deutsche Boerse failed in 2000.

Commentators say that a deal with Euronext, which owns the Liffe derivatives exchange in London and combines the Paris, Amsterdam and Lisbon stock exchanges, could potentially offer the LSE more cost savings than a deal with Deutsche Boerse.Pan-European stock market Euronext has approached the London Stock Exchange (LSE) about a possible takeover bid.The offer follows widespread media speculation that Euronext would make an offer for LSE.However, Euronext said it could not guarantee "at this stage" that a firm offer would be made for LSE.Talks with the European stock market and with rival bidder Deutsche Boerse will continue, the LSE said.A weekend report in the Telegraph had quoted an unnamed executive at Euronext as saying the group would make a cash bid to trump Deutsche Boerse's offer.