dataset.csv

news,type
"China had role in Yukos split-up
 
 China lent Russia $6bn (£3.2bn) to help the Russian government renationalise the key Yuganskneftegas unit of oil group Yukos, it has been revealed.
 
 The Kremlin said on Tuesday that the $6bn which Russian state bank VEB lent state-owned Rosneft to help buy Yugansk in turn came from Chinese banks. The revelation came as the Russian government said Rosneft had signed a long-term oil supply deal with China. The deal sees Rosneft receive $6bn in credits from China's CNPC.
 
 According to Russian newspaper Vedomosti, these credits would be used to pay off the loans Rosneft received to finance the purchase of Yugansk. Reports said CNPC had been offered 20% of Yugansk in return for providing finance but the company opted for a long-term oil supply deal instead. Analysts said one factor that might have influenced the Chinese decision was the possibility of litigation from Yukos, Yugansk's former owner, if CNPC had become a shareholder. Rosneft and VEB declined to comment. ""The two companies [Rosneft and CNPC] have agreed on the pre-payment for long-term deliveries,"" said Russian oil official Sergei Oganesyan. ""There is nothing unusual that the pre-payment is for five to six years.""
 
 The announcements help to explain how Rosneft, a medium-sized, indebted, and relatively unknown firm, was able to finance its surprise purchase of Yugansk. Yugansk was sold for $9.3bn in an auction last year to help Yukos pay off part of a $27bn bill in unpaid taxes and fines.
 
 The embattled Russian oil giant had previously filed for bankruptcy protection in a US court in an attempt to prevent the forced sale of its main production arm. But Yugansk was sold to a little known shell company which in turn was bought by Rosneft. Yukos claims its downfall was punishment for the political ambitions of its founder Mikhail Khodorkovsky. Once the country's richest man, Mr Khodorkovsky is on trial for fraud and tax evasion.
 
 The deal between Rosneft and CNPC is seen as part of China's desire to secure long-term oil supplies to feed its booming economy. China's thirst for products such as crude oil, copper and steel has helped pushed global commodity prices to record levels. ""Clearly the Chinese are trying to get some leverage [in Russia],"" said Dmitry Lukashov, an analyst at brokerage Aton. ""They understand property rights in Russia are not the most important rights, and they are more interested in guaranteeing supplies."" ""If the price of oil is fixed under the deal, which is unlikely, it could be very profitable for the Chinese,"" Mr Lukashov continued. ""And Rosneft is in desperate need of cash, so it's a good deal for them too.""
",business
"Oil rebounds from weather effect
 
 Oil prices recovered in Asian trade on Tuesday, after falling in New York on milder winter weather across the US.
 
 With winter temperatures staying relatively high in the northern US, a barrel of light crude ended Monday down $1.33 to $42.12. However crude prices have rebounded in Asia, rising to $42.30 a barrel for February delivery. In London, trading of Brent crude was suspended for a public holiday, but the price fell to $39.20 in the Far East.
 
 With milder temperatures expected to continue in the northern parts of the US over the next few days at least, analysts have said the price of oil may fall further - even if the decline was only temporary. ""Weather has been the Achilles' heel of this market,"" said ABN AMRO analyst John Brady. ""But it is winter in the northeast. Eventually we'll get another cold blast."" Despite a fall of more than $12 a barrel from the record highs reached in late October, the price of crude oil remains almost 30% higher than year-ago levels. Prices rose last week after militant attacks in Riyadh, the capital of Saudi Arabia, briefly renewed fears that the supply chain might be broken in the world's leading crude exporter. ""The market was panicked but fears essentially evaporated... since there was no follow-up,"" said Deborah White, senior economist for energy at SG Securities in Paris.
",business
"Indonesia 'declines debt freeze'
 
 Indonesia no longer needs the debt freeze offered by the Paris Club group of creditors, Economics Minister Aburizal Bakrie has reportedly said.
 
 Indonesia, which originally accepted the debt moratorium offer, owes the Paris Club about $48bn (£25.5bn). Mr Bakrie told the Bisnis Indonesia newspaper that a $1.7bn donors' aid package meant that the debt moratorium was unnecessary. This aid comes on top of a previously-pledged $3.4bn package. Most of this 'normal aid' would be used to finance the country's budget deficit. The Indonesian Economics Minister explained that the money - $1.2bn in grants and $500m in soft loans - was for the rebuilding of Aceh province, which was badly hit by the tsunami of 26 December. Nevertheless, one of Mr Bakrie's deputies, Mahendra Siregar, told AFP news agency that Indonesia was still considering the offer by the Paris Club of rich creditor nations to temporarily suspend its debt payments. ""What is true is that we are still discussing... the Paris Club decision to find out more details such as how much of our debt will be subject to a moratorium. That's how far we are at this stage,"" said Mr Siregar.
 
 The 19 member countries of the Paris Club are owed about $5bn this year in debt repayments by nations affected by the Indian Ocean tsunami. Indonesia, Sri Lanka and the Seychelles accepted the Paris Club offer, which was criticised by some aid groups as being too little. Thailand and India have however declined the offer, with Thailand prefering to keep up with its payments while India said it would prefer to rely on its own resources rather than on international aid. Putting off payments may lower a country's rating among financial organisations, making it more expensive and more difficult for them to borrow money in the future, analysts said. Separately, the Indonesian government has said it will announce monthly how much it has received in foreign donations and how it has spent the money. Welfare Minister Alwi Shihab told AP news agency that this announcement should allay suspicion of official corruption in relief operations.
",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.
",business
"US bank in $515m SEC settlement
 
 Five Bank of America subsidiaries have agreed to pay a total of $515m (£277m) to settle an investigation into fraudulent trading share practices.
 
 The US Securities and Exchange Commission announced the settlements, the latest in an industry-wide clean-up of US mutual funds. The SEC also said it had brought fraud charges against two ex-senior executives of Columbia Distributor. Columbia Distributor was part of FleetBoston, bought by BOA last year. Three other ex-Columbia executives agreed settlements with the SEC.
 
 The SEC has set itself the task of stamping out the mutual funds' use of market-timing, a form of quick-fire, short-term share trading that harms the interests of small investors, with whom mutual funds are particularly popular. In the last two years, it has imposed penalties totalling nearly $2bn on 15 funds. The SEC unveiled two separate settlements, one covering BOA's direct subsidiaries, and another for businesses that were part of FleetBoston at the time. In both cases, it said there had been secret deals to engage in market timing in mutual fund shares. The SEC agreed a deal totalling $375m with Banc of America Capital Management, BACAP Distributors and Banc of America Securities. It was made up of $250m to pay back gains from market timing, and $125m in penalties. It is to be paid to the damaged funds and their shareholders. Separately, the SEC said it had reached a $140m deal - equally split between penalties and compensation - in its probe into Columbia Management Advisors (CAM) and Columbia Funds Distributor (CFD) and three ex-Columbia executives. These businesses became part of BOA when it snapped up rival bank FleetBoston in a $47bn merger last March.
 
 The SEC filed civil fraud charges in a Boston Federal court against James Tambone, who it says headed CFD's sales operations, and his alleged second in command Robert Hussey. The SEC is pressing for the highest tier of financial penalties against the pair for ""multiple violations"", repayment of any personal gains, and an injunction to prevent future breaches, a spokeswoman for the SEC's Boston office told the BBC. There was no immediate comment from the men's' lawyers. The SEC's settlement with CAM and CFD included agreements with three other ex-managers, Peter Martin, Erik Gustafson and Joseph Palombo, who paid personal financial penalties of between $50-100,000.
",business
"Verizon 'seals takeover of MCI'
 
 Verizon has won a takeover battle for US phone firm MCI with a bid worth $6.8bn (£3.6bn), reports say.
 
 The two firms are expected to seal the deal on Monday morning, according to news agency reports, despite what was thought to be a higher bid from Qwest. The US telecoms market is consolidating fast, with former long-distance giant AT&T being bought by former subsidiary SBC earlier this year for $16bn. MCI exited bankruptcy in April, having gone bust under previous name WorldCom. The bankruptcy followed its admission in 2002 that it illegally booked expenses and inflated profits.
 
 Shareholders lost about $180bn when the company collapsed, while 20,000 workers lost their jobs. Former Worldcom boss Bernie Ebbers is currently on trial, accused of overseeing an $11bn fraud. Qwest has itself come under suspicion of sub-standard behaviour, paying the Securities and Exchange Commission $250m in October to settle charges that it manipulated its results to keep Wall Street happy.
 
 MCI is the US's second-biggest long distance firm after AT&T. Consolidation in the US telecommunications industry has picked up in the past few months as companies look to cut costs and boost client bases. A merger between MCI and Verizon would be the fifth billion-dollar telecoms deal since October. Last week, SBC Communications agreed to buy its former parent and phone trailblazer AT&T for about $16bn. Buying MCI would give either Qwest or Verizon access to MCI's global network and business-based subscribers. The rationale is similar to the one underpinning SBC's AT&T deal. Verizon is by far the bigger company and has its own successful mobile arm - factors which may have swung the board in its favour since both suitors are offering a mixture of cash and shares.
",business
"Parmalat boasts doubled profits
 
 Parmalat, the Italian food group at the centre of one of Europe's most painful corporate scandals, has reported a doubling in profit.
 
 Its pre-tax earnings in the fourth quarter were 77m euros (£53m; $100m), up from 38m in the same period of 2003. Less welcome was the news that the firm had been fined 11m euros for having violated takeover rules five years ago. The firm sought bankruptcy protection in December 2003 after disclosing a 4bn-euro hole in its accounts. Overall, the company's debt is close to 12bn euros, and is falling only slowly. Its brands, well-known in Italy and overseas, have continued to perform strongly, however, and have barely lost revenue since the scandal broke.
 
 But a crucial factor for the company's future is the legal unwinding of its intensely complex financial position. On Tuesday, the company's administrator, turnaround expert Enrico Bondi, sued Morgan Stanley, its former banker, to return 136m euros relating to a 2003 bond deal. That brought to 49 the number of banks that Mr Bondi has sued, a mass of legal action that could bring in as much as 3bn euros. The company has also sued former auditors and financial advisors for damages. And criminal cases against the company's former management are proceeding separately.
",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.
",business
"Steel firm 'to cut' 45,000 jobs
 
 Mittal Steel, one of the world's largest steel producers, could cut up to 45,000 jobs over the next five years, its chief executive has said.
 
 The Netherlands-based company is due to complete its $4.5bn acquisition of US firm ISG next month, making it one of the largest global firms of its kind. However, Lakshmi Mittal has told investors the combined company will have to shed thousands of jobs. The Indian-born magnate did not say where the job losses would fall.
 
 Mr Mittal told US investors that once the acquisition of International Steel Group was completed, the company would aim to reduce its workforce by between 7,000 and 8,000 annually. This could see its workforce trimmed from 155,000 to 110,000 staff by 2010. ""We are investing in modernisation so employees will go down,"" Mr Mittal told the conference in Chicago.
 
 Mittal Steel was formed last year when Mr Mittal's LNM Holdings merged with Dutch firm Ispat. A combination of Mittal Steel and ISG would have annual sales of $32bn (£16.7bn; 24.1bn euros) and a production capacity of 70 million tonnes.
 
 A Mittal Steel spokeman said that no decisions on job cuts have been made yet. ""We are trying to create a sustainable steel industry and if we want to do that, we have to invest in new technology,"" a spokesman said. Mittal Steel has operations in 14 countries. Many of its businesses - particularly those in eastern Europe - were previously state owned and have huge workforces. It employs 50,000 staff in Kazakhstan alone, and has large operations in Romania, the Czech Republic, South Africa and the United States.
",business
"Cars pull down US retail figures
 
 US retail sales fell 0.3% in January, the biggest monthly decline since last August, driven down by a heavy fall in car sales.
 
 The 3.3% fall in car sales had been expected, coming after December's 4% rise in car sales, fuelled by generous pre-Christmas special offers. Excluding the car sector, US retail sales were up 0.6% in January, twice what some analysts had been expecting. US retail spending is expected to rise in 2005, but not as quickly as in 2004.
 
 Steve Gallagher, US chief economist at SG Corporate & Investment Banking, said January's figures were ""decent numbers"".
 
 ""We are not seeing the numbers that we saw in the second half of 2004, but they are still pretty healthy,"" he added. Sales at appliance and electronic stores were down 0.6% in January, while sales at hardware stores dropped by 0.3% and furniture store sales dipped 0.1%. Sales at clothing and clothing accessory stores jumped 1.8%, while sales at general merchandise stores, a category that includes department stores, rose by 0.9%. These strong gains were in part put down to consumers spending gift vouchers they had been given for Christmas.
 
 Sales at restaurants, bars and coffee houses rose by 0.3%, while grocery store sales were up 0.5%. In December, overall retail sales rose by 1.1%. Excluding the car sector, sales rose by just 0.3%. Parul Jain, deputy chief economist at Nomura Securities International, said consumer spending would continue to rise in 2005, only at a slower rate of growth than in 2004. ""Consumers continue to retain their strength in the first quarter,"" he said. Van Rourke, a bond strategist at Popular Securities, agreed that the latest retail sales figures were ""slightly stronger than expected"".
",business
"Singapore growth at 8.1% in 2004
 
 Singapore's economy grew by 8.1% in 2004, its best performance since 2000, figures from the trade ministry show.
 
 The advance, the second-fastest in Asia after China, was led by growth of 13.1% in the key manufacturing sector. However, a slower-than-expected fourth quarter points to more modest growth for the trade-driven economy in 2005 as global technology demand falls back. Slowdowns in the US and China could hit electronics exports, while the tsunami disaster may effect the service sector.
 
 Economic growth is set to halve in Singapore this year to between 3% and 5%. In the fourth quarter, the city state's gross domestic product (GDP) rose at an annual rate of 2.4%. That was up from the third quarter, when it fell 3.0%, but was well below analyst forecasts. ""I am surprised at the weak fourth quarter number. The main drag came from electronics,"" said Lian Chia Liang, economist at JP Morgan Chase. Singapore's economy had contracted over the summer, weighed down by soaring oil prices. The economy's poor performance in the July to September period followed four consecutive quarters of double-digit growth as Singapore bounced back strongly from the effects of the deadly Sars virus in 2003.
",business
"UK bank seals South Korean deal
 
 UK-based bank Standard Chartered said it would spend $3.3bn (£1.8bn) to buy one of South Korea's main retail banks.
 
 Standard Chartered said acquiring Korea First Bank (KFB) fulfilled a strategic objective of building a bigger presence in Asia's third largest economy. Its shares fell nearly 3% in London as the bank raised funds for the deal by selling new stocks worth £1bn ($1.8bn), equal to 10% of its share capital. Standard Chartered expects about 16% of future group revenue to come from KFB.
 
 The South Korean bank will also make up 22% of the group's total assets. The move, a year after Citigroup beat Standard Chartered to buy Koram bank, would be the South Korean financial sector's biggest foreign takeover. This time around, Standard Chartered is thought to have beaten HSBC to the deal. KFB is South Korea's seventh largest bank, with 3 million retail customers, 6% of the country's banking market and an extensive branch network.
 
 The country's banking market is three times the size of Hong Kong's with annual revenues of $44bn. Standard Chartered has its headquarters in London but does two thirds of its business in Asia, and much of the rest in Africa. ""We're comfortable with the price paid...the key here has been speed and decisiveness in making sure that we won,"" said Standard Chartered chief executive Mervyn Davies at a London press conference. Standard Chartered said KFB was a ""well-managed, conservatively run bank with a highly skilled workforce"" and represented a ""significant acquisition in a growth market"". In London, Standard Chartered's sale of 118 million new shares to institutional investors pushed its share price down, and contributing to the FTSE 100's 0.3% decline. Standard Chartered's shares were 28 pence lower at 925p by midday. Some analysts also queried whether Standard Chartered had overpaid for KFB. The deal, which requires regulatory approval, is expected to be completed by April 2005 and to be earnings accretive in 2006, Standard Chartered said.
 
 Rival banking giant HSBC, which is based in London and Hong Kong, was also in the running. Standard Chartered is believed to have gained the initiative by putting together a bid during the Christmas break. ""They were able to move so quickly it caught HSBC by surprise,"" the Financial Times newspaper quoted an insider in the talks as saying. HSBC will now have to wait for the next South Korean bank in line to be sold off - thought likely to be Korea Exchange Bank, also currently in the hands of a US group. Standard Chartered said it was buying 100% of KFB, an agreement that would bring an end to the bank's complex dual ownership. The South Korean government owns 51.4% of KFB, while the remaining shareholding, and operational control, are in the hands of US private equity group Newbridge Capital. Newbridge bought its stake during the government's nationalisation of several banks in the wake of the 1997 Asia-wide currency crisis which crippled South Korea's financial institutions.
 
 South Korea's economy is expected to grow by 4.5% this year. Although often thought of an export-driven economy, South Korea's service sector has overtaken manufacturing in the last decade or so. Services now make up roughly 40% of the economy, and consumer spending and retail banking have become increasingly important. In the aftermath of the Asian financial crisis, the government encouraged the growth of consumer credit. Bad loan problems followed; LG Card, the country's biggest credit card provider, has been struggling to avoid bankruptcy for months, for instance. But analysts believe South Korea's financial services industry is still in its infancy, offering plenty of scope for new products. Standard Chartered sees ""the opportunity to create value by the introduction of more sophisticated banking products"". Since 1999, KFB has been restructured from a wholesale bank into a retail bank focused on mortgage lending, which makes up 45% of its loans.
",business
"ECB holds rates amid growth fears
 
 The European Central Bank has left its key interest rate unchanged at 2% for the 19th month in succession.
 
 Borrowing costs have remained on hold amid concerns about the strength of economic growth in the 12 nations sharing the euro, analysts said. Despite signs of pick-up, labour markets and consumer demand remain sluggish, while firms are eyeing cost cutting measures such as redundancies. High oil prices, meanwhile, have put upward pressure on the inflation rate.
 
 Surveys of economists have shown that the majority expect borrowing costs to stay at 2% in coming months, with an increase of a quarter of a percentage point predicted some time in the second half of the year. If anything, there may be greater calls for an interest rate cut, especially with the euro continuing to strengthen against the dollar. ""The euro land economy is still struggling with this recovery,"" said economist Dirk Schumacher. The ECB ""may sound rather hawkish but once the data allows them to cut again, they will."" Data coming out of Germany on Thursday underlined the problems facing European policy makers. While Germany's economy expanded by 1.7% in 2004, growth was driven by export sales and lost some of its momentum in the last three months of the year.
 
 The strength of the euro is threatening to dampen that foreign demand in 2005, and domestic consumption currently is not strong enough to take up the slack. Inflation in the eurozone, however, is estimated at about 2.3% in December, above ECB guidelines of 2%. ECB President Jean-Claude Trichet has remained upbeat about prospects for the region, and inflation is expected to drop below 2% later in 2005. The ECB has forecast economic growth in the eurozone of 1.9% in 2005.
",business
"Rank 'set to sell off film unit'
 
 Leisure group Rank could unveil plans to demerge its film services unit and sell its media business, reports claim.
 
 Rank, formerly famous for the Carry On series, will expose the shake-up at the announcement of its results on Friday, the Sunday Telegraph reported. Advisors Goldman Sachs are understood to have valued its demerged Deluxe Film unit at £300m, the report added. Speculation of a possible shake-up has mounted since Rank announced a study into a possible demerger in September. Since Mike Smith's appointment as chief executive in 1999, the group has focused on fewer businesses and embarked on a major cost-cutting programme which has seen it dispose of a number of businesses, including the Odeon cinema chain and the Pinewood studios. The move left the group with three core divisions: gaming, Hard Rock and Deluxe Films, which provides technical services to Hollywood studios.
 
 Rank now aims to concentrate on its gaming, bars and hotels business, including extending its Hard Rock brand to its casinos - trials of which have been a success. It also owns Deluxe Media, which makes and distributes DVDs and videos. However, that business is seen as less successful. Last year it made profits of £21.5m on a turnover of £392.1m and experts suggest its success in moving to DVDs from VHS video could make it an attractive target for a private equity buyer. A spokesman for the firm refused to comment on the reports, but said any results from the demerger study were likely to be set out when it unveiled its results on Friday. Analysts predict the firm is likely to report a slight drop in annual pre-tax profits to £170m from £194m last year. Formed in the 1940s the firm was a leading UK film producer and cinema owner for many years. It has now diversified into a range of other leisure activities - mainly in the UK - including hotels, roadside service areas and holiday centres. It now owns 34 Grosvenor casinos, the Mecca Bingo chain and more than 100 Hard Rock Cafes in 38 countries.
",business
"US adds more jobs than expected
 
 The US economy added 337,000 jobs in October - a seven-month high and far more than Wall Street expectations.
 
 In a welcome economic boost for newly re-elected President George W Bush, the Labor Department figures come after a slow summer of weak jobs gains. Jobs were created in every sector of the US economy except manufacturing. While the separate unemployment rate went up to 5.5% from 5.4% in September, this was because more people were now actively seeking work.
 
 The 337,000 new jobs added to US payrolls in October was twice the 169,000 figure that Wall Street economists had forecast. In addition, the Labor Department revised up the number of jobs created in the two previous months - to 139,000 in September instead of 96,000, and to 198,000 in August instead of 128,000. The better than expected jobs data had an immediate upward effect on stocks in New York, with the main Dow Jones index gaining 45.4 points to 10,360 by late morning trading. ""It looks like the job situation is improving and that this will support consumer spending going into the holidays, and offset some of the drag caused by high oil prices this year,"" said economist Gary Thayer of AG Edwards & Sons.
 
 Other analysts said the upbeat jobs data made it more likely that the US Federal Reserve would increase interest rates by a quarter of a percentage point to 2% when it meets next week. ""It should empower the Fed to clearly do something,"" said Robert MacIntosh, chief economist with Eaton Vance Management in Boston. Kathleen Utgoff, commissioner of the Bureau of Labor, said many of the 71,000 new construction jobs added in October were involved in rebuilding and clean-up work in Florida, and neighbouring Deep South states, following four hurricanes in August and September. The dollar rose temporarily on the job creation news before falling back to a new record low against the euro, as investors returned their attention to other economic factors, such as the US's record trade deficit. There is also speculation that President Bush will deliberately try to keep the dollar low in order to assist a growth in exports.
",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.
",business
"Pension hitch for long-living men
 
 Male life expectancy is much higher than originally estimated, leading pension researchers have said.
 
 The Pensions Policy Institute (PPI) said life expectancy for unskilled and professional men has been understated. Life expectancy at birth is 71 years for a manual worker and 79 years for a professional - a gap of eight years. But if measured at age 65 instead, the PPI said, a manual worker will live to 81 years and a professional worker to 86 years - a gap of just five years. The PPI's estimate is higher because it excludes people who have died before they reach 65 years of age and also takes into account ongoing improvements in life expectancy.
 
 The government has ruled out raising the state pension age, because it says it would penalise lower-skilled workers who generally have lower life expectancies. Chris Curry, PPI research director, said its calculations suggested there could be more pressure on state pension spending than originally envisaged. ""Even people in social class V [unskilled manual workers] who are widely likely to have the lowest life expectancy can still expect to live 16 years after state pension age,"" he said. Researchers have not updated life expectancy projections for women, who on average live longer than men.
",business
"Asian quake hits European shares
 
 Shares in Europe's leading reinsurers and travel firms have fallen as the scale of the damage wrought by tsunamis across south Asia has become apparent.
 
 More than 23,000 people have been killed following a massive underwater earthquake and many of the worst hit areas are popular tourist destinations. Reisurance firms such as Swiss Re and Munich Re lost value as investors worried about rebuilding costs. But the disaster has little impact on stock markets in the US and Asia.
 
 Currencies including the Thai baht and Indonesian rupiah weakened as analysts warned that economic growth may slow. ""It came at the worst possible time,"" said Hans Goetti, a Singapore-based fund manager. ""The impact on the tourist industry is pretty devastating, especially in Thailand."" Travel-related shares dropped in Europe, with companies such as Germany's TUI and Lufthansa and France's Club Mediterranne sliding. Insurers and reinsurance firms were also under pressure in Europe.
 
 Shares in Munich Re and Swiss Re - the world's two biggest reinsurers - both fell 1.7% as the market speculated about the cost of rebuilding in Asia. Zurich Financial, Allianz and Axa also suffered a decline in value.
 
 However, their losses were much smaller, reflecting the market's view that reinsurers were likely to pick up the bulk of the costs. Worries about the size of insurance liabilities dragged European shares down, although the impact was exacerbated by light post-Christmas trading. Germany's benchmark Dax index closed the day 16.29 points lower at 3.817.69 while France's Cac index of leading shares fell 5.07 points to 3.817.69. Investors pointed out, however, that declines probably would be industry specific, with the travel and insurance firms hit hardest. ""It's still too early for concrete damage figures,"" Swiss Re's spokesman Floiran Woest told Associated Press. ""That also has to do with the fact that the damage is very widely spread geographically.""
 
 The unfolding scale of the disaster in south Asia had little immediate impact on US shares, however. The Dow Jones index had risen 20.54 points, or 0.2%, to 10,847.66 by late morning as analsyts were cheered by more encouraging reports from retailers about post-Christmas sales. In Asian markets, adjustments were made quickly to account for lower earnings and the cost of repairs. Thai Airways shed almost 4%. The country relies on tourism for about 6% of its total economy. Singapore Airlines dropped 2.6%. About 5% of Singapore's annual gross domestic product (GDP) comes from tourism. Malaysia's budget airline, AirAsia fell 2.9%. Resort operator Tanco Holdings slumped 5%.
 
 Travel companies also took a hit, with Japan's Kinki Nippon sliding 1.5% and HIS dropping 3.3%. However, the overall impact on Asia's largest stock market, Japan's Nikkei, was slight. Shares fell just 0.03%. Concerns about the strength of economic growth going forward weighed on the currency markets. The Indonesian rupiah lost as much as 0.6% against the US dollar, before bouncing back slightly to trade at 9,300. The Thai baht lost 0.3% against the US currency, trading at 39.10. In India, where more than 2,000 people are thought to have died, the rupee shed 0.1% against the dollar Analysts said that it was difficult to predict the total cost of the disaster and warned that share prices and currencies would come under increasing pressure as the bills mounted.
",business
"Honda wins China copyright ruling
 
 Japan's Honda has won a copyright case in Beijing, further evidence that China is taking a tougher line on protecting intellectual property rights.
 
 A court ruled that Chongqing Lifan Industry Group must stop selling Honda brand motorbikes and said it must pay 1.47m yuan ($177,600) in compensation. Internationally recognized regulation is now a key part of China's plans for developing its economy, analysts said. Beijing also has been threatened with sanctions if it fails to clamp down.
 
 Chinese firms copy products ranging from computer software and spark plugs to baby milk and compact discs. Despite the fact that product piracy is a major problem, foreign companies have only occasionally won cases and the compensation awarded has usually been small. Still, recent rulings and announcements will have boosted optimism that attitudes are changing. Earlier this week China said that in future it will punish violators of intellectual property rights with up to seven years in jail. And on Tuesday, Paws Incorporated - the owner of the rights to Garfield the cat - won a court battle against a publishing house that violated its copyright. Other firms that have taken legal action in China, with varying degrees of success, include Yamaha, General Motors and Toyota.
 
 The problem of piracy is not limited to China, however, and the potential for profit is huge. The European Union estimates that the global trade in pirated wares is worth more than 200bn euros a year (£140bn; $258bn), or about 5% of total world trade. And it is growing. Between 1998 and 2002, the number of counterfeit or pirated goods intercepted at the EU's external borders increased by more than 800%, it said. Last month the EU said it will start monitoring China, Ukraine and Russia to ensure they are going after pirated goods. Other countries on the EU's hit list include Thailand, Brazil, South Korea and Indonesia. Any countries that are not making enough of an effort could be dragged to the World Trade Organisation (WTO), a step that could trigger economic sanctions, the EU warned.
",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.""
",business
"Macy's owner buys rival for $11bn
 
 US retail giant Federated Department Stores is to buy rival May Department Stores for $11bn (£5.7bn).
 
 The deal will bring together famous stores like Macy's, Bloomingdale's and Marshall Field's, creating the largest department store chain in the US. The combined firm will operate about 1,000 stores across the US, with combined annual sales of $30bn. The two companies, facing competition from the likes of Wal-Mart, tried to merge two years ago but talks failed. Sources familiar with the deal said that negotiations between the two companies sped up after May's chairman and chief executive Gene Kahn resigned in January. As part of the deal, Federated - owner of Macy's and Bloomingdale's - will assume $6bn of May's debt, bringing the deal's total value to $17bn. Directors at both companies have approved the deal and it is expected to conclude by the third quarter of this year.
 
 May has struggled to compete against larger department store groups such as Federated and other retailers such as Wal-Mart. Federated expects the merger to boost earnings from 2007 but the deal will cost it $1bn in one-off charges.
 
 ""We have taken the first step toward combining two of the best department store companies in America, creating a new retail company with truly national scope and presence,"" said Terry Lundgren, Federated's chairman. Some analysts see the merger as a rescue deal for May. ""Without this deal May would have been, to put it bluntly, washed up,"" said Kurt Barnard, president of Barnard's Retail Consulting Group. Federated has annual sales of $15.6bn, while May's yearly sales are $14.4bn.
",business
"China suspends 26 power projects
 
 China has ordered a halt to construction work on 26 big power stations, including two at the Three Gorges Dam, on environmental grounds.
 
 The move is a surprising one because China is struggling to increase energy supplies for its booming economy. Last year 24 provinces suffered black outs. The State Environmental Protection Agency said the 26 projects had failed to do proper environmental assessments. Topping the list was a controversial dam on the scenic upper Yangtze River. ""Construction of these projects has started without approval of the assessment of their environmental impact... they are typical illegal projects of construction first, approval next,"" said SEPA vice-director Pan Yue, in a statement on the agency's website.
 
 Some of the projects may be allowed to start work again with the proper permits, but others would be cancelled, he said. Altogether, the agency ordered 30 projects halted. Other projects included a petrochemicals plant and a port in Fujian. The bulk of the list was made up of new power plants, with some extensions to existing ones. The stoppages would appear to be another step in the central government's battle to control projects licensed by local officials. However, previous crackdowns have tended to focus on projects for which the government argued there was overcapacity, such as steel and cement. The government has encouraged construction of new electricity generating capacity to solve chronic energy shortages which forced many factories onto part-time working last year. In 2004, China increased its generating capacity by 12.6%, or 440,700 megawatts (MW). The biggest single project to be halted was the Xiluodi Dam project, designed to produce 12,600 MW of electricity. It is being built on the Jinshajiang - or 'river of golden sand' as the upper reaches of the Yangtze are known. Second and third on the agency's list were two power stations being built at the $22bn Three Gorges Dam project on the central Yangtze - an underground 4,200 MW power plant and a 100 MW plant.
 
 The Three Gorges Dam has proved controversial in China - where more than half a million people have been relocated to make way for it - and abroad. It has drawn criticism from environmental groups and overseas human rights activists. The damming of the Upper Yangtze has also begun to attract criticism from environmentalists in China. In April 2004, central government officials ordered a halt to work on the nearby Nu River, which is part of a United Nations world heritage site, the Three Parallel Rivers site which covers the Yangtze, Mekong and Nu (also known as the Salween), according to the UK-published China Review. That move reportedly followed a protest from the Thai government about the downstream impact of the dams, and a critical documentary made by Chinese journalists. China's energy shortage influenced global prices for oil, coal and shipping last year.
",business
"High fuel prices hit BA's profits
 
 British Airways has blamed high fuel prices for a 40% drop in profits.
 
 Reporting its results for the three months to 31 December 2004, the airline made a pre-tax profit of £75m ($141m) compared with £125m a year earlier. Rod Eddington, BA's chief executive, said the results were ""respectable"" in a third quarter when fuel costs rose by £106m or 47.3%. BA's profits were still better than market expectation of £59m, and it expects a rise in full-year revenues.
 
 To help offset the increased price of aviation fuel, BA last year introduced a fuel surcharge for passengers.
 
 In October, it increased this from £6 to £10 one-way for all long-haul flights, while the short-haul surcharge was raised from £2.50 to £4 a leg. Yet aviation analyst Mike Powell of Dresdner Kleinwort Wasserstein says BA's estimated annual surcharge revenues - £160m - will still be way short of its additional fuel costs - a predicted extra £250m. Turnover for the quarter was up 4.3% to £1.97bn, further benefiting from a rise in cargo revenue. Looking ahead to its full year results to March 2005, BA warned that yields - average revenues per passenger - were expected to decline as it continues to lower prices in the face of competition from low-cost carriers. However, it said sales would be better than previously forecast. ""For the year to March 2005, the total revenue outlook is slightly better than previous guidance with a 3% to 3.5% improvement anticipated,"" BA chairman Martin Broughton said. BA had previously forecast a 2% to 3% rise in full-year revenue.
 
 It also reported on Friday that passenger numbers rose 8.1% in January. Aviation analyst Nick Van den Brul of BNP Paribas described BA's latest quarterly results as ""pretty modest"". ""It is quite good on the revenue side and it shows the impact of fuel surcharges and a positive cargo development, however, operating margins down and cost impact of fuel are very strong,"" he said. Since the 11 September 2001 attacks in the United States, BA has cut 13,000 jobs as part of a major cost-cutting drive. ""Our focus remains on reducing controllable costs and debt whilst continuing to invest in our products,"" Mr Eddington said. ""For example, we have taken delivery of six Airbus A321 aircraft and next month we will start further improvements to our Club World flat beds."" BA's shares closed up four pence at 274.5 pence.
",business
"Ebbers denies WorldCom fraud
 
 Former WorldCom chief Bernie Ebbers has denied claims that he knew accountants were doctoring the books at the firm.
 
 Speaking in court, Mr Ebbers rejected allegations he pressured ex-chief financial officer Scott Sullivan to falsify company financial statements. Mr Sullivan ""made accounting decisions,"" he told the federal court, saying his finance chief had ""a keen command of the numbers"". Mr Ebbers has denied charges of fraud and conspiracy. During his second day of questioning in the New York trial Mr Ebbers played down his working relationship with Mr Sullivan and denied he frequently met him to discuss company business when questioned by the prosecution.
 
 ""In a lot of weeks, we would speak ... three or four times,"" Mr Ebbers said, adding that conversations about finances were rarely one-on-one and were usually discussed by a ""group of people"" instead.
 
 Mr Ebbers relationship to Mr Sullivan is key to the case surrounding financial corruption that led to the collapse of the firm in 2002 following the discovery of an $11bn accounting fraud. The prosecution's star witness is Mr Sullivan, one of six WorldCom executives indicted in the case, He has pleaded guilty to fraud and appeared as a prosecution witness as part of an agreement with prosecutors. During his time on the witness stand Mr Sullivan repeatedly told jurors he met frequently with Mr Ebbers, told him about changes made to WorldCom's accounts to hide costs and had warned him such practises were improper. However during the case on Tuesday Mr Ebbers denied the allegations. ""I wasn't advised by Scott Sullivan of anything ever being wrong,"" he told the court. ""He's never told me he made an entry that wasn't right. If he had, we wouldn't be here today."" Mr Ebbers could face a jail sentence of up to 85 years if convicted of all the charges he is facing. Shareholders lost about $180bn in WorldCom's collapse, 20,000 workers lost their jobs and the company went bankrupt. The company emerged from bankruptcy last year and is now known as MCI.
",business
"Oil prices fall back from highs
 
 Oil prices retreated from four-month highs in early trading on Tuesday after producers' cartel Opec said it was now unlikely to cut production.
 
 Following the comments by acting Opec secretary general Adnan Shihab-Eldin, US light crude fell 32 cents to $51.43 a barrel. He said that high oil prices meant Opec was unlikely to stick to its plan to cut output in the second quarter. In London, Brent crude fell 32 cents to $49.74 a barrel.
 
 Opec members are next meeting to discuss production levels on 16 March. On Monday, oil prices rose for a sixth straight session, reaching a four-month high as cold weather in the US threatened stocks of heating oil. US demand for heating oil was predicted to be about 14% above normal this week, while stocks were currently about 7.5% below the levels of a year ago. Cold weather across Europe has also put upward pressure on crude prices.
",business
"Bank voted 8-1 for no rate change
 
 The decision to keep interest rates on hold at 4.75% earlier this month was passed 8-1 by the Bank of England's rate-setting body, minutes have shown.
 
 One member of the Bank's Monetary Policy Committee (MPC) - Paul Tucker - voted to raise rates to 5%. The news surprised some analysts who had expected the latest minutes to show another unanimous decision. Worries over growth rates and consumer spending were behind the decision to freeze rates, the minutes showed. The Bank's latest inflation report, released last week, had noted that the main reason inflation might fall was weaker consumer spending.
 
 However, MPC member Paul Tucker voted for a quarter point rise in interest rates to 5%. He argued that economic growth was picking up, and that the equity, credit and housing markets had been stronger than expected.
 
 The Bank's minutes said that risks to the inflation forecast were ""sufficiently to the downside"" to keep rates on hold at its latest meeting. However, the minutes added: ""Some members noted that an increase might be warranted in due course if the economy evolved in line with the central projection"". Ross Walker, UK economist at Royal Bank of Scotland, said he was surprised that a dissenting vote had been made so soon. He said the minutes appeared to be ""trying to get the market to focus on the possibility of a rise in rates"". ""If the economy pans out as they expect then they are probably going to have to hike rates."" However, he added, any rate increase is not likely to happen until later this year, with MPC members likely to look for a more sustainable pick up in consumer spending before acting.
",business
"US trade deficit widens sharply
 
 The gap between US exports and imports has widened to more than $60bn (£31.7bn), an all-time record.
 
 Figures from the Commerce Department for November showed exports down 2.3% to $95.6bn, while imports grew 1.3% to $155.8bn on rising consumer demand. Part of the expanding deficit came from high prices for oil imports. But the numbers suggested the sliding dollar - which makes exports less expensive - has had little impact, and could indicate slowing economic growth.
 
 The trade deficit - far bigger than the $54bn widely expected on Wall Street - prompted a rapid response from the currency markets.
 
 By 1650 GMT, the dollar was trading against the euro at $1.3280, almost a cent and a half weaker than before the announcement. Against the pound, the dollar was down about 0.7% at $1,8923. ""The dollar's fall has been sudden, violent and appropriate given this number,"" said Brian Taylor of Wells Fargo in Minneapolis. ""Recent exchange rate movements certainly haven't had any impact yet."" Treasury Secretary John Snow put a brave face on the news, saying it was a sign of strong economic expansion. ""The economy is growing at such a fast rate that it is generating lots of disposable income... some of which is used to buy goods from our trading partners.""
 
 Although the White House officially still backs the US's traditional ""strong dollar"" policy, it has tacitly indicated that it would be happy if the slide continued. The dollar has fallen by 50% against the euro - as well as by 30% against the yen - in the past three years. The main catalyst, most economists accept, is the large budget deficit on the one hand, and the current account deficit - the difference between the flow of money in and out of the US - on the other. The trade deficit is a large part of the latter. In November, the fall in exports was largely due to a decline in sales of industrial supplies and materials such as chemicals, as well as of cars, consumer goods and food. One small bright spot for US policy-makers was a slight decline in the deficit with China, often blamed for job losses and other economic woes. Although China's overall trade surplus is expanding, according to Chinese government figures, the Commerce Department revealed the US's deficit with China was $19.6bn in November, down from $19.7bn the month before. But the deficit with Japan was at its worst in more than four years.
",business
"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.
",business
"Hyundai to build new India plant
 
 South Korea's Hyundai Motor has announced that it plans to build a second plant in India to meet the country's growing demand for cars.
 
 The company didn't give details of its investment but it said the new plant would produce 150,000 cars a year. This will boost the annual production capacity of the company - India's second-largest car manufacturer - to 400,000 units. Hyundai expects its sales in India to grow 16% to 250,000 in 2005. By 2010, it expects to nearly double sales to 400,000 cars. The new plant will be built close to the existing one in Chennai, in the southern province of Tamil Nadu.
 
 South Korea's top car maker estimates that the Indian market will grow 15% this year, to 920,000 vehicles, reaching 1.6 million vehicles by 2010. Demand in India has been driven by the poor state of public transport and the very low level of car ownership, analysts said. Figures show that currently only eight people per thousand are car owners. ""We desperately need to expand our production in order to meet growing demand in the Indian auto market, which is growing over 12 percent every year, and to top our competitors,"" chairman Chung Mong-koo said in the statement. He said the company plans to use India as a base for exports to Europe, Latin America and the Middle East. The company - which controls half of the South Korean's market - aims to become a global top five auto maker by 2010.
",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.
",business
"German jobless rate at new record
 
 More than 5.2 million Germans were out of work in February, new figures show.
 
 The figure of 5.216 million people, or 12.6% of the working-age population, is the highest jobless rate in Europe's biggest economy since the 1930s. The news comes as the head of Germany's panel of government economic advisers predicted growth would again stagnate. Speaking on German TV, Bert Ruerup said the panel's earlier forecast of 1.4% was too optimistic and warned growth would be just 1% in 2005.
 
 The German government is trying to tackle the stubbornly-high levels of joblessness with a range of labour market reforms. At their centre is the ""Hartz-IV"" programme introduced in January to shake up welfare benefits and push people back into work - even if some of the jobs are heavily subsidised. The latest unemployment figures look set to increase the pressure on the government. Widely leaked to the German newspapers a day in advance, they produced screaming headlines criticising Chancellor Gerhard Schroeder's Social Democrat-Green Party administration. Mr Schroeder had originally come into office promising to halve unemployment.
 
 Still, some measures suggest the picture is not quite so bleak. The soaring official unemployment figure follows a change in the methodology which pushed up the jobless rate by more than 500,000 in January. Adjusted for seasonal changes, the overall unemployment rate is 4.875 million people or 11.7%, up 0.3 percentage points from the previous month. Using the most internationally-accepted methodology of the International Labour Organisation (ILO), Germany had 3.97 million people out of work in January. And ILO-based figures also suggest that 14,000 new net jobs were created that month, taking the number of people employed to 38.9 million. The ILO defines an unemployed person as someone who in the previous four weeks had actively looked for work they could take up immediately.
",business
"S Korean lender faces liquidation
 
 Creditors of South Korea's top credit card firm have said they will put the company into liquidation if its ex-parent firm fails to back a bail-out.
 
 LG Card's creditors have given LG group until Wednesday to sign up to a $1.1bn rescue package. The firm avoided bankruptcy thanks to a $4.5bn bail-out in January 2004, which gave control to the creditors. LG Group has said any package should reflect the firm's new ownership, and it will not accept an unfair burden. At least seven million people in South Korea use LG Card's plastic for purchases.
 
 LG Card's creditors have threatened parent group LG Group with penalties if it fails to respond to their demands.
 
 ""Creditors would seek strong financial sanctions against LG Group if LG Card is liquidated,"" said Yoo Ji-chang, governor of Korean Development Bank (KDB) - one of the card firm's major creditors. LG Group has said providing further help to the credit card issuer could hurt its corporate credibility and could spark shareholder lawsuits. It says it wants ""fair and reasonable guidelines"" on splitting the financial burden with the creditors, who now own 99.3% of LG Card. The creditors have asked the government to mediate to avoid any risk to the stability of financial markets, KDB said. Analysts believe a compromise is likely. ""LG Group knows the impact on consumer demand and the national economy from a liquidation of LG Card,"" said Kim Yungmin, an equity strategist at Dongwon Investment Trust Management.
 
 LG Card almost collapsed in 2003 due to an increase in overdue credit card bills after the bursting of a credit bubble. The firm returned to profit in September 2004, but now needs a capital injection to avoid being delisted from the Korea Stock Exchange. The exchange can delist a company if its debt exceeds its assets for two years running. LG card's creditors fear that such a move would triggered massive debt redemption requests that could bankrupt the firm, which owes about $12.05bn. ""Eventually, LG Group will have to participate, but they have been stalling to try to earn better concessions,"" said Mr Kim.
",business
"Asian banks halt dollar's slide
 
 The dollar regained some lost ground against most major currencies on Wednesday after South Korea and Japan denied they were planning a sell-off.
 
 The dollar suffered its biggest one-day fall in four months on Tuesday on fears that Asian central banks were about to lower their reserves of dollars. Japan is the biggest holder of dollar reserves in the world, with South Korea the fourth largest. The dollar was buying 104.76 yen at 0950 GMT, 0.5% stronger on the day. It also edged higher against both the euro and the pound, with one euro worth $1.3218, and one pound buying $1.9094. Concerns over rising oil prices and the outlook for the dollar pushed down US stock markets on Tuesday; the Dow Jones industrial average closed down 1.6%, while the Nasdaq lost 1.3%.
 
 The dollar's latest slide began after a South Korean parliamentary report suggested the country, which has about $200bn in foreign reserves, had plans to boost holdings of currencies such as the Australian and Canadian dollar. On Wednesday, however, South Korea moved to steady the financial markets. It issued a statement that ""The Bank of Korea will not change the portfolio of currencies in its reserves due to short term market factors"". Japan, too, steadied nerves. A senior Japanese Finance Ministry official told Reuters ""we have no plans to change the composition of currency holdings in the foreign reserves, and we are not thinking about expanding our euro holdings"". Japan has $850bn in foreign exchange reserves. At the start of the year, the US currency, which had lost 7% against the euro in the final three months of 2004 and had fallen to record lows, staged something of a recovery. Analysts, however, pointed to the dollar's inability recently to extend that rally despite positive economic and corporate data, and highlighted the fact that many of the US's economic problems had not disappeared. The focus has been on the country's massive trade and budget deficits, and analysts have predicted more dollar weakness to come.
",business
"Krispy Kreme shares hit
 
 Shares in Krispy Kreme Doughnuts have taken a dunking on Wall Street after the firm revealed it would have to restate its 2004 financial reports.
 
 The company warned the move would cut its profits by $3.8m to $4.9m (£2m to £2.6m) - or between 6.6% and 8.6%. Krispy Kreme said accounting errors had forced the move, adding that its board of directors made the decision to restate its accounts on 28 December. However, the company was unavailable to comment on why it had delayed the news.
 
 It also warned it might have to further restate results for 2004 and 2005.
 
 Shares in Krispy Kreme sank 14.87% - or $1.83 - to close at $10.48 on the news. The revelation comes just a month after the firm warned earnings would be cut by as much as 7.6% as a result of accounting errors. Krispy Kreme said the latest adjustments involved the way it accounted for the repurchase of three franchise restaurants. It added it would now be reviewing how it accounts for its leases. In a further blow, the firm said it had been advised that some of its franchise owners were not in compliance with their loan agreements, and warned it might need to borrow extra money if it was required to honour agreements on franchisee debts or operating leases.
 
 Krispy Kreme added that it had enough cash to fund its current operations, but it could not borrow any more under its existing agreements. ""There are many more questions than answers, especially given increased concerns regarding company liquidity,"" JP Morgan Securities analyst John Ivankoe said in a research note on the firm. The announcement is the latest blow for the one-time darling of Wall Street, which has lost 80% of its stock value in just over a year. The firm is currently facing Securities and Exchange Commission investigation of its accounts. Shareholders have also launched lawsuits against the group, claiming it made false statements and inflated sales.
",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.
",business
"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.
",business
"Yukos owner sues Russia for $28bn
 
 The majority owner of embattled Russian oil firm Yukos has sued the Russian government for $28.3bn (£15.2bn).
 
 The Kremlin last year seized and sold Yukos' main production arm, Yugansk, to state-run oil group Rosneft for $9.3bn to offset a massive back tax bill. Group Menatep, the Gibraltar-based holding company which controls 51% of Yukos, says this was illegal. Menatep has already asked Rosneft to repay a $900m loan that Yugansk had secured on its assets.
 
 The Russian government's argument for selling Yuganskneftegaz - the unit's full name - was that Yukos owed more than $27bn in back taxes for the years from 2000 onwards. It accused the firm of using a web of offshore firms to avoid its tax liabilities, and the courts sent in bailiffs to freeze Yukos accounts and seize Yugansk.
 
 But critics say the sell-off, and the assault on Yukos' finances, are part of an attempt to bring the energy industry back under state control. According to Menatep, the government's actions were contrary to the 1994 Energy Charter Treaty, which was designed to regulate disagreements over energy investments. ""We have warned the Russian government about their continuing attacks against Yukos, its personnel and its shareholders and we have warned any buyer of Yuganskneftegaz that they would face a lifetime of litigation,"" said Tim Osborne, a director of Group Menatep. ""The time for warning is over and actions to recover the value of our losses begin in earnest today.""
 
 Menatep said the value of its Yukos shareholding had gone from $17.8bn to ""virtually nothing"" since 2003 as a result of the Russian government's action, as its shares have fallen 97%. According to its Paris lawyer, Emmanuel Gaillard of Shearman and Sterling, the overall claim is based on that figure, with a 60% addition for the share gains that could have accrued since then. Arbitration of the lawsuit could take place in Stockholm or The Hague, Mr Gaillard said. While Russia has signed the Charter, it has never ratified it - which some experts say could make it difficult for Menatep to press its case. But Mr Gaillard told BBC News that the Charter came into effect on signature, not ratification. ""Russia has said in the past that it is bound by it, so as to attract foreign investors,"" he said.
 
 Yukos is still waiting to see what will happen to its filing in a US court for bankruptcy protection. It took the action to try to prevent the forced sale of Yugansk - first to a little-known shell company, which in turn was bought by Rosneft. Yukos claims its downfall was punishment for the political ambitions of its founder Mikhail Khodorkovsky. Mr Khodorkovsky, currently facing fraud and tax evasion charges of his own, was one of the founders of Menatep. He has since signed over his shareholding to one of his fellow investors.
",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.
",business
"Irish company hit by Iraqi report
 
 Shares in Irish oil company Petrel Resources have lost more than 50% of their value on a report that the firm has failed to win a contract in Iraq.
 
 Reuters news agency reported that Iraq's Oil Ministry has awarded the first post-war oilfield contracts to a Canadian and a Turkish company. By 1700 GMT, Petrel's shares fell from 97p ($1.87) to 44p ($0.85). Petrel said that it has not received any information from Iraqi authorities to confirm or deny the report.
 
 Iraq is seeking to award contracts for three projects, valued at $500m (£258.5m). Turkey's Everasia is reported by Reuters to have won a contract to develop the Khurmala Dome field in the north of the country. A Canadian company, named IOG, is reported to have won the contract to run the Himrin field. Ironhorse Oil and Gas has denied to Reuters that it is the company in question. These two projects aim to develop Khurmala field to produce 100,000 barrels per day and raise the output of Himrin. The winners of the contract are to build new flow lines and build gas separation stations. The contract to develop the Suba-Luhais field has not yet been awarded as Iraq's Oil Ministry is studying the offers. If Iraq's cabinet approves the oil ministry's choice of companies, then this will be the first deal that Iraq has signed with a foreign oil company. Iraq is still trying to boost its production capacity to match levels last seen in the eighties, before the war with Iran. Oil officials hope to double Iraq's output by the end of the decade.
",business
"Booming markets shed few tears
 
 The market, former British government minister Michael Heseltine once said, has no morality.
 
 And indeed, stock exchange traders around Asia have wasted little time regretting the victims of this week's disaster. Stock markets in Indonesia and India have hit all-time highs this week; even in Sri Lanka, more comprehensively affected, the main index has lost only 5% since the waves hit. Bigger markets further afield have barely twitched. The MSCI World share index, a measure of global stock market performance, hit its highest level this week since early 2001; the BBC Global 30 has risen by 3% in the past week. And this at a time when - all sentiment aside - insurance costs are already estimated in the tens of billions of dollars, and countries around the region are looking at trimming their growth forecasts.
 
 In fact, the markets are being perfectly rational.
 
 For a start, the notional insurance cost of the disaster will have little bearing on corporate bottom lines. The overwhelming majority of the victims will have had no insurance: according to estimates from India, only one-quarter of those affected there were wealthy enough to afford insurance, and only one-quarter of that group at most will have taken out policies. Indonesia is likely to have even lower take-up rates. And where insurance certainly is in place - in, for example, the many tourist complexes affected - the costs will be borne in far-away corners of the global reinsurance market, rather than landing locally.
 
 Second, stock markets do not trade the sort of companies likely to have been damaged. Most of the biggest companies traded on the soaring Jakarta Stock Exchange are in oil, technology and financial services - none of which have been hit by the flooding. Tourist businesses, the most likely sufferers, are either foreign-owned or too small to have their shares listed. Those that are listed have suffered: Confifi Hotel Holdings, a small Sri Lankan tourism firm, has halved in value this week. But there are winners as well as losers. Asian stock markets are heavily inclined towards property and construction companies, many of which will be rubbing their hands over the reconstruction opportunities. In Indonesia, shares in state construction companies Adhi Karya and Semen Gresik have jumped sharply this week.
 
 More broadly, the academic consensus is that major disasters are largely neutral in their longer-term economic impact.
 
 According to the Natural Hazards Research and Applications Information Center at Colorado State University, there is little evidence that disasters are inevitably followed by a depression. The need to find money to replace lost and damaged property is balanced by the beneficial effect of reconstruction activity; there is rarely, the centre says, any sort of rebuilding boom, but in most cases sizeable indirect losses are avoided. A study of the 1993 Des Moines floods, from the Disaster Research Center at the University of Delaware*, found that 70% of local businesses were no worse off after the disaster, and another 18% felt themselves better off. ""Although it is commonly assumed on the basis of anecdotal evidence that disasters result in business failures and bankruptcies on a large scale, our research indicates that most businesses, even those that are especially hard-hit, do indeed recover,"" the authors concluded.
 
 But disasters have a vast psychological impact, and markets are driven by psychological factors.
 
 In particular, many analysts warn of panic spreading unchecked through the global financial system, as investors seek to cover themselves against the unforeseeable effects of unguessable events. In fact, again, the risks here are lower than they seem. Even the costliest natural disaster is rendered minuscule by the global capital market - currently $30 trillion and rising. A series of recent shocks, the Colorado centre has argued, have demonstrated that this seamless global contagion hardly ever happens: market tremors rarely translate into economic slumps, and economic woes rarely seriously undermine markets. The trillion-dollar debts of Japan's banks, for example, have had no effect on stock markets further afield than Tokyo. And the US stock market was on its way down long before 11 September, 2001; it rose by 20% during the six months following the attacks. ""It is not that the broking community is indifferent to disasters or feelings,"" one Bombay trader said this week. ""But the reaction would have been seen if business had been affected. Business sense probably tends to overrule everything else.""
",business
"UK homes hit £3.3 trillion total
 
 The value of the UK's housing stock reached the £3.3 trillion mark in 2004 - triple the value 10 years earlier, a report indicates.
 
 Research from Halifax, the country's biggest mortgage lender, suggests the value of private housing stock is continuing to rise steadily. All regions saw at least a doubling in their assets during the past decade. But Northern Ireland led the way with a 262% rise, while Scotland saw the smallest increase of just 112%.
 
 The core retail price index rose by just 28% in the same period, underlining how effective an investment in housing has been for most people during the past decade. More than a third of the UK's private housing assets - representing more than a trillion pounds in value - are concentrated in London and the South East, the Halifax's figures indicate. Tim Crawford, Group Economist at Halifax, said: ""The value of the private housing stock continues to grow and the family home remains, by a large margin, the most valuable asset of the majority of households in the UK."" Halifax's own monthly figures on house sales - issued on Thursday - suggest the average price of a British property now stands at £163,748 after a 0.8% rise in January. Housing experts are split on prospects for the market, with some saying price growth will slow but not fall, while others predict a sharp drop in values.
",business
"Survey confirms property slowdown
 
 Government figures have confirmed a widely reported slowdown of the UK's housing market in late 2004.
 
 House prices were 11.8% higher on the year in the last quarter of 2004, down from 16.3% in the July-to-September quarter, the Land Registry said. The average house price in England and Wales was £182,920, down from £187,971 in July-September. The volume of sales between October and December dropped by nearly a quarter from the same period in 2003. The government figures are the first official confirmation of falls in the market at the end of 2004. Land Registry figures are less up to date than those of banks and building societies, since they record completions not mortgage approvals. However, the figures are viewed as the most accurate measure of house prices as they include all property transactions, including cash sales.
 
 The cost of buying a home fell in seven out of 10 regions between the third and fourth quarters of 2004.
 
 The biggest annual gains were made in Wales, where house prices were up by 23% in the fourth quarter. House prices rose the slowest in Greater London, being up by 6%. In the capital, the volume of sales fell by 23% from 36,185 in 2003 to 28,041 for the same period in 2004. There was also a decline in the number of million-pound properties sold in the capital, with 436 properties over £1m sold compared to 469 for the same period in 2003. Although the figures point to a slowdown in the market, the most recent surveys from Nationwide and Halifax have indicated the market may be undergoing a revival. After registering falls at the back end of 2004, Halifax said house prices rose by 0.8% in January and Nationwide reported a rise of 0.4% in the first month of the year. Members of the Bank of England's rate-setting committee will make their latest decision on interest rates on Thursday.
",business
"Japanese mogul arrested for fraud
 
 One of Japan's best-known businessmen was arrested on Thursday on charges of falsifying shareholder information and selling shares based on the false data.
 
 Yoshiaki Tsutsumi was once ranked as the world's richest man and ran a business spanning hotels, railways, construction and a baseball team. His is the latest in a series of arrests of top executives in Japan over business scandals. He was taken away in a van outside one of his Prince hotels in Tokyo.
 
 There was a time when Mr Tsutsumi seemed untouchable. Inheriting a large property business from his father in the 1960s, he became one of Japan's most powerful industrialists, with close connections to many of the country's leading politicians. He used his wealth and influence to bring the Winter Olympic Games to Nagano in 1998. But last year, he was forced to resign from all the posts he held in his business empire, after being accused of falsifying the share-ownership structure of Seibu Railways, one of his companies. Under Japanese stock market rules, no listed company can be more than 80% owned by its 10 largest shareholders. Now Mr Tsutsumi faces criminal charges and the possibility of a prison sentence because he made it look as if the 10 biggest shareholders owned less than this amount. Seibu Railways has been delisted from the stock exchange, its share value has plunged and it is the target of a takeover bid.
 
 Mr Tsutsumi's fall from grace follows the arrests of several other top executives in Japan as the authorities try to curb the murky business practices which were once widespread in Japanese companies. His determination to stay at the top at all costs may have had its roots in his childhood. The illegitimate third son of a rich father, who made his money buying up property as Japan rebuilt after World War II, he has described the demands his father made. ""I felt enormous pressure when I dined with him and it was nothing but pain,"" Tsutsumi told a weekly magazine in 1987. ""He scolded me for pouring too much soy sauce or told me fruit was not for children. He didn't let me use the silk futon, saying it's a luxury."" There have been corporate governance issues at some other Japanese companies too. Last year, twelve managers from Mitsubishi Motors were charged with covering up safety defects in their vehicles and three executives from Japan's troubled UFJ bank were charged with concealing the extent of the bank's bad loans.
",business
"MCI shares climb on takeover bid
 
 Shares in US phone company MCI have risen on speculation that it is in takeover talks.
 
 The Wall Street Journal reported on Thursday that Qwest has bid $6.3bn (£3.4bn) for MCI. Other firms have also expressed an interest in MCI, the second-largest US long-distance phone firm, and may now table rival bids, analysts said. Shares in MCI, which changed its name from Worldcom when it emerged from bankruptcy, were up 2.4% at $20.15. Press reports suggest that Qwest and MCI may reach an agreement as early as next week, although rival bids may muddy the waters. The largest US telephone company Verizon has previously held preliminary merger discussions with MCI, Reuters quoted sources as saying.
 
 Consolidation in the US telecommunications industry has picked up in the past few months as companies look to cut costs and boost client bases. A merger between MCI and Qwest would be the fifth billion-dollar telecoms deal since October. Last week, SBC Communications agreed to buy its former parent and phone trailblazer AT&T for about $16bn. Competition has intensified and fixed-line phone providers such as MCI and AT&T have seen themselves overtaken by rivals. Buying MCI would give Qwest, a local phone service provider, access to MCI's global network and business-based subscribers. MCI also offers internet services.
 
 MCI was renamed after it emerged from Chapter 11 bankruptcy protection in April last year. It hit the headlines as Worldcom in 2002 after admitting it illegally booked expenses and inflated profits. The scandal was a key factor in a global slide in share prices and the reverberations are still being felt today. Shareholders lost about $180bn when the company collapsed, while 20,000 workers lost their jobs. Former Worldcom boss Bernie Ebbers is currently on trial, accused of overseeing an $11bn fraud.
",business
"Winter freeze keeps oil above $50
 
 Oil prices carried on rising on Wednesday after cold weather on both sides of the North Atlantic pushed US crude prices to four-month highs.
 
 Freezing temperatures and heavy snowfalls took crude oil prices past $50 a barrel on Tuesday for the first time since November. Declines in the dollar have also contributed to the rising oil price. US crude was trading at $51.39 at 0710 GMT in Asian electronic trade on Wednesday. A barrel of US crude oil closed up $2.80 at $51.15 in New York on Tuesday. Opec members said on Tuesday that, given such high prices, the cartel saw no reason to cut its output.
 
 Although below last year's peak of $55.67 a barrel, which was reached in October, prices are now well above 2004's average of $41.48. Brent crude also rose in London trading, adding $1.89 to $48.62 at the close.
 
 Much of western Europe and the north east of America has been shivering under unseasonably low temperatures in recent days. The decline in the US dollar to a five-week low against the euro has also served to inflate prices. ""The primary factor is the weak dollar,"" said Victor Shum, a Singapore-based analyst with Purvin and Gertz. Expectations that a rebound in the dollar would halt the oil price rise were not immediately borne out on Wednesday morning, as oil prices carried on upwards as the dollar strengthened against the euro, the pound and the yen.
 
 Several Opec members said on Tuesday that a cut in production was unlikely, citing rising prices and strong demand for oil from Asia. ""I agree that we do not need to cut supply if the prices are as much as this,"" Fathi Bin Shatwan, Libya's oil minister, told Reuters. ""I do not think we need to cut unless the prices are falling below $35 a barrel,"" he added.
",business
"Golden rule boost for Chancellor
 
 Chancellor Gordon Brown has been given a £2.1bn boost in his attempts to meet his golden economic rule, which allows him to borrow only for investment.
 
 The extra leeway came after the Office for National Statistics said it had been measuring road expenditure data wrongly over the past five years. It comes just weeks ahead of the Budget and an expected general election. Shadow chancellor Oliver Letwin said: ""At best the timing of these changes is very convenient for the government.""
 
 A review by the ONS found it had made a mistake by ""double counting"" some spending on roads since 1998/9. Correcting the error would mean reducing current expenditure and increasing net investment, thus helping Mr Brown to meet his ""golden rule"" of borrowing only to invest over the economic cycle. Economists speculated that it might also allow for some vote-catching measures in the Budget.
 
 The changes by the ONS increase the current budget measure for the past five years by £2.1bn in total. Mr Letwin said: ""This is a very murky area... There will inevitably be suspicions that the figures are being fiddled."" The Conservatives also said Mr Brown would still be forced to raise taxes after the general election to fill an annual £10.5bn ""black hole"" in the nation's coffers. But the Treasury said there would be no relaxation of economic discipline and the golden rule would be met even without the data revisions.
 
 In January the independent Institute for Fiscal Studies (IFS) said Mr Brown would need to raise taxes to get public finances onto the track predicted in last year's Budget. It also said the government might narrowly miss its ""golden rule"" if the current economic cycle ended in 2005/06. After the ONS announcement, economists said there could also be a proportionate boost to the current budget in 2004/05 of about £400m. ""None of this changes the big picture of a dramatic deterioration in the overall fiscal position over the last four or five years,"" said Jonathan Loynes, chief UK economist at Capital Economics. ""Accordingly, it seems very likely that some form of fiscal consolidation will be required in due course.""
",business
"Nasdaq planning $100m-share sale
 
 The owner of the technology-dominated Nasdaq stock index plans to sell shares to the public and list itself on the market it operates.
 
 According to a registration document filed with the Securities and Exchange Commission, Nasdaq Stock Market plans to raise $100m (£52m) from the sale. Some observers see this as another step closer to a full public listing. However Nasdaq, an icon of the 1990s technology boom, recently poured cold water on those suggestions.
 
 The company first sold shares in private placements during 2000 and 2001. It technically went public in 2002 when the stock started trading on the OTC Bulletin Board, which lists equities that trade only occasionally. Nasdaq will not make money from the sale, only investors who bought shares in the private placings, the filing documents said. The Nasdaq is made up shares in technology firms and other companies with high growth potential. It was the most potent symbol of the 1990s internet and telecoms boom, nose-diving after the bubble burst. A recovery in the fortunes of tech giants such as Intel, and dot.com survivors such as Amazon has helped revive its fortunes.
",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.
",business
"Call centre users 'lose patience'
 
 Customers trying to get through to call centres are getting impatient and quicker to hang up, a survey suggests.
 
 Once past the welcome message, callers on average hang up after just 65 seconds of listening to canned music. The drop in patience comes as the number of calls to call centres is growing at a rate of 20% every year. ""Customers are getting used to the idea of an 'always available' society,"" says Cara Diemont of IT firm Dimension Data, which commissioned the survey. However, call centres also saw a sharp increase of customers simply abandoning calls, she says, from just over 5% in 2003 to a record 13.3% during last year. When automated phone message systems are taken out of the equation, where customers have to pick their way through multiple options and messages, the number of abandoned calls is even higher - a sixth of all callers give up rather than wait. One possible reason for the lack in patience, Ms Diemont says, is the fact that more customers are calling 'on the move' using their mobile phones.
 
 The surge in customers trying to get through to call centres is also a reflection of the centres' growing range of tasks. ""Once a call centre may have looked after mortgages, now its agents may also be responsible for credit cards, insurance and current accounts,"" Ms Diemont says. Problems are occurring because increased responsibility is not going hand-in-hand with more training, the survey found.
 
 In what Dimension Data calls an ""alarming development"", the average induction time for a call centre worker fell last year from 36 to just 21 days, leaving ""agents not equipped to deal with customers"". This, Ms Diemont warns, is ""scary"" and not good for the bottom line either. Poor training frustrates both call centre workers and customers. As a result, call centres have a high ""churn rate"", with nearly a quarter of workers throwing in the towel every year, which in turn forces companies to pay for training new staff. Resolution rates - the number of calls where a customer's query is resolved to mutual satisfaction - are running at just 50%. When the query is passed on to a second or third person - a specialist or manager - rates rise to about 70%, but that is still well below the industry target of an 85% resolution rate.
 
 Suggestions that ""outsourcing"" - relocating call centres to low-cost countries like India or South Africa - is to blame are wrong, Ms Diemont says.
 
 There are ""no big differences in wait time and call resolution"" between call centres based in Europe or North America and those in developing countries around the world. ""You can make call centres perform anywhere if you have good management and the right processes in place,"" she says. However, companies that decide to ""offshore"" their operations are driven not just by cost considerations. Only 42% of them say that saving money is the main consideration when closing domestic call centre operations. Half of them argue that workers in other countries offer better skills for the money. But not everybody believes that outsourcing and offshoring are the solution. Nearly two-thirds of all firms polled for the survey have no plans to offshore their call centres. They give three key reasons for not making the move:
 
 - call centre operations are part of their business ""core function"", 
  - they are worried about the risk of going abroad, 
  - they fear that they will damage their brand if they join the offshoring drive. The survey was conducted by Sunovate on behalf of Dimension Data, and is based on in-depth questionnaires of 166 call centres in 24 countries and five continents. What are your experiences with call centres? Are you happy to listen to Vivaldi or Greensleeves, or do you want an immediate response? And if you work in a call centre: did your training prepare you for your job?
",business
"Worldcom ex-boss launches defence
 
 Lawyers defending former WorldCom chief Bernie Ebbers against a battery of fraud charges have called a company whistleblower as their first witness.
 
 Cynthia Cooper, WorldCom's ex-head of internal accounting, alerted directors to irregular accounting practices at the US telecoms giant in 2002. Her warnings led to the collapse of the firm following the discovery of an $11bn (£5.7bn) accounting fraud. Mr Ebbers has pleaded not guilty to charges of fraud and conspiracy.
 
 Prosecution lawyers have argued that Mr Ebbers orchestrated a series of accounting tricks at WorldCom, ordering employees to hide expenses and inflate revenues to meet Wall Street earnings estimates. But Ms Cooper, who now runs her own consulting business, told a jury in New York on Wednesday that external auditors Arthur Andersen had approved WorldCom's accounting in early 2001 and 2002. She said Andersen had given a ""green light"" to the procedures and practices used by WorldCom. Mr Ebber's lawyers have said he was unaware of the fraud, arguing that auditors did not alert him to any problems.
 
 Ms Cooper also said that during shareholder meetings Mr Ebbers often passed over technical questions to the company's finance chief, giving only ""brief"" answers himself. The prosecution's star witness, former WorldCom financial chief Scott Sullivan, has said that Mr Ebbers ordered accounting adjustments at the firm, telling him to ""hit our books"". However, Ms Cooper said Mr Sullivan had not mentioned ""anything uncomfortable"" about WorldCom's accounting during a 2001 audit committee meeting. Mr Ebbers could face a jail sentence of 85 years if convicted of all the charges he is facing. WorldCom emerged from bankruptcy protection in 2004, and is now known as MCI. Last week, MCI agreed to a buyout by Verizon Communications in a deal valued at $6.75bn.
",business
"Giant waves damage S Asia economy
 
 Governments, aid agencies, insurers and travel firms are among those counting the cost of the massive earthquake and waves that hammered southern Asia.
 
 The worst-hit areas are Sri Lanka, India, Indonesia and Thailand, with at least 23,000 people killed. Early estimates from the World Bank put the amount of aid needed at about $5bn (£2.6bn), similar to the cash offered Central America after Hurricane Mitch. Mitch killed about 10,000 people and caused damage of about $10bn in 1998. World Bank spokesman Damien Milverton told the Wall Street Journal that he expected an aid package of financing and debt relief.
 
 Tourism is a vital part of the economies of the stricken countries, providing jobs for 19 million people in the south east Asian region, according to the World Travel and Tourism Council (WTTC). In the Maldives islands, in the Indian ocean, two-thirds of all jobs depend on tourism.
 
 But the damage covers fishing, farming and businesses too, with hundreds of thousands of buildings and small boats destroyed by the waves. International agencies have pledged their support; most say it is impossible to gauge the extent of the damage yet. The International Monetary Fund (IMF) has promised rapid action to help the governments of the stricken countries cope.
 
 ""The IMF stands ready to do its part to assist these nations with appropriate support in their time of need,"" said managing director Rodrigo Rato. Only Sri Lanka and Bangladesh currently receive IMF support, while Indonesia, the quake's epicentre, has recently graduated from IMF assistance. It is up to governments to decide if they want IMF help. Other agencies, such as the Asian Development Bank, have said that it is too early to comment on the amount of aid needed. There is no underestimating the size of the problem, however. The United Nations' emergency relief coordinator, Jan Egeland, said that ""this may be the worst national disaster in recent history because it is affecting so many heavily populated coastal areas... so many vulnerable communities. ""Many people will have [had] their livelihoods, their whole future destroyed in a few seconds."" He warned that ""the longer term effects many be as devastating as the tidal wave or the tsunami itself"" because of the risks of epidemics from polluted drinking water.
 
 Insurers are also struggling to assess the cost of the damage, but several big players believe the final bill is likely to be less than the $27bn cost of the hurricanes that battered the US earlier this year.
 
 ""The region that's affected is very big so we have to check country-by-country what the situation is"", said Serge Troeber, deputy head of the natural disasters department at Swiss Re, the world's second biggest reinsurance firm. ""I should assume, however, that the overall dimension of insured damages is below the storm damages of the US,"" he said. Munich Re, the world's biggest reinsurer, said: ""This is primarily a human tragedy. It is too early for us to state what our financial burden will be."" Allianz has said it sees no significant impact on its profitability. However, a low insurance bill may simply reflect the general poverty of much of the region, rather than the level of economic devastation for those who live there.
 
 The International Federation of the Red Cross and Red Crescent Societies told the Reuters news agency that it was seeking $6.5m for emergency aid.
 
 ""The biggest health challenges we face is the spread of waterborne diseases, particularly malaria and diarrhoea,"" the aid agency was quoted as saying. The European Union has said it will deliver 3m euros (£2.1m; $4.1m) of aid, according to the Wall Street Journal. The EU's Humanitarian Aid Commissioner, Louis Michel, was quoted as saying that it was key to bring aid ""in those vital hours and days immediately after the disaster"". Other countries also are reported to have pledged cash, while the US State Department said it was examining what aid was needed in the region. Getting companies and business up and running also may play a vital role in helping communities recover from the weekend's events.
 
 Many of the worst-hit areas, such as Sri Lanka, Thailand's Phuket island and the Maldives, are popular tourist resorts that are key to local economies.
 
 December and January are two of the busiest months for the travel in southern Asia and the damage will be even more keenly felt as the industry was only just beginning to emerge from a post 9/11 slump. Growth has been rapid in southeast Asia, with the World Tourism Organisation figures showing a 45% increase in tourist revenues in the region during the first 10 months of 2004. In southern Asia that expansion is 23%. ""India continues to post excellent results thanks to increased promotion and product development, but also to the upsurge in business travel driven by the rapid economic development of the country,"" the WTO said. ""Arrivals to other destinations such as... Maldives and Sri Lanka also thrived."" In Thailand, tourism accounts for about 6% of the country's annual gross domestic product, or about $8bn. In Singapore the figure is close to 5%. Tourism also brings in much needed foreign currency. In the short-term, however, travel companies are cancelling flights and trips. That has hit shares across Asia and Europe, with investors saying that earnings and economic growth are likely to slow.
",business
"Market unfazed by Aurora setback
 
 As the Aurora limped back to its dock on 20 January, a blizzard of photos and interviews seemed to add up to an unambiguous tale of woe.
 
 The ship had another slice of bad luck to add to its history of health scares and technical trouble. And its owner, P&O Cruises - now part of the huge US Carnival Corporation - was looking at a significant slice chopped off this year's profits and a potential PR fiasco. No-one, however, seems to have told the stock markets. The warning of a five-cent hit to 2005 earnings came just 24 hours after one of the world's biggest investment banks had upped its target for Carnival's share price, from £35 to £36.20. Other investors barely blinked, and by 1300 GMT Carnival's shares in London were down a single penny, or 0.03%, at £32.26.
 
 Why the mismatch between the public perception and the market's response? ""The Aurora issue had been an ongoing one for some time,"" says Deutsche Bank's Simon Champion. ""It was clearly a source of uncertainty for the company - it was a long cruise, after all. But the stock market is very good at treating these issues as one-off events.""
 
 Despite its string of bad luck, he pointed out, Aurora is just one vessel in a large Carnival fleet, the UK's P&O Princess group having been merged into the much larger US firm in 2003. And generally speaking, Carnival has a reputation for keeping its ships pretty much on schedule. ""Carnival has an incredibly strong track record,"" Mr Champion.
 
 Similarly, analysts expect the impact on the rest of the cruise business to be limited. The hundreds of disappointed passengers who have now had to give up the opportunity to spend the next three months on the Aurora have got both a refund and a credit for another cruise. That should mitigate some of the PR risk, both for Carnival and its main competitor, Royal Caribbean. ""While not common, cancellations for technical reasons are not entirely unusual in the industry,"" wrote analysts from Citigroup Smith Barney in a note to clients on Friday. ""Moreover, such events typically have a limited impact on bookings and pricing for future cruises."" After all, the Aurora incident may be big news in the UK - but for Carnival customers elsewhere it's unlikely to make too much of a splash.
 
 Assuming that Citigroup is right, and demand stays solid, the structure of the industry also works in Carnival's favour. In the wake of P&O Princess's takeover by Carnival, the business is now to a great extent a duopoly. Given the expense of building, outfitting and running a cruise ship, ""slowing supply growth"" is a certainty, said David Anders at Merrill Lynch on Thursday. In other words, if you do want a cruise, your options are limited. And with Carnival remaining the market leader, it looks set to keep selling the tickets - no matter what happens to the ill-fated Aurora in the future.
",business
"Turkey knocks six zeros off lira
 
 Turkey is to relaunch its currency on Saturday, knocking six zeros off the lira in the hope of boosting trade and powering its growing economy.
 
 The change will see the end of such dizzyingly-high denominations as five million lira - enough for a short taxi ride - and the 20m note, worth $15. These valuations were the product of decades of inflation which, as recently as 2001, was as high as 70%. Inflation has since been tamed and economic prospects are improving.
 
 The currency - officially to be known as the new lira - will be launched at midnight on 1 January. From that point, the one-million lira note will become the new one-lira coin. The government hopes the change will be seen as a promise of growing economic stability as Turkey embarks on the long process of trying to join the European Union.
 
 On an everyday level, it is hoped the change will stimulate more international trade and end confusion among foreign investors and Turks alike. ""The transition to the new Turkish lira shows clearly that our economy has broken the vicious circle that it was imprisoned in for long years,"" said Sureyya Serdengecti, head of the Turkish Central Bank. ""The new lira is also the symbol of the stable economy that we dreamed of for long years.""
 
 The Turkish economy teetered on the brink of collapse in 2001 when the lira plunged in value and two million people lost their jobs.
 
 Turkey had to turn to the International Monetary Fund for financial assistance, accepting a $18bn loan in return for pushing through a wide-ranging austerity programme. These tough measures have borne fruit. Inflation fell below 10% earlier this year for the first time in decades while exports are up 30% this year. Meanwhile, the economy is expanding at a healthy rate, with 7.9% growth expected in 2004. The government hopes that the new currency will cement the country's economic progress, two weeks after EU leaders set a date for the start of Turkey's accession talks.
 
 The slimmed-down lira is likely to be widely welcomed by the business community.
 
 ""The Turkish lira has been like funny money,"" Tevfik Aksoy, chief Turkish economist for Deutsche Bank, told Associated Press. ""Now at least in cosmetic terms it will look like real currency."" However, some do not feel quite so happy about seeing the nominal value of their investments reduced. ""If a person has 10 billion lira in investments this will suddenly decrease,"" shop owner Hayriye Evren, told Associated Press. ""This will definitely affect people psychologically.""
",business
"US prepares for hybrid onslaught
 
 Sales of hybrid cars in the US are set to double in 2005, research suggests.
 
 Research group JD Power estimates sales will hit 200,000 in 2005, despite higher prices and customer scepticism. Carmakers are starting to build hybrid sports utility vehicles (SUVs), the four-wheel-drive vehicles which now dominate the US car market. Hybrids cut both petrol consumption and emissions by combining a petrol engine with an electric motor constantly kept charged by extra engine power. Several jurisdictions, notably the state of California, mandate low emissions for new cars. Equally, the rise in oil prices over the past year has sparked hopes that consumers may be tempted by potential savings of a few hundred dollars a year on fuel.
 
 At the Detroit Motor Show, a range of manufacturers are prominently displaying their hybrid credentials. Toyota has led the market to date with the Prius, popularised by a number of celebrities keen to burnish their ""green"" credentials. In April it will launch a hybrid version of its Highlander SUV, with an SUV from its luxury Lexus marque due later in the year.
 
 Honda has three hybrids on the market, and between them the two Japanese carmakers sold more than 80,000 units last year. Ford, which has sold 4,000 of its first hybrid since its launch in August, is bringing a hybrid SUV - the Mariner - to market a year ahead of schedule, with plans for three more models by 2008. GM has a hybrid pickup on the market and is showing two concept SUVs in Detroit. Even sports car maker Porsche may join the race, although it insists it is still considering whether to hybridise its Cayenne SUV.
 
 Others remain more sceptical. Nissan has bought Toyota's hybrid technology, but plans to bring out its first model only in 2006. ""We want to make sure we are not concentrating on one technology,"" Nissan chief executive Carlos Ghosn said. ""We will not be surprised by any acceleration or deceleration in the hybrid market."" Volkswagen, meanwhile, says it will focus on clean-burning diesel engines instead. And some watchers point out that the price tag on a hybrid - upwards of $3,000 above that of an equivalent normal-engined car, and suspicion of the technology - may still cool its attraction. ""The average consumers aren't willing to pay that premium for a car they won't drive more than six years,"" said Anthony Pratt from JD Power.
",business
"Alfa Romeos 'to get GM engines'
 
 Fiat is to stop making six-cylinder petrol engines for its sporty Alfa Romeo subsidiary, unions at the Italian carmaker have said.
 
 The unions claim Fiat is to close the Fiat Powertrain plant at Arese near Milan and instead source six-cylinder engines from General Motors. Fiat has yet to comment on the matter, but the unions say the new engines will be made by GM in Australia. The news comes a week after GM pulled out of an agreement to buy Fiat. GM had to pay former partner Fiat 1.55bn euros ($2bn; £1.1bn) to get out of a deal which could have forced it to buy the Italian carmaker outright. Fiat and GM also ended their five-year alliance and two joint ventures in engines and purchasing, but did agree to continue buying each other's engines.
 
 ""Powertrain told us today that Alfa Romeo engines will no longer be made in Arese,"" said union leader Vincenzo Lilliu, as reported by the Reuters news agency. ""The assembly line will be dismantled and the six-cylinder Alfa Romeo motor will be replaced with an engine GM produces in Australia."" Reuters also said that Mr Lilliu and other union bosses shouted insults at Fiat chairman Luca di Montezemolo, following a meeting on Tuesday regarding the future of the Arese plant. The unions said the end of engine production at the facility would mean the loss of 800 jobs. All Alfa Romeo models can be bought with a six-cylinder engine - the 147, 156, 156 Sportwagon, 166, GTV, GT and Spider.
",business
"M&S cuts prices by average of 24%
 
 Marks & Spencer has cut prices in London and the regions by an average of 24%, according to research from a City investment bank.
 
 Dresdner Kleinwort Wasserstein said: ""In spite of the snow in the UK, it still feels very early to be cutting prices of spring merchandise."" Stuart Rose, head of M&S, said last year its prices were too high. ""We are bringing in ranges at new price points to compete against mid-market retailers like Next,"" said M&S.
 
 Next is one of M&S's biggest competitors and the move may force it to lower prices. DrKW said the cuts are either to clear stock or could indicate a longer term ""step change in pricing in certain areas"" at M&S. ""Either way, this cannot be good news for M&S' margin,"" it added. ""We have brought in quite a lot of new clothing at new price points as part of Stuart Rose's strategy of quality, style -and price,"" said the M&S spokesman. Many analysts believe February is proving to be a difficult month for retailers and British Retail Consortium figures, due in a few weeks, are expected to reflect the tough trading environment. Separately, investment bank Goldman Sachs produced reseach showing that a basket of 35 M&S goods is now 11% above the high-street average, compared with 43% higher last year.
 
 It has been a strange week for M&S, which on Tuesday received a statement from Philip Green, the billionaire Bhs owner, confirming he was not rebidding for the company. This was followed the same day by Mark Paulsmeier, a South African financier, issuing a press release saying his Paulsmeier Group was interested in M&S. A sudden spike in M&S's share price followed. However, an M&S spokesman said on Sunday it had no evidence that Mr Paulsmeier had lined up sufficient finance for a bid. He also said the Takeover Panel and the UK's financial watchdog the Financial Services Authority had been in touch with M&S at the beginning of the week to find out what it knew about the Paulsmeier developments.
",business
"Yukos unit fetches $9bn at auction
 
 A little-known Russian company has bought the main production unit of oil giant Yukos at auction in Moscow.
 
 Baikal Finance Group outbid favourite Gazprom, the state-controlled gas monopoly, to buy Yuganskneftegas. Baikal paid 260.75bn roubles ($9.37bn: £4.8bn) for Yugansk - nowhere near the $27bn Russia says Yukos owes in taxes. Yukos reacted immediately by repeating its view that the auction was illegal in international and Russian law, and said Baikal had bought itself trouble.
 
 ""The company considers that the victor of today's auction has bought itself a serious $9bn headache,"" said Yukos spokesman Alexander Shadrin. He said the company would continue to make ""every lawful move"" to protect tens of thousands of shareholders in Yukos from ""this forcible and illegitimate removal of their property"". Meanwhile, Tim Osborne, head of Yukos main shareholders' group Menatep, said that Yukos may have to declare itself bankrupt, and that legal action would be taken, outside Russia, against the auction winners. Reports from Russia say Baikal has paid a deposit of nearly $1.7bn from a Sberbank (Savings Bank) account to the Russian Federal Property Fund, for Yugansk.
 
 The sale came despite a restraining order issued by a US court dealing with the firm's bankruptcy application for Chapter 11 protection. Yukos has always insisted the auction was state-sponsored theft but Russian authorities argued they were imposing the law, trying to recover billions in unpaid taxes. There were originally four registered bidders, and with its close ties to the Kremlin, state-backed gas monopoly Gazprom had been seen as favourite. But just two companies turned up for the auction, Gazprom and the unknown Baikal Finance Group, named after a large freshwater lake in Siberia. And, according to Tass news agency, Gazprom did not make a single bid, leaving the way open for Baikal, which paid above the auction start price of 246.75bn roubles.
 
 Mystery firm Baikal Finance Group is officially registered in the central Russian region of Tver, but many analysts believe it may be linked to Gazprom. Kaha Kiknavelidze, analyst at Troika Dialog, said: ""I think a decision that Yugansk should end up with Gazprom was taken a long time ago. So the main question was how to structure this transaction.
 
 ""I would not exclude that the structure of the deal has slightly changed and Gazprom now has a partner. ""I would also not exclude that Baikal will decline to pay in 14 days, that are given by law, and Gazprom is then recognised as the winner. This would give Gazprom an extra 14 days to accumulate the needed funds. ""Another surprise was that the winner paid a significant premium above the starting price."" However, Gazprom has announced it is not linked to Baikal in any way. And Paul Collison, chief analyst at Brunswick UBS, said: ""I see no plausible explanation for the theory that Baikal was representing competing interests. ""Yugansk will most likely end up with Gazprom but could still end up with the government. There is still potential for surprises."" Yugansk is at the heart of Yukos - pumping close to a million barrels of oil a day. The unit was seized by the government which claims the oil giant owes more than $27bn in taxes and fines. Yukos says those tax demands are exorbitant, and had sought refuge in US courts.
 
 The US bankruptcy court's initial order on Thursday - to temporarily block the sale - in response to Yukos filing for Chapter 11 bankruptcy protection, was upheld in a second ruling on Saturday. The protection, if recognised by the Russian authorities, would have allowed Yukos' current management to retain control of the business and block the sale of any company assets. Yukos has said the sale amounts to expropriation - punishment for the political ambitions of its founder, Mikhail Khodorkovsky. Mr Khodorkovsky is now in jail, on separate fraud charges. But President Vladimir Putin has described the affair as a crackdown on corruption - and the BBC's Sarah Rainsford in Moscow says most Russians believe the destruction of Yukos is now inevitable. Hours before the auction lawyers for Menatep, a group through which Mr Khodorkovsky and his associates control Yukos, said they would take legal action in other countries. Menatep lawyers, who were excluded from observing the auction, said they would retaliate by seeking injunctions in foreign courts to impound Russian oil and gas exports.
",business
"China keeps tight rein on credit
 
 China's efforts to stop the economy from overheating by clamping down on credit will continue into 2005, state media report.
 
 The curbs were introduced earlier this year to ward off the risk that rapid expansion might lead to soaring prices. There were also fears that too much stress might be placed on the fragile banking system. Growth in China remains at a breakneck 9.1%, and corporate investment is growing at more than 25% a year. The breakneck pace of economic expansion has kept growth above 9% for more than a year. Rapid tooling-up of China's manufacturing sector means a massive demand for energy - one of the factors which has kept world oil prices sky-high for most of this year. In theory, the government has a 7% growth target, but continues to insist that the overshoot does not mean a ""hard landing"" in the shape of an overbalancing economy. A low exchange rate - China's yuan is pegged to a rate of 8.28 to the dollar, which seems to be in relentless decline - means Chinese exports are cheap on world markets. China has thus far resisted international pressure to break the link or at least to shift the level of its peg. To some extent, the credit controls do seem to be taking effect. Industrial output grew 15.7% in the year to October, down from 23% in February, and inflation slowed to 4.3% - although retail sales are still booming.
",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.
",business
"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.
",business
"BMW cash to fuel Mini production
 
 Less than four years after the new Mini was launched, German car maker BMW has announced £100m of new investment.
 
 Some 200 new jobs are to be created at the Oxford factory, including modernised machinery and a new body shell production building. The result of the investment could be to raise output to more than 200,000 cars from 2007. The rise, from 189,000 last year, is a response to rapidly-rising demand and could help wipe out waiting lists. Before Wednesday's announcement, BMW had invested some £280m in Mini production.
 
 Since its launch during summer 2001, the new Mini has gone from strength to strength.
 
 Last year, almost one in six cars sold by the BMW group was a Mini. The company admits that the success of the brand came despite scepticism from many in the industry. ""Our decision to produce a new Mini was not received well right away,"" said Norbert Reithofer, a member of the BMW management board. Initially, BMW said it would produce 100,000 Mini models a year at its vast Cowley factory on the outskirts of Oxford, but the target was quickly reached, then raised, time and time again. Not everyone is convinced that the boom can continue. ""The risk is that after they've invested massively in the brand, demand tapers off like it did with the new VW Beetle,"" said Brad Wernle, from Automotive News Europe.
 
 The price of the car has also gone up. When it was launched, the cheapest Mini cost just more than £10,000. These days, buyers will have to fork out almost £11,500 to own a new Mini One, or even more for the Cooper S which costs up to £17,730. The Mini Convertible, which was launched last spring, costs up to £15,690 for the top model, and there is even a waiting list. Second-hand Minis are not cheap either. A Mini One bought when the model was launched should still fetch at least £8,000 for the cheapest model, while a used Cooper S is likely to be priced from £12,556, according to the-car buying website Parker's. The consumers' association Which operates with slightly different numbers, yet it confirms that the Mini Cooper 1.6 depreciates slower than any other car, other than the Mercedes Benz C180 SE and the BMW 1 Series 116i SE.
 
 The Cowley factory, which initially seemed far too large a production plant for just 100,000 Minis, is increasingly being put to good use.
 
 There are plans to tear down old buildings and build new ones and there are rumours that a new paint shop could be included in the plans. BMW's Mini adventure has made good much of what went wrong during its stewardship of the UK car maker Rover which it sold for £10 five years ago to the Phoenix consortium. In 1999, when BMW still owned Rover, the Oxford factory was producing the award-winning Rover 75. During that year, 3,500 people produced 56,000 cars. Last year, in the same factory, almost four times as many vehicles were produced by just 4,500 Mini-workers. The Mini factory's current output is equally impressive when compared with the main Rover factory in Longbridge, which in 1999 produced 180,000 Rover cars. Last year, MG Rover, which employs more than 6,000 people, produced just 110,000 cars, though it hopes to land a deal with Shanghai Automotive Industry Corporation (SAIC) that could help double the number of cars produced at Longbridge. Indeed, Mini is not only producing more cars than MG Rover does; it remains ahead even when the current sales of Land Rovers and Range Rovers (which are made by the former Rover unit that BMW sold to Ford) are taken into account.
",business
"Brazil buy boosts Belgium's Inbev
 
 Belgian brewing giant Inbev has seen its profits soar thanks to its acquisition of Brazil's biggest beer firm Ambev last year.
 
 Inbev, which makes Stella Artois, said pre-tax profits for 2004 rose 56% to 1.16bn euros ($1.5bn; £800m), and said it expected solid growth in 2005. The performance comes on sales up 21% at 8.6bn euros. The firm, formerly Interbrew, became the world's biggest brewer by volume when it bought Ambev in August 2004. The acquisition meant its sales by volume grew 57% in 2004, with four months of Ambev sales accounting for almost all of the increase. US beermaker Anheuser-Busch sells less beer by volume than Inbev but is bigger in terms of the value of its sales. Continuing demand for Inbev's products in the South American markets where its Brazilian arm is most popular means it expects to keep boosting its turnover. ""It's the Brazil business that's doing it,"" said ING analyst Gerard Rijk of Inbev's strong performance. Ambev boosted its share of Brazil's beer market from 62% at the end of 2003 to more than 68% by December 2004, Inbev reported. In contrast, Inbev's European business saw volume sales fall 2.5%, although Central and Eastern European sales rose 12%. Overall, net profits were up 42% to 719m euros.
",business
"Go-ahead for Balkan oil pipeline
 
 Albania, Bulgaria and Macedonia has given the go ahead for the construction of a $1.2bn oil pipeline that will pass through the Balkan peninsula.
 
 The project aims to allow alternative ports for the shipping of Russian and Caspian oil, that normally goes through Turkish ports. It aims to transport 750,000 daily barrels of oil. The pipeline will be built by the US-registered Albanian Macedonian Bulgarian Oil Corporation (AMBO). The 912km pipeline will run from the Bulgarian port of Burgas, over the Black Sea to the Albanian city of Vlore on the Adriatic coast, crossing Macedonia.
 
 The project was conceived in 1994 but it was delayed because of the lack of political support. By signing the agreement on Tuesday, the prime ministers of Bulgaria, Albania and Macedonia have overcome the problem. ""This is one of the most important infrastructure projects for regional, EU, and Euro-Atlantic integration for the western Balkans,"" said Albanian Prime Minister Fatos Nano. According to Pat Ferguson, President of AMBO, work on the pipeline will begin in 2005 and it is expected to be ready in three or four years. He added that the company had already raised about $900m from the Overseas Private Investment Corporation (OPIC) - a US development agency - the Eximbank and Credit Suisse First Boston, among others. The project has also the support of the European Union. Analysts have said that oil companies like ChevronTexaco, Exxon Mobil and British Petroleum would be happy to find alternative routes to the Bosphorus and Dardanelles Straits.
",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.
",business
"Khodorkovsky ally denies charges
 
 A close associate of former Yukos boss Mikhail Khodorkovsky has told a court that fraud charges levelled against him are ""false"".
 
 Platon Lebedev has been on trial alongside Mr Khodorkovsky since June in a case centring around the privatisation of a fertiliser firm. The pair claim they are being punished by the authorities for the political ambitions of Mr Khodorkovsky. Mr Lebedev said there were ""absurd contradictions"" in the case. Opening his defence, he said he could not see the legal basis of the charges he faced, which also include allegations of tax evasion. ""To my embarrassment, I could not understand the file of complaints against me,"" he told a Moscow court. Mr Lebedev headed the Menatep group, the parent company of Yukos.
 
 Mr Lebedev and Mr Khodorkovsky, who each face a possible 10 year jail sentence if convicted, will be questioned by a judge over the next few days. Mr Khodorkovsky began his testimony last week, telling the court that he objected to the way that the ""running of a normal business has been presented as a work of criminal fiction"". The charges are seen by supporters 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. Yukos has been presented with a $27.5bn (£13bn) tax demand by the Russian authorities and its key Yugansk division was auctioned off to part settle the bill. The company's effort to gain bankruptcy protection in the US - in a bid to win damages for the sale - were dismissed by a court in Texas.
",business
"WorldCom trial starts in New York
 
 The trial of Bernie Ebbers, former chief executive of bankrupt US phone company WorldCom, has started in New York with the selection of the jury.
 
 Mr Ebbers, 63, is accused of being the mastermind behind an $11bn (£6bn) accounting fraud that eventually saw the firm collapse in July 2002. His indictment includes charges of securities fraud, conspiracy and filing false reports with regulators. If found guilty, Mr Ebbers could face a substantial jail sentence. He has firmly declared his innocence.
 
 Under Mr Ebbers' leadership, WorldCom emerged from Mississippi obscurity to become a $160bn telecoms giant and the darling of late 1990s investors. Yet as competition intensified and the telecoms boom petered out, WorldCom found itself under growing financial stress. When WorldCom finally collapsed, shareholders lost about $180bn and 20,000 workers lost their jobs. Mr Ebbers' trial, which is expected to last two months, is the latest in a series of attempts by US prosecutors to pursue senior executives for fraud. It will coincide with the retrial of former Tyco International chief Dennis Kozlowski and his top lieutenant, accused of looting the industrial conglomerate to the tune of $600m. Trail preparations are also preparing for former executives of shamed US energy firm Enron.
",business
"Business fears over sluggish EU economy
 
 As European leaders gather in Rome on Friday to sign the new EU constitution, many companies will be focusing on matters much closer to home - namely how to stay in business.
 
 Lille is a popular tourist destination for Britons who want a taste of France at the weekend. But how many tourists look at the impressively grand Victorian Chambre de Commerce, which stands beside the Opera House, and consider that it was built - like the town halls in many northern English towns - on the wealth created by coal, steel and textiles? Like northern England and industrial Scotland, those industries have been in long term decline - the last coal pit closed in 1990. Beck-Crespel is a specialist steel firm in Armentieres, about 20 miles from Lille. The company has not laid off a worker since 1945. It specialises in making bolts and fixings for power stations and the oil industry, but not many of those are being built in Europe these days.
 
 Director Hugues Charbonnier says he is under pressure because factories in the Far East are able to make some of his output more cheaply, while his key markets are now in China and India. ""In our business the market is absolutely global, you can not imagine living with our size (of business) even within an enlarged European Union, (if we did that) we would need not 350 people but perhaps just 150 or 200,"" he says. It isn't just globalisation that is hurting; the law in France means workers are paid for a 39 hour week even though they work just 35 hours. But at least there is still a steel industry. Coal has now totally vanished and textiles are struggling. New business has been attracted, but not enough to make up the difference.
 
 That is one reason why people here are not great fans of the EU, says Frederic Sawicki, a politics lecturer at the University of Lille.
 
 ""In the region today the unemployment rate is 12%, in some areas it is 15%. They don't see what Europe is doing for them, so there is a kind of euro scepticism, especially in the working classes,"" he says. Which is strange because Lille is at the crossroads of Europe - if anywhere should be benefiting from the euro it is here. The euro was designed to increase trade within the eurozone, but the biggest increase in trade has been with the rest of the world. Much of that trade passes through the world's largest port, Rotterdam, in Holland, home to specialist crane maker Huisman Itrec. Its cranes help build oil rigs and lifted the sunken Russian submarine Kursk from the sea bed, but Huisman Itrec is now setting up a factory in China, where costs are cheaper and its main customers are closer.
 
 Boss Henk Addink blames the low growth rate in Europe for the lack of orders closer to home. ""In the US growth is something like 6%, in China they are estimating 15%, and in the EU it is more or less 1%,"" he says. Mr Addink blames the euro for stifling demand. He much preferred the old currencies of Europe, which moved in relation to each country's economic performance. In Germany, industry is exporting more these days, but the economy as a whole is once again mired in slow growth and high unemployment. Growth is likely to peak this year at just under 2%. In Britain that would be a bad year; in Germany it is one of the best in recent years. With Germany making up a third of the eurozone's economy, this is a major problem. If Germany doesn't once again become the powerhouse of Europe, growth across the bloc is never going to be as strong as it could be. However, at one factory near the Dutch border things are changing.
 
 The Siemens plant at Boscholt makes cordless phones and employs 2,000 staff. Staff have started working an extra four hours a week for no extra pay, after Siemens threatened to take the factory and their jobs to Hungary. Factory manager Herbert Stueker says that he now hopes to increase productivity ""by nearly 30%"". But Germany needs much more reform if all its industry is to compete with places such Hungary or China. The Government is reforming the labour market and cutting the generous unemployment system, but the real solution is to cut the wages of low skilled workers, says Helmut Schneider, director of the Institute for the Study of Labour at Bonn University. ""Labour is too costly in Germany, especially for the low skilled labour and this is the main problem. If we could solve that problem we could cut unemployment by half,"" he says. The EU set itself the target of being the most efficient economy in the world by 2010. Four years into that process, and the target seems further away than ever.
",business
"Glazer makes new Man Utd approach
 
 Malcolm Glazer has made a fresh approach to buy Manchester United, which could lead to a bid valuing the Premiership club at £800m.
 
 The US tycoon, who has been wooing the club for the last 12 months, has approached the United board with ""detailed proposals"", it has confirmed. Mr Glazer, who owns the Tampa Bay Buccaneers team, hopes this will lead to a formal bid being accepted. His new offer is expected to contain substantially less debt. Mr Glazer has already had one takeover attempt turned down by the Red Devils and responded by using his 28.1% shareholding to vote off three board members last November.
 
 Man United had turned down the bid because it was based on a high level of borrowing. But newspapers have speculated recently that the tycoon had gained the support of leading banks to come up with a stronger and less debt-laden bid. Last week, however, Mr Glazer issued a statement to the Stock Exchange distancing himself from a new bid.
 
 Meanwhile, United's chief executive David Gill said in December that talks would not resume unless Glazer came up with ""definitive proposals"". Now the board has confirmed that the US bidder is back, with a statement issued on Sunday reading: ""The board can confirm it has now received a detailed proposal subject to various preconditions which may form the basis of an offer. ""A further announcement will be made in due course.""
 
 To succeed Malcolm Glazer will still need the approval of major shareholders John Magnier and JP McManus, who own 28.9% of the club. But the Irish duo have cut off talks with Glazer over the proposed sale of their stake and have so far made no comment on his latest approach. United fans have reacted with anger at the announcement. They have vehemently opposed any proposed takeover by Glazer since he first showed interest in the club in September 2003 and after Sunday's announcement they vowed to fight on. ""We will fight tooth and nail to stop him whatever his offer says. We do not want him or anybody else taking over United,"" said Mark Longden of the Independent Manchester United Supporters' Association. ""The campaign against this proposed takeover will continue as it has done since Glazer first showed interest in the club.""
",business
"German business confidence slides
 
 German business confidence fell in February knocking hopes of a speedy recovery in Europe's largest economy.
 
 Munich-based research institute Ifo said that its confidence index fell to 95.5 in February from 97.5 in January, its first decline in three months. The study found that the outlook in both the manufacturing and retail sectors had worsened. Observers had been hoping that a more confident business sector would signal that economic activity was picking up.
 
 ""We're surprised that the Ifo index has taken such a knock,"" said DZ bank economist Bernd Weidensteiner. ""The main reason is probably that the domestic economy is still weak, particularly in the retail trade."" Economy and Labour Minister Wolfgang Clement called the dip in February's Ifo confidence figure ""a very mild decline"". He said that despite the retreat, the index remained at a relatively high level and that he expected ""a modest economic upswing"" to continue.
 
 Germany's economy grew 1.6% last year after shrinking in 2003. However, the economy contracted by 0.2% during the last three months of 2004, mainly due to the reluctance of consumers to spend. Latest indications are that growth is still proving elusive and Ifo president Hans-Werner Sinn said any improvement in German domestic demand was sluggish. Exports had kept things going during the first half of 2004, but demand for exports was then hit as the value of the euro hit record levels making German products less competitive overseas. On top of that, the unemployment rate has been stuck at close to 10% and manufacturing firms, including DaimlerChrysler, Siemens and Volkswagen, have been negotiating with unions over cost cutting measures. Analysts said that the Ifo figures and Germany's continuing problems may delay an interest rate rise by the European Central Bank. Eurozone interest rates are at 2%, but comments from senior officials have recently focused on the threat of inflation, prompting fears that interest rates may rise.
",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.
",business
"Circuit City gets takeover offer
 
 Circuit City Stores, the second-largest electronics retailer in the US, has received a $3.25bn (£1.7bn) takeover offer.
 
 The bid has come from Boston-based private investment firm Highfields Capital Management, which already owns 6.7% of Circuit City's shares. Shares in the retailer were up 19.6% at $17.04 in Tuesday morning trading in New York following the announcement. Highfield said that it intends to take the Virginia-based firm private.
 
 ""Such a transformation would eliminate the public-company transparency into the company's operating strategy that is uniquely damaging in a highly competitive industry where Circuit City is going head-to-head with a tough and entrenched rival,"" Highfield said. One analyst suggested that a bidding battle may now begin for the company. Bill Armstrong, a retail analyst at CL King & Associates, said he expected to see other private investment firms come forward for Circuit City. The retailer is debt free with a good cash flow, despite the fact that it is said to be struggling to keep up with market leader Best Buy and cut-price competition from the likes of Wal-Mart, said Mr Armstrong.
",business
"India-Pakistan peace boosts trade
 
 Calmer relations between India and Pakistan are paying economic dividends, with new figures showing bilateral trade up threefold in the summer.
 
 The value of trade in April-July rose to $186.3m (£97m) from $64.4m in the same period in 2003, the Indian Government said. Nonethless, the figures represent less than 1% of India's overall exports. But business is expected to be boosted further from 2006 when the South Asian Free Trade Area Agreement starts. Both countries eased travel and other restrictions as part of the peace process aimed at ending nearly six decades of hostilities.
 
 Sugar, plastics, pharmaceutical products and tea are among the major exports from India to its neighbour, while firms in Pakistani have been selling fabrics, fruit and spices. ""If the positive trend continues, two-way trade could well cross half a billion dollars this fiscal year,"" India's federal commerce Minister Kamal Nath said. According to official data, the value of India's overall exports in the current fiscal year is expected to reach more than $60bn, while in Pakistan's case it is set to hit more than $12bn. Meanwhile, the Indian Government said the prospects for the country's booming economy remained ""very bright"" despite a ""temporary aberration"" this year. Its mid-year economic review forecasts growth of 6-6.5% in 2004, compared with 8.2% in 2003. Higher oil prices, the level of tax collections, and an unfavourable monsoon season affecting the farm sector had hurt the economy in April-September, it said.
",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.
",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.
",business
"House prices suffer festive fall
 
 UK house prices fell 0.7% in December, according to figures from the Office of the Deputy Prime Minister.
 
 Nationally, house prices rose at an annual rate of 10.7% in December, less than the 13.7% rise the previous month. The average UK house price fell from £180,126 in November to £178,906, reflecting recent Land Registry figures confirming a slowdown in late 2004. All major UK regions, apart from Northern Ireland, experienced a fall in annual growth during December.
 
 December is traditionally a quiet month for the housing market because of Christmas celebrations. However, recent figures from the Land Registry - showing a big drop in sales between the last quarter of 2004 and the previous year - suggested the slowdown could be more than a seasonal blip. The volume of sales between October and December dropped by nearly a quarter from the same period in 2003, the Land Registry said. Although both the Office of the Deputy Prime Minister (ODPM) and the Land Registry figures point to a slowdown in the market, the most recent surveys from Nationwide and Halifax have indicated the market may be undergoing a revival. After registering falls at the back-end of 2004, Halifax said house prices rose by 0.8% in January and Nationwide reported a rise of 0.4% in the first month of the year.
",business
"Mitsubishi in Peugeot link talks
 
 Trouble-hit Mitsubishi Motors is in talks with French carmaker PSA Peugeot Citroen about a possible alliance.
 
 On Tuesday Mitsubishi, the only major Japanese car firm in the red, confirmed earlier reports of negotiations. But a spokesman refused to comment on speculation that Mitsubishi could end up building cars for PSA and perhaps its Japanese rival Nissan. Mitsubishi has been hit by a recall scandal and the withdrawal of support from shareholder DaimlerChrysler. The US-German firm, once a majority shareholder, decided last April to stop providing financial backing. Mitsubishi's sales have slid 41% in the past year, catalysed by the revelation that the company had systematically been hiding records of faults and then secretly repairing vehicles. Mitsubishi is due to unveil a recovery plan later in January. Analysts said that alliances with other carmakers would be a necessary part of whatever it came up with, not least because its own slow sales have left its manufacturing capacity under-used.
",business
"Consumers drive French economy
 
 France's economic growth accelerated in the last three months of 2004, driven by consumer spending, a report shows.
 
 Gross domestic product (GDP) rose by 0.8% in the fourth quarter compared with the previous three month period, the statistical office INSEE said. That expansion pushed annual growth to 2.3%, the fastest rate in two years. Consumer spending was up by 1.2% in the fourth quarter, and there also was a rebound in business investment that gave the recovery an extra shove.
 
 Analysts warned that France still was facing challenges and was unlikely to keep expanding at its current pace.
 
 ""France still has a strong economic growth,"" said Marc Toutai, an economist at Natexis Banques Populaires. ""But, if we check the figures in detail, there's a problem."" ""Consumer spending is still high. But French households have spent their savings to consume. ""France can't sustain a high growth rate without an improvement in the job market. There's too much of a gap between growth and employment."" Unemployment levels are currently stuck at about 10%, and is proving difficult to bring down despite government efforts. Another worry is that demand in Germany and Italy, two of France's main trading partners, is sluggish.
 
 Despite the concerns, analysts pointed out that France was outperforming the majority of its European counterparts and that its economy was looking more robust than in previous years. As well as strong domestic demand, exports climbed by 1.3% in the fourth quarter - the biggest increase in foreign sales for a year. ""It's an economic growth that seems well balanced,"" said Nicolas Claquin, an analyst at CCF. ""In the beginning of 2004, growth was mainly driven by consumer spending. Here it gets contributions from investment and exports, though household consumption is still strong. ""But we expect overall economic growth to fall to 2.0 percent in 2005.""
",business
"Bad weather hits Nestle sales
 
 A combination of bad weather, rising raw material costs and the sluggish European economy has hit sales at Swiss food and drink giant Nestle.
 
 Revenue dipped 1.4% to 86.7bn Swiss francs ($74.6bn; £39.1bn) in 2004 as sales of ice cream and mineral water were dampened by the wet summer. However, Nestle's profits margins were helped by a strong performance in the Americas and China. Nestle is to raise its dividend by 11% after paying back some of its debt.
 
 Nestle said that the strength of the Swiss franc against the US dollar, the disposal of businesses and challenging trading conditions in Europe all dented sales. A poor summer across the continent - in contrast to the prolonged heat wave in 2003 - ""severely affected"" demand for ice cream. Sales of bottled water also fell, although chocolate, coffee, frozen goods and petcare products performed better.
 
 Elsewhere, Nestle said it had enjoyed an ""exceptional"" year in North America, outperforming the market in terms of sales growth. Nestle added that it had performed strongly in Africa and Asia despite the impact of high oil prices and political instability. Nestle's total earnings before interest remained broadly flat over the past year, despite the company managing to boost profit margins. As well as increasing its dividend, Nestle plans to buy back shares worth 1bn Swiss francs ($861m; £451m). Looking forward, Nestle forecasts organic earnings growth of about 5% in 2005, although it warned that trading would remain just as competitive.
 
 Uncertainty remains over the future of Perrier, the iconic French mineral water owned by Nestle. Perrier has been locked in a long-standing dispute with unions about productivity levels at the business, which has lead Nestle to consider selling the firm. ""The option of selling is Perrier is still on the table,"" chief executive Peter Brabeck-Letmathe confirmed on Thursday.
",business
"India power shares jump on debut
 
 Shares in India's largest power producer, National Thermal Power Corp (NTPC) have risen 13% on their stock market debut.
 
 The government's partial sell-off of NTPC is part of a controversial programme to privatise state-run firms. The 865 million share offer, a mix of new shares and sales by the government, raised 54bn rupees($1.2bn). It was India's second $1bn stock debut in three months, coming after the flotation by software firm Tata. The share offer was eleven times oversubscribed. ""It is a good investment bet,"" said Suhas Naik, an investment analyst from ING Mutual Fund. ""Power needs in India are set to rise and NTPC will benefit from that."" Analysts say the success of the NTPC flotation would encourage the government to reduce stakes in more power companies. NTPC has said it will use the money from the share sale to feed the growing needs of the country's energy-starved economy. The firm is the largest utility company in India, and the sixth largest power producer in the world.
",business
"Europe asks Asia for euro help
 
 European leaders say Asian states must let their currencies rise against the US dollar to ease pressure on the euro.
 
 The European single currency has shot up to successive all-time highs against the dollar over the past few months. Tacit approval from the White House for the weaker greenback, which could help counteract huge deficits, has helped trigger the move. But now Europe says the euro has had enough, and Asia must now share some of the burden.
 
 China is seen as the main culprit, with exports soaring up 35% in 2004 partly on the back of a currency pegged to the dollar. ""Asia should engage in greater currency flexibility,"" said French finance minister Herve Gaymard, after a meeting with his German counterpart Hans Eichel. Markets responded by pushing the euro lower, in the expectation that the rhetoric - and the pressure - is unlikely to ease ahead of a meeting of the G7 industrialised countries next week. Early on Tuesday morning, the dollar had edged higher to 1.3040 euros. The yen, meanwhile, had strengthened to 102.975 against the dollar by 0730 GMT.
",business
"China now top trader with Japan
 
 China overtook the US to become Japan's biggest trading partner in 2004, according to numbers released by Japan's Finance Ministry on Wednesday.
 
 China accounted for 20.1% of Japan's trade in 2004, compared with 18.6% for the US. In 2003, the US was ahead with 20.5% and China came second with 19.2%. The change highlights China's growing importance as an economic powerhouse. In 2004, Japan's imports from and exports to China (and Hong Kong) added up to 22,201bn yen ($214.6bn;£114.5bn). This is the highest figure for Japanese trade with China since records began in 1947. It compares with 20,479.5bn yen in trade with the US.
 
 Trade with the US during 2004 was hurt by one-off factors, including a 13-month ban on US beef imports following the discovery of a cow infected with mad cow disease (BSE) in the US. However, economists predict China will become an even more important Japanese trading partner in the coming years. On Tuesday, figures showed China's economy grew by 9.5% in 2004 and experts say the overall growth picture remains strong. Analysts see two spurs to future growth as being China's membership of the World Trade Organisation and lower trade tariffs. During 2004, Japan's trade surplus grew 17.9% to 12.011 trillion yen, with more than half the surplus, 6.962 trillion yen, accounted for by its trade with the US. In December, the surplus grew 1.8% on a year ago to 1.14 trillion yen thanks to stronger-than-expected exports.
",business
"Dollar hits new low versus euro
 
 The US dollar has continued its record-breaking slide and has tumbled to a new low against the euro.
 
 Investors are betting that the European Central Bank (ECB) will not do anything to weaken the euro, while the US is thought to favour a declining dollar. The US is struggling with a ballooning trade deficit and analysts said one of the easiest ways to fund it was by allowing a depreciation of the dollar. They have predicted that the dollar is likely to fall even further.
 
 The US currency was trading at $1.364 per euro at 1800 GMT on Monday. This compares with $1.354 to the euro in late trading in New York on Friday, which was then a record low.
 
 The dollar has weakened sharply since September when it traded about $1.20 against the euro. It has lost 7% this year, while against the Japanese yen it is down 3.2%. Traders said that thin trading levels had amplified Monday's move. ""It's not going to take much to push [the dollar] one way or the other,"" said Grant Wilson of Mellon Bank. Liquidity - a measure of the number of parties willing to trade in the market - was about half that of a normal working day, traders said.
",business
"China continues breakneck growth
 
 China's economy has expanded by a breakneck 9.5% during 2004, faster than predicted and well above 2003's 9.1%.
 
 The news may mean more limits on investment and lending as Beijing tries to take the economy off the boil. China has sucked in raw materials and energy to feed its expansion, which could have knock-on effects on the rest of the world if it overheats. But officials pointed out that industrial growth had slowed, with services providing much of the impetus. Growth in industrial output - the main target of government efforts to impose curbs on credit and investments - was 11.5% in 2004, down from 17% the previous year.
 
 Still, consumer prices - at 2.4% - rose faster than in 2004, adding to concern that a sharp rise in producer prices of 7.1% could stoke inflation. And overall investment in fixed assets was still high, up 21.3% from the previous year - although some way off the peak of 43% seen in the first quarter of 2004. The result could be higher interest rates. China raised rates by 0.27 percentage points to 5.8% - its first hike in nine years - in October 2004.
 
 Despite the apparent rebalancing of the economy the overall growth picture remains strong, economists said. ""There is no sign of a slowdown in 2005,"" said Tim Congdon, economist at ING Barings.
 
 China's economy is not only gathering speed thanks to domestic demand, but also from soaring sales overseas. Figures released earlier this year showed exports at a six-year high in 2004, up 35%. Part of the impetus comes from the relative cheapness of the yuan, China's currency. The government keeps it pegged close to a rate of 8.28 to the US dollar, - much to the chagrin of many US lawmakers who blame China for lost jobs and competitiveness. Despite urging to ease the peg, officials insist they are a long way from ready to make a shift to a more market-set rate. ""We need a good and feasible plan and formulating such a plan also needs time,"" National Bureau of Statistics chief Li Deshui told Reuters. ""Those who hope to make a fortune by speculating on a renminbi revaluation will not succeed in making a profit.""
",business
"GM pays $2bn to evade Fiat buyout
 
 General Motors of the US is to pay Fiat 1.55bn euros ($2bn; £1.1bn) to get out of a deal which could have forced it to buy the Italian car maker outright.
 
 Fiat had sold GM a stake in 2000, as part of a partnership agreement. But Fiat's heavy losses have convinced GM - whose own European operations are in the red - to back away. The pay-off means the two firms will unwind joint ventures, but Fiat will keep supplying diesel engines and the money will allow it to reduce its debt. Fiat's shares on the Milan stock exchange rose 4.5% by 0900 GMT to 6.2 euros, having shot up more than 7% in early trading. ""We now have absolute freedom to design our own future,"" said Fiat chief executive Sergio Marchionne.
 
 Analysts said Fiat seemed to have done well out of the deal, although some predictions had expected a 2bn euro pay-off. Fiat is to get 1bn euros immediately, with another 550m to follow within 90 days. The firm is Italy's largest private employer, and a failure to reach an agreement could have had severe consequences for thousands of workers and for the Italian economy. For its part, GM was keen to ward off any criticism that the deal had been a mistake.
 
 ""We needed scale in Europe to get costs down, and we were able to do that in working with Fiat,"" said GM chief executive Rick Wagoner.
 
 The Fiat-GM alliance came about in 2000 as an alternative to selling Fiat outright. German-US car firm DaimlerChrysler had been willing to buy the firm, but Fiat patriarch Gianni Agnelli did not want to give up control. Instead, GM swapped a 6% stake in itself for 20% of Fiat - and gave Fiat a ""put option"" to sell GM the rest of the car maker between January 2004 and July 2009. But despite the alliance Fiat failed to put itself back on track, continuing to lose money and market share. As a result, the sell-off looked better and better for the Italians - and much worse for GM, which is struggling with its own loss-making European marques Opel and Saab. The relationship soured further after Fiat sold half its finance arm and recapitalised in 2003, halving GM's stake to 10%.
",business
"Crude oil prices back above $50
 
 Cold weather across parts of the United States and much of Europe has pushed US crude oil prices above $50 a barrel for the first time in almost three months.
 
 Freezing temperatures and heavy snowfall have increased demand for heating fuel in the US, where stocks are low. Fresh falls in the value of the dollar helped carry prices above the $50 mark for the first time since November. A barrel of US crude oil closed up $2.80 to $51.15 in New York on Tuesday. Opec members said on Tuesday that it saw no reason to cut its output.
 
 Although below last year's peak of $55.67 a barrel, which was reached in October, prices are now well above 2004's average of $41.48.
 
 Brent crude also rose in London trading, adding $1.89 to $48.62 at the close. Much of western Europe and the north east of America has been shivering under unseasonably low temperatures in recent days. The decline in the US dollar to a five-week low against the euro has also served to inflate prices. ""The dollar moved sharply overnight and oil is following it,"" said Chris Furness, senior market strategist at 4Cast. ""If the dollar continues to weaken, oil will be obviously higher.""
 
 Several Opec members said a cut in production was unlikely, citing rising prices and strong demand for oil from Asia. ""I agree that we do not need to cut supply if the prices are as much as this,"" Fathi Bin Shatwan, Libya's oil minister, told Reuters. ""I do not think we need to cut unless the prices are falling below $35 a barrel,"" he added. Opec closely watches global stocks to ensure that there is not an excessive supply in the market. The arrival of spring in the northern hemisphere will focus attention on stockpiles of US crude and gasoline, which are up to 9% higher than at this time last year. Heavy stockpiles could help force prices lower when demand eases.
",business
"Iraqi voters turn to economic issues
 
 Beyond the desperate security situation in Iraq lies an economy in tatters.
 
 A vicious cycle of unemployment, poor social services and poverty has been made worse by a lack of investment. So there is much hope that an elected government will break the deadlock. ""First rule of law, then the economy,"" says Radwan Hadi, deputy managing director of Aberdeen-based oil and gas consultancy Blackwatch Petroleum Services, which entered Iraq in 2003. Mr Hadi's view about what the new government's priorities should be is shared by many Iraqis. The economy has become the second-most dominant issue for many political parties ahead of Sunday's election, according to Bristol University political scientist Anne Alexander, who is working on a project that looks at governance and security in post-war Iraq.
 
 Job creation ranks high both on election manifestos and on the Iraqi people's wish list. Nobody knows exactly how many Iraqis are out of work, but it is clear that the situation is dire. ""Estimates of Iraq's unemployment rate vary, but we estimate it to be between 30-40%,"" the Washington-based independent think-tank The Brookings Institution says in its Iraq Index. But some progress has been made, largely thanks to the country's oil revenues which have exceeded $22bn since June 2003.
 
 Iraq's infrastructure is on the mend, with notable improvements having been made in areas such as electricity supply, irrigation, telephone networks and the re-opening of hospitals. But serious problems remain and the growing divide between haves and have-nots is angering voters. One Iraqi woman told Ms Alexander about her frustration as she watched TV adverts for private hospitals soon after having failed to track down basic medicines from Baghdad's pharmacies. Observes Mr Hadi: ""The economy at present marks a big divide; the rich get richer, the poor get poorer."" An indication of this can be seen in the world of finance where, in contrast with the daily plight of ordinary people, 19 private banks operate, only one of which is run in accordance with Islamic banking principles. Hopes are high for the future of finance, so foreign banks have been buying into the sector. National Bank of Kuwait has bought a majority stake in Credit Bank of Iraq, the Jordanian investment bank Export & Finance Bank has bought 49% of National Bank of Iraq.
 
 Foreign firms also hope to cash in on the reconstruction effort. Bechtel's efforts to rebuild schools and restore power have attracted controversy as well as boosting its bottom line while Halliburton has enjoyed a wealth of military contracts. But the involvement of foreign firms in the health and banking sectors and beyond sits uneasily with many Iraqis who are accustomed to the state taking responsibility for functions that are essential to making society work, observes Ms Alexander. ""It is seen as a selling off of Iraq's assets and bringing in multinationals at the expense of Iraqi businesses and Iraqi workers,"" she says. Consequently, the transitional government has been forced to backtrack in recent months over its proposal to allow 100% foreign ownership of Iraqi assets, she explains. In the West, it is easy to forget that the otherwise brutal Baathist regime used to look after the majority of Iraq's citizens rather well in terms of job creation, social security and healthcare. Opinion polls suggest that ""people still want the state to take a leading role in providing these things"", Ms Alexander says.
 
 Yet in some areas of the economy, investment from abroad is still warmly welcomed, insists Mr Hadi, an Iraqi who left the country three decades ago. ""I think the private sector will evolve incredibly fast,"" Mr Hadi says. ""Iraq's vast natural resources can support any magnitude of economic growth.""
 
 Many foreign companies say they are keen to get in on the act, yet few are actually entering the country in any meaningful way. But there are exceptions. Mr Hadi's Blackwatch is just one of many small operators preparing for a much bigger future. Blackwatch's Baghdad-based affiliate Falcon Group has dozens of people working for it across the country in Kirkuk and Baghdad, and its engineers and geo-scientists work with the Iraqi oil ministry to hammer out technology transfer issues, Mr Hadi points out. ""These guys are trying to work. The Iraqi business people will do business at all times. ""Life goes on in Iraq, the people take responsibility, they want to live normal lives.""
",business
"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.
",business
"India and Iran in gas export deal
 
 India has signed a $40bn (£21bn) deal to import millions of tonnes of liquefied natural gas from Iran.
 
 Firms led by the Oil & Natural Gas Corporation (ONGC) will also assist in the development of Iranian oil fields. Ministers, eager to gain access to energy supplies to meet the demands of a booming economy, secured a similar deal to one between Iran and China. The announcement comes as ONGC said it was in talks to buy former assets of troubled Russian oil firm Yukos. The agreements with Iran were sealed after talks in New Delhi between Middle East producers and Asia's biggest energy consumers - China, India, Japan and South Korea.
 
 Iran - Opec's second-biggest oil producer and one of the world's top gas producers - has been pursuing a series of deals, rewarding LNG buyers with participation in development of its oil fields. Under the agreement, it will supply India with 7.5 million tonnes of LPG annually over a 25 year period from 2009. ONGC and the National Iranian Oil Company (NIOC) reached a preliminary deal for Indian firms to take part in the development of the Yadavaran and Jufeyr oilfields, both countries said in a statement. India's oil production has stagnated over recent years, and it is having to look abroad to secure future supplies. India imports about 70% of its total oil consumption. Consumption has jumped to 2.4 million barrels per day, compared with 474,000 bpd in 1973.
",business
"Barclays profits hit record level
 
 Barclays, the UK's third-biggest bank, has seen annual pre-tax profits climb to record levels boosted by a sharp rise in business at its investment arm.
 
 Profits for the year to 31 December rose 20% to £4.6bn ($8.6bn). Barclays' chief John Varley said the bank had ""caught the winds"" of a very strong world economy. Earnings at Barclays Capital investment bank rose 25% to £1.04bn, but investment in branch operations held back growth in its UK retail business.
 
 The group is the first of Britain's five big banks to report 2004 results. According to analysts' forecasts, HSBC, the biggest UK bank by stock market valuation, will report profits of £9.4bn later this month.
 
 Barclays results were in line with market expectations. Its Global Investors wing made £347m, an 82% jump on 2003 figures. Profits at Barclaycard rose by 5% to £801m but were said to have been affected by a series of interest rate rises and investment to grow its customer base. The bank also blamed margins pressure on its mortgage business and spending on its branches over the past year for a 1% fall in profits in its UK retail division to £1.13bn.
 
 ""The outlook for 2005 is good as a result of balance sheet growth and investments made in 2004,"" Mr Varley said. Barclays cautioned that growth this year may be slower than in 2004 on the back of softer US and Chinese economies and the impact of interest rate rises on household spending in the UK. It added its bid to acquire a controlling stake in South Africa's leading retail bank Absa, was being considered by regulatory authorities. Speaking on BBC Radio 4, Mr Varley declined to be drawn on reports that Barclays had held merger talks with US bank Wells Fargo. A tie-up between Barclays and California-based Wells Fargo would create the world's fourth biggest bank, valued at $180bn. At 1405 GMT, shares in Barclays were trading down 0.67% at 590 pence. ""The headline numbers are in line, but the story is costs,"" said analyst Alex Potter at Lehman Brothers. ""They are a bit more aggressive than we had expected. The cost overshoot is not in Barclays Capital but in the UK bank.""
",business
"Egypt and Israel seal trade deal
 
 In a sign of a thaw in relations between Egypt and Israel, the two countries have signed a trade protocol with the US, allowing Egyptian goods made in partnership with Israeli firms free access to American markets.
 
 The protocol, signed in Cairo, will establish what are called ""qualified industrial zones"" in Egypt. Products from these zones will enjoy duty free access to the US, provided that 35% of their components are the product of Israeli-Egyptian cooperation. The US describes this as the most important economic agreement between Egypt and Israel in two decades.
 
 The protocol establishing the zones has been stalled for years. There has been deep sensitivity in Egypt about any form of co-operation with Israel as long as its peace process with the Palestinians remains blocked. But in recent weeks an unusual warmth has crept into relations between the two countries. Both exchanged prisoners earlier this month, with Egypt handing back an Israeli who has served eight years in prison after being convicted for spying.
 
 Egyptian President Hosni Mubarak has described Israeli Prime Minister Ariel Sharon as the best chance for the Palestinians to achieve peace. The government in Cairo now believes Mr Sharon is moving towards the centre and away from the positions of right wing groups. It also believes the US, pressed by Europe, is now more willing to engage seriously in the search for a settlement. But there are also pressing economic reasons for Egypt's decision to enter into the trade agreement. It will give a huge boost to Egyptian textile exports, which are about to suffer a drop after new regulations come into force in the US at the beginning of the year.
",business
"Crossrail link 'to get go-ahead'
 
 The £10bn Crossrail transport plan, backed by business groups, is to get the go-ahead this month, according to The Mail on Sunday.
 
 It says the UK Treasury has allocated £7.5bn ($13.99bn) for the project and that talks with business groups on raising the rest will begin shortly. The much delayed Crossrail Link Bill would provide for a fast cross-London rail link. The paper says it will go before the House of Commons on 23 February.
 
 A second reading could follow on 16 or 17 March. ""We've always said we are going to introduce a hybrid Bill for Crossrail in the Spring and this remains the case,"" the Department for Transport said on Sunday. Jeremy de Souza, a spokesman for Crossrail, said on Sunday he could not confirm whether the Treasury was planning to invest £7.5bn or when the bill would go before Parliament.
 
 However, he said some impetus may have been provided by the proximity of an election.
 
 The new line would go out as far as Maidenhead, Berkshire, to the west of London, and link Heathrow to Canary Wharf via the City. Heathrow to the City would take 40 minutes, dramatically cutting journey times for business travellers, and reducing overcrowding on the tube. The line has the support of the Mayor of London, Ken Livingstone, business groups and the government, but there have been three years of arguments over how it should be funded. The Mail on Sunday's Financial Mail said the £7.5bn of Treasury money was earmarked for spending in £2.5bn instalments in 2010, 2011 and 2012.
",business
"WMC profits up amid bid criticism
 
 Australian mining firm WMC Resources has seen a fivefold rise in profits while continuing to be the target of a hostile takeover bid.
 
 WMC said it made net profits of 1.33bn Australian dollars ($1bn; £550m) in 2004, up from A$246bn the year before. It is currently arguing against an offer from Swiss Xstrata, which the firm raised to A$8.4bn last week after WMC said it was an undervaluation. Now reports say that the Australian government is against the deal.
 
 Trade Minister Mark Vaile has said that the bid may be ""against the national interest"". Mr Vaile, who was quoted in the Australian Financial Review, compared Xstrata's attempt to take over WMC to a similar bid by oil giant Shell for Australia's Woodside Petroleum in 2001. The bid was thrown out by Treasurer Peter Costello on national interest grounds. WMC's interests in uranium deposits were a contributing factor, Mr Vaile said. WMC itself, however, has no objection in principle to being bought out, having spun off its aluminium operations in 2002 to make itself a more tempting target - as long as the price is right. Its stellar performance in 2004 has been built on sky-high prices for metals. Copper and nickel in particular have been in high demand thanks to China's booming economy, which expanded more than 9% in each of the past two years. Nickel prices rose 43% during the year, with copper up 36%.
",business
"Brazil jobless rate hits new low
 
 Brazil's unemployment rate fell to its lowest level in three years in December, according to the government.
 
 The Brazilian Institute for Geography and Statistics (IBGE) said it fell to 9.6% in December from 10.6% in November and 10.9% in December 2003. IBGE also said that average monthly salaries grew 1.9% in December 2004 from December 2003. However, average monthly wages fell 1.8% in December to 895.4 reais ($332; £179.3) from November. Tuesday's figures represent the first time that the unemployment rate has fallen to a single digit since new measurement rules were introduced in 2001. The unemployment rate has been falling gradually since April 2004 when it reached a peak of 13.1%. The jobless rate average for the whole of 2004 was 11.5%, down from 12.3% in 2003, the IBGE said.
 
 This improvement can be attributed to the country's strong economic growth, with the economy registering growth of 5.2% in 2004, the government said. The economy is expected to grow by about 4% this year. President Luiz Inacio Lula da Silva promised to reduce unemployment when he was elected two years ago. Nevertheless, some analysts say that unemployment could increase in the next months. ""The data is favourable, but a lot of jobs are temporary for the (Christmas) holiday season, so we may see slightly higher joblessness in January and February,"" Julio Hegedus, chief economist with Lopes Filho & Associates consultancy in Rio de Janeir, told Reuters news agency. Despite his leftist background, President Lula has pursued a surprisingly conservative economic policy, arguing that in order to meet its social promises, the government needs to first reach a sustained economic growth. The unemployment rate is measured in the six main metropolitan areas of Brazil (Sao Paolo, Rio de Janeiro, Belo Horizonte, Recife, Salvador and Porto Alegre), where most of the population is concentrated.
",business
"Rescue hope for Borussia Dortmund
 
 Shares in struggling German football club Borussia Dortmund slipped on Monday despite the club agreeing a rescue plan with creditors on Friday.
 
 The club, which has posted record losses and racked up debts, said last week that it was in ""a life-threatening profitability and financial situation"". Creditors agreed on Friday to suspend interest payments until 2007. News of the deal had boosted shares in the club on Friday, but the stock slipped back 7% during Monday morning.
 
 In addition to the interest-payment freeze, Borussia Dortmund also will get short-term loans to help pay salaries. It estimated that it needs almost 30m euros ($39m; £21m) until the end of June if it is to pay its bills. The football club is hoping that all its creditors will agree to defer rent payments on its Westfalen stadium. Borussia officials met with almost all the banks involved in its financing on Friday and over the weekend. Three creditors have yet to agree to the deal struck last week. On 14 March, one of these creditors - property investment fund Molsiris which owns the club's stadium - holds its AGM at which it will discuss the rescue plan. Chief executive Gerd Niebaum stepped down last week and creditors have been pushing for a greater say in how the club is run. Borussia Dortmund also is facing calls to appoint executives from outside the club. The club posted a record loss of 68m euros in the 12 months through June. Adding to its woes, Borussia Dortmund was beaten 5-0 by Bayern Munich on Saturday.
",business
"Fiat chief takes steering wheel
 
 The chief executive of the Fiat conglomerate has taken day-to-day control of its struggling car business in an effort to turn it around.
 
 Sergio Marchionne has replaced Herbert Demel as chief executive of Fiat Auto, with Mr Demel leaving the company. Mr Marchionne becomes the fourth head of the business - which is expected to make a 800m euro ($1bn) loss in 2004 - in as many years. Fiat underperformed the market in Europe last year, seeing flat sales.
 
 The car business has made an operating loss in five of the last six years and was forced to push back its break-even target from 2005 to 2006. The management changes are part of a wider shake-up of the business following Fiat's resolution of its dispute with General Motors. As part of a major restructuring, Fiat is to integrate the Maserati car company - currently owned by Ferrari - within its own operations. Ferrari, in which Fiat owns a majority stake, could be separately floated on the stock market in either 2006 or 2007.
 
 Mr Marchionne, who only joined the company last year, said Fiat Auto was now the ""principal focus"" of his attention. ""I have made the decision to take on the post of chief executive of the auto unit to speed up the company's recovery,"" he said. ""A profound cultural transformation is underway following a management reorganisation that has delivered a more agile and efficient structure,"" he added.
 
 Although Mr Marchionne does not have a background in the car industry, he has been playing an increasing role in the group's activities. Last year, he said that a series of new models, launched as part of the group's recovery plan, had not boosted revenues as much as hoped. The car business, best known for its Alfa Romeo marque, is expected to make a loss of about 800m euros in 2004. Sales are expected to fall in 2005, Fiat said this week, as it exits unprofitable areas such as the rental car market. Mr Demel, a car industry veteran, took the helm in November 2003 after being recruited by former Fiat chief executive Giuseppe Morchio. Mr Morchio made a bid last year to become chairman after the death of president Umberto Agnelli. However, this was rejected by the founding Agnelli family and Mr Morchio subsequently resigned. Earlier this week, Fiat reached an agreement with GM to dissolve an alliance which could have obliged GM to buy the Italian firm outright. GM will pay Fiat $2bn as part of the settlement.
",business
"Deadline nears for Fiat-GM deal
 
 Fiat and General Motors (GM) have until midnight on 1 February to settle a disagreement over a potential takeover.
 
 The deadline marks the point at which Fiat will gain the right to sell its car division to GM, part of an alliance agreed in 2000. GM, whose own European operations are losing money, no longer wants to own the unprofitable Fiat unit. Reports of deadlocked talks sent Fiat shares down 1.2% on Tuesday, after Monday's 4% gain on hopes of a payoff. The US firm is thought to be offering about $2bn (£1.06bn) to extricate itself from the arrangement. It has argued the deal was voided by Fiat's decision to sell off Fiat's finance arm and halve GM's stake via a capital-raising effort.
 
 The 2000 deal resulted from a race between GM and DaimlerChrysler to ally with Fiat. The German firm wanted to buy Fiat outright. But Gianni Agnelli, the godfather of the group, wanted to keep control, and preferred GM's offer to buy a 20% stake and give Fiat the right to sell in the future, known as a ""put option"". Since then, however, Fiat cars have lost market share and the firm has piled up losses, while a plan to raise new money in 2003 cut GM's stake in half to 10%. For its part, GM's European units Opel and Saab have both had trouble, with Opel management threatening to cut 12,000 jobs. ""The last thing they need is additional production capacity in Europe,"" said Patrick Juchemich, auto analyst at Sal Oppenheim Bank.
",business
"Dollar slides ahead of New Year
 
 The US dollar has hit a new record low against the euro and analysts predict that more declines are likely in 2005.
 
 Disappointing economic reports dented the currency, which had been rallying after European policy makers said they were worried about the euro's strength. Earlier on Thursday, the Japanese yen touched its lowest versus the euro on concerns about economic growth in Asia. Currency markets have been volatile over the past week because of technical and automated trading and light demand. This has amplified reactions, analysts said, adding that they expect markets to become less jumpy in January.
 
 ""People want to go into the weekend and the New Year positioned for a weaker buck,"" said Tim Mazanec, director of foreign exchange at Investors Bank and Trust. The dollar slid to a record $1.3666 versus the euro on Thursday, before bouncing back to $1.3636. Against the yen the dollar was trading down at $103.05.
 
 The yen, meanwhile, dropped to 141.60 per euro in afternoon trading. It later strengthened to 140.55. Investors are concerned about the size of the US trade and budget deficits and are betting that George W Bush's administration will allow the dollar to weaken despite saying they favour a strong currency. Also playing on investors' minds are mixed reports about the state of the US economy. On Thursday, disappointing business figures from Chicago brought a sudden end to a rally in the value of the dollar. The National Association of Purchasing Management-Chicago said its index dropped to 61.2, more than analysts had expected. German Chancellor Gerhard Schroeder and Italian Prime Minister Silvio Berlusconi voiced concerns about the strength of the euro. Mr Berlusconi said the euro's strength was ""absolutely worrying"" for Italian exports. Mr Schroeder said in a newspaper article that stability in foreign exchange markets required a correction of global economic imbalances.
",business
"US consumer confidence up
 
 Consumers' confidence in the state of the US economy is at its highest for five months and they are optimistic about 2005, an influential survey says.
 
 The feel-good factor among US consumers rose in December for the first time since July according to new data. The Conference Board survey of 5,000 households pointed to renewed optimism about job creation and economic growth. US retailers have reported strong sales over the past 10 days after a slow start to the crucial festive season.
 
 According to figures also released on Tuesday, sales in shopping malls in the week to 25 December were 4.3% higher than in 2003 following a last minute rush. Wal-Mart, the largest US retailer, has said its December sales are expected to be better than previously forecast because of strong post-Christmas sales.
 
 It is expecting annual sales growth of between 1% and 3% for the month. Consumer confidence figures are considered a key economic indicator because consumer spending accounts for about two thirds of all economic activity in the United States. ""The continuing economic expansion, combined with job growth, has consumers ending this year on a high note,"" said Lynn Franco, director of the Conference Board's consumer research centre. ""And consumers' outlook suggests that the economy will continue to expand in the first half of next year."" The overall US economy has performed strongly in recent months, prompting the Federal Reserve to increase interest rates five times since June.
",business
"Georgia plans hidden asset pardon
 
 Georgia is offering a one-off 'tax amnesty' to people who hid their earnings under the regime of former president Eduard Shevardnadze.
 
 The country's new president, Mikhail Saakashvili, has said that anyone now willing to disclose their wealth will only have to pay 1% in income tax. The measure is designed to legitimise previously hidden economic activity and boost Georgia's flagging economy. Georgia's black market is estimated to be twice the size of its legal economy.
 
 Mr Saakashvili, elected president in January after Mr Shevardnadze was toppled, has urged the Georgian Parliament to approve the amnesty as soon as possible. It is one of a series of proposals designed to tackle corruption, which was rampant during the Shevardnadze era, and boost Georgia's fragile public finances.
 
 The new government is encouraging companies to pay taxes by scrapping existing corruption investigations and destroying all tax records from before 1 January, three days before President Saakashvili was elected. ""There are people who have money but are afraid to show it,"" the president told a government session. ""Documentation about where this money came from doesn't exist because under the former, entirely warped regime, earning capital honestly was not possible.""
 
 By declaring their assets and paying the one-off tax, people would be able to ""legalise their property"", Mr Saakashvili stressed.
 
 ""No one will have the right to check this money's origin. This money must go back into the economy."" The amnesty will not extend to people who made money through drugs trafficking or international money laundering. Criminal investigations in such cases -thought to involve about 5% of Georgian businesses -are to continue. Mr Saakashvili has accused the Shevardnadze regime, which was toppled by a popular uprising in November, of allowing bribery to flourish. Georgia's economy is in a desperate condition. Half the population are living below the poverty line with many surviving on income of less than $4, or three euros, a day. The unemployment rate is around 20% while the country has a $1.7bn public debt.
",business
"Deutsche Boerse boosts dividend
 
 Deutsche Boerse, the German stock exchange that is trying to buy its London rival, has said it will boost its 2004 dividend payment by 27%.
 
 Analysts said that the move is aimed at winning over investors opposed to its bid for the London Stock Exchange. Critics of the takeover have complained that the money could be better used by returning cash to shareholders. Deutsche Boerse also said profit in the three months to 31 December was 120.7m euros ($158.8m; £83.3m). Sales climbed to 364.4m euros, lifting revenue for the year to a record 1.45bn euros.
 
 Frankfurt-based Deutsche Boerse has offered £1.3bn ($2.48bn; 1.88bn euros) for the London Stock Exchange. Rival pan-European bourse Euronext is working also on a bid. Late on Monday, Deutsche Boerse said it would lift its 2004 dividend payment to 70 euro cents (£0.48; $0.98) from 55 euro cents a year earlier. ""There is a whiff of a sweetener in there,"" Anais Faraj, an analyst at Nomura told the BBC's World Business Report. ""Most of the disgruntled shareholders of Deutsche Boerse are complaining that the money that is being used for the bid could be better placed in their hands, paid out in dividends,"" Mr Faraj continued. Deutsche Boerse is ""trying to buy them off in a sense"", he said.
",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.
",business
"Cactus diet deal for Phytopharm
 
 A slimming aid made from a southern African cactus is set to be developed by UK firm Phytopharm and Unilever.
 
 Anglo-Dutch food giant Unilever will help the pharmaceutical firm develop the snacks containing Hoodia extract. Phytopharm shares jumped 10.7% on the news, with analysts saying sales of $600m (£309m) a year were possible. The plant, licensed to Phytopharm in 1997, has been used for thousands of years by the Sans bushmen of the Kalahari desert to stave off hunger. Studies have reportedly shown the plant curbs appetite instead of reducing calorific intake like many existing products.
 
 Phytopharm will receive an initial fee of £6.5m from Unilever - out of a potential total of £21m - as well as future royalties on product sales. Under the deal, production of the Hoodia cactus at Phytopharm's nursery in South Africa will also rise from eight million plants to potentially hundreds of millions, said Phytopharm chief executive Richard Dixey. The firm had initially hoped to market a slimming drug from Hoodia with Pfizer. But the research collaboration came to an end in 2003. Analysts said Unilever could launch the new products in 2007. ""This deal goes a long way to restoring the market faith in Phytopharm's pipeline after the Pfizer exit,"" said analyst Erling Refsum at Nomura.
",business
"India's Deccan gets more planes
 
 Air Deccan has signed a deal to acquire 36 planes from Avions de Transport Regional (ATR).
 
 The value of the deal has not been revealed, because of a confidentiality clause in the agreement. But Air Deccan's managing director Gorur Gopinath has said the price agreed was less than the catalogue price of $17.6m (£9.49m) per plane. Recently, India's first low-cost airline ordered 30 Airbus A320 planes for $1.8bn.
 
 Under the agreement, Air Deccan will buy 15 new ATR 72-500 and lease another 15. ATR will also provide six second hand airplanes. In a statement, ATR has said deliveries of the aircraft will begin in 2005 and will continue over a five-year period.
 
 Mr Gopinath said the planes will connect regional Indian cities. ""After an evaluation of both ATR and Bombardier aircraft, we have chosen the ATR aircraft as we find it most suitable for our operations and for the Indian market for short haul routes."" Filippo Bagnato, ATR's chief executive, has said that his firm will also work with Air Deccan to create a training centre in Bangalore.
 
 The potential of the Indian budget market has attracted attention from businesses at home and abroad. Air Deccan has said it will base its business model on European firms such as Ireland's Ryanair. Beer magnate Vijay Mallya recently set up Kingfisher Airlines, while UK entrepreneur Richard Branson has said he is keen to start a local operation. India's government has given its backing to cheaper and more accessible air travel.
",business
"Boeing secures giant Japan order
 
 Boeing is to supply Japan Airlines with up to 50 of its forthcoming 7E7 planes in a deal that could be worth as much as $6bn (£3.1bn) for the US giant.
 
 Japan Airlines has made a firm order for 30 of the aircraft, at $120m each, with the option to buy 20 more. Asia's biggest airline joins Japanese rival All Nippon as one of the first carriers to order the mid-size 7E7, which Boeing says is super-economical. Airbus this week announced the first pre-sale of its 7E7 rival - the A350. Boeing's great European competitor is to sell 10 of its forthcoming A350 to Spanish carrier Air Europe, which has the option to buy two more in a deal that could be worth more than $1.8bn. Both the 7E7 and the A350 are being designed to be as fuel-efficient as possible in the 200- to 300-seat sector, and each will be available in both short and long range versions.
 
 Japan Airlines said it had looked at both aircraft before choosing the 7E7, also known as the Dreamliner. ""We chose the 7E7 after carefully considering both it and Airbus' aircraft,"" said a Japan Airlines spokesman. ""The 7E7 fits better for what we needed and it could be delivered when we hoped to get it."" Boeing continues to enjoy a dominance over Airbus in Japan, and Japanese companies are taking key roles in building the 7E7. The first 7E7s will be delivered to Japan Airlines in April 2008. Boeing has set itself a target of getting 200 firm commitments for the 7E7 by the end of this year, and has orders for 56 so far. Airbus hopes to have 50 orders in place for the A350 by mid-2005.
",business
"The 'ticking budget' facing the US
 
 The budget proposals laid out by the administration of US President George W Bush are highly controversial. The Washington-based Economic Policy Institute, which tends to be critical of the President, looks at possible fault lines. US politicians and citizens of all political persuasions are in for a dose of shock therapy. Without major changes in current policies and political prejudices, the federal budget simply cannot hold together. News coverage of the Bush budget will be dominated by debates about spending cuts, but the fact is these will be large cuts in small programs. From the standpoint of the big fiscal trends, the cuts are gratuitous and the big budget train wreck is yet to come. Under direct threat will be the federal government's ability to make good on its debts to the Social Security Trust Fund. As soon as 2018, the fund will begin to require some cash returns on its bond holdings in order to finance all promised benefits.
 
 The trigger for the coming shock will be rising federal debt, which will grow in 10 years, by conservative estimates, to more than half the nation's total annual output.
 
 This upward trend will force increased borrowing by the federal government, putting upward pressure on interest rates faced by consumers and business. Even now, a growing share of US borrowing is from abroad. The US Government cannot finance its operations without heavy borrowing from the central banks of Japan and China, among other nations. This does not bode well for US influence in the world. The decline of the dollar is a warning sign that current economic trends cannot continue. The dollar is already sinking. Before too long, credit markets are likely to react, and interest rates will creep upwards. That will be the shock.
 
 Interest-sensitive industries will feel pain immediately - sectors such as housing, automobiles, other consumer durables, agriculture, and small business. Some will recall the news footage of angry farmers driving their heavy equipment around the US Capitol in the late 1970s. There will be no need for constitutional amendments to balance the budget. The public outcry will force Congress to act. Whether it will act wisely is another matter. How did this happen?
 
 By definition, the deficit means too little revenue and too much spending - but this neutral description doesn't adequately capture the current situation. Federal revenues are at 1950s levels, while spending remains where it has been in recent decades - much higher. In addition, the United States has two significant military missions. The Bush administration's chosen remedy is the least feasible one. Reducing domestic spending, or eliminating ""waste, fraud and abuse"" is toothless because this slice of the budget is too small to solve the problem. Indeed, if Congress were rash enough to balance the budget in this way, there would hardly be any such spending left. Law enforcement, space exploration, environmental clean-up, economic development, the Small Business Administration, housing, veterans' benefits, aid to state and local governments would all but disappear. It's fantasy to think these routine government functions could be slashed. The biggest spending growth areas are defence (including homeland security), and health care for the elderly and the poor. To some extent, increases in these areas are inevitable. The US population is aging, and the nation does face genuine threats in the world. But serious savings can only be found where the big money is. Savings in health care spending that do not come at the expense of health can only be achieved with wholesale reform of the entire system, public and private. Brute force budget cuts or spending caps would ill-serve the nation's elderly and indigent.
 
 On the revenue side, the lion's share of revenue lost to tax cuts enacted since 2000 will have to be replaced.
 
 Some rearranging could hold many people harmless and focus most of the pain on those with relatively high incomes. Finally, blind allegiance to a balanced budget will have to be abandoned. There is no good reason to fixate on it, anyway. Moderate deficits and slowly rising federal debt can be sustained indefinitely. Borrowing for investments in education and infrastructure that pay off in future years makes sense. The sooner we face that reality, the sooner workable reforms can be pursued. First on the list should be tax reform to raise revenue, simplify the tax code, and restore some fairness eroded by the Bush tax cuts. Second should be a dispassionate re-evaluation of the huge increase in defence spending over the past three years, much of it unrelated to Afghanistan, Iraq, or terrorism. Third must be the start of a serious debate on large-scale health care reform. One thing is certain - destroying the budget in order to save it is not going to equip the US economy and government for the challenges of this new century.
",business
"Christmas shoppers flock to tills
 
 Shops all over the UK reported strong sales on the last Saturday before Christmas with some claiming record-breaking numbers of festive shoppers.
 
 A spokesman for Manchester's Trafford Centre said it was ""the biggest Christmas to date"" with sales up 5%. And the Regent Street Association said shops in central London were also expecting the ""best Christmas ever"". That picture comes despite reports of disappointing festive sales in the last couple of weeks.
 
 The Trafford Centre spokeswoman said about 8,500 thousand vehicles had arrived at the centre on Saturday before 1130 GMT. ""We predict that the next week will continue the same trend,"" she added.
 
 It was a similar story at Bluewater in Kent. Spokesman Alan Jones said he expected 150,000 shoppers to have visited by the end of Saturday and a further 100,000 on Sunday. ""Our sales so far have been 2% up on the same time last year,"" he said. ""We're very busy, it's really strong and people will be shopping right up until Christmas. ""Over the Christmas period we're expecting people to spend in excess of £200m at the centre.""
 
 On Saturday afternoon, a spokeswoman for the St David's Shopping Centre in Cardiff said it looked like being its busiest day of the year with about 200,000 shoppers expected to have visited by the close of play. At the St Enoch's Shopping Centre in Glasgow, more than 140,000 shoppers - an all-time record - were expected to have passed through the doors by its closing time of 1900 GMT. Senior business manager Jon Walton said: ""It has been phenomenal - absolutely mobbed. ""Every week footfall has been showing strong growth and at the weekends it has been going mad."" Regent Street Association director Annie Walker said on Saturday: ""The stores were heaving today and a lot of people are going to be doing last minute shopping as many people finished work on Friday and can go in the week.""
 
 She said reports of a slump in pre-Christmas sales were related to the growing popularity of internet sales. ""I do think this has had a lot to do with reports of lower sales figures,"" she said. ""Internet shopping has gone up enormously and not all stores have websites.""
",business
"Markets signal Brazilian recovery
 
 The Brazilian stock market has risen to a record high as investors display growing confidence in the durability of the country's economic recovery.
 
 The main Bovespa index on the Sao Paolo Stock Exchange closed at 24,997 points on Friday, topping the previous record market close reached the previous day. The market's buoyancy reflects optimism about the Brazilian economy, which could grow by as much as 4.5% in 2004. Brazil is recovering from last year's recession - its worst in a decade.
 
 Economic output declined 0.2% in 2003 and President Luiz Inacio Lula da Silva - elected as Brazil's first working-class president in 2002 - was strongly criticised for pursuing a hardline economic policy.
 
 Investors have praised his handling of the economy as foreign investment has risen, unemployment has fallen and inflation has been brought under control. Analysts believe the stock market will rise above the 25,000 mark for the first time before too long. ""There should be more space for gains until the end of the year, somewhere up to 27,000 points,"" said Paschoal Tadeu Buonomo, head of equities trading at brokers TOV. Brazil's currency, the real, also rose to its highest level against the dollar in more than two years on Friday. Although interest rates still stand at a punitive 17.25%, inflation has fallen from 9% to 7% while exports are booming, particularly of agricultural products. ""For the first time in decades, we have all three economic policy pillars in line during a recovery,"" Finance Minister Antonio Palocci told the Associated Press news agency. ""Government accounts are in surplus, we have a current account surplus and inflation is under control.""
 
 Investors were deeply suspicious of President da Silva, a former trade union leader who campaigned on a programme of extensive land redistribution and a large rise in the minimum wage. However, Mr da Silva has stuck to an orthodox monetary policy inherited from his predecessor even in the face of last year's economic crisis. This has earned him the disapproval of rural farm workers, thousands of whom who took to the streets of Brasilia on Thursday to protest against government policies. President da Silva has defended his policies, arguing that Brazil cannot afford to continue the cycle of boom and bust which afflicted it in recent decades.
",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.
",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.
",business
"BMW reveals new models pipeline
 
 BMW is preparing to enter the market for car-style people carriers, the firm's chief has told BBC News.
 
 Speaking at a BMW event ahead of the Geneva motor show, Helmut Panke predicted demand for such crossover vehicles would soar in Europe. In contrast, he said, the popularity of van-style seven-seat vehicles and traditional saloon cars would fade. ""Customers are moving out of the mini-van (and) traditional concepts are not as attractive anymore,"" he said. ""We have decided that BMW will enter the [crossover] segment,"" he said in the clearest indication yet about the car maker's intentions.
 
 Mr Panke praised the Honda Accura as the ""best execution"" yet of a crossover vehicle. ""We have decided that the BMW brand will enter the segment,"" he said.
 
 A decision on just how BMW will manage its entry into the new market is due in the first half of 2005. Typically it takes about three years from when a decision is taken before a new model hits the streets, Mr Panke said, implying that a BMW crossover could be on the market by 2008. The coming switch is driven in part by the need for successful carmakers to stay aware of trans-Atlantic differences in the car market, Mr Panke insisted. While in the US drivers tend to prefer sports utility vehicles (SUVs), such as the BMW X5 and its sibling X3, in Europe demand for crossover vehicles is likely to be considerable, Mr Panke said. ""There's a growing market here,"" he said. ""We are going to go that way.""
",business
"Minister hits out at Yukos sale
 
 Russia's renationalisation of its energy industry needs to be reversed, a senior government figure has warned.
 
 Economy minister German Gref told the Kommersant newspaper that direct state involvement in oil was ""unjustified"". His comments follow the sale of much of oil giant Yukos to cover back taxes - a deal which effectively took most of the firm's assets into public ownership. On 28 December, another senior economic adviser called the sale ""the swindle of the century"". Yuganskneftegaz, the unit which produced 60% of Yukos' output, had been seized and sold in December for less than $10bn to a previously unknown firm called Baikal.
 
 Baikal promptly passed into the hands of state-controlled firm Rosneft, itself shortly to merge with state gas giant Gazprom. ""We used to see street hustlers do this kind of thing,"" Andrei Illarionov - then economic adviser to President Vladimir Putin - told a press conference. ""Now officials are doing it."" Within days, he was stripped of most of his responsibilities.
 
 Mr Gref, a well-known opponent of nationalisation in competitive parts of the market, was keen to distance himself from Mr Iliaronov's comments. The privatisation of companies such as Yukos in the 1990s had been badly handled, he said. But he stressed that the government needed to get out of oil. ""I think that Rosneft and Yuganskneftegaz, should it become a state-owned company, must be privatized,"" he said.
 
 ""Today our government is ineffective and state companies, as a result, are for the overwhelming part ineffective as well."" And he warned that using back taxes to deal with firms like Yukos - a technique now being applied by the Kremlin to several other firms - was a mistake. ""If we follow that logic, we should nationalise all businesses,"" he said. Many large Russian companies, particularly in the energy sector, use complex webs of offshore companies to avoid taxes.
 
 Mr Gref also poured cold water on President Putin's promises of doubled economic growth within a decade. The assault on Yukos' assets has been widely blamed for a slowdown in economic growth in recent months. ""The task is not simply to double GDP; instead it is to use GDP to qualitatively improve people's lives,"" Mr Gref told Kommersant. ""We don't need simply to increase GDP, but to improve its structure."" Instead of focusing on headline growth figures, Russia needed to focus on better institutions, such as a more efficient - and less corrupt - court system.
",business
"Executive trio leave Aer Lingus
 
 Three senior executives of Ireland's state-owned airline, Aer Lingus, are set to leave early on 28 January after accusations of a conflict of interest.
 
 The trio are chief executive Willie Walsh, chief financial officer Brian Dunne and chief operations officer Seamus Kearney. The three have refused to confirm reports they plan to launch a private airline in competition with Aer Lingus. They announced in November they would quit in May, but did not give a reason. That decision had followed an announcement by Irish Prime Minister Bertie Ahern - who is still considering the future of the airline - which ruled out a proposed management buy-out of Aer Lingus. Mr Walsh denied they had been forced out early because of the reports claiming they were set to launch a competitor airline.
 
 ""What I do after I leave Aer Lingus is still too early to say,"" Mr Walsh told AP news agency on Wednesday. ""I have opportunities open to me. Brian and Seamus are in the equally fortunate position."" He said he had received more than 40 business proposals, mostly aviation-related, since the trio announced their resignations two months ago. Mr Walsh said there was no conflict of interest, and, if he was to launch a rival airline or join an existing competitor, ""this thing happens in every business"". ""There's absolutely no question of a conflict of interest. I've been completely focused on my responsibilities at Aer Lingus,"" he told AP.
 
 This week opposition politicians had called on the Irish government to make an urgent decision on the future of the airline. On Wednesday Irish Transport Minister Martin Cullen said in a statement: ""A conflict of interest cannot, should not and will not be allowed to arise between their current roles at Aer Lingus and their future career intentions."" Last Friday the minister had announced he was to advertise for three senior executives for Aer Lingus. Mr Walsh, who took charge in 2000, and his team have earned praise for turning Aer Lingus around, by cutting air fares and staff, and re-positioning it as a low-fare airline to rival Ryanair. The company is 85% owned by the government and 15% by its staff.
",business
"US crude prices surge above $53
 
 US crude prices have soared to fresh four-month highs above $53 in the US as refinery problems propelled petrol prices to an all-time high.
 
 US light sweet crude futures jumped to $53.09 a barrel in New York before closing at $53.03. The gains tracked a surge in US gasoline futures to a record high of $1.4850 a gallon. The jump followed a fire at Western Refining Company's refinery in Texas, which shut down petrol production. A spokesman for the group was unable to say when the production unit would be back up and running. ""This market simply wants to go up,"" Citigroup Global Markets analyst Kyle Cooper told Reuters news agency. Ed Silliere, analyst at Energy Merchant, added: ""Gasoline is up because of the refinery issues in Texas, which means there will be a scramble for product in the (US) Gulf Coast.""
 
 Elsewhere, a refinery in Houston was closed due to mechanical problems, while on Tuesday production at BP's Texas City refinery was taken down for a short time. In the approach to Spring, the market becomes much more sensitive to problems with petrol production as dealers anticipate rising demand for fuel ahead of the holiday season. The rise in prices came despite a US government report that showed domestic supplies of fuel oil and fuel were rising. Meanwhile, oil production cartel Opec's recent announcement that it was now unlikely to cut production levels has also failed to calm fears on the market. Oil prices are roughly 45% higher than a year ago and have risen sharply in recent weeks due to a combination of colder weather, the declining value of the dollar and fears that Opec could rein in production to head off a seasonal drop in demand. Instability in Iraq and underlying fears about terrorism have also played a part in the rally.
",business
"Warning over US pensions deficit
 
 Taxpayers may have to bail out the US agency that protects workers' pension funds, leading economists have warned.
 
 With the Pension Benefit Guaranty Corporation (PBGC) some £23bn (£12m) in deficit, the Financial Economists Roundtable (FER) wants Congress to act. Instead of taxpayers having to pick up the bill, the FER wants Congressmen to change the PBGC's funding rules. The FER says firms should not have been allowed to reduce the insurance premiums they pay into the PBGC fund. The FER blames this on a 2004 law, in a statement signed by several members, who include Nobel economics laureate William Sharpe. It said it was ""dismayed"" at the situation and wants Congress to overturn the legislation.
 
 Cash-strapped US companies, including those in the airline, car-making and steel industries, had argued in favour of the 2004 rule change, claiming that funding the insurance premiums adequately would force them to have to cut jobs. ""With a little firmer hand on the pensions issues in the US, I think that Congress could avoid having to turn to the taxpayer and instead turn the obligations back onto the companies that deserve to pay them,"" said Professor Dennis Logue, dean of Price College of Business at the University of Oklahoma. The PBGC was founded in 1974 to protect workers' retirement rights. Its most recent action came last week when it took control of the pilots' pension scheme at United Airlines. With United battling bankruptcy, the carrier had wanted to use the money set aside for pensions to finance running costs. The company has an estimated $2.9bn hole in its pilots' pension scheme, which the PBGC will now guarantee.
",business
"EU to probe Alitalia 'state aid'
 
 The European Commission has officially launched an in-depth investigation into whether Italian airline Alitalia is receiving illegal state aid.
 
 Commission officials are to look at Rome's provision of a 400m euro ($495m; £275m) loan to the carrier. Both the Italian government and Alitalia have repeatedly denied that the money - part of a vital restructuring plan - is state aid. The investigation could take up to 18 months. However, Transport Commissioner Jacques Barrot said he wanted it to be carried out as swiftly as possible. ""The Italian authorities have presented a serious industrial plan,"" said Mr Barot. ""We now have to verify certain aspects to confirm that this plan contains no state aid. I would like our analysis to be completed swiftly.""
 
 The matter of possible state aid was brought to the Commission's attention by eight of Alitalia's rivals, including Germany's Lufthansa, British Airways and Spain's Iberia. While Alitalia needs to restructure to bring itself back to profitability, the rival carriers say it has both violated state aid rules and threatened competition. Alitalia lost 330m euros in 2003 as it struggled to get to grips with high costs, spiralling oil prices, competition from budget carriers and reduced demand. It plans to split into AZ Fly and AZ Services, which will handle air and ground services respectively. Alitalia already enjoyed state aid in 1997. EU rules prevent that from happening again in what is known as the ""one time, last time"" rule for airlines. Otherwise, EU regulations on state aid stipulate that governments may help companies financially, but only on the same terms as a commercial investor. The airline declined to comment on the Commission decision.
",business
"Brewers' profits lose their fizz
 
 Heineken and Carlsberg, two of the world's largest brewers, have reported falling profits after beer sales in western Europe fell flat.
 
 Dutch firm Heineken saw its annual profits drop 33% and warned that earnings in 2005 may also slide. Danish brewer Carlsberg suffered a 3% fall in profits due to waning demand and increased marketing costs. Both are looking to Russia and China to provide future growth as western European markets are largely mature.
 
 Heineken's net income fell to 537m euros ($701m; £371m) during 2004, from 798m euro a year ago. It blamed weak demand in western Europe and currency losses. It had warned in September that the weakening US dollar, which has cut the value of foreign sales, would knock 125m euros off its operating profits. Despite the dip in profits, Heineken's sales have been improving and total revenue for the year was 10bn euros, up 8.1% from 9.26bn euros in 2003. Heineken said it now plans to invest 100m euros in ""aggressive"" and ""high-impact"" marketing in Europe and the US in 2005. Heineken, which also owns the Amstel and Murphy's stout brands, said it would also seek to cut costs. This may involve closing down breweries.
 
 Heineken increased its dividend payment by 25% to 40 euro cents, but warned that the continued impact of a weaker dollar and an increased marketing spend may lead to a drop in 2005 net profit.
 
 Carlsberg, the world's fifth-largest brewer, saw annual pre-tax profits fall to 3.4bn Danish kroner (456m euros). Its beer sales have been affected by the sluggish European economy and by the banning of smoking in pubs in several European countries. Nevertheless, total sales increased 4% to 36bn kroner, thanks to strong sales of Carlsberg lager in Russia and Poland. Carlsberg is more optimistic than Heineken about 2005, projecting a 15% rise in net profits for the year. However, it also plans to cut 200 jobs in Sweden, where sales have been hit by demand for cheap, imported brands. ""We remain cautious about the medium-to-long term outlook for revenue growth across western Europe for a host of economic, social and structural reasons,"" investment bank Merrill Lynch said of Carlsberg.
",business
"Asia quake increases poverty risk
 
 Nearly two million people across Asia could be thrown into poverty because of the Indian Ocean tsunami, the Asian Development Bank (ADB) has said.
 
 In its first overview of the disaster, the ADB said the impact on economic growth would be slight because major cities and factories escaped damage. But the blow to many low-income people could be ""enormous"". The Paris Club of rich creditor nations on Wednesday offered to freeze debts owed by tsunami-hit countries.
 
 The move was aimed at helping South Asian governments find budgets to rebuild devastated coastal areas, though so far only Sri Lanka, Indonesia and the Seychelles have indicated that they will take it up.
 
 Other countries believe their economies are strong enough to cope or wish to avoid being viewed as credit risks. ""Poverty is potentially the most important impact of this natural disaster,"" said ADB chief economist Ifzal Ali. Donor nations have promised to give $717m (£379m) in disaster relief over the next six months, according to the United Nations.
 
 Mr Ali added his voice to those warning that aid pledges must be promptly delivered, saying the number of people at risk of poverty hinged on ""concerns over sanitation and health conditions, and other basic needs"" being ""properly and quickly addressed"".
 
 There are 1.9 billion people in Asia living on less than $2 a day. The ADB fears that 1 million Indonesians could join them, while in India just over half a million people - 645,000 - are at risk of falling into poverty. A quarter of a million Sri Lankans and 23,500 people in the Maldives are also facing poverty. In the Maldives, where 43% of the population already lives on less than $2 a day, this could rise to half. Sri Lanka and the Maldives are the two countries the ADB fears are most at risk of suffering lasting economic damage from the tsunami. Sri Lanka's government has estimated reconstruction costs at nearly $3bn. A government task force held meetings to discuss an emergency rebuilding plan with the ADB, World Bank and Japanese aid agencies on Wednesday, and promised to publish the plan within 10 days.
 
 Indonesia, Malaysia, Thailand and India have enjoyed strong economic growth in recent years, which should cushion them against reconstruction costs. Although Indonesia's northern province of Aceh suffered the worst death toll, the region's oil and natural gas production facilities ""have survived intact"", the report said. However, it remains too soon to asses the damage to poor people's livelihoods in Aceh because it would depend on how much farm land had been flooded by seawater. ""This is a profoundly tragic event for the region and for the millions who are suffering. But the economies of the affected countries except Sri Lanka and the Maldives should emerge with minimal damage,"" the ADB report said. Some businesses may even gain from the reconstruction efforts, thereby creating jobs. At a meeting in Thailand, ABD president Thadao Chino said he was confident of the country's ""own capabilities to restore normalcy to the affected areas and meet the rehabilitation requirements"". Thailand has said it does not wish to opt for a debt repayment freeze, while India has also rejected international aid, saying it can cope on its own resources. Debt repayment holidays carry the risk of credit ratings downgrades, making it more expensive to borrow money in future. Indonesia, however, is pressing for greater help with its debts than the current freeze would bring. It is one of the world's most indebted countries.
",business
"Palestinian economy in decline
 
 Despite a short-lived increase in Palestinian jobs in 2003, the economy is performing well below its potential, said a World Bank report.
 
 Unemployment stood at 25%, compared with 10% before the uprising against Israeli occupation four years ago. Young people are particularly hard hit with 37% out of work, compared with 14% four years ago. But 104,000 new jobs were created last year during a brief easing of violence and closures. However, during the first half of this year, the Palestinian economy lost more than 22,000 jobs. Last year's growth rate of 6% can also be attributed to this temporary gap in violence, the report said. According to the report, Intifada, Closures and Palestinian Economic Crisis: An Assessment, there is a close link between the number of closures - both border closures and internal closures between cities - and Palestinian economic problems. The closures arranged by Israel restrict the movement of Palestinian people and goods, slowing down trade.
 
 ""Closures are a key factor behind today's economic crisis in the West Bank,"" said Nigel Roberts, World Bank country director for the West Bank and Gaza. Nearly half of all Palestinians - some 47% - live below the poverty line and are particularly vulnerable to economic shocks. The report said even more would be on the poverty line without an average of $950m a year from international donors, some of which goes towards job creation. It also called on the Palestinian Authority to revive its reform programme and maintain financial discipline to create an investment-friendly climate. This week Colin Powell, US Secretary of State was visiting the West Bank to stress US support for a smooth Palestinian election in January.
",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.
",business
"US insurer Marsh cuts 2,500 jobs
 
 Up to 2,500 jobs are to go at US insurance broker Marsh & McLennan in a shake up following bigger-than-expected losses.
 
 The insurer said the cuts were part of a cost-cutting drive, aimed at saving millions of dollars. Marsh posted a $676m (£352m) loss for the last three months of 2004, against a $375m (£195.3m) profit a year before. It blamed an $850m payout to settle a price-rigging lawsuit, brought by New York attorney general Elliot Spitzer. Under the settlement announced in January, Marsh took a pre-tax charge of $618m in the October-to-December quarter, on top of the $232m charge from the previous quarter. ""Clearly 2004 was the most difficult year in MMC's financial history,"" Marsh chief executive Michael Cherkasky said.
 
 An ongoing restructuring drive at the group also led to a $337m hit in the fourth quarter, the world's biggest insurer said.
 
 Analysts expect its latest round of cuts to focus on its brokerage unit, which employs 40,000 staff. The latest layoffs will take the total number of jobs to go at the firm to 5,500 and are expected to lead to annual savings of more than $375m. As part of its efforts to cut costs, the company said it was halving its dividend payment to 17 cents a shares from 34 cents, a move which should enable it to save $360m. Looking ahead, Mr Cherkasky forecast profitable growth for the year ahead ""with an operating margin in the upper-teens, and with the opportunity for further margin expansion"". Meanwhile, the company also announced it would spin-off its MMC Capital private equity unit, which manages the $3bn Trident Funds operation, to a group of employees. Marsh did not say when the move would take place, but said it had signed a letter of intent.
 
 The insurer hit the headlines in October last year when it faced accusations of price rigging. New York Attorney General Elliot Spitzer sued the company, accusing it of receiving illegal payments to steer clients to selected firms as well as rigging bids and fixing prices. In January, Marsh agreed to pay $850m to settle the suit - a figure in line with the placement fees it collected in 2003 - and agreed to change its business practices. In February, a former senior executive pleaded guilty to criminal charges in a wide-ranging probe of fraud and bid-rigging in the insurance industry. In January, a former senior vice president also pleaded guilty to criminal charges related to the investigation. In an effort to reform its business practises, Marsh said it has already introduced new leadership, new compliance procedures and new ways of dealing with customers. ""As a result, we are ready to put these matters behind us and move ahead in 2005 to restore the trust our clients have placed in us and to rebuild shareholder value,"" Mr Cherkasky said.
",business
"Japan narrowly escapes recession
 
 Japan's economy teetered on the brink of a technical recession in the three months to September, figures show.
 
 Revised figures indicated growth of just 0.1% - and a similar-sized contraction in the previous quarter. On an annual basis, the data suggests annual growth of just 0.2%, suggesting a much more hesitant recovery than had previously been thought. A common technical definition of a recession is two successive quarters of negative growth.
 
 The government was keen to play down the worrying implications of the data. ""I maintain the view that Japan's economy remains in a minor adjustment phase in an upward climb, and we will monitor developments carefully,"" said economy minister Heizo Takenaka. But in the face of the strengthening yen making exports less competitive and indications of weakening economic conditions ahead, observers were less sanguine. ""It's painting a picture of a recovery... much patchier than previously thought,"" said Paul Sheard, economist at Lehman Brothers in Tokyo. Improvements in the job market apparently have yet to feed through to domestic demand, with private consumption up just 0.2% in the third quarter.
",business
"Jobs growth still slow in the US
 
 The US created fewer jobs than expected in January, but a fall in jobseekers pushed the unemployment rate to its lowest level in three years.
 
 According to Labor Department figures, US firms added only 146,000 jobs in January. The gain in non-farm payrolls was below market expectations of 190,000 new jobs. Nevertheless it was enough to push down the unemployment rate to 5.2%, its lowest level since September 2001. The job gains mean that President Bush can celebrate - albeit by a very fine margin - a net growth in jobs in the US economy in his first term in office. He presided over a net fall in jobs up to last November's Presidential election - the first President to do so since Herbert Hoover. As a result, job creation became a key issue in last year's election. However, when adding December and January's figures, the administration's first term jobs record ended in positive territory.
 
 The Labor Department also said it had revised down the jobs gains in December 2004, from 157,000 to 133,000.
 
 Analysts said the growth in new jobs was not as strong as could be expected given the favourable economic conditions. ""It suggests that employment is continuing to expand at a moderate pace,"" said Rick Egelton, deputy chief economist at BMO Financial Group. ""We are not getting the boost to employment that we would have got given the low value of the dollar and the still relatively low interest rate environment."" ""The economy is producing a moderate but not a satisfying amount of job growth,"" said Ken Mayland, president of ClearView Economics. ""That means there are a limited number of new opportunities for workers.""
",business
"Dollar gains on Greenspan speech
 
 The dollar has hit its highest level against the euro in almost three months after the Federal Reserve head said the US trade deficit is set to stabilise.
 
 And Alan Greenspan highlighted the US government's willingness to curb spending and rising household savings as factors which may help to reduce it. In late trading in New York, the dollar reached $1.2871 against the euro, from $1.2974 on Thursday. Market concerns about the deficit has hit the greenback in recent months. On Friday, Federal Reserve chairman Mr Greenspan's speech in London ahead of the meeting of G7 finance ministers sent the dollar higher after it had earlier tumbled on the back of worse-than-expected US jobs data. ""I think the chairman's taking a much more sanguine view on the current account deficit than he's taken for some time,"" said Robert Sinche, head of currency strategy at Bank of America in New York. ""He's taking a longer-term view, laying out a set of conditions under which the current account deficit can improve this year and next.""
 
 Worries about the deficit concerns about China do, however, remain. China's currency remains pegged to the dollar and the US currency's sharp falls in recent months have therefore made Chinese export prices highly competitive. But calls for a shift in Beijing's policy have fallen on deaf ears, despite recent comments in a major Chinese newspaper that the ""time is ripe"" for a loosening of the peg. The G7 meeting is thought unlikely to produce any meaningful movement in Chinese policy. In the meantime, the US Federal Reserve's decision on 2 February to boost interest rates by a quarter of a point - the sixth such move in as many months - has opened up a differential with European rates. The half-point window, some believe, could be enough to keep US assets looking more attractive, and could help prop up the dollar. The recent falls have partly been the result of big budget deficits, as well as the US's yawning current account gap, both of which need to be funded by the buying of US bonds and assets by foreign firms and governments. The White House will announce its budget on Monday, and many commentators believe the deficit will remain at close to half a trillion dollars.
",business
"Telegraph newspapers axe 90 jobs
 
 The Daily and Sunday Telegraph newspapers are axing 90 journalist jobs - 17% of their editorial staff.
 
 The Telegraph Group says the cuts are needed to fund an £150m investment in new printing facilities. Journalists at the firm met on Friday afternoon to discuss how to react to the surprise announcement. The cuts come against a background of fierce competition for readers and sluggish advertising revenues amid competition from online advertising. The National Union of Journalists has called on the management to recall the notice of redundancy by midday on Monday or face a strike ballot.
 
 Pearson's Financial Times said last week it was offering voluntary redundancy to about 30 reporters.
 
 The National Union of Journalists said it stood strongly behind the journalists and did not rule out a strike. ""Managers have torn up agreed procedures and kicked staff in the teeth by sacking people to pay for printing facilities,"" said Jeremy Dear, NUJ General Secretary. NUJ official Barry Fitzpatrick said the company had ignored the 90-day consultation period required for companies planning more than 10 redundancies. ""They have shown a complete disregard for the consultative rights of our members,"" said Mr Fitzpatrick, who added that the company now planned to observe the consultation procedures. The two Telegraph titles currently employ 521 journalists.
 
 Some broadsheet newspapers - especially those which have not moved to a tabloid format - have suffered circulation declines, which are hitting revenues. The Telegraph has announced no plans to go tabloid although both The Independent and The Times have seen circulation rise since shrinking in size.
 
 The Guardian is hedging its bets, planning a larger tabloid format like those popular in continental Europe. The Telegraph Group was bought by the Barclay twins - Frederick and David - last year, having previously been owned by Lord Conrad Black's Hollinger International. The brothers are currently mulling the sale of another of their businesses, retailer Littlewoods.
 
 Telegraph executive Murdoch MacLennan said the two newspapers would add eight colour pages in the coming months.
 
 ""Journalists are the lifeblood of any newspaper, and maintaining the quality of The Daily Telegraph and The Sunday Telegraph for our readers is vital,"" he said. ""However, action to improve our production capability and secure our titles against the competition is also vital."" Many newspapers are investing in new printing machinery that enables them to print more colour pages, or in some cases, have colour on every page. They are hoping that by boosting colour it will make their publications more attractive to advertisers and readers alike. In recent months News Corp's News International unit, which publishes The Sun and the News of the World, the Guardian Media Group, Trinity Mirror and the Daily Mail & General Trust have all announced substantial investments in new printing plants.
",business
"Chinese wine tempts Italy's Illva
 
 Italy's Illva Saronno has agreed to buy 33% of Changyu, the largest wine maker in China.
 
 Changyu said in a statement to the Shenzhen stock exchange that Illva will pay 481.42m yuan ($58.16m; £30.7m), once the government approves the deal. The Italian liqueur maker will acquire the shares from the Yantai State Asset Management Bureau. Chinese wine sales are growing, the US Agriculture Department said, with wine sales in 2003 up 25% at 61.1bn yuan.
 
 China is encouraging state-owned companies to sell shares to foreign investors. Anheuser-Busch, Heineken and Scottish & Newcastle have all invested in the Chinese beer industry in the last two years and now Illva Saronno is betting on the Chinese wine market. Yantai State Asset Management Bureau - a government agency in the north-eastern city of Yantai - owns 55% of Changyu. The state agency will also sell 10% of its stake in Changyu to another overseas company, although it didn't say who. The remaining 12% will be retained by the Yantai city government. The consumption of wine in China is still low, at just 0.22 litres per capita, said the US Agriculture Department. This compares with 59 litres in France, 12 litres in the US and three litres in Japan.
",business
"Consumer spending lifts US growth
 
 US economic growth accelerated in the third quarter, helped by strong consumer spending, official figures have shown.
 
 The economy expanded at an annual rate of 3.7% in the July to September period, the Commerce Department said. The figure marked an increase on the 3.3% growth recorded in the second quarter, but fell short of the 4.2% rate pencilled in by forecasters. The increase reflected the biggest jump in consumer spending in a year. ""It was a little softer than the consensus, but not a real surprise,"" said Gary Thayer, an economist at AG Edwards & Sons. Friday's growth estimate is one of the last significant pieces of economic data before the 2 November presidential election.
 
 Democrat challenger John Kerry has criticised President George W Bush's handling of the economy, pointing to a net loss of over 800,000 jobs since Mr Bush took office. Analysts said the economy was still not growing fast enough to stimulate large-scale job creation. ""It's a pretty good growth rate, but it may not be good enough to create enough jobs,"" said Robert Brusca, chief economist at Fact and Opinion Economics in New York. However, President Bush is expected to point to Commerce Department figures showing that consumer spending grew at 4.6% in the third quarter, up from just 1.6% in the second, as evidence that his policies are generating solid growth. Consumer spending accounts for about two thirds of all economic activity in the US.
 
 The weaker than expected growth figure makes it less likely that the US Federal Reserve will raise interest rates next month, economists said. ""The economy regained some traction in the third quarter, but the growth is not robust,"" AG Edwards' Thayer. ""I think that means the Fed can take its time raising rates. We'll probably see one more rate hike before the end of the year."" In an effort to pre-empt rising inflation, the Federal Reserve has pushed through three quarter-point rate rises since June this year, taking borrowing costs to 1.75%. On the financial markets, the dollar fell slightly against the euro and the yen, while the Dow Jones index of leading US shares was little changed.
",business
"Deutsche Telekom sees mobile gain
 
 German telecoms firm Deutsche Telekom saw strong fourth quarter profits on the back of upbeat US mobile earnings and better-than-expected asset sales.
 
 Net profit came in at 1.4bn euros (£960m; $1.85bn), a dramatic change from the loss of 364m euros in 2003. Sales rose 2.8% to 14.96bn euros. Sales of stakes in firms including Russia's OAO Mobile Telesystems raised 1.17bn euros. This was more than expected and helped to bring debt down to 35.8bn euros.
 
 A year ago, debt was more than 11bn euros higher. T-Mobile USA, the company's American mobile business, made a strong contribution to profits. ""It's a seminal achievement that they cut debt so low. That gives them some head room to invest in growth now,"" said Hannes Wittig, telecoms analyst at Dresdner Kleinwort Wasserstein. The company also said it would resume paying a dividend, after two years in which it focused on cutting debt.
",business
"S Korean credit card firm rescued
 
 South Korea's largest credit card firm has averted liquidation following a one trillion won ($960m; £499m) bail-out.
 
 LG Card had been threatened with collapse because of its huge debts but the firm's creditors and its former parent have stepped in to rescue it. A consortium of creditors and LG Group, a family owned conglomerate, have each put up $480m to stabilise the firm. LG Card has seven million customers and its collapse would have sent shockwaves through the country's economy.
 
 The firm's creditors - which own 99% of LG Card - have been trying to agree a deal to secure its future for several weeks. They took control of the company in January when it avoided bankruptcy only through a $4.5bn bail-out.
 
 They had threatened to delist the company, a move which would have triggered massive debt redemptions and forced the company into bankruptcy, unless agreement was reached on its future funding. ""LG Card will not need any more financial aid after this,"" Laah Chong-gyu, executive director of Korea Development Bank - one of the firm's creditors - said.
 
 The agreement will see some 12 trillion won of debt converted into equity. ""The purpose of the capital injection is to avoid delisting and the goal will be met,"" David Kim, an analyst at Sejong Securities, told Reuters. South Korea's consumer credit market has been slowly recovering from a crisis in 2002 when a credit bubble burst and millions of consumers fell behind on their debt repayments. LG Card returned to profit in September but needed further capital to avoid being thrown off the market. South Korea's stock exchange can delist any firm if its debt exceeds its assets two years running.
",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%.
",business
"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.
",business
"US gives foreign firms extra time
 
 Foreign firms have been given an extra year to meet tough new corporate governance regulations imposed by the US stock market watchdog.
 
 The Securities and Exchange Commission has extended the deadline to get in line with the rules until 15 July 2006. Many foreign firms had protested that the SEC was imposing an unfair burden. The new rules are the result of the Sarbanes-Oxley Act, part of the US clean-up after corporate scandals such as Enron and Worldcom. Section 404 of the Sox Act, as the legislation is nicknamed, calls for all firms to certify that their financial reporting is in line with US rules. Big US firms already have to meet the requirements, but smaller ones and foreign-based firms which list their shares on US stock markets originally had until the middle of this year.
 
 Over the past few months, delegations of European and other business leaders have been heading to the SEC's Washington DC headquarters to protest. They say the burden is too expensive and the timescale too short and some, particularly the UK's CBI, warned that companies would choose to let their US listings drop rather than get in line with section 404. The latest delegation from the CBI met SEC officials on Wednesday, just before the decision to relax the deadline was announced. ""I think this signifies a change of heart at the SEC,"" CBI director-general Sir Digby Jones told the BBC's Today programme. ""They have been listening to us and to many overseas companies, who have reminded America what globalisation really means: that they can't make these rules in isolation."" The SEC said it had taken into consideration the fact that foreign companies were already working to meet more onerous financial reporting rules in their home countries. The European Union, in particular, was imposing new international financial reporting standards in 2005, it noted. ""I don't underestimate the effort (compliance) will require... but this extension will provide additional time for those issuers to take a good hard look at their internal controls,"" said Donald Nicolaisen, the SEC's chief accountant.
",business
"Feta cheese battle reaches court
 
 A row over whether only Greece should be allowed to label its cheese feta has reached the European Court of Justice.
 
 The Danish and German governments are challenging a European Commission ruling which said Greece should have sole rights to use the name. The Commission's decision gave the same legal protection to feta as to Italian Parma ham and French Champagne. But critics of the judgement say feta is a generic term, with the cheese produced widely outside Greece.
 
 The Commission's controversial 2002 ruling gave ""protected designation of origin"" status to feta cheese made in Greece, effectively restricting the use of the feta name to producers there.
 
 From 2007 onwards, Greek firms will have the exclusive use of the feta label and producers elsewhere in Europe must find another name to describe their products. The German and Danish governments argue that feta does not relate to a specific geographical area and that their firms have been producing and exporting the cheese for years. ""In our opinion it is a generic designation and we do not have any other name or term for this type of cheese,"" Hans Arne Kristiansen, a spokesman for the Danish Dairy Board, told the BBC. Denmark is Europe's second largest producer of feta after Greece - producing about 30,000 tonnes a year - and exports its products to Greece. It is concerned that the ruling could threaten the production of other cheeses in Denmark such as brie. ""It would cost millions if we wanted to introduce a new designation,"" Mr Kristiansen said. ""That is just one of the costs.""
 
 The case will also have a major impact on Britain's sole feta producer, Yorkshire company Shepherds Purse Cheeses.
 
 Judy Bell, the company's founder, said it would cost a huge amount to rebrand its product. ""If we lose we will have to go through a massive re-merchandising process and reorganisation,"" she said. ""We have never tried to pull the wool over anyone's eyes - it's very clear from the label that it's Yorkshire feta."" The original decision was a victory for Greece, where feta cheese is believed to have been produced for about 6,000 years. Feta is a soft white cheese made from sheep or goat's milk, and is an essential ingredient in Greek cuisine. Greece makes 115,000 tonnes, mainly for domestic consumption. The Court is expected to reach a verdict in the case in the autumn.
",business
"US company admits Benin bribery
 
 A US defence and telecommunications company has agreed to pay $28.5m after admitting bribery in the West African state of Benin.
 
 The Titan corporation was accused of funnelling more than $2m into the 2001 re-election campaign of President Mathieu Kerekou. At the time, Titan was trying to get a higher price for a telecommunications project in Benin. There is no suggestion that Mr Kerekou was himself aware of any wrongdoing. Titan, a California-based company, pleaded guilty to falsifying its accounts and violating US anti-bribery laws. It agreed to pay $13m in criminal penalties, as well as $15.5m to settle a civil lawsuit brought by the US financial watchdog, the Securities and Exchange Commission (SEC).
 
 The SEC had accused Titan of illegally paying $2.1m to an unnamed agent in Benin claiming ties with President Kerekou. Some of the money was used to pay for T-shirts with campaign slogans on them ahead of the 2001 election. Shortly after the poll, which Mr Kerekou won, Benin officials agreed to quadruple Titan's management fee. Prosecuting attorney Carol Lam said: ""All US companies should take note that attempting to bribe foreign officials is criminal conduct and will be appropriately prosecuted."" The company says it no longer tolerates such practices. Under the US Foreign Corrupt Practices Act, it is a crime for American firms to bribe foreign officials.
",business
"J&J agrees $25bn Guidant deal
 
 Pharmaceutical giant Johnson & Johnson has agreed to buy medical technology firm Guidant for $25.4bn (£13bn).
 
 Guidant is a key producer of equipment that combats heart problems such as implant defibrillators and pacemakers. Analysts said that the deal is aimed at offsetting Johnson & Johnson's reliance on a slowing drug business. They also pointed out that more mergers are likely because the drug and healthcare industries are fragmented and are under pressure to cut costs. A number of Johnson & Johnson's products are facing patent expirations, while the company is also battling fierce competition from generic products. Meanwhile, demand for defibrillators, which give the heart a small electric shock when an irregular heartbeat or rhythm is detected, is expected to increase, analysts said. The move by Johnson & Johnson has been widely expected and the firm will pay $76 for each Guidant share, 6% more than Wednesday's closing price. Analysts say that US antitrust regulators could force the firms to shed some overlapping stent operations. Stents are tubes that are used to keep an artery open after it has been unblocked.
",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.
",business
"Unilever shake up as profit slips
 
 Anglo-Dutch consumer goods giant Unilever is to merge its two management boards after reporting ""unsatisfactory"" earnings for 2004.
 
 It blamed the poor results on sluggish decision making, a rise in discounted retailers and a wet European summer. The company also cited difficult trading conditions and a lack of demand for goods such as its Slimfast range. Unilever, which owns brands including Dove soap, said annual pre-tax profit fell 36% to 2.9bn euros (£1.99bn). Shares fell 1% to 510.75 pence in London, and dropped by 1.2% to 50.50 euros in Amsterdam.
 
 Under the restructuring plans, Patrick Cescau, the UK-based co-chairman, will become group chief executive. Dutch co-chairman Antony Burgmans will take on the role of non-executive chairman.
 
 ""We have recognised the need for greater clarity of leadership and we are moving to a simpler leadership structure that will provide a sharper operational focus,"" Mr Burgmans said. ""We are leaving behind one of the key features of Unilever's governance but this is a natural development following the changes introduced last year."" The company, which has had dual headquarters in Rotterdam and London since 1930, will announce the location of its head office at a later date. Unilever is not alone in trying to simplify its business. Oil giant Shell last year dismantled its dual-ownership structure, after a series of problems relating to the size of its oil reserves that hammered its share price and led to the resignation of key board members. ""The best part of the news this morning was that the company announced a structure simplification,"" said Arjan Sweere, an analyst at Petercam.
 
 The company said the organizational changes would speed decision making, and it also may make further changes.
 
 The company said its main focus will be on improving profits, and it is planning to accelerate and increase investment in its 400 main brands. ""While it is certainly the case that markets have been tougher in the past eighteen months than we had expected, we have also lost some market share,"" said Mr Cescau. ""We let a range of targets limit our ability flexibility and did not adjust our plans quickly enough to a more difficult business environment."" ""Our objective is to reverse the share loss that we experienced in some markets in 2004 and return to growth.""
 
 Unilever said European sales fell 2.8% last year, dragged down by below part sales at its beverage division, where revenues dipped by almost 4%.
 
 Sales of ice cream and frozen food dipped by 3.4% In the US last year, revenue grew by 1.5% ""despite disappointing sales in Slimfast"", the company said. In Asia, leading products came under ""attack"" from rivals such as Procter & Gamble. Unilever took a 1.5bn euro one-time charge in the fourth quarter, including a 650m euro write-down on Slimfast diet foods. Sales of Slimfast products have been hit in recent years by the popularity of the Atkins diet. But looking ahead, Unilever said it was optimistic about prospects for its slimming products saying that demand is on the wane for rival low-carbohydrate diets. The company also said it planned to spend 500m euros this year buying back shares.
",business
"Court rejects $280bn tobacco case
 
 A US government claim accusing the country's biggest tobacco companies of covering up the effects of smoking has been thrown out by an appeal court.
 
 The demand for $280bn (£155bn) - filed by the Clinton administration in 1999 - was rejected in a 2-1 decision. The court in Washington found that the case could not be brought under federal anti-racketeering laws. Among the accused were Altria Group, RJ Reynolds Tobacco, Lorillard Tobacco, Liggett Group and Brown and Williamson. In its case, the government claimed tobacco firms manipulated nicotine levels to increase addiction, targeted teenagers with multi-billion dollar advertising campaigns, lied about the dangers of smoking and ignored research to the contrary.
 
 Prosecutors wanted the cigarette firms to surrender $280bn in profits accumulated over the past 50 years and impose tougher rules on marketing their products. But the Court of Appeals for the District of Columbia ruled that the US government could not sue the firms under legislation drawn up to counteract Mafia infiltration of business. The tobacco companies deny that they illegally conspired to promote smoking and defraud the public. They also say they have already met many of the government's demands in a landmark $206bn settlement reached with 46 states in 1998. Shares of tobacco companies closed higher after the ruling, with Altria rising 5% and Reynolds showing gains of 4.5%.
",business
"Fannie Mae 'should restate books'
 
 US mortgage company Fannie Mae should restate its earnings, a move that is likely to put a billion-dollar dent in its accounts, watchdogs have said.
 
 The Securities & Exchange Commission accused Fannie Mae of using techniques that ""did not comply in material respects"" with accounting standards. Fannie Mae last month warned that some records were incorrect. The other main US mortgage firm Freddie Mac restated earnings by $5bn (£2.6bn) last year after a probe of its books. The SEC's comments are likely to increase pressure on Congress to strengthen supervision of Fannie Mae and Freddie Mac.
 
 The two firms are key parts of the US financial system and effectively underwrite the mortgage market, financing nearly half of all American house purchases and dealing actively in bonds and other financial instruments. The investigation of Freddie Mac in June 2003 sparked concerns about the wider health of the industry and raised questionsmarks over the role of the Office of Federal Housing Enterprise Oversight (OFHEO), the industry's main regulator. Having been pricked into action, the OFHEO turned its attention to Fannie May and in September this year said that the firm had tweaked its books to spread earnings more smoothly across quarters and play down the amount of risk it had taken on. The SEC found similar problems. The watchdog's chief accountant Donald Nicolaisen said that ""Fannie Mae's methodology of assessing, measuring and documenting hedge ineffectiveness was inadequate and was not supported"" by generally accepted accounting principles.
",business
"Dutch bank to lay off 2,850 staff
 
 ABN Amro, the Netherlands' largest bank, is to cut 2,850 jobs as a result of falling profits.
 
 The cuts - amounting to 3% of the bank's workforce - will result in a one-off charge of 790m euros ($1.1bn). About 1,100 jobs will go in investment banking while 1,200 and 550 will go in IT and human resources respectively. ABN Amro is the third large European bank to announce cutbacks in the past month following Deutsche Bank and Credit Suisse Group.
 
 Its profitability has been hit by a fall in mortgage lending in the United States - the bank's largest single market - following recent interest rate rises. ABN Amro's operations in the Netherlands and the United Kingdom will be hardest hit. Jobs will also be lost in the US - which accounted for 46% of profit in the first half of 2004 - and across its operations in the Americas and Asia-Pacific regions.
 
 The restructuring is designed to improve efficiency by reducing administrative costs and increasing focus on client service. The bank said it was on course for a 10% rise in net income this year but operating profits are set to fall because of a fall in US revenues. ABN Amro currently has more than 100,000 staff. ""To get any profit growth in the coming years, they will have to lower costs, so shedding jobs makes total sense,"" Ivo Geijsen, an analyst with Bank Oyens & Van Eeghen, told Bloomberg. Europe's leading banks seem set for a period of retrenchment. Deutsche Bank said earlier this month it would reduce its German workforce by 1,920 while as many as 300 jobs will be lost at Credit Suisse First Boston.
",business
"Cairn shares slump on oil setback
 
 Shares in Cairn Energy, a UK oil firm, have closed down 18% after a disappointing drilling update and a warning over possible tax demands.
 
 The company said tests had shown no significant finds in one of its Indian oil fields, but was upbeat about the potential of other areas. It also said the Indian government had told it to pay a production tax, for which Cairn argues it is not liable. Cairn's shares have jumped by almost 400% this year. Investors had piled into Cairn after the company announced significant oil finds in India this year. Chief executive Bill Gammell said on Friday he was ""disappointed"" with exploration in the so-called N-C extension area in Rajasthan. Investors had held high hopes of major oil finds in this area. But Cairn said estimates had been revised in what was a ""significant downgrade of the initial expectation"".
 
 Cairn also said that the government believed the company was liable to pay taxes under its production-sharing contract. The company said the rate would be about 900 rupees ($20.40; £10.50) per tonne, or seven barrels, of oil. A spokesman for the firm said that the tax would wipe 5% of the field's current value.
 
 ""Cairn refutes the government's position,"" Mr Gammell said. He insisted that the contract made it clear that the tax should be shouldered by the licensee - India's state-run Oil & Natural Gas Corp (ONGC) - and not the contractor. ""We have a pretty strong legal case here,"" he added, saying it would only become an issue once the firm started production. Investors took a dim view of the statements though. The shares closed down 247p, or 18%, at 1115 pence. ""I think people were slightly over-ambitious for how quickly Cairn would be able to develop and potentially offload these reserves,"" said analyst Jason Kenney at ING.
 
 The disappointments overshadowed increased production targets for Cairn's existing oilfields. The company raised targets for its Mangala and Aishwariya fields in India from 60,000 barrels a day to between 80,000 and 100,000 barrels a day. Its Mangala field, thought to contain a billion barrels, is its biggest find to date. ""These two fields will provide the core of the future developments in Rajasthan,"" Mr Gammell said. Cairn added that it would be appraising another field early next year. Mr Gammell set up the company in the 1980s and has successfully switched its focus to South Asia from interests in the US and Europe. Cairn, which also operates in Nepal and Bangladesh, was catapulted into the FTSE 100 index of leading UK shares earlier this year after the sharp rise in its share price.
",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.
",business
"Cairn Energy in Indian gas find
 
 Shares in Cairn Energy rose 3.8% to 1,088 pence on Tuesday after the UK firm announced a fresh gas discovery in northern India.
 
 The firm, which last year made a number of other new finds in the Rajasthan area, said the latest discovery could lead to large gas volumes. However, chief executive Bill Gammell cautioned that additional evalution was first needed at the site. Cairn has also been granted approval to extend its Rajasthan exploration area. This approval has come from the Indian government.
 
 A spokesman said the company's decision to carry out further investigations at the new find showed that it believed there was significant gas. But he added: ""It's still too early to say what the extent of it is."" Cairn's string of finds in Rajasthan last year saw it elevated to the FTSE 100 index of the UK's leading listed companies. The company had bought the rights to explore in the area from oil giant Shell. Mr Gammell is a former Scottish international rugby player.
",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.
",business
"Gaming firm to sell UK dog tracks
 
 Six UK greyhound tracks have been put up for sale by gaming group Wembley as part of a move which will lead to the break-up of the group.
 
 Wembley announced the planned sale as it revealed it was to offload its US gaming division to BLB Investors. US gaming consortium BLB will pay $339m (£182.5m) for the US unit, although the deal is subject to certain conditions. BLB holds a 22% stake in Wembley and last year came close to buying the whole firm in a £308m takeover deal. Shares in Wembley were up 56 pence, or 7.6%, at 797p by mid-morning.
 
 The sale of the US gaming unit will leave Wembley with its UK business. This includes greyhound tracks at Wimbledon in London, Belle Vue in Manchester, Perry Barr and Hall Green in Birmingham, Oxford and Portsmouth. Analysts have valued the six tracks at between £40m-£50m. The US business accounts for about 90% of Wembley's operating profit and consists of operations in Rhode Island and Colorado. BLB's purchase of the US unit is subject to the agreement of a revenue-sharing deal being struck with Rhode Island authorities. Wembley said that, once the deal was completed, it anticipated returning surplus cash to shareholders. ""Whilst the completion of the sale of the US Gaming Division remains subject to a number of conditions, we believe this development is a positive step towards the maximisation of value for shareholders,"" said Wembley chairman Claes Hultman. Wembley sold the English national football stadium in 1999 to concentrate on its gaming operations.
",business
"French wine gets 70m euro top-up
 
 The French government is to hand its struggling wine industry 70m euros ($91m) in aid to help it battle falling sales and damaging overproduction.
 
 The financial package is aimed at assisting vintners in financial trouble and improving how its wine is marketed. The French wine industry, the world's second largest, has been hit by declining consumption at home and the growing popularity of New World wines. Wine makers, however, claimed the support did not go far enough. The package was announced by agriculture minister Dominique Bussereau after talks with vintners' representatives.
 
 The bulk of the money - about 40m euros - will be offered in the form of preferential loans to heavily indebted producers to enable them to reschedule their payments. A further 15m euros will be made available to wine cooperatives, which make up the majority of French producers, in low interest loans. Efforts to promote French wine abroad are to be boosted by an extra 3.5m euros in funding. France fell behind the 'New World' producers of Australia, Chile and the United States for the first time in 2003 in terms of exports.
 
 Domestic consumption, accounting for 70% of sales, has suffered from strict restrictions on advertising and tough drink-driving laws.
 
 The aid package would ""create a positive climate around French viticulture,"" Mr Bussereau said. However, wine makers and farmers said the support was much less than they had been hoping for. ""I am afraid the resources are not up to the ambitions,"" Jean-Michel Lemetayer, from the FNSEA agricultural union, told the Associated Press news agency. In an effort to tackle overcapacity, the government will agree that vines can be destroyed in areas where growers give their unanimous consent, while 500 vintners will be helped to take early retirement. The government will also seek European Union approval to distil about 250 million litres of excess wine into alcohol, with vintners receiving compensation. Production is currently outstripping demand by about 30%. The support is designed to make French producers more competitive in the face of increasing global consolidation across the wine industry. Wine makers in France's best-known regions, such as Burgundy, have found it hard to invest in new technology and to create recognisable brands to appeal to overseas buyers.
",business
"Mild winter drives US oil down 6%
 
 US oil prices have fallen by 6%, driven down by forecasts of a mild winter in the densely populated northeast.
 
 Light crude oil futures fell $2.86 to $41.32 a barrel on the New York Mercantile Exchange (Nymex), and have now lost $4 in five days. Nonetheless, US crude is still 30% more expensive than at the beginning of 2004, boosted by growing demand and bottlenecks at refineries. Traders ignored the possible effects of Asia's tidal waves on global supplies.
 
 Instead, the focus is now on US consumption, which is heavily influenced in the short term by the weather. ""With the revised milder temperatures... I'm more inclined to think we'll push lower and test the $40-40.25 range,"" said John Brady of ABN AMRO. ""The market definitely feels to be on the defensive."" Statistics released last week showed that stockpiles of oil products in the US had risen, an indication that severe supply disruptions may not arise this winter, barring any serious incident. Oil prices have broken records in 2004, topping $50 a barrel at one point, driven up by a welter of worries about unrest in Iraq and Saudi Arabia, rising demand and supply bottlenecks. London's International Petroleum Exchange remained closed for the Christmas holiday.
",business
"European losses hit GM's profits
 
 General Motors (GM) saw its net profits fall 37% in the last quarter of 2004, as it continued to be hit by losses at its European operations.
 
 The US giant earned $630m (£481.5m) in the October-to-December period, down from $1bn in the fourth quarter of 2003. GM's revenues rose 4.7% to $51.2bn from $48.8bn a year earlier. The fourth-quarter losses at General Motors Europe totalled $345m, up from $66m during the same period in 2003. GM's main European brands are Opel and Vauxhall.
 
 Excluding special items, GM's global income from continuing operations totalled $569m during the quarter, down from $838m a year earlier. The results were in line with Wall Street expectations and shares in GM rose by about 1% in pre-market trade. For the whole of 2004, GM earned $3.7bn, down from $3.8bn in 2003, while its annual revenue rose 4.5% to $193bn. GM said its profits were also hit by higher healthcare costs in the US. ""GM reported solid overall results in 2004, despite challenging competitive conditions in many markets around the globe,"" GM chairman and chief executive Rick Wagoner said in a statement. The company recently announced that it expected profits in 2005 to be lower than in 2004.
",business
"LSE doubts boost bidders' shares
 
 Shares in Deutsche Boerse have risen more than 3% after a shareholder fund voiced opposition to the firm's planned takeover of the London Stock Exchange.
 
 TCI, which claims to represent owners of 5% of Deutsche Boerse's (DB) shares, has complained that the £1.35bn ($2.5bn) offer for the LSE is too high. Opposition from TCI has fuelled speculation that the proposed takeover could fail. Rival exchange operator Euronext has also said it may bid for the LSE. Euronext operates the Paris, Amsterdam, Brussels and Lisbon bourses, while Deutsche Boerse runs the Frankfurt exchange.
 
 BBC News spoke to a number of analysts on Monday morning about shareholder worries over Deutsche Boerse's bid for LSE. Although none were prepared to speak on the record, most thought it was unlikely that TCI's opposition would halt the deal
 
 ""Obviously we'll have to wait and see, but I don't think it will make much difference. Deutsche Boerse appears very committed,"" said one London-based broker. He forecast the takeover bid would succeed and was more concerned to see improvements in the daily running of the LSE. In voicing its opposition to the planned takeover, TCI said it would prefer to see Deutsche Boerse return $500m (£350m) to shareholders. The Deutsche Boerse was prepared to pay for the LSE ""exceeds the potential benefits of this acquisition"", said TCI.
 
 Another Deutsche Boerse shareholder on Monday also appeared to back TCI's call. Another investor in Deutsche Boerse has supported the view that a payout to shareholders would be preferable to Deutsche Boerse overpaying for the LSE, Reuters news agency reported. ""We prefer a sensible entrepreneurial solution at a price that is not too high,"" said Rolf Dress, a spokesman for Union Investment. ""If that cannot be achieved, then we would wish for a distribution of liquid assets to shareholders."" The Financial Times also reported a third Deutsche Boerse shareholder as opposed to the deal. It quoted a spokesman for US-based hedge fund Atticus Capital complaining that the planned takeover appeared to be motivated by ""empire-building"" rather than the best interests of shareholders.
 
 TCI has called for Deutsche Boerse to hold an emergency general meeting to discuss the bid for LSE. Yet under German business law, DB does not have to gain shareholder approval before making a significant acquisition. Deutsche Boerse said TCI's opposition would not change its bid approach. ""Deutsche Boerse is convinced that its contemplated cash acquisition of the London Stock Exchange is in the best interests of its shareholders and the company,"" it said. DB's shares were up 3.4% to 45.25 euros by 1030 GMT, the highest gainer in Frankfurt.
",business
"US trade gap hits record in 2004
 
 The gap between US exports and imports hit an all-time high of $671.7bn (£484bn) in 2004, latest figures show.
 
 The Commerce Department said the trade deficit for all of last year was 24.4% above the previous record - 2003's imbalance of $496.5bn. The deficit with China, up 30.5% at $162bn, was the largest ever recorded with a single country. However, on a monthly basis the US trade gap narrowed by 4.9% in December to £56.4bn. The US consumer's appetite for all things from oil to imported cars, and even wine and cheese, reached record levels last year and the figures are likely to spark fresh criticism of President Bush's economic policies.
 
 Democrats claim the administration has not done enough to clamp down on unfair foreign trade practices. For example, they believe China's currency policy - which US manufacturers claim has undervalued the yuan by as much as 40% - has given China's rapidly expanding economy an unfair advantage against US competitors.
 
 Meanwhile, the Bush administration argues that the US deficit reflects the fact the America is growing at faster rate than the rest of the world, spurring on more demand for imported goods. Some economists say this may allow an upward revision of US economic growth in the fourth quarter. But others point out that the deficit has reached such astronomical proportions that foreigners many choose not to hold as many dollar-denominated assets, which may in turn harm growth. For all of 2004, US exports rose 12.3% to $1.15 trillion, but imports rose even faster by 16.3% to a new record of $1.76 trillion. Foreign oil exports surged by 35.7% to a record $180.7bn, reflecting the rally in global oil prices and increasing domestic demand. Imports were not affected by the dollar's weakness last year. ""We expect the deficit to continue to widen in 2005 even if the dollar gets back to its downward trend,"" said economist Marie-Pierre Ripert at IXIS.
",business
"Tsunami 'to hit Sri Lanka banks'
 
 Sri Lanka's banks face hard times following December's tsunami disaster, officials have warned.
 
 The Sri Lanka Banks Association said the waves which killed more than 30,000 people also washed away huge amounts of property which was securing loans. According to its estimate, as much as 13.6% of the loans made by private banks to clients in the disaster zone has been written off or damaged. State-owned lenders may be even worse hit, it said.
 
 The association estimates that the private banking sector has 25bn rupees ($250m; £135m) of loans outstanding in the disaster zone. On one hand, banks are dealing with the death of their customers, along with damaged or destroyed collateral. On the other, most are extending cheap loans for rebuilding and recovery, as well as giving their clients more time to repay existing borrowing. The combination means a revenue shortfall during 2005, SLBA chairman - and Commercial Bank managing director - AL Gooneratne told a news conference. ""Most banks have given moratoriums and will not be collecting interest, at least in this quarter,"" he said. In the public sector, more than one in ten of the state-owned People's Bank's customers in the south of Sri Lanka were affected, a bank spokesman told Reuters. He estimated the bank's loss at 3bn rupees.
",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.
",business
"Economy 'strong' in election year
 
 UK businesses are set to prosper during the next few months - but this could trigger more interest rate rises, according to a report.
 
 Optimism is at its highest since 1997 and business will reap the benefits of a continuing rise in public spending, say researchers at BDO Stoy Hayward. The Bank of England is expected to keep rates on hold this week - but they could go up later in the year. Rates are likely to rise after the anticipated general election in May. The BDO optimism index - a leading indicator of GDP growth two quarters ahead edged up in January to 102.5, from 102.2 in October. The rise is due, in part, to an increase in public spending and increased merger and acquisition activity.
 
 The only thing blighting business optimism this year will be uncertainties associated with the general election, BDO said. Its BDO's output index - which predicts GDP movements a quarter in advance - remained at 100.8 for January, implying GDP growth at 2.9% in the second quarter of 2005. However, the output index is being held back by recent interest rate rises, sterling's strength against the dollar and high oil prices, the group noted. Its inflation index, which has risen continuously over the last 8 months, climbed to 110.0 in January from 108.0 in October last year. ""The UK is looking strong going into the general election, but businesses need to prepare themselves for a jolt ahead as the Bank of England reacts to growth and inflationary pressures,"" said Peter Hemington, partner at BDO Stoy Hayward. ""Growth will probably slow by the end of 2005 and it is likely that we will see higher interest rates or a sharp drop in demand for products and services.""
",business
"Winemaker rejects Foster's offer
 
 Australian winemaker Southcorp has rejected a takeover offer worth 3.1bn Australian dollars ($2.3bn; £1.8bn) from brewing giant Foster's Group.
 
 Southcorp, whose brands include Penfolds, Rosemount and Lindemans, dismissed the offer as inadequate. The two companies held four days of talks after Foster's bought an 18.8% stake in Southcorp on 13 January. A merger would create a global player with worldwide annual sales of 39m cases and revenues of A$2.6bn.
 
 Southcorp said Foster's A$4.17-a-share takeover proposal offered a ""excellent strategic fit"" but undervalued the company. ""Southcorp's board has informed Foster's that it is not prepared to recommend the offer as it does not adequately reflect the strategic value of the company,"" said Southcorp chairman Brian Finn.
 
 Southcorp said Foster's takeover offer was ""opportunistic"". However, it said that the offer may represent an 'opening bid', opening up the possibility of Foster's returning with an improved offer.
 
 Foster's said a combination of the two companies would create a global player with an ""unrivalled"" collection of premium wine brands. Despite being best known for brewing Foster's Lager, Foster's is already one of Australia's largest wine producers, owning the Beringer and Wolf Blass brands among others. ""The combination of Foster's and Southcorp will transform the global wine industry and significantly enhance Australia's competitive position on the global stage,"" said Trevor O'Hoy, Foster's chief executive officer. Foster's spent A$584m on buying an 18.8% stake in Southcorp from the Oatley family, which founded the Rosemount Estates business and later merged it into Southcorp. Shares in both companies were suspended while the two held talks about a deal. Southcorp's shares rose 12% to A$4.76 on news of the offer but Foster's shares fell 3.7% to A$5.44.
",business
"Yukos accused of lying to court
 
 Russian oil firm Yukos lied to a US court in an attempt to stop the Russian government selling off its key production unit, the court has heard.
 
 The unit, Yugansk, was sold to pay off a $27.5bn (£14.5bn) back tax bill. Yukos argued that since it had a US subsidiary and local bank accounts, the US court could declare it bankrupt and stop the auction of Yugansk. But Deutsche Bank - itself a target of a Yukos lawsuit - said documents had been backdated to strengthen the case.
 
 Deutsche Bank's evidence came on the first day of a two-day hearing in Houston. Its lawyer, Hugh Ray, told the court that Yukos had claimed it had transferred $27m into two Texas bank accounts opened by its new US subsidiary. By doing so, he said, the firm had intended to reinforce its US presence - and thus its chances of getting its case heard in US courts. But he said that the papers documenting the transaction were not drawn up till weeks after Yukos made its bankruptcy application on 14 December, and then backdated.
 
 Yukos chief financial officer Bruce Misamore, who had moved to the US in early December to set up Yukos USA, acknowledged the point. He said the discrepancy was only in the paperwork, but that money had indeed been transferred on 14 December. Even so, he told the court that only $480,000 had been in the accounts that day, with the rest arriving a day later.
 
 Deutsche Bank is involved in the case because it is itself being sued by Yukos. It had agreed to loan to an arm of Russian state gas firm Gazprom the money to bid for Yuganskneftegaz, as the Yukos unit is formally known. The sale went ahead, despite an order from the US bankruptcy court ordered that it should be stopped. In the end, the auction was won by an unknown shell company for $9.4bn - much less than most assessments of its value - before ending up in the hands of state-controlled oil firm Rosneft. Rosneft, meanwhile, has agreed to merge with Gazprom, bringing a large chunk of Russia's very profitable oil business back under state control.
 
 Yukos maintains that it filed for bankruptcy in the US because it feared it would not be able to do so in Russia. It also said that in the event of going bust, it could offer the chance of restructuring. ""It gives us a kind of life after death alternative,"" said Yukos chief executive Steven Theede. Yukos is currently suing four companies - Gazprom, its unit Gazpromneft, Rosneft and the shell company which won the bidding - for their part in Yugansk's disposal. It has also threatened to sue the Russian government for $28bn. Analysts have questioned whether a US court has any jurisdiction over Russian companies, while Moscow officials have dismissed Yukos' legal wrangling as meaningless. Yukos claims that the rights of its shareholders have been ignored and that is has been punished for the political ambitions of its founder Mikhail Khodorkovsky. Mr Khodorkovsky, once Russia's richest man, is in prison, having been charged with fraud and tax evasion and repeatedly denied bail.
",business
"Google shares fall as staff sell
 
 Shares in Google have fallen 6.7% after employees and early investors in the web search took advantage of the first chance to sell their holdings.
 
 Restrictions were imposed ahead of its flotation in August, to prevent shares being dumped quickly onto the market. In one of the most closely-watched initial public offerings in stock market history, the US-based company sold 19.6 million shares at $85 each. Google shares have risen since but fell $12.33 on Tuesday to close at $172.55. The restriction - known as a lockup - is being eased piecemeal: in all, some 227 million additional shares will become free to trade by February 2005. Selling the shares could turn many of Google's workers into millionaires.
 
 There were fears that the potential increase of shares in circulation from Tuesday would ease demand for stock. However, analysts say they expected most shareholders would be holding back from selling all their shares immediately, as Google's good performance and future growth potential means demand will hold.
 
 In its first earnings report since floating on the stock market, Google said it made a net profit of $52m in the three months ending 30 September. Sales surged to $805.9m in the third quarter, up from $393.9m a year earlier. Google's main service - its internet search - is free to users, so the firm makes much of its money from selling advertising space linked to the words for which its users search. It also sells the use of its technology to companies who need to make either their websites, or their internal information systems, searchable.
",business
"South African car demand surges
 
 Car manufacturers with plants in South Africa, including BMW, General Motors, Toyota and Volkswagen, have seen a surge in demand during 2004.
 
 New vehicle sales jumped 22% to 449,603 from a year earlier, the National Association of Automobile Manufacturers of South Africa (NAAMSA) said. Strong economic growth and low interest rates have driven demand, and analysts expect the trend to continue. NAAMSA said it expects sales to top 500,000 in 2005. During 2004 ""South Africa was one of the best performing markets internationally"" for car sales, NAAMSA said. While domestic demand is set to continue to enjoy rapid growth, foreign sales could come under pressure, analysts said. The vehicle industry accounts for about 13% of South Africa's total exports. However, the world auto market has its problems and analysts warn that overcapacity and the strength of the rand could hit exports.
",business
"Qantas considers offshore option
 
 Australian airline Qantas could transfer as many as 7,000 jobs out of its home country as it seeks to save costs, according to newspaper reports.
 
 Chief executive Geoff Dixon was quoted by The Australian newspaper as saying the carrier could no longer afford to remain ""all-Australian"". Unions criticised the possible move - which may affect cabin and maintenance staff - saying Qantas was profitable. More than 90% of the airline's staff are based in Australia.
 
 Qantas confirmed it was looking at whether it might recruit and source products overseas - potentially through joint ventures - but said it would continue to create jobs in Australia.
 
 Despite making a record Australian dollars 648m ($492m) profit last year, Qantas has argued that it needs to make considerable savings if it is to remain competitive. ""We're going to have to get the lowest cost structure we can and that willmean sourcing things more and more from overseas,"" the newspaper quoted Qantas chief executive Geoff Dixon as saying. Early this year, Qantas increased the number of flight attendants based in London from 370 to 870. If Qantas were to follow the lead of other airlines moving staff 'offshore' 7,000 jobs could shift overseas, the newspaper reported. In a statement, Qantas said it was looking to build its operations overseas. However, it stressed this would not result in large scale redundancies in its home market, where most of its 35,000 staff are employed. ""We are totally committed to continuing to grow jobs in Australia,"" Mr Dixon said. ""We are, however, operating in a global market and there is no room for complacency simply because we are currently profitable and successful.""
 
 Unions reacted angrily to the reported disclosure, arguing that Qantas was profitable and did not need to take such action. ""We could understand if Qantas was a struggling airline about to go under,"" Michael Mijatov, international division secretary of the Flight Attendants Association, told Agence France Presse. ""Qantas announced a record profit last year and is on course this year for an even greater profit so it is totally unnecessary."" In an effort to meet the challenge posed by low cost carriers, Qantas sought a tie-up with Air New Zealand last year However, the deal was thrown out by the New Zealand High Court on competition grounds.
",business
"Disaster claims 'less than $10bn'
 
 Insurers have sought to calm fears that they face huge losses after an earthquake and giant waves killed at least 38,000 people in southern Asia.
 
 Munich Re and Swiss Re, the world's two biggest reinsurers, have said exposure will be less than for other disasters. Rebuilding costs are likely to be cheaper than in developed countries, and many of those affected will not have insurance, analysts said. Swiss Re has said total claims are likely to be less than $10bn (£5.17bn). Swiss Re believes that the cost would be substantial but that it is unlikely to be in double-digit billions, the Financial Times reported. Munich Re, the world's largest reinsurance company, said that its exposure is less than 100m euros (£70m; $136m).
 
 At least 10 countries have been affected, with Sri Lanka, Indonesia, India and Thailand among the worst hit. The region's resorts and Western tourists are expected to be among the main claimants.
 
 Lloyds of London told the Financial Times it expected its exposure to be limited to ""holiday resorts, personal accident, travel insurance and marine risks"". A spokeswoman for Hanover Re, Europe's fifth-largest reinsurance firm, estimated tsunami-related damage claims would be in the low double-digit millions of euros. The company has paid out about 300 million euros (£281m; $400m) to cover damage caused recently by four major hurricanes in the US.
 
 But insurers have not had long to assess the economic impact of the damage and reports of more casualties and destruction are still coming through.
 
 ""So many things are unclear, it is just too early to tell,"" said Serge Troeber, deputy head of Swiss Re's natural disasters department. ""You need very complicated processes to estimate damages. Unlike the hurricanes, you can't just run a model."" He anticipated that his own company's total claims would be less then those from the hurricanes, which the company put at $640m. Allianz, a leading German insurer, said it did not know yet what its exposure would be. However, it said the tidal waves were unlikely to have a ""significant"" impact on its business. Zurich Financial said they could not yet assess the cost of the disaster.
 
 The impact on US insurance companies is not expected to be heavy, analysts said.
 
 Most US insurers have relatively little exposure to Asia and those that do, pass on a lot of the risk to reinsurance companies or special catastrophe funds. Insured damage could be a fraction of the ""billions of dollars worth of destruction in Sri Lanka, India, Thailand, Indonesia, the Maldive Islands and Malaysia,"" said Prudential Equity Group insurance analyst Jay Gelb. ""US insurers are likely to have only minimal to no exposure. It's more likely the Bermuda-based reinsurance [companies] might have some exposure,"" said Paul Newsome, an insurance analyst at AG Edwards & Co.
 
 Many of the affected countries, such as Indonesia, Sri Lanka or the Maldives, do not usually buy insurance for these kinds of disasters, said a US-based insurance expert. Early estimates from the World Bank put the amount of aid needed for the worst affected countries including Sri Lanka, India, Indonesia and Thailand, at about $5bn (£2.6bn), similar to the cash offered to Central America after Hurricane Mitch.
 
 Mitch killed about 10,000 people and caused damage of about $10bn in 1998. But the cost of the tsunamis on the individuals involved is incalculable. ""We cannot fathom the cost of these poor societies and the nameless fishermen and fishing villages ... that have just been wiped out. Hundreds of thousands of livelihoods have gone,"" said Jan Egeland, head of the UN Office for the Coordination of Humanitarian Affairs. Tourists cutting short their holidays in affected areas may suffer a financial impact too. The Association of British insurers warned that travel insurance does not normally cover cutting short a holiday. It said loss of possessions will usually be covered, but the Association stressed the importance of checking the wording of travel policies.
",business
"Saudi investor picks up the Savoy
 
 London's famous Savoy hotel has been sold to a group combining Saudi billionaire investor Prince Alwaleed bin Talal and a unit of HBOS bank.
 
 Financial details of the deal, which includes the nearby Simpson's in the Strand restaurant, were not disclosed. The seller - Irish-based property firm Quinlan Private - bought the Savoy along with the Berkeley, Claridge's and the Connaught for £750m last year. Prince Alwaleed's hotel investments include the luxury George V in Paris. He also has substantial stakes in Fairmont Hotels & Resorts, which will manage the Savoy and Simpson's in the Strand, and Four Seasons. Fairmont said it planned to invest $48m (£26m) in renovating parts of the Savoy including the River Room and suites with views over the River Thames. Work was expected to be completed by summer 2006, Fairmont said.
",business
"UK house prices dip in November
 
 UK house prices dipped slightly in November, the Office of the Deputy Prime Minister (ODPM) has said.
 
 The average house price fell marginally to £180,226, from £180,444 in October. Recent evidence has suggested that the UK housing market is slowing after interest rate increases, and economists forecast a drop in prices during 2005. But while the monthly figures may hint at a cooling of the market, annual house price inflation is still strong, up 13.8% in the year to November. Economists, however, forecast that ODPM figures are likely to show a weakening in annual house price growth in coming months. ""Overall, the housing market activity is slowing down and that is backed up by the mortgage lending and the mortgage approvals data,"" said Mark Miller, at HBOS Treasury Services. ""The ODPM data is a fairly lagging indicator.""
 
 The figures come after the Bank of England said the number of mortgages approved in the UK has fallen to the lowest level for nearly a decade. The Halifax, meanwhile, said last week that house prices increased by 1.1% in December - the first monthly rise since September.
 
 The UK's biggest mortgage lender said prices rose 15.1% over the whole of 2004, but by only 2.8% in the second half of the year. It is predicting a 2% fall in overall prices in 2005 as the market stabilises after large gains in recent years. The ODPM attributed the monthly fall of prices in November to a drop in the value of detached houses and flats. It said annual inflation rose between October and November because prices had fallen by 1.1% in the same period in 2003.
 
 The ODPM data showed the average house price was £192,713 in England; £139,544 in Wales; £116,542 in Scotland, and £111,314 in Northern Ireland.
 
 All areas saw a rise in annual house price inflation in November except for Northern Ireland and the West Midlands, where the rate was unchanged, the ODPM said. The North East showed the highest rate of inflation at 26.2%, followed by Yorkshire and the Humber on 21.7%, and the North West on 21.1%. The East Midlands, the West Midlands and the South West all had an annual inflation rate of more than 15%. In London, the area with the highest average house price at £262,825, annual inflation rose only slightly in November to 7.1% from 7% the previous month.
",business
"India and Russia in energy talks
 
 India and Russia are to work together in a series of energy deals, part of a pact which could see India invest up to $20bn in oil and gas projects.
 
 On the agenda are oil and gas extraction as well as transportation deals, to be led by Russian energy giant Gazprom and India's ONGC. The Indian firm is also expected to hold talks on Tuesday about buying a stake in assets once owned by Yukos. It is reported to be keen on buying a 15% stake in oil unit Yuganskneftegas. The former Yukos subsidiary was controversially sold off last year and eventually acquired by state-owned energy giant Rosneft.
 
 Russian media reported that India and Russia signed a memorandum of understanding on energy co-operation on Tuesday during a meeting between Oil and Natural Gas Corporation chairman Subir Raha, Gazprom chairman Aleksey Miller and India's petroleum minister Mani Shankar Aiyar.
 
 The agreement is likely to see the two companies develop refining facilities in Russia, India and elsewhere and organise delivery of oil, gas and petrochemicals from Russia to India and other countries across Asia. ONGC could invest in gas and oil fields in Sakhalin, in the far east of Russia, and may also take part in joint tender bids for projects in eastern Siberia and the Caspian Sea.
 
 India is urgently searching for fresh energy supplies - particularly liquefied natural gas - as domestic demand is growing at more than 5% a year.
 
 ONGC's Mr Raha said the two could work together on joint bids from next year. ""At current oil and gas prices, our cash flow situation is good,"" he told Reuters. ""What we are saying is - Gazprom has a huge amount of gas and we have the money. ""The investment may go up to $20bn or more for a period of five years or so.""
 
 Russian news agencies reported that India's petroleum minister Mr Aiyar and Russian energy minister Viktor Khristenko would discuss the future of Yugansk at a meeting on Tuesday. ONGC's Mr Raha declined to be drawn on his firm's reported interest in the company. However, he stressed that ONGC was not interested in a 'loan-for-oil deal' in connection to Yugansk, similar to that concluded recently between Rosneft and China's National Petroleum Corporation. ""China's problem is it has immediate demand and they needed the oil for their coastal refineries. We do not. We would like long-term security through equity participation."" It is thought that any decision over Yugansk will be delayed until a US court has decided whether to grant Yukos bankruptcy protection. Yukos is suing a host of companies involved in the sale of Yugansk, auctioned off to pay a huge back-tax bill. It has also threatened legal action against any business which has future commercial dealings with its former subsidiary.
",business
"Irish markets reach all-time high
 
 Irish shares have risen to a record high, with investors persuaded to buy into the market by low inflation and strong growth forecasts.
 
 The ISEQ index of leading shares closed up 23 points to 6661.89 on Thursday, fuelled by strong growth in banking and financial stocks. A fall in the rate of inflation to 2.3% in January gave a fresh boost to shares which have advanced 4% this month. The economy is set for strong growth in 2005 while interest rates remain low.
 
 Several of Ireland's biggest companies saw their market value hit recent highs on Thursday. Allied Irish Banks, Ireland's biggest company by capitalisation, touched a five year peak while Bank of Ireland shares rose to their highest level since August 2002.
 
 Telecoms firm Eircom, which recently revealed that it would re-enter the Irish mobile phone market, hit a yearly high. Analysts said that economic conditions were benign and Irish shares were still trading at a discount to other European markets. ""Ireland ticks all the boxes as far as international investors are concerned,"" Roy Asher, chief investment officer of Hibernian Investment Managers, told Reuters. ""Buoyant economic conditions are set to continue in Ireland over the next few years and Irish equities continue to offer quality growth at a reasonable valuation.""
 
 Bernard McAlinden, head of equity research at NCB Stockbrokers, said equities represented good value compared to other investments. ""It is still looking good,"" he told Reuters. ""We have seen good economic data on Ireland which benefits the financial stocks."" Ireland's economic 'miracle' is enjoying a second wind, with 5% growth forecast for 2005 and 2006. The economy cooled markedly between 2001 and 2003 after enjoying spectacular growth of more than 10% in 2000. However, it has bounced back strongly with growth of just under 5% expected in 2004.
",business
"Borussia Dortmund near bust
 
 German football club and former European champion Borussia Dortmund has warned it will go bankrupt if rescue talks with creditors fail.
 
 The company's shares tumbled after it said it has ""entered a life-threatening profitability and financial situation"". Borussia Dortmund has posted record losses and missed rent payments on its Westfallen stadium. Chief executive Gerd Niebaum stepped down last week and creditors are now pushing for greater control. Shares in Borussia Dortmund, Germany's only stock-market listed football club, dropped by almost 23% to 2.05 euros during early afternoon trading.
 
 Fund manager Florian Hamm - Borussia Dortmund's largest investor - said he would only invest more money in the company if he got a greater say in how it is run. ""I demand better transparency,"" he is quoted as saying by Germany's Manger Magazin. The club has also faced calls to appoint executives from outside the club.
 
 Borussia Dortmund posted a record loss of 68m euros ($89m; £47m) in the 12 months through June. It made a loss of 27.2m euros in the first half of the current fiscal year and said that total debts will increase to 134.7m euros by the middle of 2006 unless a restructuring plan is pushed through. ""This is the bill for their mismanagement over the past years,"" said HVB analyst Peter-Thilo Halser. The club appointed an auditor, who has recommended a number of steps, including deferring the rent due on the stadium and suspending debt repayments until at least the 2006-2007 fiscal year. Stephen Schechter, a UK investment banker who has held talks with Borussia Dortmund over a possible bond sale, said the club needs a capital injection of 35m euros. ""They need strong people on the board who do not have a history with the club,"" he said.
",business
"Criminal probe on Citigroup deals
 
 Traders at US banking giant Citigroup are facing a criminal investigation in Germany over a controversial bond deal.
 
 The deal saw the sale of 11bn euros ($14.4bn; £7.6bn) of government bonds in a few minutes on 2 August, with 4bn euros-worth then bought back later. The move was widely criticised at the time, and now the German regulator has said it has found evidence of possible market manipulation. Citigroup said it would continue to co-operate fully with the authorities. ""We are disappointed that the BaFin has referred to the prosecutor the question of whether action should be brought against individuals involved,"" Citigroup said. If the traders are found guilty, they could face a five-year jail term or a fine, Reuters reported BaFin as saying. However, under German criminal law, prosecutors cannot pursue Citigroup itself.
 
 Germany's financial watchdog BaFin told BBC News it had now transferred the investigation to the public prosecutor. ""I can confirm that BaFin has passed through the case to the public prosecutor,"" a BaFin spokeswoman said. ""It is now a criminal investigation."" ""We found clues of possible market manipulation,"" the spokeswoman said, which included signs of linked bond trading ahead of the main trades on 2 August. ""Germany's Securities Trading Act says that if BaFin finds such clues, it has to put the case in the hands of the prosecutor."" Regulatory investigations are still going on in France, the UK and elsewhere. Some Citigroup operations elsewhere in the world came under regulatory criticism in 2004. Its private banking operation in Japan was closed down by regulators in Tokyo after an ""aggressive sales culture"" led the bank to flout anti-money laundering rules.
",business
"Gold falls on IMF sale concerns
 
 The price of gold has fallen after the International Monetary Fund (IMF) said it will look at ways of using its gold reserves to provide debt relief.
 
 By revaluing its holdings, the IMF may be able to sell billions of dollars of gold and use the cash to cancel debts owed by the world's poorest nations. The plan was put forward by G7 finance ministers over the weekend. The price of gold fell to $413.50 an ounce in Asia, before rebounding slightly in early European trading.
 
 IMF boss Rodrigo Rato was asked by G7 ministers to carry out a study into the feasibility of revaluing and selling gold reserves.
 
 He is expected to present his conclusions at an IMF meeting in Washington during April. ""Whatever happens the market is going to be disconcerted and on the back foot until the April IMF meetings,"" said John Reade, an analyst at UBS. The IMF values its gold reserves at between $40 and $50 an ounce, a price that was fixed in the 1970s and is about a tenth of the metal's current market value. The IMF has 3,217 tonnes of gold, or about 113.5m ounces. Bringing the book price of the gold in line with market value would boost the IMF's balance sheet, giving it more money to distribute.
 
 This idea has been put forward before, but there now seems to be a more committed political drive to address the issue of global poverty. ""This is the first time there has been a mention of the use of gold in a G7 communiqué for achieving debt relief,"" said UK Chancellor of the Exchequer Gordon Brown. At their meeting in London, G7 finance ministers backed plans to write off up to 100% of the debts owed by some of the world's poorest countries. Mr Brown said the meeting would be remembered as ""the 100% debt relief summit"". While debt relief seems to have jumped to the top of the global agenda, not everyone is convinced that selling IMF gold is the best way forward. The US, which can veto any plan to sell IMF gold should it so choose, said it is looking at other ways of solving the problem. ""The US is not convinced that's the necessary way to do it,"" said Treasury Under Secretary John Taylor. Canada, a key gold producer, also expressed reservations.
",business
"Israel looks to US for bank chief
 
 Israel has asked a US banker and former International Monetary Fund director to run its central bank.
 
 Stanley Fischer, vice chairman of banking giant Citigroup, has agreed to take the Bank of Israel job subject to approval from parliament and cabinet. His nomination by Prime Minister Ariel Sharon came as a surprise, and led to gains on the Tel Aviv stock market. Mr Fischer, who speaks fluent Hebrew, will have to become an Israeli citizen to take the job. The US says he will not have to give up US citizenship to do so.
 
 Previous incumbent David Klein, who often argued with the Finance Ministry, steps down on 16 January. Mr Fischer will face a delicate balancing act - both in political and economic terms - between Mr Sharon and finance minister Binyamin Netanyahu, who also backed his nomination. But his appointment has also raised hopes that it could bring in fresh investment - and perhaps even an improvement in the country's credit rating Mr Fischer first went to Israel for six months in 1973, and almost emigrated there before deciding finally to return to the US. While teaching at the Massachussetts Institute of Technology he spent a month seconded to the Bank of Israel in 1979, beginning a long-time involvement in studying Israel's economy. In 1983 Mr Fischer became adviser on Israel's economy to then-US secretary of state George Shultz. At the World Bank in 1985, he participated in drawing up an economic stabilisation package for Israel.
",business
"Two Nigerian banks set to merge
 
 Nigerian banks United Bank of Africa and Standard Trust Bank have agreed plans to merge and create the biggest bank in West Africa.
 
 The deal is also in line with a 2004 directive from the Nigerian central bank that called for more consolidation in the nation's crowded banking sector. The merger was announced in a statement on Standard Trust's website on Tuesday, but no financial details were revealed. United Bank is the third biggest in Nigeria in terms of number of branches. Standard Trust is smaller but more profitable. ""The boards of United Bank and Standard Trust, at separate meetings yesterday, approved arrangements to merge both institutions,"" Standard Trust said. Standard Trust is 100% Nigerian-owned, but United Bank has some foreign investors, including New York-based Global Depository Receipts (32.8%), and Banca Nazionale del Lavoro and Monte del Paschi di Siena, both from Italy, who each have a 2.4% stake.
",business
"Man Utd to open books to Glazer
 
 Manchester United's board has agreed to give US tycoon Malcolm Glazer access to its books.
 
 Earlier this month, Mr Glazer presented the board with detailed proposals on an offer to buy the football club. In a statement, the club said it would allow Mr Glazer ""limited due diligence"" to give him the opportunity to take the proposal on to a formal bid. But it said it continued to oppose Mr Glazer's plans, calling his assumptions ""aggressive"" and his plan ""damaging"". Many of Manchester United's supporters own shares in the club, and the fan-based group Shareholders United is strongly opposed to any takeover by Mr Glazer. About 300 fans protested outside the Old Trafford ground two days ago.
 
 Rival local club Manchester City has pleaded with visiting fans not to protest inside its ground when the two teams play a televised match on Sunday.
 
 Manchester United's response comes as little surprise, as the board made clear. ""Any board has a responsibility to consider a bona fide offer proposal,"" the club said in its statement. Should it become a firm offer, it should be at a price that ""the board is likely to regard as fair"" and on terms which ""may be deliverable"". But it also stressed that it stayed opposed to Mr Glazer's proposal. ""The board continues to believe that Mr Glazer's business plan assumptions are aggressive,"" the statement said, ""and the direct and indirect financial strain on the business could be damaging."" Whether or not the bid is attractive in monetary terms, in the case of Manchester United many investors hold the stock for sentimental rather than financial reasons. At present, Mr Glazer and his family hold a 28.1% stake, making them Manchester United's second biggest shareholders. They own the successful Tampa Bay Buccaneers American football team based in Florida. If the family makes a formal offer, they will need the support of the club's biggest shareholders.
 
 Irish horse racing millionaires JP McManus and John Magnier own 29% of United through their investment vehicle Cubic Expression, and have yet to express a view on the bid approach.
 
 A group of five MPs are calling on the Department of Trade and Industry to block any takeover of the club by the US football magnate on public interest grounds. They have signed a House of Commons motion, and Tony Lloyd, the Manchester Central MP, whose constituency includes the club's Old Trafford ground, has pledged to take the matter ""to Tony Blair if necessary"". The Commons motion says ""any takeover designed to transform the club into a private company would be against the interests of those supporters and football"". However, the DTI has dismissed the proposal. A spokesman said the department did not believe there was a case for changing the Enterprise Act so that takeovers of football clubs could be looked at on non-competition grounds. Mr Glazer's offer values the club at £800m ($1.5bn). Pitched at 300p per share, it also relies less on debt to finance it than an earlier approach from the US tycoon, which was rejected out of hand. Manchester United shares closed at 270.25p on Friday, down 3.75p on the day.
",business
"McDonald's to sponsor MTV show
 
 McDonald's, the world's largest restaurant chain, is to sponsor a programme on music channel MTV as part of its latest youth market promotion.
 
 The show Advance Warning highlights new talent and MTV reckons it will give McDonald's access to nearly 400 million homes in 162 countries. McDonald's golden arches, name and ""I'm loving it"" catchphrase will be used throughout the half-hour programme. The move comes amid growing concerns about obesity in Europe and the US.
 
 The European Union has called on the food industry to reduce the number of adverts aimed at young children, warning that legislation would be introduced. unless voluntary steps were taken. In the US, food group Kraft is among firms that already have cut back on promoting sugar and fattening products to the young. McDonalds has also been taking steps to improve its junk food reputation, revamping its menu and providing clients with health-related products such as pedometers. As well as burgers like the Big Mac and Quarter Pounder with Cheese, the company now sells healthier options such as salads and fresh fruit. Chief executive Jim Skinner attributed an 8.3% increase in January worldwide sales to the ""vitality of our menu"", among other things.
 
 Hooking up with MTV is expected to add extra momentum to McDonald's recent revival. MTV, which played a key role in the emergence of the music video, is to show Advance Warning on all 25 of its channels across the world. The programme can at present only been seen in the US, where it has featured artists like British stars Joss Stone and Franz Ferdinand. McDonald's has targeted the youth market in the past with its advertisements, signing up stars like jelly-legged dancer Justin Timberlake and all-woman singing group Destiny's Child.
",business
"Delta cuts fares in survival plan
 
 Delta Air Lines is cutting domestic fares by as much as 50% as part of a plan to ensure its financial survival.
 
 Other US carriers, including United, have sought bankruptcy protection, amid high fuel costs and competition from discount carriers. Delta is restructuring in a bid to fight off insolvency. This latest move to boost business has prompted speculation other firms will be forced to match their fares, hurting revenues in the sector. Delta's new SimpliFares were trialled from August last year on tickets from Cincinnati, its second-largest hub.
 
 The airline says no one-way economy fare will now be priced higher than $499 (£264), and no first-class fare will be priced higher than $599. It is also eliminating a Saturday-night stay requirement on discount fares and will give further reductions to customers opting for non-refundable tickets, booking in advance and online. Delta, which lost $646m in the three months to September, was forced to cut 6,900 jobs worldwide as part of its aim to slash $5bn from its costs. In October, it reached a crucial agreement with pilots on pay and conditions and it has also issued new shares to staff in return for wage cuts. Airline shares closed lower on the announcement, with Delta, Continental and American Airlines all falling by more than 7%. ""We believe the whole airline industry will now have to move in this direction; this will likely hurt revenue in the short run but could be beneficial in the long run,"" said analyst Ray Neidl at Calyon Securities.
",business
"Could Yukos be a blessing in disguise?
 
 Other things being equal, the notion of entrepreneurs languishing in jail while their companies are sold off for a song ought to be bad for business.
 
 But in the looking-glass world of modern Russia, the opposite might just be true, a new report* has argued. The study, from the Centre for Economic Policy Research, does not praise the rough handling of oil company Yukos. But it argues that more rigorous tax policing has benefited all Russian firms, even targets of the tax police. ""An increase in tax enforcement can increase the amount [of dividends and other income] outside shareholders will receive, even accounting for increased levels of taxation,"" the authors say.
 
 The paper's reasoning is complex, and is based on a sophisticated model of the relationship between tax regimes and corporate governance - in particular, the propensity of management to steal from the company. The calculations demonstrated what many Russian analysts already knew: that increasing the tax rate increases the amount that managers steal, since undeclared income becomes relatively more valuable. In the West, meanwhile, higher tax rates translate far more smoothly into higher government revenues. On the other hand, increasing the rigour with which taxes are collected encourages companies to become more transparent, forcing them to be able to demonstrate their financial position far more accurately. The net result, the authors say, is that the extra amount companies pay in tax is more than compensated for by greater efficiency and financial soundness.
 
 After Vladimir Putin became president in 2000, he did not raise taxes, but put a lot of effort - too much, critics argue - into enforcement.
 
 Since then, the Russian stock market has more than trebled in value, a rise the authors attribute at least in part to the newly tough approach. The report highlights the case of Sibneft, a Russian oil company that came close to merging with Yukos last year. After Mr Putin came to power, the company's overall effective tax rate rose from 2.6% to 10.4%, and Sibneft was the target of a series of aggressive raids by fiscal police. But shareholders benefited hugely: Sibneft started to pay dividends - $53m in 2000 and almost $1bn in 2001 - and closed down the network of opaque subsidiaries it had previously used for siphoning off unofficial funds. According to the authors, although a variety of changes were sweeping through Russian industry at the time, the increase in tax enforcement is the only likely explanation for the change of fortunes at Sibneft and many of its peers.
 
 Does this analysis make sense? In part, certainly. For all its faults, corporate Russia has become far more orderly and law-abiding since 2000. Companies have rushed to list their shares on international stock exchanges - something unthinkable in the wilder days of the 1990s - and most large firms now produce their accounts to international standards. Foreign direct investment, long negligible, is starting to flow in serious amounts - $7bn in 2003 - and stock market returns have been among the healthiest in Europe. But the authors' model does not quite cover all the complexities. For a start, the model assumes that the various parties have clearly-defined motivation: companies want to maximise profit, governments want to maximise tax revenue. In fact, the alarmingly close connections between big business and government in Russia - connections often greased by bribery - blur the apparently antagonistic relationship. Companies can, for example, persuade officials to overlook non-payment of taxes.
 
 And the authors' definition of tax enforcement seems unrealistically Western. Genuine, disinterested tax collection might well work wonders in Russia; the problem with recent examples has been the erratic and unpredictable way laws are enforced. The case against Yukos, for example, has moved in fits and starts, with little clarity from the government about its intentions, and little faith from investors that the letter of the law would be followed. As far as most commentators are concerned, the state is pursuing Yukos out of a political vendetta, rather than simply to enforce fiscal rectitude. Since Yukos' founder, Mikhail Khodorkovsky, was arrested a year ago, the Russian market has dropped by 10% - an indication that few investors feel optimistic about the salutary effect on corporate performance.
",business
"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"".
",business
"Split-caps pay £194m compensation
 
 Investors who lost money following the split-capital investment trust scandal are to receive £194m compensation, the UK's financial watchdog has announced.
 
 Eighteen investment firms involved in the sale of the investments agreed the compensation package with the Financial Services Authority (FSA). Splits were marketed as a low-risk way to benefit from rising share prices. But when the stock market collapsed in 2000, the products left thousands of investors out of pocket. An estimated 50,000 people took out split-capital funds, some investing their life savings in the schemes. The paying of compensation will be overseen by an independent company, the FSA said.
 
 Further details of how investors will be able to claim their share of the compensation package will be announced in the new year. ""This should save investors from having to take their case to the Financial Ombudsman Service, something, no doubt, that will be very welcome,"" Rob McIvor, FSA spokesman, told BBC News. Agreeing to pay compensation did not mean that the eighteen firms involved were admitting any guilt, the FSA added. Any investor accepting the compensation will have to waive the right to take their case to the Financial Ombudsman Service.
 
 The FSA has been investigating whether investors were misled about the risks posed by split-capital investment trusts. The FSA's 60 strong investigation team looked into whether fund managers colluded in a so-called ""magic circle"", in the hope of propping up one another's share prices.
 
 Firms involved were presented with 780 files of evidence detailing 27,000 taped conversations and over 70 interviews. In May, the FSA was widely reported as having asked firms to pay up to £350m in compensation. Mr McIvor told the BBC that the final settlement figure was smaller because two unnamed firms had pulled out of the compensation negotiations. Investors in these two firms may now have to take any compensation claim to the Financial Ombudsman Service or the courts.
",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.
",business
"Rover deal 'may cost 2,000 jobs'
 
 Some 2,000 jobs at MG Rover's Midlands plant may be cut if investment in the firm by a Chinese car maker goes ahead, the Financial Times has reported.
 
 Shanghai Automotive Industry Corp plans to shift production of the Rover 25 to China and export it to the UK, sources close to the negotiations tell the FT. But Rover told BBC News that reports of job cuts were ""speculation"". A tie-up, seen as Rover's last chance to save its Longbridge plant, has been pushed by UK Chancellor Gordon Brown. Rover confirmed the tie-up would take place ""not very far away from this time"".
 
 Rover bosses have said they are ""confident"" the £1bn ($1.9bn) investment deal would be signed in March or early April.
 
 Transport & General Worker's Union general secretary Tony Woodley repeated his view on Friday that all mergers led to some job cuts. He said investment in new models was needed to ensure the future of the Birmingham plant. ""This is a very crucial and delicate time and our efforts are targeted to securing new models for the company which will mean jobs for our people,"" he said. SAIC says none of its money will be paid to the four owners of Rover, who have been accused by unions of awarding themselves exorbitant salaries, the FT reports. ""SAIC is extremely concerned to ensure that its money is used to invest in the business rather than be distributed to the shareholders,"" the newspaper quotes a source close to the Chinese firm. Meanwhile, according to Chinese state press reports, small state-owned carmaker Nanjing Auto is in negotiations with Rover and SAIC to take a 20% stake in the joint venture. SAIC was unavailable for comment on the job cuts when contacted by BBC News. Rover and SAIC signed a technology-sharing agreement in August.
",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
"Train strike grips Buenos Aires
 
 A strike on the Buenos Aires underground has caused traffic chaos and large queues at bus stops in the Argentine capital.
 
 Tube workers walked out last week demanding a 53% pay rise and in protest against the installation of automatic ticket machines. Metrovias, the private firm which runs the five tube lines in the city, has offered an 8% increase in wages. The firm promised no jobs would be lost as a result of new ticket machines. It said it would put this commitment on paper.
 
 Underground staff have warned they will continue with the protests until the management put an acceptable offer on the table. The Argentine Work Ministry has been mediating in the conflict and it could call an ""obligatory conciliation"", which would force both sides to find a solution and put an end to the conflict. Some tube commuters have not hidden their frustration at the ongoing strike and have broken the windows of the underground trains, according to the local press. ""We are taken as hostages. I don't know who is right, but the harm ones are us,"" said accountant Jose Lopez.
",business
"Ukraine strikes Turkmen gas deal
 
 Ukraine has agreed to pay 30% more for natural gas supplied by Turkmenistan.
 
 The deal was sealed three days after Turkmenistan cut off gas supplies in a price dispute that threatened the Ukrainian economy. Supplies from Turkmenistan account for 45% of all natural gas imported by Ukraine, which has large coal deposits but no gas fields. Turkmenistan is also trying to strike a similar deal with Russia, which is not so dependent on its gas. Turkmen President Saparmurat Niyazov, who signed the contract, said the Turkmen side agreed to lower the price demanded by $2 per 1,000 cubic metres, bringing it down to $58. But the new price is still $14 higher than the price fixed in the contract for 2004. The head of the Ukrainian state-owned Naftohaz company, Yury Boyko, said he was ""fully happy"" with the deal. On Friday, Turkmenistan acted on a threat and shut off gas supplies to Ukraine in attempt to bring the price dispute to a head. Mr Niyazov said that his government would insist on the same price for supplies to Russia. Analysts say thay may not happen as Russia, the world's leading gas producer, needs the cheap Turkmen gas only to relieve is state-owned Gazprom from costly investment in the exploration of oil fields in Siberia. Turkmenistan is the second-largest gas producer in the world.
",business
"Soros group warns of Kazakh close
 
 The Open Society Institute (OSI), financed by billionaire George Soros, has accused Kazakhstan officials of trying to close down its local office.
 
 A demand for unpaid taxes and fines of $600,000 (£425,000) is politically motivated, the OSI claimed, adding that it paid the money in October. The organisation has found itself in trouble after being accused of helping to topple Georgia's former president. It denies having any role, but offices have had to close across the region.
 
 The OSI shut its office in Moscow last year and has withdrawn from Uzbekistan and Belarus. In the Ukraine earlier this year, Mr Soros - who took on the Bank of England in the 1990s - and won, was pelted by protestors. ""This legal prosecution can be considered an attempt by the government to force Soros Foundation-Kazakhstan to cease its activities in Kazakhstan and shut its doors for Kazakh citizens and organisations,"" the OSI said.
 
 The OSI aims to promote democratic and open, market-based societies. Since the break up of the Soviet Union in 1991, Kazakhstan has been dominated by its president Nursultan Abish-uly Nazarbayev. He has powers for life, while insulting the president and officials has been made a criminal offence. The government controls the printing presses and most radio and TV transmission facilities. It operates the country's national radio and TV networks. Recent elections were criticised as flawed and the opposition claimed there was widespread vote rigging. Supporters, however, say he brings much needed stability to a region where Islamic militancy is on the rise. They also credit him with promoting inter-ethnic accord and pushing through harsh reforms.
",business
"French consumer spending rising
 
 French consumers increased their spending by 1.5% in January, a figure which bodes well for the country's economic growth, figures revealed.
 
 The National Statistic Institute (INSEE) added that consumer spending in January rose 3.8% on a year-on-year basis. Rising sales of household equipment were behind the increase. The INSEE also said that French consumer prices fell 0.6% in January, but were up 1.6% on an annual basis.
 
 Despite the general increase in spending in January, French households bought fewer cars in January. According to the INSEE, car sales fell 2.8% in January, following a fall of 0.6% in December. But on a year-on-year basis, the sector still saw a sales increase of 6.5%. Consumer spending fuelled France's economic growth in the last quarter of 2004 and analysts expect that it will continue to support the economy. ""It's a growth that will remain fragile and vulnerable to risks like a strong rise in long-term interest rates, tension in the oil price,"" Emmanuel Ferry, from Exane BNP Paribas told Reuters news agency.
 
 Meanwhile in Italy, consumer confidence rose to its highest level since October 2004. Economic research group ISAE has said that Italian consumer confidence rose to 104.4 from 103.3, despite a slight deterioration in short-term sentiment.
",business
"Businesses fail to plan for HIV
 
 Companies fail to draw up plans to cope with HIV/Aids until it affects 20% of people in a country, new research says.
 
 The finding comes in a report published on Thursday by the World Economic Forum, Harvard and the UN aids agency. ""Too few companies are responding proactively to the social and business threats,"" said Dr Kate Taylor, head of the WEF's global Health Initiative. Nearly 9,000 business leaders in 104 countries were surveyed for Business and HIV/AIDS: Commitment and Action?
 
 Dr Taylor described the level of action taken by businesses as revealed by the report as ""too little, too late"". The issue will be highlighted to business and world leaders at the World Economic Forum, which meets in Davos, Switzerland, next week. The WEF report shows that despite the fact that 14,000 people contract HIV/Aids every day, concern among businesses has dropped by 23% in the last 12 months. Most (71%) have no policies in place to address the disease. Nor could over 65% of the business leaders surveyed say or estimate the prevalence of HIV among their staff. The UN programme tackling Aids, UNAIDS, pointed out that having a clear strategy for dealing with HIV/Aids was a good investment as well as being socially responsible.
 
 One company that does have a plan is Anglo-American, the international mining company, which estimates an HIV prevalence of 24% among its 130,000-strong Southern African workforce.
 
 Over the last two years the company has implemented extensive voluntary counselling and testing for HIV infection, coupled with anti-retroviral therapy for employees progressing to Aids. Over 90% of the 2,200 employees who have accessed and remained on treatment are well and have returned to normal work. ""Effective action on HIV/Aids is synonymous with good business management and leads to more profitable and sustainable operations,"" said Brian Brink, senior vice-president, health, at Anglo-American.
 
 ""Companies should encourage all workers to know their HIV status, making it as routine as monitoring blood pressure or cholesterol,"" he said. ""Providing access to treatment is a critical part of this."" Across sub-Saharan Africa, even in countries with an HIV prevalence of 10-19%, only around 7% of companies have formal HIV/Aids policies in place, according to the report. The gap is even wider in China, Ethiopia, India, Nigeria and Russia, the so-called ""next wave"" countries, which are predicted to experience the highest numbers of new HIV/Aids cases worldwide by 2010. The report adds ""an important building block to our understanding of how the business community is experiencing the HIV/Aids epidemic and to whether and how it is reacting,"" said David Bloom, professor of economics and demography at the Harvard School of Public Health.
 
 The WEF report concludes that businesses need to understand their exposure to HIV/Aids risks and come up with good local practices to manage them. A key priority, in both high and low-prevalence settings, said the WEF is to establish a policy based on non-discrimination and confidentiality.
",business
"Europe blames US over weak dollar
 
 European leaders have openly blamed the US for the sharp rise in the value of the euro.
 
 US officials were talking up the dollar, they said, but failing to take action to back up their words. Meeting in Brussels, finance ministers of the 12 eurozone countries voiced their concern that the rise of the european currency was harming exports. The dollar is within touching distance of an all-time low reached earlier in November. At 0619 GMT on Tuesday, the dollar was up slightly at just above $1.29 to the euro, and buying 105.6 yen in Tokyo. It rallied briefly on Monday amid signs that oil prices are easing.
 
 But analysts said the respite was likely to be only temporary. The European ministers' comments, said Junya Tanase of JPMorgan Chase bank in Tokyo, were ""generally too weak to produce a market reaction"".
 
 Still, by the standards of diplomacy the European ministers were forthright. Nicolas Sarkozy of France said he and his colleagues were unanimous in their worry that the decline of the dollar would hit Europe's economies by eating into their exports. ""We are concerned about these developments, which are destabilising, and which are linked to the accumulation of deficits by our American friends,"" he said. The comments come a day after US Treasury Secretary John Snow said a strong dollar was ""in America's interest"".
 
 But that was not enough for Mr Sarkozy.
 
 ""If the Americans were to change their policy, it's up to them to say so,"" he said. And the European Union's monetary affairs commissioner, made it clear that action was necessary. ""I fully welcome the words of Mr Snow,"" said Joaquin Almunia, ""but we will need to see decisions adopted in that direction. ""If the imbalances in the US economy are not adjusted in the future, the decision in the market will be as in the past weeks."" Economists point out that whatever Europe says, in the short term a weaker dollar is a boon to President George W Bush's administration. Not only does it boost US exports, but it also makes the budget deficit easier to fund. On the other hand, slower European exports would mean slower EU growth - potentially reducing the demand for US goods.
",business
"US firm pulls out of Iraq
 
 A US company has pulled out of a major contract to rebuild Iraq's transport system after attacks on reconstruction efforts, Pentagon officials have said.
 
 Contrack International, of Arlington, Virginia, heads a coalition of firms working on a series of schemes. Its withdrawal from the $325m (£170m) contract in November is thought to be the largest cancellation to date. Contrack said ""the original scope of work that was envisioned could not be executed in a cost-effective manner"". But the firm denied reports it was withdrawing completely from Iraq. ""Members of the joint venture including Contrack are committed to the ongoing reconstruction efforts, are actively working in Iraq and continue to look for new construction opportunities in the country,"" it said in a statement. The Pentagon's Project and Contract Office (PCO) in Baghdad said it had taken over Contrack's management of the subcontractors working on the transportation projects.
 
 US firms and their workers have been targets of attacks, and security concerns are said to be a major reason for the slow pace of reconstruction in Iraq. Of the $18.4bn in reconstruction funds approved by Congress, less than $2bn has been spent. Lt Col Eric Schnaible of the PCO told the Associated Press news agency Contrack's withdrawal from the transportation contract was a ""mutually agreed-to separation"" and did not indicate a movement by US companies to leave Iraq. ""Some parts of the country are a whole lot more permissive than others,"" he added. ""Where we can get the work done, good things are happening.""
",business
"Umbro profits lifted by Euro 2004
 
 UK sportswear firm Umbro has posted a 222% rise in annual profit after sales of replica England football kits were boosted by the Euro 2004 tournament.
 
 Pre-tax profit for 2004 was £15.4m ($29.4m). Umbro, which recently lost sponsorship deals with Chelsea and Celtic, said on Thursday it had signed a new four-year agreement with Scottish club Rangers. It hopes 2005 sales will benefit from the launch of a new England replica shirt ahead of the 2006 World Cup. In January, Umbro announced its sponsorship agreement with Chelsea, which gave Umbro the lucrative right to make replica shirts, would end in 2006, five years earlier than expected. The firm, which is to receive a payment from Chelsea of £24.5m, said it is ""appraising a number of additional investment opportunities as a result of this compensation"" . Chief executive Peter McGuigan said the firm plans to grow sales both in the UK and internationally.
 
 The firm, reporting its first annual results since listing on the London Stock Exchange in June, said the UK market had seen sales growth of 8% last year. It said the launch of its Evolution X fashion range had boosted sales. Umbro supplies more than 150 teams across the world including the national sides of Ireland, Sweden and Norway. Shares in Umbro were up 1.76% at 115.5 pence in morning trade.
",business
"Slowdown hits US factory growth
 
 US industrial production increased for the 21st month in a row in February, but at a slower pace than in January, official figures show.
 
 The Institute for Supply Management (ISM) index fell to 55.3 in February, from an adjusted 56.4 in January. Although the index was lower than in January, the fact that it held above 50 shows continued growth in the sector. ""February was another good month in the manufacturing sector,"" said ISM survey chairman Norbert Ore.
 
 ""While the overall rate of growth is slowing, the overall picture is improving as price increases and shortages are becoming less of a problem. Exports and imports remain strong,"" he said. Analysts had expected February's figure to be stronger than January's and come in at 57. Of the 20 manufacturing sectors surveyed by ISM, 13 reported growth. They included the textiles, apparel, tobacco, chemicals and transportation sectors. The ISM's index of national manufacturing activity is compiled from the responses of purchasing executives at more than 400 industrial companies.
",business
"US bank 'loses' customer details
 
 The Bank of America has revealed it has lost computer tapes containing account details of more than one million customers who are US federal employees.
 
 Several members of the US Senate are among those affected, who could now be vulnerable to identity theft. Senate sources say the missing tapes may have been stolen from a plane by baggage handlers. The bank gave no details of how the records disappeared, but said they had probably not been misused. Customers' accounts were being monitoring and account holders would be notified if any ""unusual activity"" was detected, bank officials said.
 
 Bank of America said the tapes went missing in December while being shipped to a back-up data centre. ""We, with federal law authorities, have done a very robust, thorough investigation on this and neither we nor they would make the statement lightly that we believe those tapes to be lost,"" Alexandra Tower, a spokeswoman for the North Carolina-based bank, told Time magazine. But although there was no evidence of criminal activity, the bank said, the Secret Service - a federal agency whose brief includes investigations of serious financial crime - is said to be looking into the loss. New York Senator Charles Schumer said he was told by the Senate Rules Committee that the tapes were probably stolen from a commercial plane. ""Whether it is identity theft, terrorism, or other theft, in this new complicated world baggage handlers should have background checks and more care should be taken for who is hired for these increasingly sensitive positions,"" the Democrat senator said. Details of his Vermont colleague Pat Leahy's credit card account are among those missing, Senator Leahy's spokeswoman Tracy Schmaler said. About 900,000 military and civilian staff at the defence department are among the 1.2 million affected, according to a Pentagon spokesman.
",business
"Irish duo could block Man Utd bid
 
 Irishmen JP McManus and John Magnier, who own a 29% stake in Manchester United, will reportedly reject any formal £800m offer for the club.
 
 The Sunday Times and The Sunday Telegraph say they will oppose any formal £800m takeover bid from US tycoon Malcom Glazer. Mr Glazer got permission to look at the club's accounts last week. Irish billionaires Mr McManus and Mr Magnier are said to believe that an £800m bid undervalues club prospects.
 
 Mr Magnier and Mr McManus, who hold their stake through their Cubic Expression investment vehicle have the power to block a bid. Mr Glazer's financial backers, including JP Morgan, the US investment bank have said they won't back a bid unless it receives backing from the owners of at least 75% of the club's shares. However, there has been much speculation that the Irish duo simply do not think the price offered - 300p a share - is high enough. Mr Glazer has been stalking the premier league football club since 2003.
 
 Mr Magnier and Mr McManus issued a statement late on Friday saying that they remained ""long-term investors"" in Man Utd. The Sunday Telegraph says the board of Manchester United also considered a management buyout at just over 300p but did not go ahead with it.
",business
"German bidder in talks with LSE
 
 Deutsche Boerse bosses have held ""constructive, professional and friendly"" talks with the London Stock Exchange (LSE), its chief has said.
 
 Werner Seifert met LSE chief executive Clara Furse amid rumours the German group may raise its bid to £1.5bn ($2.9bn) from its initial £1.3bn offer. However, rival suitor Euronext also upped the ante in the bid battle. Ahead of talks with the LSE on Friday, the pan-European bourse said it may be prepared to make its offer in cash. The Paris-based exchange, owner of Liffe in London, is reported to be ready to raise £1.4bn to fund a bid.
 
 The news came as Deutsche Boerse held its third meeting with the LSE since its bid approach in December which was turned down by the London exchange for undervaluing the business. However, the LSE did agree 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. However, neither side has made a formal offer for the LSE, with sources claiming such a step may still be weeks away.
 
 Deutsche Boerse could also face mounting opposition to a bid at home. Among sweeteners reported to have been discussed by Mr Seifert with Ms Furse were plans to move the management of its cash and Eurex derivatives market to London, as well as two members of its executive board. But, Hans Reckers, a board member of Germany's central bank, the Bundesbank, said that cash trading should also remain in Frankfurt, something Deutsche Boerse could move to the UK. ""It is not just the headquarters of the Boerse but also important market segments that must stay permanently in Frankfurt. This has special importance for the business activities of the banks and the consultants,"" he said. Local government officials in Frankfurt's state of Hessen have also spoken out against the move. ""It is our wish that the headquarters stay here to maintain Frankfurt's standing as the number one financial centre in continental Europe,"" Alois Rhiel, its minister for economic affairs added.
",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.
",business
"LSE 'sets date for takeover deal'
 
 The London Stock Exchange (LSE) is planning to announce a preferred takeover by the end of the month, newspaper reports claim.
 
 The Sunday Telegraph said the LSE's plan was further evidence it wants to retain tight control over its destiny. Both Deutsche Boerse and rival Euronext held talks with the London market last week over a possible offer. A £1.3bn offer from Deutsche Boerse has already been rejected, while Euronext has said it will make an all cash bid. Speculation suggests that Paris-based Euronext has the facilities in place to make a bid of £1.4bn, while its German rival may up its bid to the £1.5bn mark. Neither has yet tabled a formal bid, but the LSE is expected to hold further talks with the two parties later this week. However, the Sunday Telegraph report added that there are signs that Deutsche Boerse chief executive Werner Seifert is becoming increasingly impatient with the LSE's managed bid process.
 
 Despite insisting he wants to agree a recommended deal with the LSE's board, the newspaper suggested he may pull out of the process and put an offer directly to shareholders instead. The newspaper also claimed Mr Seifert was becoming ""increasingly frustrated"" with the pace of negotiations since Deutsche Boerse's £1.3bn offer was rejected in mid-December, in particular the LSE's decision to suspend talks over the Christmas period. Meanwhile, the German exchange's offer has come under fire recently. Unions for Deutsche Boerse staff in Frankfurt have reportedly expressed fears that up to 300 jobs would be moved to London if the takeover is successful. Others claim it will weaken the city's status as Europe's financial centre, while German politicians are also said to be angry over the market operator's promise to move its headquarters to London if a bid is successful. A further stumbling block is Deutsche Boerse's control over its Clearstream unit, the clearing house that processes securities transactions. LSE shareholders fear it would create a monopoly situation, weakening 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.
",business
"India calls for fair trade rules
 
 India, which attends the G7 meeting of seven leading industrialised nations on Friday, is unlikely to be cowed by its newcomer status.
 
 In London on Thursday ahead of the meeting, India's finance minister, lashed out at the restrictive trade policies of the G7 nations. He objected to subsidies on agriculture that make it hard for developing nations like India to compete. He also called for reform of the United Nations, the World Bank and the IMF.
 
 Palaniappan Chidambaram, India's finance minister, argued that these organisations need to take into account the changing world order, given India and China's integration into the global economy. He said the issue is not globalisation but ""the terms of engagement in globalisation."" Mr Chidambaram is attending the G7 meeting as part of the G20 group of nations, which account for two thirds of the world's population. At a conference on developing enterprise hosted by UK finance minister Gordon Brown on Friday, he said that he was in favour of floating exchange rates because they help countries cope with economic shocks. ""A flexible exchange rate is one more channel for absorbing both positive and negative shocks,"" he told the conference. India, along with China, Brazil, South Africa and Russia, has been invited to take part in the G7 meeting taking place in London on Friday and Saturday. China is expected to face renewed pressure to abandon its fixed exchange rate, which G7 nations, in particular the US, have blamed for a surge in cheap Chinese exports. ""Some countries have tried to use fixed exchange rates. I do not wish to make any judgements,"" Mr Chidambaram said. Separately, the IMF warned on Thursday that India's budget deficit was too large and would hamper the country's economic growth, which it forecast to be around 6.5% in the year to March 2005. In the year to March 2004, the Indian economy grew by 8.5%.
",business
"Venezuela identifies 'idle' farms
 
 Venezuelan authorities have identified more than 500 farms, including 56 large estates, as idle as it continues with its controversial land reform policy.
 
 Under a 2001 land law, the government can tax or seize unused farm sites. A further 40,000 farms are yet to be inspected, the state's National Land Institute has told Associated Press. Vice president Jose Vicente Rangel has said farmers and ranchers with their titles in order and their lands productive have ""nothing to fear."" Critics of the land reform policy claim president Hugo Chavez is trying to enforce a communist-style economic programme that ignores property rights and will damage the country. Land owners claim the National Land Institute has made mistakes in classifying lands as public or private.
 
 But the government - Venezuela's largest land owner - say they are proceeding cautiously to prevent conflicts. In a statement, Mr Rangel said the land reform is not against the constitution, which permits private property, while stressing the efforts are to ""vindicate social and economically"" years of inequality in the country.
 
 One property in conflict with the government is the El Charcote cattle ranch, run by Agroflora, a subsidiary of the UK food group Vestey. Agriculture minister Arnoldo Marquez told Reuters news agency the site's documents ""do not guarantee that this is a private land"". Administrators of the ranch, however, have complained that pro-Chavez squatters have taken over 80% of the property in the last four years, and the UK government has asked Venezuelan authorities to resolve the conflict. ""You should ask the company when they are going to put their papers in order and hand over the land that is not theirs,"" said Mr Marquez.
",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.
",business
"Bush to outline 'toughest' budget
 
 President Bush is to send his toughest budget proposals to date to the US Congress, seeking large cuts in domestic spending to lower the deficit.
 
 About 150 federal programs could be cut or axed altogether as part of a $2.5 trillion (£1.3 trillion) package aimed at curbing the giant US budget deficit. Defence spending will rise, however, while the proposals exclude the cost of continuing military operations in Iraq. Vice-President Dick Cheney said the budget was the ""tightest"" so far.
 
 At the heart of the administration's fifth budget, presented to Congress on Monday, is an austere package of domestic measures. These would see discretionary spending rise below the projected level of inflation.
 
 Such belt-tightening is designed to tackle the massive budget deficit increases of President Bush's first term. Mr Cheney admitted that the budget was the toughest of the Bush Presidency but argued it was ""fair and responsible"". ""It is not something we have done with a meat axe, nor are we suddenly turning our back on the most needy people in our society,"" he said. The wars in Iraq and Afghanistan, increased expenditure on national security after 9/11 and the 2001 recession wiped out the budget surplus inherited by President Bush in 2001 and turned it into a record deficit. The shortfall is projected to rise to $427bn in 2005.
 
 Education, environmental protection and transport initiatives are set to be scaled back as a first step towards reducing the deficit to $230bn by 2009.
 
 Most controversially, the government is seeking to cut the Medicaid budget, which provides health care to the nation's poorest, by $45bn and to reduce farm subsidies by $587m. Spending on defence and homeland security is set to increase, although not by as much as originally planned. President Bush's proposals would see the Pentagon's budget rise by $19bn to $419.3bn while homeland security would get an extra $2bn.
 
 The budget does not include the cost of running military operations in Iraq and Afghanistan, for which the administration in expected to seek an extra $80bn from Congress later this year.
 
 Also not featuring in the proposals is the cost of funding the administration's radical proposed overhaul of social security provision. Some expects believe this could require borrowing of up to $4.5bn trillion over a twenty year period. Despite the Republicans holding a majority in both houses of Congress, the proposals will be fiercely contested over the next few months.
 
 John McCain, a Republican Senator, said he was pleased the administration was prepared to tackle the deficit. ""With the deficits that we are now running, I am glad the president is coming over with a very austere budget,"" he said. However, Democratic Senator Kent Conrad said the proposals exposed the country to huge financial commitments beyond 2009. ""The cost of everything he [President Bush] advocates explodes,"" he said.
",business
"Nissan names successor to Ghosn
 
 Nissan has named a lifetime employee to run its operations after Carlos Ghosn, its highly successful boss, takes charge at Renault.
 
 As chief operating officer, Toshiyuki Shiga will run Nissan on a daily basis, although Mr Ghosn, who masterminded its recovery, will remain chief executive. Mr Ghosn is to become chairman and chief executive of Renault, which owns 44% of the Japanese carmaker, in April. Mr Ghosn transformed Nissan into a fast-growing and profitable business.
 
 Mr Shiga will nominally serve as Mr Ghosn's deputy. However, he will be Nissan's most senior Japan-based executive and will be in charge of the firm's global sales and marketing.
 
 He is currently in charge of Nissan's operations across Asia and Australasia and is credited with significantly improving its sales in China. He will inherit a strong legacy from Mr Ghosn, who has overseen a dramatic turnaround in Nissan's fortunes in the past five years. Dubbed 'le cost killer' for pushing through huge cost cuts in previous jobs, Mr Ghosn reduced Nissan's overheads by 20% and trimmed its workforce by about 200,000 after taking charge in 1999. These actions helped Nissan turn a 684bn yen ($6.4bn) loss in 2000 into a 331bn yen ($2.7bn) profit the following year. During his tenure, Nissan has increased its market share and made significant strides in key export markets. Nissan aims to increase vehicle sales to more than four million by 2008, launching 28 new models in the process.
 
 In his new job as Renault chief executive, Mr Ghosn will devote 40% of his time to Renault, 40% to Nissan and the rest to the group's activities in North America and other key markets.
 
 Mr Ghosn said Mr Shiga's appointment would ensure a ""seamless"" transition in management. ""I need a leadership team capable of accelerating the performance and delivery of results that has characterized Nissan over the past six years,"" Mr Ghosn said. ""I have full confidence in Toshiyuki Shiga and the new leadership team to help me implement the next chapter of Nissan's growth."" Nissan also announced a number of other management appointments with promotions for several younger executives.
",business
"Worldcom director ends evidence
 
 The former chief financial officer at US telecoms firm WorldCom has finished giving evidence at the trial of his ex-boss Bernie Ebbers.
 
 Scott Sullivan admitted to jurors he was willing to commit fraud to meet Wall Street earnings projections. Mr Ebbers is on trial for fraud and conspiracy in relation to WorldCom's collapse in 2002. He pleads not guilty. Mr Sullivan has spent two days being cross-examined by lawyers for former Worldcom chief executive Mr Ebbers.
 
 Attorney Reid Weingarten has attempted to portray Mr Sullivan as a liar and on Thursday quizzed him about his decision to commit fraud to meet analysts' profit estimates. ""At that point in time,"" Mr Sullivan said, referring to the first false entries in late 2000, ""I knew it was wrong and I knew it was against the law, but I thought we would get through it in the short term."" Mr Sullivan, 42, has already pleaded guilty to fraud and will be sentenced following Mr Ebbers' trial, where he is appearing as a prosecution witness. Mr Ebbers, 63, has always insisted that he was unaware of any hidden shortfalls in WorldCom's finances. The former finance officer said Mr Ebbers knew about the improper accounting entries that were made between 2000 and 2002 to conceal soaring expenses and inflate revenue.
 
 Mr Ebbers could face a sentence of 85 years if convicted of all the charges he is facing. WorldCom's problems appear to have begun with the collapse of the dotcom boom which cut its business from internet companies. Prosecutors allege that the company's top executives responded by orchestrating massive fraud over a two-year period. WorldCom emerged from bankruptcy protection in 2004, and is now known as MCI. On Monday, MCI agreed to a buyout by Verizon Communications in a deal valued at $6.75bn.
",business
"Standard Life concern at LSE bid
 
 Standard Life is the latest shareholder in Deutsche Boerse to express concern at the German stock market operator's plans to buy the London Stock Exchange.
 
 It said Deutsche Boerse had to show why its planned £1.35bn ($2.5bn) offer for the LSE was good for shareholder value. Reports say Standard Life, which owns a 1% stake in Deutsche Boerse, may seek a shareholder vote on the issue. Fellow shareholders US-based hedge fund Atticus Capital and UK-based TCI Fund Management have also expressed doubts.
 
 Deutsche Boerse's supervisory board has approved the possible takeover of the LSE despite the signs of opposition from investors. ""The onus is on Deutsche Boerse's management to demonstrate why the purchase of the LSE creates more value for shareholders than other strategies, such as a buyback,"" said Richard Moffat, investment director of UK Equities at Standard Life Investments. Atticus Capital, holding 2% of Deutsche Boerse, wants it to buy back its own shares rather than buy the LSE. And TCI which holds about 5%, has made a request for an extraordinary shareholders meeting to be held to vote on replacing the company's entire supervisory board. It has also demanded that shareholders be consulted about the proposed acquisition, and whether the operator of the Frankfurt stock exchange should return $500m (£266m) to shareholders instead.
 
 In December, Deutsche Boerse, which also owns the derivatives market Eurex and the clearing firm Clearstream, put an informal offer of 530 pence per LSE share on the table. However, the LSE said the cash offer ""undervalued"" both its own business and the benefits of such a tie-up. Since then an improved offer from Deutsche Boerse has been anticipated as its management has continued talks with LSE chief executive Clara Furse. But the London exchange is also holding talks with Deutsche Boerse's rival Euronext, which operates the Amsterdam, Brussels, Lisbon and Paris exchanges, as well as London-based international derivatives market Liffe.
",business
"WorldCom bosses' $54m payout
 
 Ten former directors at WorldCom have agreed to pay $54m (£28.85m), including $18m from their own pockets, to settle a class action lawsuit, reports say.
 
 James Wareham, a lawyer representing one of the directors, told Reuters the 10 had agreed to pay those who lost billions when the firm collapsed. The remaining $36m will be paid by the directors' insurers. But, a spokesman for the prosecutor, New York State Comptroller Alan Hevesi, said no formal agreement had been made.
 
 Corporate governance experts said that if the directors do dip into their own pockets for the settlement, it will set a new standard for the accountability of bosses, when the firms they oversee face problems.
 
 ""Directors very rarely pay,"" said Charles Elson, chairman of the Center for Corporate Governance at the University of Delaware. He added that the settlement ""sends a pretty strong shockwave through the director world"". A formal agreement on the payout is expected to be signed on Thursday in a US district court in Manhattan. Earlier, the New York Times had reported that the personal payments were required as part of any deal at the start of negotiations. The ten former outside directors are James Allen, Judith Areen, Carl Aycock, Max Bobbitt, Clifford Alexander, Stiles Kellett, Gordon Macklin, John Porter, Lawrence Tucker and the estate of John Sidgmore, who died last year. It has not yet been determined how much each director will have to pay. ""None of the 10 former directors was a direct participant in the accounting machinations of the WorldCom fraud,"" said the Wall Street Journal (WSJ).
 
 Two other outside former directors, Bert Roberts and Francesco Galesi, remain defendants in the lawsuit, said the newspaper. According to the WSJ, which cites people familiar to the case, the settling directors are expected to deny wrongdoing and state they are settling the case to eliminate the uncertainties and expense of further litigations. The second-largest US long-distance telecoms operator filed for bankruptcy in 2002 when an $11bn accounting scandal was unearthed. The company emerged from Chapter 11 protection last year and changed its name to MCI Inc. Former WorldCom chief executive Bernard Ebbers is to face trial this month on criminal charges that he oversaw the fraud.
",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.
",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.
",business
"Trial begins of Spain's top banker
 
 The trial of Emilio Botin, the chairman of Spain's most powerful bank, Santander Central Hispano, has started in Madrid.
 
 Mr Botin is accused of misusing the bank's funds after he approved the payment of 160m euros ($208m; £111m) in bonus and pension payouts to two former executives. However, the trial was suspended when Mr Botin's lawyer introduced a new set of documents on the day testimony was set to begin. A three-judge panel gave prosecution lawyers until Monday to study the documents, when the trial will be reconvened.
 
 The high-profile case began after two Santander shareholders filed a criminal complaint about the payments to Jose Maria Amusategui and Angel Corcostegui, who stepped down in 2001. Both executives helped Mr Botin orchestrate Spain's biggest bank merger, between Santander and Banco Central Hispano, in 1999. As he arrived at Spain's High Court earlier on Wednesday, Mr Botin greeted the waiting media, saying: ""I have full faith in justice."" Santander's board of governors strongly reject the charges against their chairman, saying the payouts were legal and made with their unanimous support. But if convicted, Mr Botin could face a prison term of up to six years. Mr Corcostegui, a former CEO at Santander, also asked the court for new evidence to be admitted. In spite of the allegations against him, Mr Botin continues to lead Santander, and was instrumental in the £8.5bn takeover last November of the British bank Abbey National. Since taking over the chairmanship in 1986, he has turned Santander into one of the top ten biggest banks in the world.
",business
"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.
",business
"Mexican in US send $16bn home
 
 Mexican labourers living in the US sent a record $16.6bn (£8.82bn) home last year.
 
 The Bank of Mexico said that remittances grew 24% last year and now represent the country's second-biggest source of income after oil. Better records and greater prosperity of Mexican expatriates in the US are the main reasons behind the increase. About 10 million Mexicans live in the US, where there are 16 million citizens of Mexican origin. Remittances now represent more than 2% of the country's GDP, according to the Bank of Mexico's figures. Last year, there were 50.9 million transactions, with an average value of $327 per remittance, the bank said. According to Standard & Poor's, which has recently upgraded Mexico's sovereign debt rating, the rise in remittances helps protect the Mexican economy against a potential fall in the international oil prices.
 
 The growth in remittances has sparked fierce competition between banks. Bank of America announced last week that it planned to eliminate transfer fees for some customers. Remittance charges are estimated to have dropped by between 50 and 60%, reports from the US Treasury and the Inter-American Development Bank have said. The Inter-American Development Bank estimates that remittances to Latin America and the Caribbean reached $45bn in 2004.
",business
"Markets fall on weak dollar fears
 
 Rising oil prices and the sinking dollar hit shares on Monday after a finance ministers' meeting and stern words from Fed chief Alan Greenspan.
 
 The London FTSE fell 0.8% while Tokyo's Nikkei 225 dropped 2.11%, its steepest fall in three months. G20 finance ministers said nothing about supporting the dollar, whose slide could further jeopardise growth in Japan and Europe. And Mr Greenspan warned Asian states could soon stop funding the US deficit.
 
 On Monday afternoon, the euro was close to an all-time high against the dollar at above $1.30. Oil pushed higher too on Monday, as investors fretted about cold weather in the US and Europe and a potential output cut from oil producers' group Opec, although prices had cooled by the end of the day. In London, the benchmark Brent crude price closed down 51 cents at $44.38 a barrel, while New York light sweet crude closed down 25 cents at $48.64 a barrel. The slide comes as the US has been attempting to talk up the traditional ""strong dollar"" policy.
 
 The latest to pitch in has been President George W Bush himself, who told the Asia Pacific Economic Co-operation (Apec) summit in Chile that he remained committed to halving the budget deficit. Together with a $500bn trade gap, the red ink spreading across America's public finances is widely seen as a key factor driving the dollar lower. And last week US Treasury Secretary John Snow told an audience in the UK that the policy remained unaltered. But he also said that the rate was entirely up to the markets - a signal which traders took as advice to sell the dollar. Some had looked to the G20 meeting for direction. But Mr Snow made clear exchange rates had not been on the agenda.
 
 For the US government, letting the dollar drift is a useful short-term fix.
 
 US exports get more affordable, helping perhaps to close the trade gap. In the meantime, the debt keeps getting bigger, with Congress authorising an $800bn rise in what the US can owe - taking the total to $8.2 trillion. But in a speech on Friday, Federal Reserve chairman Alan Greenspan warned that in the longer term things are likely to get tricky. At present, much of gap in both public debt is covered by selling bonds to Asian states such as Japan and China, since the dollar is seen as the world's reserve currency. Similarly, Asian investment helps bridge the gap in the current account - the deficit between what the US as a whole spends and what it earns. But already they are turning more cautious - an auction of debt in August found few takers. And Mr Greenspan said that could turn into a trend, if the fall of the dollar kept eating into the value of those investments. ""It seems persuasive that, given the size of the US current account deficit, a diminished appetite for adding to dollar balances must occur at some point,"" he said.
",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.
",business
"UK 'risks breaking golden rule'
 
 The UK government will have to raise taxes or rein in spending if it wants to avoid breaking its ""golden rule"", a report suggests.
 
 The rule states that the government can borrow cash only to invest, and not to finance its spending projects. The National Institute of Economic and Social Research (NIESR) claims that taxes need to rise by about £10bn if state finances are to be put in order. The Treasury said its plans were on track and funded until 2008. According to NIESR, if the government's current economic cycle runs until March 2006 then it is ""unlikely"" the golden rule will be met. Should the cycle end a year earlier, then the chances improve to ""50/50"". Either way, fiscal tightening is needed, NIESR said.
 
 The report is the latest to call into question the viability of government spending projections. Earlier this month, accountancy firm Ernst & Young said that Chancellor of the Exchequer Gordon Brown's forecasts for tax revenues were too optimistic.
 
 It claimed revenues were likely to be £6bn below estimates by the end of the tax year despite the economy growing in line with forecasts. A Treasury spokesperson dismissed the latest claims, saying it was ""on track to meeting spending rules and the golden rule in the current cycle and beyond"". ""Spending plans have been set out until 2008 and they are fully affordable."" Other than its warning on possible tax hikes, the NIESR report was optimistic about the state of the UK and global economy.
 
 It said the recent record-busting surge in oil prices would have a limited effect on worldwide expansion, saying that if anything the ""world economy will continue to grow strongly"". Global gross domestic product (GDP) is tipped to be 4.1% this year, dipping to 4% in 2005, before picking up again to 4.2% in 2006. The US will continue to drive expansion until 2006, albeit at a slightly slower rate, as will be the case in Japan. Hinting at better times for UK exporters, NIESR said the euro zone ""is expected to pick up speed"".
 
 Growth in Britain also is set to accelerate, it forecast. ""Despite weak growth in the third quarter, the forces sustaining the upswing remain intact and the economy will expand robustly in 2005 and 2006,"" NIESR said, adding that ""the economy will become better balanced over the next two years as exports stage a recovery"". GDP is expected at 3.2% in 2004, and 2.8% in both 2005 and 2006. The main cloud on the horizon, NIESR said, was the UK's much analysed and fretted over property market.
",business
"Reliance unit loses Anil Ambani
 
 Anil Ambani, the younger of the two brothers in charge of India's largest private company, has resigned from running its petrochemicals subsidiary.
 
 The move is likely to be seen as the latest twist in a feud between Mr Ambani and his brother Mukesh. Anil, 45, has stepped down as director and vice-chairman of Indian Petrochemicals Corporation (IPC). The company was not available for comment. IPC is 46%-owned by Reliance Industries which in turn is run by Mukesh. Mukesh has spoken of ownership issues between the two brothers, who took over control of the Reliance empire following the death of their father in July, 2002.
 
 Reliance's operations have massive reach, covering textiles, telecommunications, petrochemicals, petroleum refining and marketing, as well as oil and gas exploration, insurance and financial services. The brothers' spat has hogged headlines in India during recent weeks, despite a denial from the family that there was anything wrong. Speculation has been rife about what has triggered the stand-off, with some observers blaming Anil's political ambitions, others the heavy investment by Mukesh and Reliance in a mobile phone venture. Shares of IPC dipped on the news in Mumbai, but recovered to trade almost 6% higher. Reliance shares added 1.7%, while Reliance Energy, headed by Anil, jumped 7%.
",business
"Record year for Chilean copper
 
 Chile's copper industry has registered record earnings of $14.2bn in 2004, the governmental Chilean Copper Commission (Cochilco) has reported.
 
 Strong demand from China's fast-growing economy and high prices have fuelled production, said Cochilco vice president Patricio Cartagena. He added that the boom has allowed the government to collect $950m in taxes. Mr Cartagena said the industry expects to see investment worth $10bn over the next three years.
 
 ""With these investments, clearly we are going to continue being the principle actor in the mining of copper. It's a consolidation of the industry with new projects and expansions that will support greater production."" Australia's BHP Billiton - which operates La Escondida, the world's largest open pit copper mine - is planning to invest $1.9bn between now and 2007, while state-owned Codelco will spend about $1bn on various projects. Chile, the biggest copper producer in the world, is now analyzing ways of to keep prices stable at their current high levels, without killing off demand or leading customers to look for substitutes for copper. The copper price reached a 16-year high in October 2004. Production in Chile is expected rise 3.5% in 2005 to 5.5 million tonnes, said Mr Cartagena. Cochilco expects for 2005 a slight reduction on copper prices and forecasts export earnings will fall 10.7%.
",business
"JP Morgan admits US slavery links
 
 Thousands of slaves were accepted as collateral for loans by two banks that later became part of JP Morgan Chase.
 
 The admission is part of an apology sent to JP Morgan staff after the bank researched its links to slavery in order to meet legislation in Chicago. Citizens Bank and Canal Bank are the two lenders that were identified. They are now closed, but were linked to Bank One, which JP Morgan bought last year. About 13,000 slaves were used as loan collateral between 1831 and 1865.
 
 Because of defaults by plantation owners, Citizens and Canal ended up owning about 1,250 slaves. ""We all know slavery existed in our country, but it is quite different to see how our history and the institution of slavery were intertwined,"" JP Morgan chief executive William Harrison and chief operating officer James Dimon said in the letter. ""Slavery was tragically ingrained in American society, but that is no excuse."" ""We apologise to the African-American community, particularly those who are descendants of slaves, and to the rest of the American public for the role that Citizens Bank and Canal Bank played."" ""The slavery era was a tragic time in US history and in our company's history."" JP Morgan said that it was setting up a $5m scholarship programme for students living in Louisiana, the state where the events took place. The bank said that it is a ""very different company than the Citizens and Canal Banks of the 1800s"".
",business
"Soaring oil 'hits world economy'
 
 The soaring cost of oil has hit global economic growth, although world's major economies should weather the storm of price rises, according to the OECD.
 
 In its latest bi-annual report, the OECD cut its growth predictions for the world's main industrialised regions. US growth would reach 4.4% in 2004, but fall to 3.3% next year from a previous estimate of 3.7%, the OECD said. However, the Paris-based economics think tank said it believed the global economy could still regain momentum.
 
 Forecasts for Japanese growth were also scaled back to 4.0% from 4.4% this year and 2.1% from 2.8% in 2005. But the outlook was worst for the 12-member eurozone bloc, with already sluggish growth forecasts slipping to 1.8% from 2.0% this year and 1.9% from 2.4% in 2005, the OECD said. Overall, the report forecast total growth of 3.6% in 2004 for the 30 member countries of the OECD, slipping to 2.9% next year before recovering to 3.1% in 2006. ""There are nonetheless good reasons to believe that despite recent oil price turbulence the world economy will regain momentum in a not-too-distant future,"" said Jean-Philippe Cotis, the OECD's chief economist. The price of crude is about 50% higher than it was at the start of 2004, but down on the record high of $55.67 set in late October.
 
 A dip in oil prices and improving jobs prospects would improve consumer confidence and spending, the OECD said. ""The oil shock is not enormous by historical standards - we have seen worse in the seventies. If the oil price does not rise any further, then we think the shock can be absorbed within the next few quarters,"" Vincent Koen, a senior economist with the OECD, told the BBC's World Business Report. ""The recovery that was underway, and has been interrupted a bit by the oil shock this year, would then regain momentum in the course of 2005."" China's booming economy and a ""spectacular comeback"" in Japan - albeit one that has faltered in recent months - would help world economic recovery, the OECD said. ""Supported by strong balance sheets and high profits, the recovery of business investment should continue in North America and start in earnest in Europe,"" it added. However, the report warned: ""It remains to be seen whether continental Europe will play a strong supportive role through a marked upswing of final domestic demand."" The OECD highlighted current depressed household expenditure in Germany and the eurozone's over-reliance on export-led growth.
",business
"Q&A: Malcolm Glazer and Man Utd
 
 The battle for control of Manchester United has taken another turn after the club confirmed it had received a fresh takeover approach from US business tycoon Malcolm Glazer.
 
 No formal offer has been made yet, but Manchester United have confirmed they have received a ""detailed proposal"" from the US entrepreneur which could lead to a bid. Reports have put the offer at 300p per share, which would value Manchester United at about £800m ($1.5bn). The approach by the 76-year-old owner of the Tampa Bay Buccaneers American football team is reportedly being led by his two sons, Avi and Joel. A previous approach to the United board by Mr Glazer in October last year was turned down. However, the BBC has learnt that the club is unlikely to reject the latest plan out of hand.
 
 Mr Glazer's previous offer involved borrowing large amounts of money to finance any takeover. That would have left the club with debt levels which were deemed ""not... in the best interests of the company"" by Manchester United's board when they rejected his approach last year. However, Mr Glazer's latest offer is reported to have cut the amount of borrowing needed by £200m.
 
 While United's board may be casting a serious eye over Mr Glazer's latest proposals, supporters remain fiercely opposed to any deal.
 
 Supporters' group Shareholders United - which has proved adept in rallying opposition to Mr Glazer's campaign - said it would fight any move. ""Manchester United are a debt-free company. We don't want to fall into debt and we don't need to fall into debt,"" Shareholders United's Sean Bones told the BBC. United's players also appear unhappy at the prospect of a takeover. ""A lot of people want the club's interest to be with people who have grown up with the club and got its interests at heart,"" Rio Ferdinand told BBC Radio Five Live. ""No-one knows what this guy will be bringing to the table.""
 
 The key to any successful bid will be attracting the support of United's largest shareholders, the Irish horse racing tycoons John Magnier and JP McManus. Through their Cubic Expression vehicle they own 28.9% of the club. Mr Glazer owns 28.1%. Joe McLean, a football specialist at accountancy firm Grant Thornton, said the support of Mr Magnier and Mr McManus was ""utterly crucial"". ""Mr Glazer's bid will not proceed without their support and they have previously indicated that they are holding their stake as an investment. ""If that's the case, the shares will therefore need a price attachment of about 300 pence, maybe 305. ""If that's the case then Mr Glazer might well secure their support - if he does, this bid could well go ahead.""
 
 Indeed it is. Malcolm Glazer was little-known in the UK until he started to build up his stake in Manchester United in late 2003. In February 2004 he said he was ""considering"" whether to bid for the club. No bid emerged, but Mr Glazer continued to increase his holding in the club. In October 2004, Manchester United said they had received a ""preliminary approach"", which turned out to have come from Mr Glazer. However, the board rejected the move because of the amount of debt it would involve. At the club's annual general meeting in November, Mr Glazer took revenge by using his hefty stake in the club to oust three directors from the board. Legal adviser Maurice Watkins, commercial director Andy Anson and non-executive director Philip Yea were voted out, against the wishes of chief executive David Gill. But the move led to bankers JP Morgan and public relations firm Brunswick withdrawing from the Glazer bid team.
",business
"Tokyo says deflation 'controlled'
 
 The Japanese government has forecast that the country's economic growth will slow to 1.6% in the next fiscal year starting in April 2005.
 
 While it predicts this fall from the current 2.1% level, it said it was making progress on ending deflation. The figures were given by economics minister Heizo Takenaka who said the economy would grow by 2% in 2006/07. He said the consumer price index (CPI) would rise 0.1% in the next fiscal year, the first gain since 2000/01. ""We are attempting to make real economic conditions better and to overcome deflation. I think we are on track,"" said Mr Takenaka. Deflation - or falling consumer prices - has plagued Japan for more than five years. To ease the problem the Bank of Japan has regularly flooded the money market with excess cash to keep short term interest rates at 0% in an attempt to spur economic activity.
",business
"Fed chief warning on US deficit
 
 Federal Reserve chairman Alan Greenspan has warned that allowing huge US budget deficits to continue could have ""severe"" consequences.
 
 Speaking to the House Budget Committee he urged Congress to take action to cut the deficit, such as increasing taxes. While the US economy is growing at a ""reasonably good pace"" he warned that budget concerns were clouding the economic outlook for the US. Pension and healthcare costs posed the greatest risks to the economy, he said.
 
 The government program faces severe financial strains in coming decades as the massive baby-boom generation retires. ""I fear that we may have already committed more physical resources to the baby-boom generation in its retirement years than our economy has the capacity to deliver. If existing promises need to be changed, those changes should be made sooner rather than later,"" Mr Greenspan said. He also warned that unless the nation sees unprecedented rises in productivity ""retirement and health programmes would need ""significant"" changes. He called on Congress to cut promised benefits for retirees, as the promised benefits for the soon-to-retire baby boom generation were much larger than the government could afford.
 
 Meanwhile any move to narrow the deficit gap by raising taxes could pose a significant risk to the economy by dampening growth and spending, he added. He also urged Congress to reinstate lapsed rules that require tax cuts and spending to be offset elsewhere in the budget in an effort to prevent the US heading further into the red. Despite the dire warnings, Mr Greenspan did offer some good news for the short term. As US growth gathers steam and incomes rise that should lead to a narrowing of the deficit. Recent increases in defence and homeland security spending were also not expected to continue indefinitely, which should cut some costs. Since President George W Bush came to office the federal budget has swung from a record surplus to a record deficit of $412bn last year.
",business
"SBC plans post-takeover job cuts
 
 US phone company SBC Communications said it expects to cut around 12,800 jobs following its $16bn (£8.5bn) takeover of former parent AT&T.
 
 SBC said 5,125 positions would go as a result of network efficiencies. Another 1,700 will go from its sales department, 3,400 from business operations and 2,600 across legal, advertising and public relations. SBC currently employs 163,000 people while AT&T employs 47,000. The takeover was announced on Monday. The deal will be financed with $15bn of shares as well as a $1bn special dividend paid to AT&T shareholders.
 
 It effectively marks the end of AT&T, which was founded in 1875 by telephone pioneer Alexander Graham Bell and is one of the US's best-known companies. SBC and AT&T said estimated cost savings of at least $2bn from 2008 were a main driver for the merger. AT&T is a long-distance telecoms firm, while SBC is mainly focused on the local market in the western US. Both also have data network businesses. The takeover is subject to approval by AT&T's shareholders and regulators. The companies said they expected to complete the agreement during the first half of 2006.
",business
"Worldcom boss 'left books alone'
 
 Former Worldcom boss Bernie Ebbers, who is accused of overseeing an $11bn (£5.8bn) fraud, never made accounting decisions, a witness has told jurors.
 
 David Myers made the comments under questioning by defence lawyers who have been arguing that Mr Ebbers was not responsible for Worldcom's problems. The phone company collapsed in 2002 and prosecutors claim that losses were hidden to protect the firm's shares. Mr Myers has already pleaded guilty to fraud and is assisting prosecutors.
 
 On Monday, defence lawyer Reid Weingarten tried to distance his client from the allegations. During cross examination, he asked Mr Myers if he ever knew Mr Ebbers ""make an accounting decision?"". ""Not that I am aware of,"" Mr Myers replied. ""Did you ever know Mr Ebbers to make an accounting entry into Worldcom books?"" Mr Weingarten pressed. ""No,"" replied the witness. Mr Myers has admitted that he ordered false accounting entries at the request of former Worldcom chief financial officer Scott Sullivan. Defence lawyers have been trying to paint Mr Sullivan, who has admitted fraud and will testify later in the trial, as the mastermind behind Worldcom's accounting house of cards.
 
 Mr Ebbers' team, meanwhile, are looking to portray him as an affable boss, who by his own admission is more PE graduate than economist. Whatever his abilities, Mr Ebbers transformed Worldcom from a relative unknown into a $160bn telecoms giant and investor darling of the late 1990s. Worldcom's problems mounted, however, as competition increased and the telecoms boom petered out. When the firm finally collapsed, shareholders lost about $180bn and 20,000 workers lost their jobs. Mr Ebbers' trial is expected to last two months and if found guilty the former CEO faces a substantial jail sentence. He has firmly declared his innocence.
",business
"China Aviation seeks rescue deal
 
 Scandal-hit jet fuel supplier China Aviation Oil has offered to repay its creditors $220m (£117m) of the $550m it lost on trading in oil futures.
 
 The firm said it hoped to pay $100m now and another $120m over eight years. With assets of $200m and liabilities totalling $648m, it needs creditors' backing for the offer to avoid going into bankruptcy. The trading scandal is the biggest to hit Singapore since the $1.2bn collapse of Barings Bank in 1995. Chen Jiulin, chief executive of China Aviation Oil (CAO), was arrested by at Changi Airport by Singapore police on 8 December. He was returning from China, where he had headed when CAO announced its trading debacle in late-November. The firm had been betting heavily on a fall in the price of oil during October, but prices rose sharply instead.
 
 Among the creditors whose backing CAO needs for its restructuring plan are banking giants such as Barclay's Capital and Sumitomo Mitsui, as well as South Korean firm SK Energy. Of the immediate payment, the firm - China's biggest jet fuel supplier - said it would be paying $30m out of its own resources. The rest would come from its parent company, China Aviation Oil Holding Company in Beijing. The holding company, owned by the Chinese government, holds most of CAO's Singapore-listed shares. It cut its holding from 75% to 60% on 20 October.
",business
"Sluggish economy hits German jobs
 
 The number of people out of work in Europe's largest economy has risen for the tenth straight month as growth remains stubbornly slow.
 
 German unemployment rose 7,000 in November to 4.464 million people, or 10.8% of the workforce. The seasonally adjusted rise showed a smaller rise than expected, as government measures to encourage job creation began to take effect. But officials said stagnant growth was still stifling the job market. ""There are clear signs of a revival in domestic demand,"" said Frank-Juergen Weise, head of the Federal Labour Agency, in a statement. ""But growth of 0.1%... in the third quarter is still insufficient to deliver positive momentum to the labour market."" High oil prices and the soaring euro - which damages the competitiveness of exporters - were also having a negative effect, he said. The brunt of the unemployment is still being felt in the eastern part of Germany, where the rate is 18.8%.
 
 With unemployment stuck above 4 million for years, the government of Chancellor Gerhard Schroeder has put job creation at the top of the agenda. A controversial package of measures to shake up incentives to get back to work, paid for by cutting some cherished benefits, has sparked anger among some German workers. Strikes in a number of industries, notably among the country's iconic carmakers, have demonstrated the displeasure - as well as fears about further job losses as outsourcing takes hold. Among the new initiatives are the so-called ""one-euro jobs"" which top up unemployment benefit. The scheme's formal launch is January, but hirings for these positions are already taking place and affecting the unemployment statistics, economists said. ""The deterioration of the labour market does not come as a surprise,"" said Isabelle Kronawitter at Hypovereinsbank. ""Job creation measures probably prevented a stronger increase in the seasonally adjusted numbers.""
",business
"Fosters buys stake in winemaker
 
 Australian brewer Fosters has bought a large stake in Australian winemaker Southcorp, sparking rumours of a possible takeover.
 
 Fosters bought 18.8% of Southcorp, the global winemaker behind the Penfolds, Lindemans and Rosemount brands, for 4.17 Australian dollars per share. A bid at that price would value the company at A$3.1bn ($2.4bn; £1.25bn ). Fosters said it was currently in discussions ""which may lead to a major corporate announcement"".
 
 In a separate statement, Southcorp confirmed the brewer had asked for talks. Both firms asked the Sydney stock market to suspend trading in their shares until Monday. Southcorp's shares were suspended at A$4.25.
 
 Fosters bought the 18.8% stake from Reline Investments, the family investment firm for the Oatleys, who founded the Rosemount Estates label and sold it to Southcorp in 2001. Robert Oatley and his son Sandy Oatley have both resigned from Southcorp's board following the share deal. Southcorp employs 2,700 people and is the largest single investor in rural Australia, according to its website. The prospect of Fosters launching a major acquisition startled investors, as the brewer said last summer that it was not looking to expand through a big buy in the near future. It has cash available, after getting A$846m from selling property business Lensworth, but it has been widely expected to return cash to shareholders.
 
 ""People will scratching their heads over this one. Fosters has done a back-flip"", said Shawn Burns, a fund manger at Deutsche Asset Management. Southcorp's shares have risen in recent months on speculation that it could become a takeover target. It spent two years in the red, returning to profit in 2004. Consolidation in the wine industry is being driven by Constellation, the world's biggest winemaker. It seized the top spot when it bought Australian firm BRL Hardy for just over $1bn in 2003. Since then, it has paid $1bn for US wine maker Robert Mondavi, bought last month. Fosters' main wine business is Beringer Blass Wine Estate. Its best known brand is Fosters lager, though it makes a clutch of beer brands, and spirits. Analysts were divided on Thursday about whether Fosters was more likely to go for a takeover or merely wanted to take a big enough chunk of Southcorp to prevent it falling to a rival. ""Currently, I think the strategic position is more sensible rather than an outright takeover,"" said one analyst quoted by the Agence France Presse news agency. However, Matt Williams, a fund manager at Perpetual Trustees said taking the stake ""is definitely a precursor to a takeover"".
",business
"Ericsson sees earnings improve
 
 Telecoms equipment supplier Ericsson has posted a rise in fourth quarter profits thanks to clients like Deutsche Telekom upgrade their networks.
 
 Operating profit in the three months to 31 December was 9.5bn kronor (£722m; $1.3bn) against 6.3bn kronor last year. Shares tumbled, however, as the company reported a profit margin of 45.6%, less than the 47.3% forecast by analysts and down from 47.1% in the third quarter. Ericsson shares dropped 5.9% to 20.7 kronor in early trading on Thursday. However, the company remained optimistic about its earnings outlook after sales in the fourth quarter rose 9% to 39.4bn kronor. ""Long-term growth drivers of the industry remain solid,"" Ericsson said in a statement.
 
 Chief executive Carl-Henric Svanberg explained that about ""27% of the world's population now has access to mobile communications"". ""This is exciting for a company with a vision of an all-communicating world,"" he added. Mr Svanberg, however, warned that the extra demand that had driven 2004 sales had already dissipated and it was ""business as usual"". He added that sales in the first three months of 2005 would be subject to ""normal seasonality"". For the whole of 2004, Ericsson returned a net profit of 19bn kronor, compared with a loss of 10.8bn kronor in 2003. Sales climbed to 131.9 billion kronor from 117.7bn kronor in 2003.
",business
"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.
",business
"China continues rapid growth
 
 China's economy has expanded by a breakneck 9.5% during 2004, faster than predicted and well above 2003's 9.1%.
 
 The news may mean more limits on investment and lending as Beijing tries to take the economy off the boil. China has sucked in raw materials and energy to feed its expansion, which could have knock-on effects on the rest of the world if it overheats. But officials pointed out that industrial growth had slowed, with services providing much of the impetus. Growth in industrial output - the main target of government efforts to impose curbs on credit and investments - was 11.5% in 2004, down from 17% the previous year.
 
 Still, consumer prices - at 2.4% - rose faster than in 2004, adding to concern that a sharp rise in producer prices of 7.1% could stoke inflation. And overall investment in fixed assets was still high, up 21.3% from the previous year - although some way off the peak of 43% seen in the first quarter of 2004. The result could be higher interest rates. China raised rates by 0.27 percentage points to 5.8% - its first hike in nine years - in October 2004.
 
 Despite the apparent rebalancing of the economy the overall growth picture remains strong, economists said. ""There is no sign of a slowdown in 2005,"" said Tim Congdon, economist at ING Barings.
 
 China's economy is not only gathering speed thanks to domestic demand, but also from soaring sales overseas. Figures released earlier this year showed exports at a six-year high in 2004, up 35%. Part of the impetus comes from the relative cheapness of the yuan, China's currency. The government keeps it pegged close to a rate of 8.28 to the US dollar, - much to the chagrin of many US lawmakers who blame China for lost jobs and competitiveness. Despite urging to ease the peg, officials insist they are a long way from ready to make a shift to a more market-set rate. ""We need a good and feasible plan and formulating such a plan also needs time,"" National Bureau of Statistics chief Li Deshui told Reuters. ""Those who hope to make a fortune by speculating on a renminbi revaluation will not succeed in making a profit.""
",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.
",business
"Home loan approvals rising again
 
 The number of mortgages approved in the UK has risen for the first time since May last year, according to lending figures from the Bank of England.
 
 New loans in December rose to 83,000, slightly higher than November's nine-year low of 77,000. Mortgage lending rose by £7.1bn in December, up from a £6.4bn rise in November. The figures contradict a survey from the British Bankers' Association, which said approvals were at a five-year low.
 
 Analysts say the figures show the market may be stabilising but still point to further house price softness. ""The modest rise in mortgage approvals and lending in December reinforces the impression that the housing market is currently slowing steadily rather than sharply,"" said Global Insight analyst Howard Archer, commenting on the BoE's figures. The BBA believes that the property market is continuing to cool down. Changes to mortgage regulation may have artificially depressed figures in November, thus flattering the December figures, analysts said. In October last year, new rules came into force, which meant some lenders were forced to withdraw mortgage products temporarily in November and defer some lending until they had made sure they had complied with the rules properly. Separately, the Bank of England said that consumer credit rose by £1.5bn in December, more than the £1.4bn expected and above the £1.4bn reported in the previous month.
",business
"Russia WTO talks 'make progress'
 
 Talks on Russia's proposed membership of the World Trade Organisation (WTO) have been ""making good progress"" say those behind the negotiations.
 
 But the chairman of the working party, Ambassador Stefan Johannesson of Iceland, warned that there was ""still a lot of work has to be done"". His comments came as President George W Bush said the US backed Russian entry. But he said for Russia to make progress the government must ""renew a commitment to democracy and the rule of law"". His comments come three days before he is due to meet President Vladimir Putin.
 
 Russia has been waiting for a decade to join the WTO and hopes to finally become a member by early 2006. A decision could be reached in December, when the WTO's 148 current members gather for a summit in Hong Kong. That would allow an earliest date for membership of January 2006, if the Hong Kong summit gave its approval. While pinpointing several areas in which there are difficulties in the bilateral and multilateral work with Russia, the US said the meeting was ""much more efficient than we've seen for some time"". And Australia said it was ""one of the best (meetings) we can recall in terms of substance"". Mr Johannesson also said progress ""on the bilateral market access side is accelerating"". Sticking points to membership have included limits on foreign ownership in the telecommunications and life insurance businesses, as well as issues surrounding counterfeiting, piracy, and data protection. Some WTO members also dislike Russia's energy price subsidies, which competitors say give Russian businesses an unfair advantage.
",business
"S Korea spending boost to economy
 
 South Korea will boost state spending next year in an effort to create jobs and kick start its sputtering economy.
 
 It has earmarked 100 trillion won ($96bn) for the first six months of 2005, 60% of its total annual budget. The government's main problems are ""slumping consumption and a contraction in the construction industry"". It aims to create 400,000 jobs and will focus on infrastructure and home building, as well as providing public firms with money to hire new workers.
 
 The government has set an economic growth rate target of 5% for next year and hinted that would be in danger unless it took action. ""Internal and external economic conditions are likely to remain unfavourable in 2005,"" the Finance and Economy Ministry said in a statement.
 
 It blamed ""continuing uncertainties such as fluctuating oil prices and foreign exchange rates and stagnant domestic demand that has shown few signs of a quick rebound"". In 2004, growth will be between 4.7% and 4.8%, the ministry said. Not everyone is convinced the plan will work. ""Our primary worry centres on the what we believe is the government's overly optimistic view that its front loading of the budget will be enough to turn the economy around,"" consultancy 4Cast said in a report.
 
 The problem facing South Korea is that many consumers are reeling from the effects of a credit bubble that only recently burst. Millions of South Koreans are defaulting on their credit card bills, and the country's biggest card lender has been hovering on the verge of bankruptcy for months. As part of its spending plans, the government said it will ask firms to ""roll over mortgage loans that come due in the first half of 2005"" . It also pledged to look at ways of helping families on low incomes.
 
 The government voiced concern about the effect of redundancies in the building trade. ""Given the economic spill over and employment effect in the construction sector, a sharp downturn in the construction industry could have other adverse effects,"" the ministry said.
 
 As a result, South Korea will give private companies also will be given the chance to build schools, hospitals, houses and other public buildings. It also will look at real estate tax system. Other plans on the table include promoting new industries such as bio-technology and nano-technology, as well as offering increased support to small and medium sized businesses. ""The focus will be on job creation and economic recovery, given that unfavourable domestic and global conditions are likely to dog the Korean economy in 2005,"" the ministry said.
",business
"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.
",business
"Troubled Marsh under SEC scrutiny
 
 The US stock market regulator is investigating troubled insurance broker Marsh & McLennan's shareholder transactions, the firm has said.
 
 The Securities and Exchange Commission has asked for information about transactions involving holders of 5% or more of the firm's shares. Marsh has said it is co-operating fully with the SEC investigation. Marsh is also the focus of an inquiry the New York attorney-general into whether insurers rigged the market. Since that inquiry was launched in October, Marsh has replaced its chief executive and held a boardroom shake-out to meet criticism by lessening the number of company executives on the board. Prosecutors allege that Marsh - the world's biggest insurance broker - and other US insurance firms may have fixed bids for corporate cover. This is the issue at the heart of the inquiry by New York's top law officer, Eliot Spitzer, and a separate prosecution of five insurers by the State of California. The SEC's investigation into so-called related party transactions includes dealings in the Trident Funds, managed by MMC Capital, the company's private equity firm. Marsh's new chief executive, Michael Cherkasky, is trying to negotiate a settlement with Mr Spitzer. Mr Spitzer has built up a reputation as a fierce critic and campaigner against corporate America's misdeeds.
 
 The uncertainty unleashed by the scandal has prompted three credit rating agencies - Standard & Poor's, Moody's and Fitch - to downgrade Marsh in recent weeks. According to the Financial Times, insurance analysts are now questioning whether Marsh will be able to maintain its strong record of earning growth as they draw up forecasts for the first quarter of next year. Doubts also exist over how much the company may have to pay regulators and lawyers to put the scandal behind.
",business
"GM in crunch talks on Fiat future
 
 Fiat will meet car giant General Motors (GM) on Tuesday in an attempt to reach agreement over the future of the Italian firm's loss-making auto group.
 
 Fiat claims that GM is legally obliged to buy the 90% of the car unit it does not already own; GM says the contract, signed in 2000, is no longer valid. Press reports have speculated that Fiat may be willing to accept a cash payment in return for dropping its claim. Both companies want to cut costs as the car industry adjusts to waning demand.
 
 The meeting between Fiat boss Sergio Marchionne and GM's Rick Wagoner is due to take place at 1330 GMT in Zurich, according to the Reuters news agency.
 
 Mr Marchionne is confident of his firm's legal position, saying in an interview with the Financial Times that GM's argument ""has no legs"". The agreement in question dates back to GM's decision to buy 20% of Fiat's auto division in 2000. At the time, it gave the Italian firm the right, via a 'put option', to sell the remaining stake to GM. In recent weeks, Fiat has reiterated its claims that this 'put' is still valid and legally binding. However, GM argues that a Fiat share sale made last year, which cut GM's holding to 10%, together with asset sales made by Fiat have terminated the agreement.
 
 Selling the Fiat's car-making unit may not prove so simple, analysts say, especially as it is a company that is so closely linked to Italy's industrial heritage. Political and public pressure may well push the two firms to reach a compromise. ""We are not expecting Fiat to exercise its put of the auto business against an unwilling GM at this point,"" brokerage Merrill Lynch said in a note to investors, adding that any legal battle would be protracted and damaging to the business. ""As far as we are aware, the Agnelli family, which indirectly controls at least 30% of Fiat, has not given a firm public indication that it wants to sell the auto business. ""Fiat may be willing to cancel the 'put' in exchange for money.""
",business
"IMF 'cuts' German growth estimate
 
 The International Monetary Fund is to cut its 2005 growth forecast for the German economy from 1.8% to 0.8%, the Financial Times Deutschland reported.
 
 The IMF will also reduce its growth estimate for the 12-member eurozone economy from 2.2% to 1.6%, the newspaper reported. The German economy has been faltering, with unemployment levels rising to a seventy-year high of 5.2 million. Its sluggish performance continues to hamper the entire eurozone.
 
 The IMF's draft World Economic Outlook - due to be published in April - would point to a marked deterioration in Germany's economy, the FT report said.
 
 In September, the IMF had said that German growth for the current year would be 1.8%. The IMF has also revised eurozone forecasts, the paper said, taking into account high oil prices, the strength of the euro and weak demand in many of the world's leading economies. Europe's economic difficulties have been highlighted by the Organisation for Economic Co-operation and Development, which argued in a report published on Tuesday that the continent could only achieve US living standards by freeing up its labour markets. ""The eurozone does not look like it has a self-sustaining recovery,"" James Carrick, an economist with ABN Amro, told the newspaper. ""It is too dependant on the rest of the world.""
",business
"Qwest may spark MCI bidding war
 
 US phone company Qwest has said it will table a new offer for MCI after losing out to larger rival Verizon, setting the scene for a possible bidding war.
 
 MCI accepted a $6.75bn (£3.6bn) buyout from telecoms giant Verizon on Monday, rejecting a higher offer from Qwest. Qwest chairman Richard Notebaert sent a letter to MCI's board on Thursday saying that it plans to submit a new offer after examining Verizon's bid. Formerly known as Worldcom, MCI is a long-distance and corporate phone firm. Snapping up MCI would give the buyer access to a global telecommunications network and a large number of business-based subscribers. Shares of MCI were up more than 4% in electronic trading after the close of New York markets.
 
 Qwest said on Wednesday that MCI had rejected a deal worth $8bn. ""We would like to advise you that once we have completed our review of the Verizon merger agreement, we do intend to submit a modified offer to acquire MCI,"" the letter from Qwest said. Verizon's offer is made up of cash, shares and dividends, and a number of investors have said that it undervalues MCI. Verizon plans to swap 0.41 of its shares and $1.50 in cash for each MCI share, as well as offering special dividends of $4.50 a share. Both company boards have backed the deal, but regulators will still need to give their approval. As well as trying to lure investors with the promise of better returns, Qwest also reckons that its offer will face less regulatory scrutiny than Verizon's.
 
 The takeover would be the fifth billion-dollar telecoms deal since October as companies look to cut costs and boost client bases. Earlier this month, SBC Communications agreed to buy its former parent and phone trailblazer AT&T for about $16bn. There may be concerns other than cash, however, especially as MCI only emerged from bankruptcy protection last April. Verizon is far bigger than Qwest, has fewer debts and has built a successful mobile division. Also, MCI, while trading under the name Worldcom, became the biggest corporate bankruptcy in US history after admitting that it illegally booked expenses and inflated profits. Former Worldcom boss Bernie Ebbers is currently standing trial, accused of overseeing an $11bn fraud. Qwest, meanwhile, had to pay the Securities and Exchange Commission $250m in October to settle charges that it massaged earnings to keep Wall Street happy.
",business
"Liberian economy starts to grow
 
 The Liberian economy started to grow in 2004, but ""sustained and deep reform efforts"" are needed to ensure long term growth, the International Monetary Fund (IMF) has said.
 
 An IMF mission made the comments in a report published following 10 days of talks with the transition government. The IMF said that, according to data provided by the Liberians, the country's GDP rose by 2% in 2004, after a 31% decline in 2003. Liberia is recovering from a 14-year civil war that came to an end in 2003. The power-sharing National Transition Government of Liberia will remain in place until elections on 11 October, the first presidential and parliamentary ballots since the conflict ended.
 
 The IMF said Liberia's economy started to grow last year thanks to a ""continued strong recovery in rubber production, domestic manufacturing and local services including post-conflict reconstruction"". The IMF however remains cautious about what it sees as a lack of transparency in government actions. In particular, it pointed to mystery surrounding the sale of iron ore stockpiles and the alleged disappearance of some import and export permits. These matters are now being investigated by the Liberian authorities and the IMF has called for their findings to be made public. The IMF also said it was crucial that the Central Bank of Liberia be strengthened, the national budget be effectively managed and a sound economic basis built to allow the country's large external debt to be addressed. ""The IMF team stands ready to assist the (Liberian) authorities in strengthening the areas mentioned,"" said the report. ""The team agreed with the (Liberian) authorities that the period until elections and the inauguration of a new government will pose exceptional challenges to fiscal management, and expresses its willingness to provide...continued support.""
",business
"Lufthansa may sue over Bush visit
 
 German airline Lufthansa may sue federal agencies for damages after the arrival of US president George W Bush disrupted flights.
 
 Lufthansa said that it may lose millions of euros as a result of Air Force One landing at Frankfurt airport. Flights were affected for an hour on Wednesday morning, double the time that had been expected, leading to cancellations and delays. Lufthansa accounts for six out of every 10 planes using Frankfurt's airport.
 
 ""We are doing research into the possibilities we have,"" Michael Lamberty, a Lufthansa spokesman told the BBC. ""We are checking if there is action to be taken and in which courts it could be taken."" Mr Lamberty explained that the company did not plan to pursue Germany's air traffic controllers' organisation or the airport authority but wanted instead to see if it was possible to sue the German federal agencies that gave the orders. The company said that it had to cancel 77 short and medium-distance flights, affecting about 5,000 passengers. Long-haul travellers were not disrupted.
 
 Central to the problem was that instead of half an hour, the arrival of President Bush on the German leg of his European tour took the best part of an hour, Lufthansa said. During that time, restrictions were put on planes taxiing, taking off and landing at Frankfurt's Rhein-Main airport. The extra time taken by President Bush and his entourage meant that there was a knock-on effect that led to significant delays. Mr Lamberty said that 92 outgoing flights and 86 income flights were delayed by an average of an hour following President Bush's arrival, affecting almost 17,000 passengers. Despite the problems, Mr Lamberty said that it was not certain that Lufthansa would take legal action.
",business
"Huge rush for Jet Airways shares
 
 Indian airline Jet Airways' initial public offering was oversubscribed 16.2 times, bankers said on Friday.
 
 Over 85% of the bids were at the higher end of the price range of 1,050-1,125 rupees ($24-$26). Jet Airways, a low-fare airline, was founded by London-based ex-travel agent Naresh Goya, and controls 45% of the Indian domestic airline market. It sold 20% of its equity or 17.2 million shares in a bid to raise up to $443m (£230.8m). The price at which its shares will begin trading will be agreed over the weekend, bankers said. ""The demand for the IPO was impressive. We believe that over the next two years, the domestic aviation sector promises strong growth, even though fuel prices could be high,"" said Hiten Mehta, manager of merchant banking firm, Fortune Financial Services. India began to open up its domestic airline market - previously dominated by state-run carrier Indian Airlines - in the 1990s. Jet began flying in 1993 and now has competitors including Air Deccan and Air Sahara. Budget carriers Kingfisher Airlines and SpiceJet are planning to launch operations in May this year. Jet has 42 aircraft and runs 271 scheduled flights daily within India. It recently won government permission to fly to London, Singapore and Kuala Lumpur.
",business
"Cash gives way to flexible friend
 
 Spending on credit and debit cards has overtaken cash spending in the UK for the first time.
 
 The moment that plastic finally toppled cash happened at 10.38am on Wednesday, according to the Association for Payment Clearing Services (Apacs) Apacs chose school teacher Helen Carroll, from Portsmouth, to make the historic transaction. The switch over took place as she paid for her groceries in the supermarket chain Tesco's Cromwell Road branch.
 
 Mrs Carroll was born in the same year that plastic cards first appeared in the UK. ""I pay for most things with my debit card, with occasional purchases on one of my credit cards,"" said Mrs Carroll, who teaches at Peel Common Infants School in Gosport.
 
 Spending patterns for the year and estimates for December led Apacs to conclude that 10.38am was the time that plastic would finally rule the roost. Shoppers in the UK are expected to put £269bn on plastic cards during the whole of 2004, compared with £268bn paid with cash, Apacs said. When the first plastic cards appeared in the UK in June 1966, issued by Barclaycard, but only a handful of retailers accepted them and very few customers held them. ""But in less than 40 years, plastic has become our most popular way to pay, due to the added security and flexibility it offers,"" said Apacs spokeswoman Jemma Smith. ""The key driver has been the introduction of debit cards, which now account for two-thirds of plastic card transactions and are used by millions of us every day.""
",business
"Ad firm WPP's profits surge 15%
 
 UK advertising giant WPP has posted larger-than-expected annual profits and predicted that it will outperform the market in 2005.
 
 Pre-tax profits rose 15% from a year ago to reach £546m ($1.04bn), ahead of average analysts' forecasts of £532m. Revenues were £4.3bn while the firm's operating margins were 14.1%, which it said could reach 14.8% by 2006. During the year WPP bought US rival Grey Global, creating a giant big enough to rival sector leader Omnicom.
 
 Chief Executive Martin Sorrell on Friday told Reuters news agency that WPP had submitted a proposal for United Business Media's NOP World market research unit. Analysts say the unit sell could sell for up to £350m. WPP in recent years has also bought firms such as Ogilvy & Mather and Cordiant Communications. It also includes the firms Young & Rubicam and J Walter Thompson. Events such as the Olympics helped boost WPP's profits in 2004. The company said the US Congressional elections and the FIFA World Cup are likely to present advertising opportunities in the near future. The long-term outlook looks ""very favourable"" because of media and technology developments and the strength of the US economy, WPP said.
",business
"Manufacturing recovery 'slowing'
 
 UK manufacturing grew at its slowest pace in one-and-a-half years in January, according to a survey.
 
 The Chartered Institute of Purchasing and Supply (CIPS) said its purchasing manager index (PMI) fell to 51.8 from a revised 53.3 in December. But, despite missing forecasts of 53.7, the PMI number remained above 50 - indicating expansion in the sector. The CIPS said that the strong pound had dented exports while rising oil and metals prices had kept costs high.
 
 The survey added that rising input prices and cooling demand had deterred factory managers from hiring new workers in an effort to cut costs. That triggered the second successive monthly fall in the CIPS employment index to 48.3 - its lowest level since June 2003. The survey is more upbeat than official figures - which suggest that manufacturing is in recession - but analysts said the survey did suggest that the manufacturing recovery was running out of steam. ""It appears that the UK is in a two-tier economy again,"" said Prebon Yamane economist Lena Komileva. ""You have weakness in manufacturing, which I think would concern policymakers at the Bank of England.""
",business
"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.
",business
"Ryanair in $4bn Boeing plane deal
 
 Budget airline Ryanair has placed an order for 70 Boeing 737-800 planes, in a deal valued at $4bn (£2.1bn) which should lead to 2,500 new Ryanair jobs.
 
 It also has an option for a further 70 aircraft, a move which brings the Ryanair/Boeing order book up to 225 firm orders and options on 193 more. Ryanair said the new planes would help it to cut operating costs further. The carrier reported a drop in quarterly profit earlier this year after it was hit by higher fuel costs. However, when it reported the results, the airline was upbeat about prospects for 2005, despite tough competition in the budget airline market.
 
 Ryanair chairman David Bonderman said that the 737-800 had ""significantly reduced our unit operating costs and allowed us to reduce air fares each year for the last five years"".
 
 ""With this new order and new pricing in place, Ryanair expects that unit operating costs (excluding fuel) will continue to fall each year for the next five years,"" he added. At the end of this year, Ryanair will have taken delivery of about 100 new planes, while the 70 new orders are due for delivery between 2008 and 2012. The airline said that when all these planes have been delivered, it will be able to carry more than 70 million passengers a year, making it Europe's largest airline. About 2,500 new jobs should be created in the next seven years, it added. The order can be seen as good news for Boeing, which in recent years has been overtaken by European plane maker Airbus as the world's biggest-selling plane maker.
",business
"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.
",business
"India's rupee hits five-year high
 
 India's rupee has hit a five-year high after Standard & Poor's (S&P) raised the country's foreign currency rating.
 
 The rupee climbed to 43.305 per US dollar on Thursday, up from a close of 43.41. The currency has gained almost 1% in the past three sessions. S&P, which rates borrowers' creditworthiness, lifted India's rating by one notch to 'BB+'. With Indian assets now seen as less of a gamble, more cash is expected to flow into its markets, buoying the rupee.
 
 ""The upgrade is positive and basically people will use it as an excuse to come back to India,"" said Bhanu Baweja, a strategist at UBS. ""Money has moved out from India in the first two or three weeks of January into other markets like Korea and Thailand and this upgrade should lead to a reversal."" India's foreign currency rating is now one notch below investment grade, which starts at 'BBB-'. The increase has put it on the same level as Romania, Egypt and El Salvador, and one level below Russia.
",business
"India's Deccan seals $1.8bn deal
 
 Air Deccan has ordered 30 Airbus A320 planes in a $1.8bn (£931m) deal as India's first low-cost airline expands in the fast-growing domestic market.
 
 Air Deccan was set up last year and wants to lure travellers away from the railway network and pricier rivals. The potential of the Indian market has attracted attention at home and abroad. Beer magnate Vijay Mallya recently set up Kingfisher Airlines, while UK entrepreneur Richard Branson has said he is keen to start a local operation.
 
 The country has a population of more than a billion people and many observers feel that it is underserved by airlines. Recently however, the booming economy has boosted personal spending power and helped swell the middle classes and the corporate sector. India's government has given its backing to cheaper and more accessible air travel. ""The days of flying being a symbol of only maharajas or the rich are over,"" the minister for civil aviation Praful Patel said earlier. Infrastructure is being built to handle the expected increase in demand and on Tuesday, Agence France Presse reported that a group led by Germany's Siemens won the contract to build a private airport near Bangalore. India's airports authority and the state government will own 13% each of the finished transport hub. For its part, Air Deccan, set up by army officer and silk farmer Gorur Gopinath, plans to increase its fleet to 60 aircraft within five years. To help finance the expansion the company may sell a 25% stake to an investor for about $50m. When it was set up the firm offered tickets that were 50% cheaper than other Indian airlines. It said it was basing its business model on European firms such as Ireland's Ryanair.
",business
"Quiksilver moves for Rossignol
 
 Shares of Skis Rossignol, the world's largest ski-maker, have jumped as much as 15% on speculation that it will be bought by US surfwear firm Quiksilver.
 
 The owners of Rossignol, the Boix-Vives family, are said to be considering an offer from Quiksilver. Analysts believe other sporting goods companies may now take a closer look at Rossignol, prompting an auction and pushing the sale price higher. Nike and K2 have previously been mentioned as possible suitors.
 
 Rossignol shares touched 17.70 euros, before falling back to trade 7.8% higher at 16.60 euros. European sporting goods companies have seen foreign revenues squeezed by a slump in the value of the US dollar, making a takeover more attractive, analysts said. Companies such as Quiksilver would be able to cut costs by selling Rossignol skis through their shops, they added. The Boix-Vives family is thought to have spent the past couple of years sounding out possible suitors for Rossignol, which also makes golf equipment, snowboards and sports clothing.
",business
"FBI agent colludes with analyst
 
 A former FBI agent and an internet stock picker have been found guilty of using confidential US government information to manipulate stock prices.
 
 A New York court ruled that former FBI man Jeffrey Royer, 41, fed damaging information to Anthony Elgindy, 36. Mr Elgindy then drove share prices lower by spreading negative publicity via his newsletter. The Egyptian-born analyst would extort money from his targets in return for stopping the attacks, prosecutors said. ""Under the guise of protecting investors from fraud, Royer and Elgindy used the FBI's crime-fighting tools and resources actually to defraud the public,"" said US Attorney Roslynn Mauskopf.
 
 Mr Royer was convicted of racketeering, securities fraud, obstruction of justice and witness tampering. Mr Elgindy was convicted of racketeering, securities fraud and extortion.
 
 The charges carry sentences of up to 20 years. When the guilty verdict was announced by the jury foreman, Mr Elgindy dropped his face into his hands and sobbed, the Associated Press news agency reported. He was led weeping from the court room by US marshals, AP said. Defense lawyers contended that Mr Royer had been feeding information to Mr Elgindy and another trader in an attempt to expose corporate fraud. Mr Elgindy's team claimed that he also was fighting against corporate wrongdoing. ""Elgindy's conviction marks the end of his public charade as a crusader against fraud in the market,"" said Ms Mauskopf. One of the more bizarre aspects of the trial focused on the claims that Mr Elgindy may have had foreknowledge of the 11 September terrorist attacks in New York and Washington. Mr Elgindy had been trying to sell stock prior to the attack and had predicted a slump in the market. No charges were brought in relation to these allegations.
",business
"US bank boss hails 'genius' Smith
 
 US Federal Reserve chairman Alan Greenspan has given a speech at a Scottish church in honour of the pioneering economist, Adam Smith.
 
 He delivered the 14th Adam Smith Lecture in Kirkcaldy, Fife. The Adam Smith Lecture celebrates the author of 1776's Wealth of Nations, which became a bible of capitalism. Dr Greenspan was invited by Chancellor Gordon Brown, whose minister father John used to preach at the St Bryce Kirk church. Mr Brown introduced Dr Greenspan to the 400 invited guests as the ""the world's greatest economist"". Dr Greenspan, 79, who has been in the UK to attend the G7 meeting in London, said the world could never repay the debt of gratitude it owed to Smith, whose genius he compared to that of Mozart.
 
 He said the philosopher was a ""towering contributor to the modern world"". ""Kirkcaldy, the birthplace in 1723 of Adam Smith and, by extension, of modern economics, is also of course, where your chancellor was reared. ""I am led to ponder to what extent the chancellor's renowned economic and financial skills are the result of exposure to the subliminal intellect-enhancing emanation in this area."" He continued: ""Smith reached far beyond the insights of his predecessors to frame a global view of how market economics, just then emerging, worked. ""In so doing he supported changes in societal organisation that were to measurably enhance standards of living.""
 
 Dr Greenspan said Smith's revolutionary philosophy on human self-interest, laissez-faire economics and competition had been a force for good in the world. ""The incredible insights of a handful of intellectuals of the Enlightenment - especially with Smith toiling in the environs of Kirkcaldy - created the modern vision of people free to choose and to act according to their individual self-interest,"" he said. Following his lecture, Dr Greenspan - who received an honorary knighthood from the Queen at Balmoral in 2002 - was awarded an honorary fellowship of the Royal Society of Edinburgh. He later opened an exhibition dedicated to Smith in the atrium of Fife College of Further and Higher Education. Joyce Johnston, principal of the college, said: ""It is very fitting that the world's premier economist delivered this lecture in tribute to the world's first economist."" Dr Greenspan - who became chairman of the Federal Reserve for an unprecedented fifth term in June 2004 - will step down in January next year. He has served under Presidents George W Bush, Bill Clinton, George Bush, and Ronald Reagan. He was also chairman of the council of economic advisors to Gerald Ford.
",business
"US industrial output growth eases
 
 US industrial production continued to rise in November, albeit at a slower pace than the previous month.
 
 The US Federal Reserve said output from factories, mines and utilities rose 0.3% - in line with forecasts - from a revised 0.6% increase in October. Analysts added that if the carmaking sector - which saw production fall 0.5% - had been excluded the data would have been more impressive. The latest increase means industrial output has grown 4.2% in the past year. Many analysts were upbeat about the prospects for the US economy, with the increase in production coming on the heels of news of a recovery in retail sales. ""This is very consistent with an economy growing at 3.5 to 4.0%. It is congruent with job growth and consumer optimism,"" Comerica chief economist David Littman said of the figures.
 
 The US economy grew at a respectable annual rate of 3.7% in the three months between July and September, while jobs growth averaged 178,000 during the same period. While the employment figures are not spectacular, experts believe they are enough to whittle away at America's 5.4% jobless rate. A breakdown of the latest production figures shows mining output drove the increase, surging 2.1%, while factory output rose 0.3%. But utility output dropped 1.4%. Meanwhile, the amount of factory capacity in use during the month rose to 77.6% - its highest level since May 2001. ""Many investors think that product market inflation won't be a problem until the utilisation rates are at 80% or higher,"" Cary Leahy, senior US economist at Deutsche Bank Securities, said. ""So there is still a lot of inflation-fighting slack in the manufacturing sector,"" ""Overall I'd say manufacturing at least away from autos continues to improve and I would bet that it improves at a faster rate in coming months given how lean inventories are,"" Citigroup senior economist Steven Wieting added.
",business
"Iraq to invite phone licence bids
 
 Iraq is to invite bids for two telephone licences, saying it wants to significantly boost nationwide coverage over the next decade.
 
 Bids have been invited from local, Arab and foreign companies, Iraq's Ministry of Communications said. The winner will work in partnership with the Iraqi Telecommunications and Post Company (ITPC). The firms will install and operate a fixed phone network, providing voice, fax and internet services.
 
 The ministry said that it wanted to increase Iraq's ""very low telephone service penetration rate from about 4.5% today to about 25% within 10 years."" It also hopes to develop a ""highly visible and changeable telecommunication sector"". Details of the bidding and tender process will be published on the ministry's website on 9 February. It also is planning a road-show for investors in Amman, Jordan. The ministry said it would base its selection on criteria including the speed of implementation, tariff rates, coverage, and the firm's experience and financial strength.
",business
"Yukos unit buyer faces loan claim
 
 The owners of embattled Russian oil giant Yukos are to ask the buyer of its former production unit to pay back a $900m (£479m) loan.
 
 State-owned Rosneft bought the Yugansk unit for $9.3bn in a sale forced by Russia to part settle a $27.5bn tax claim against Yukos. Yukos' owner Menatep Group says it will ask Rosneft to repay a loan that Yugansk had secured on its assets. Rosneft already faces a similar $540m repayment demand from foreign banks. Legal experts said Rosneft's purchase of Yugansk would include such obligations. ""The pledged assets are with Rosneft, so it will have to pay real money to the creditors to avoid seizure of Yugansk assets,"" said Moscow-based US lawyer Jamie Firestone, who is not connected to the case. Menatep Group's managing director Tim Osborne told the Reuters news agency: ""If they default, we will fight them where the rule of law exists under the international arbitration clauses of the credit.""
 
 Rosneft officials were unavailable for comment. But the company has said it intends to take action against Menatep to recover some of the tax claims and debts owed by Yugansk. Yukos had filed for bankruptcy protection in a US court in an attempt to prevent the forced sale of its main production arm. The sale went ahead in December and Yugansk was sold to a little-known shell company which in turn was bought by Rosneft. Yukos claims its downfall was punishment for the political ambitions of its founder Mikhail Khodorkovsky and has vowed to sue any participant in the sale.
",business
"Beijingers fume over parking fees
 
 Choking traffic jams in Beijing are prompting officials to look at reorganising car parking charges.
 
 Car ownership has risen fast in recent years, and there are now two and a half million cars on the city's roads. The trouble is that the high status of car ownership is matched by expensive fees at indoor car parks, making motorists reluctant to use them. Instead roads are being clogged by drivers circling in search of a cheaper outdoor option. ""The price differences between indoor and outdoor lots are unreasonable,"" said Wang Yan, an official from the Beijing Municipal Commission for Development and Reform quoted in the state-run China Daily newspaper. Mr Wang, who is in charge of collecting car parking fees, said his team would be looking at adjusting parking prices to close the gap. Indoor parking bays can cost up to 250% more than outdoor ones.
 
 Sports fans who drive to matches may also find themselves the target of the commission's road rage. It wants them to use public transport, and is considering jacking up the prices of car parks near sports grounds. Mr Wang said his review team may scrap the relatively cheap hourly fee near such places and impose a higher flat rate during matches. Indoor parking may be costly, but it is not always secure. Mr Wang's team are also going to look into complaints from residents about poor service received in exchange for compulsory monthly fees of up to 400 yuan ($48; £26). The Beijing authorities decided two years ago that visiting foreign dignitaries' motorcades should not longer get motorcycle outriders as they blocked the traffic. Unclogging Beijing's increasingly impassable streets is a major concern for the Chinese authorities, who are building dozens of new roads to create a showcase modern city ahead of the 2008 Olympic Games.
",business
"Why few targets are better than many
 
 The economic targets set out at the Lisbon summit of European Union leaders in 2000 were meant to help Europe leapfrog its way past the United States to become the world's leading economy by 2010.
 
 But the Lisbon targets are about much more than just economic prestige. For many economists and analysts they are about ensuring Europe doesn't become a global economic laggard. They are also about ensuring Europe can continue to compete as an equal with the growing economic giants of Asia, India and China, as well as with the economic might of the United States. That's why there was a tone of urgency in the report, out on Wednesday, by the former Dutch prime minister Wim Kok. Mr Kok was commissioned by the European Commission in March this year to assess how far the EU has come towards meeting the Lisbon targets, five years on from their inception. His conclusion was simple: too many of the targets will be seriously missed.
 
 Lisbon risks becoming a ""synonym for missed objectives and failed promises"", his report said. ""The status quo is not an option.""
 
 At risk in the medium to long run is nothing less than the sustainability of the society Europe has built, it said. The report comes at a time when Europe's competitive position is waning. The EU's economic growth rate is projected to be 2% this year and 2.4% next. While there has been growth in overall employment rates in Europe, productivity lags behind that of the US. But meeting the Lisbon targets requires a political commitment that no EU member state has volunteered so far. That has in part been due to the state of the global economy in the past few years.
 
 As Mr Kok's report noted: ""The ink had scarcely dried on the [Lisbon] agreement before the worldwide stock market bubble imploded."" ""The US suffered two years of economic slowdown and recession and the European economy followed suit.""
 
 The circumstances weren't conducive to creating the 20 million new jobs promised by EU leaders in Lisbon in 2000. Neither were they conducive to getting governments to spend more on research and development, money needed if the EU was to meet its target of becoming a so-called ""knowledge-based economy"". ""The [Lisbon] vision is a compelling one, but in order to do it society has to change,"" said Paul Hofheinz of the Lisbon Council, a Brussels-based citizen action group. ""What you find is that a lot of people have been fighting change. You find trade unions fighting change. But also the employers' associations. ""Even though they tell you they're in favour of change, many are actually pushing for less competition, more subsidy and less free market activity.""
 
 But part of the problem was also linked to the original targets set out in Lisbon five years ago. Targets have a habit of coming back to haunt you and in the Lisbon case, they covered too much, according to the Wim report. Economic growth and job creation were linked to issues ranging from environmental protection to social inclusion, and even safety at sea. The agenda was just too broad and as a result nothing was prioritised.
 
 ""Lisbon is about everything and thus about nothing,"" the Kok report said. ""Everybody is responsible and thus no one."" That's why the Kok report recommends that the Lisbon targets be narrowed down to 14 key indicators, with an emphasis on creating jobs and economic growth. It also recommends that the European Commission draw up a league table which ranks countries according to the steps they're taking towards meeting the targets, effectively ""naming, shaming and faming"". ""Rhetoric and delivery don't necessarily go hand in hand,"" Mr Kok said in a press conference alongside the publication of his report. ""We don't have the luxury anymore just to exchange politeness with one another.""
 
 On one point Mr Kok was very clear: The European Union should not try to emulate the US economy. The European economic and social model needs to change, but not so much so that social and environmental issues take a backseat to economic growth. In that sense, the Lisbon agenda is sailing into unchartered waters. The Kok report tries to do away with a belief that jobs need to be sacrificed at the altar of economic growth. ""It's very ambitious,"" said John Palmer, political director at the European Policy Centre, a Brussels-based think-tank. ""This is something that no advanced economy in the world has tried to do. It's going to require quite new and innovative policies."" But some analysts believe that the Kok report doesn't come up with the sort of innovative policies and thinking needed to make the Lisbon targets a reality. For example, it recommends putting in place policies which encourage women and older people to remain in the workforce. But it doesn't say how companies should be convinced to do this. It will be up to the incoming president of the European Commission, Jose Manuel Barroso, to adopt Mr Kok's recommendations and press them on EU governments. Mr Barroso has said that the EU's competitiveness will be his top priority. He expects his five-year term in office to be judged on Europe's success in meeting the Lisbon agenda.
",business
"Wembley firm won't make a profit
 
 Shares in Multiplex Group, which is building the new Wembley stadium, fell as much as 19% after it said it would not make any money on the project.
 
 The Australian firm said it would only break even on the 1.2bn Australian dollars (£458m; $874m) rebuild, after a rise in costs on the work. Any profits would depend on the outcome of legal cases resulting from a change in steel contractor, it added. It cut A$68m from profit targets for Wembley and another UK project.
 
 Investors were shaken by the news and the firm's shares fell to a four month low of A$4.50, before recovering to close 16% down at A$4.67. The decline came despite Multiplex reporting an 11% rise in pre-tax profits to A$67.7m for 2004 and reaffirming its 2005 profit forecasts. Increased costs at Wembley and a separate development in London's Docklands saw Multiplex's construction division report profits of A$35.1m.
 
 The firm said the result was below expectations but stressed that the majority of its UK projects - which also include the White City redevelopment scheme in west London - were performing strongly.
 
 To recoup any profit from Wembley, where the firm changed its steel contractor due to a legal dispute, Multiplex will have to win legal claims against subcontractors. These claims could take up to two years to resolve. ""Multiplex believes its claim are sound and ultimately will exceed the level needed to support the break even position,"" it said. ""It is expected that profits will be possible in future periods as the claims are finalised."" Wembley Stadium is to due to be completed in January and will officially open for the 2006 FA Cup Final. Analysts expressed concern at the unexpected paring back in profit. ""Such a big writeback on the Wembley project in such a short period has impacted on management credibility,"" Simon Wheatley, from Goldman Sachs, told Reuters.
",business
"Ad sales boost Time Warner profit
 
 Quarterly profits at US media giant TimeWarner jumped 76% to $1.13bn (£600m) for the three months to December, from $639m year-earlier.
 
 The firm, which is now one of the biggest investors in Google, benefited from sales of high-speed internet connections and higher advert sales. TimeWarner said fourth quarter sales rose 2% to $11.1bn from $10.9bn. Its profits were buoyed by one-off gains which offset a profit dip at Warner Bros, and less users for AOL.
 
 Time Warner said on Friday that it now owns 8% of search-engine Google. But its own internet business, AOL, had has mixed fortunes. It lost 464,000 subscribers in the fourth quarter profits were lower than in the preceding three quarters. However, the company said AOL's underlying profit before exceptional items rose 8% on the back of stronger internet advertising revenues. It hopes to increase subscribers by offering the online service free to TimeWarner internet customers and will try to sign up AOL's existing customers for high-speed broadband. TimeWarner also has to restate 2000 and 2003 results following a probe by the US Securities Exchange Commission (SEC), which is close to concluding.
 
 Time Warner's fourth quarter profits were slightly better than analysts' expectations. But its film division saw profits slump 27% to $284m, helped by box-office flops Alexander and Catwoman, a sharp contrast to year-earlier, when the third and final film in the Lord of the Rings trilogy boosted results. For the full-year, TimeWarner posted a profit of $3.36bn, up 27% from its 2003 performance, while revenues grew 6.4% to $42.09bn. ""Our financial performance was strong, meeting or exceeding all of our full-year objectives and greatly enhancing our flexibility,"" chairman and chief executive Richard Parsons said. For 2005, TimeWarner is projecting operating earnings growth of around 5%, and also expects higher revenue and wider profit margins.
 
 TimeWarner is to restate its accounts as part of efforts to resolve an inquiry into AOL by US market regulators. It has already offered to pay $300m to settle charges, in a deal that is under review by the SEC. The company said it was unable to estimate the amount it needed to set aside for legal reserves, which it previously set at $500m. It intends to adjust the way it accounts for a deal with German music publisher Bertelsmann's purchase of a stake in AOL Europe, which it had reported as advertising revenue. It will now book the sale of its stake in AOL Europe as a loss on the value of that stake.
",business
"Renault boss hails 'great year'
 
 Strong sales outside western Europe helped Renault boost its profits by more than 40% in 2004 although the firm warned of lower margins this year.
 
 France's second largest carmaker enjoyed a healthy 43% rise in net profits to 2.4bn euros ($3.1bn; £2.9bn) as sales rose 8% to 40.7bn euros. The firm said strong demand outside western Europe and the good performance of its Megane range lifted its results. Chairman Louis Schweitzer said 2004 had been a ""great year"" for the firm.
 
 Renault sold more than 2.4 million vehicles in 2004, an increase of 4% on the previous year. Growth came mainly from outside western Europe, with particularly strong sales in Turkey, Russia and North Africa.
 
 In total, sales outside western Europe - Renault's core market - rose 16.5%. Japanese carmaker Nissan - in which Renault owns a 44% stake - contributed 1.7bn euros in net income over the year. Nissan chairman Carlos Ghosn is to succeed Mr Schweitzer at the head of Renault later this year.
 
 Renault said the outlook for the industry in Europe this year was ""stable"", with small growth forecast in other regions. The firm will benefit from the launch of a new Clio model in the coming year and the roll-out of the Logan in many markets. However, the firm said it expected operating margins to be lower in 2005, at 4% of sales as opposed to 5%. ""In a sluggish market and an environment impacted by the rise in raw material prices, Renault intends to continue to grow its global sales,"" the company said in a statement.
",business
"Argentina, Venezuela in oil deal
 
 Argentina and Venezuela have extended a food-for-oil deal, which helped the former to overcome a severe energy crisis last year.
 
 Argentine President Nestor Kirchner and Venezuelan President Hugo Chavez signed the deal in Buenos Aires on Tuesday. Last April, Argentina signed a $240m agreement to import Venezuelan fuel in exchange for agricultural goods and this deal has now been extended. Venezuela will now import cattle, medicines and medical equipment. Last year, Argentina's severe energy crisis forced President Kirchner to suspend gas exports to Chile. Argentina fears that rising demand could spark another crisis and wants to prevent it by signing this deal. The two countries also formalised a co-operation deal between Venezuelan energy firm PDVSA and Argentina's Enarsa. Under this deal, the Argentine market will be opened to Venezuelan investment. President Chavez added that Brazil's Petrobras could join soon the co-operation deal. President Chavez is an ardent promoter of the concept of a South American oil company, which could include the state-owned companies of Venezuela, Argentina, Brazil and Bolivia. The two presidents also agreed to create 'Television Sur', a Latin American network of state-owned television channels.
",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.
",business
"India opens skies to competition
 
 India will allow domestic commercial airlines to fly long haul international routes, a move it hopes will stoke competition and drive down prices.
 
 However, only state controlled carriers will be able to fly the lucrative Gulf routes, to countries such as Kuwait and Saudi Arabia, for at least three years. Jet Airways and Air Sahara are the two companies that will benefit initially. India is looking to develop its airline industry as booming economic growth drives demand for travel.
 
 Monica Chadha, BBC Delhi reporter, said air travel in India had increased by almost 20% from the previous year and was expected to rise even further. Infrastructure development is lagging demand, however, and will have to improve. ""Most international airports in the country are shabby and ill-equipped to handle heavy air traffic,"" Ms Chada said, adding that while the Civil Aviation minister has promised to modernise and privatise airports little progress has been made. Steps have been take to move things forward and the government recently changed legislation that limited foreign investment in domestic airlines. It raised the maximum stake holding allowed to 49% from 40%. Local press, meanwhile, have reported that the US and India will start negotiations about adding more routes in January. Jet Airways is India's premier private domestic carrier; Air Sahara is ranked third in the category.
",business
"Diageo to buy US wine firm
 
 Diageo, the world's biggest spirits company, has agreed to buy Californian wine company Chalone for $260m (£134m) in an all-cash deal.
 
 Although Diageo's best-known brands include Smirnoff vodka and Guinness stout, it already has a US winemaking arm - Diageo Chateau & Estate Wines. Diageo said it expects to get US regulatory approval for the deal during the first quarter of 2005. It said Chalone would be integrated into its existing US wine business.
 
 ""The US wine market represents a growth opportunity for Diageo, with favourable demographic and consumption trends,"" said Diageo North America president Ivan Menezes. In July, Diageo, which is listed on the London Stock Exchange, reported an annual turnover of £8.89bn, down from £9.28bn a year earlier. It blamed a weaker dollar for its lower turnover. In the year ending 31 December 2003, Chalone reported revenues of $69.4m.
",business
"Parmalat bank barred from suing
 
 Bank of America has been banned from suing Parmalat, the food group which went bust in 2003 after an accounting scandal.
 
 The bank - along with investors, auditors and the group's managers - wants damages for being a victim of fraud at the hands of the Italian firm. But a judge has barred Bank of America and two auditors from the case. The bank, and Italaudit - formerly the Italian arm of auditor Grant Thornton - face lawsuits and possible prosecution. A second auditor, Deloitte & Touche, has also been banned from the case. Grant Thornton - now rid of the Italian unit at the centre of the case - is still being permitted to sue, as are Consob, Italy's stock market regulator, hundreds of small investors and Parmalat's new managers. Parmalat collapsed in December 2003 after it emerged that the 4bn euros ($5.2bn; £2.8bn) it supposedly held in a Bank of American offshore account did not in fact exist.
",business
"Putin backs state grab for Yukos
 
 Russia's president has defended the purchase of Yukos' key production unit by state-owned oil firm Rosneft, saying it followed free market principles.
 
 Vladimir Putin said it was quite within the rights of a state-owned company to ensure its interests were met. Rosneft bought 100% of Baikal Finance Group, in a move that amounts to the renationalisation of a major chunk of Russia's booming oil industry. Rosneft will now control about 16% of Russia's total crude oil output. Yukos share jumped in Moscow, climbing as much as 50% before being suspended.
 
 Rosneft is already in the process of merging with Gazprom, the world's biggest gas company, a move that will see Gazprom return to majority state-ownership.
 
 Baikal was the surprise buyer of oil and gas giant Yukos's main production division at a forced auction on Sunday. ""Everything was done by market methods,"" Mr Putin said at his year-end press conference in Moscow. Shedding some light on the Kremlin's motivation, Mr Putin referred to a period of so-called ""cowboy capitalism"" that followed the collapse of the Soviet Union.
 
 He said privatisations carried out in the early 1990s had involved trickery, including law breaking, by people seeking to acquire valuable state property. ""Now the state, using market methods, is safeguarding its interests. I think this is quite normal,"" the Russian president said. A Rosneft spokesman has said the acquisition is part of its plan to build a ""balanced, national energy corporation.""
 
 The latest announcement comes after more than a year of wrangling that has pushed Yukos, one of Russia's biggest companies to the brink of collapse. The Russian government put Yukos's Yuganskneftegas subsidiary up for sale last week after hitting the company with a $27bn (£14bn) bill for back taxes and fines.
 
 Analysts say that Yukos's legal attempts to block the auction by filing for bankruptcy protection in the US are probably what caused this week's cloak-and-dagger dealings. Gazprom, the company originally tipped to buy Yuganskneftegas, was banned from taking part in the auction by a US court injunction. By selling the Yukos unit to little-known Baikal and then to Rosneft, Russia is able to circumvent a host of tricky legal landmines, analysts said. ""You cannot sue the Russian government,"" said Eric Kraus, a strategist at Moscow's Sovlink Securities. ""The Russian government has sovereign immunity."" ""The government is renationalising Yuganskneftegas.""
 
 Even so, analysts reckon that the saga still has a long way to go. The Rosneft announcement came just hours after Yukos accused Gazprom of illegally taking part in Sunday's auction. It has said it will be seeking damages of $20bn. The claim was made at the latest hearing in the US bankruptcy court in Houston, Texas, where Yukos, had filed for Chapter 11 bankruptcy protection. If found in contempt of the US court order blocking the auction, Gazprom could face having foreign assets seized. Yukos' lawyers had also been expected to try to have Baikal's assets frozen. Lawyers claimed the auction was illegal because Yukos - with an office in Houston - had filed for bankruptcy and therefore its assets were under the protection of US law which has worldwide jurisdiction. Further muddying the waters is a merger between Rosneft and Gazprom which authorities have said will go ahead as planned.
",business
"Ore costs hit global steel firms
 
 Shares in steel firms have dropped worldwide amid concerns that higher iron ore costs will hit profit growth.
 
 Shares in Germany's ThyssenKrupp, the UK's Corus and France's Arcleor fell while Japan's Nippon Steel slid after it agreed to pay 72% more for iron ore. China's Baoshan Iron and Steel Co. said it was delaying a share sale because of weak market conditions, adding it would raise steel prices to offset ore costs. The threat of higher raw material costs also hit industries such as carmakers. France's Peugeot warned that its profits may decline this year as a result of the higher steel, plastic and commodity prices.
 
 Steelmakers have been enjoying record profits as demand for steel has risen, driven by the booming economies of countries such as China and India. Steel prices rose by 8% globally in January alone and by 24% in China.
 
 The boom times are far from over, but analysts say that earnings growth may slow. The share price fall was initially triggered by news that two of the world's biggest iron ore suppliers had negotiated contracts at much-higher prices. Miners Rio Tinto and Cia. Vale Do Rio Dolce (CVRD) this week managed to boost by 72% the price of their iron ore, a key component of steel. Analysts had expected Japan's Nippon to agree to a price rise of between 40% and 50%. Steel analyst Peter Fish, director of Sheffield-based consulting group MEPS, said the extent of CVRD's price rise was ""uncharted territory"", adding that the steel industry ""hasn't seen an increase of this magnitude probably in 50 years"". Analysts now expect other iron ore producers, such as Australia's BHP Billiton, to seek annual price rises of up to 70%.
 
 The news triggered the share price weakness. ""It sparked worries that steel makers might not be able to increase product prices further [ to cover rising ore costs]"" explained Kazuhiro Takahashi of Daiwa Securities SMBC. In Europe, Arcelor shed 2.1% to 17.58 euros in Paris, with ThyssenKrupp dropping 1.7% to 16.87 euros. In London, Corus fell 2.2% to 55.57 pence. Japan's biggest steel company Nippon Steel lost 2.5% to 270 yen, with closest rival JFE Holdings down 3.4%. China's Baoshan, the country's largest steel producer, said that the uncertainty surrounding the industry has prompted it to pull its planned share sale. The firm had been expected to offer 22.5bn yuan ($2.7bn) worth of shares to investors. No date has been given for when the 5 billion shares will come to the market. Baoshan stock climbed on news of the delay and its decision to increase the price of its steel by 10%.
",business
"Strong demand triggers oil rally
 
 Crude oil prices surged back above the $47 a barrel mark on Thursday after an energy market watchdog raised its forecasts for global demand.
 
 The International Energy Agency (IEA) warned demand for Opec's crude in the first quarter would outstrip supply. The IEA raised its estimate of 2005 oil demand growth by 80,000 barrels a day to 84 million barrels a day. US light crude rose $1.64 to $47.10, while Brent crude in London gained $1.32 to $44.45.
 
 The Paris-based IEA watchdog, which advises industrialized nations on energy policy, said the upward revision was due to stronger demand from China and other Asian countries. The fresh rally in crude prices followed gains on Wednesday which were triggered by large falls in US crude supplies following a cold spell in North America in January. The US Department of Energy reported that crude stockpiles had fallen 1m barrels to 294.3m. On top of that, ongoing problems for beleaguered Russian oil giant Yukos have also prompted the IEA to revise its output estimates from Russia - a major non-Opec supplier. ""I think that prices are now beginning to set a new range and it looks like the $40 to $50 level,"" said energy analyst Orin Middleton of Barclays Capital.
",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.
",business
"Aviation firms eye booming India
 
 India's defence minister has opened the country's Aero India 2005 air show with an invitation for global aerospace firms to outsource jobs to the nation.
 
 Pranab Mukherjee said such companies could take advantage of India's highly skilled workers and low wages. More than 240 civil and military aerospace firms from 31 countries are attending the show. Analysts said India could spend up to $35bn (£18.8bn) in the aviation market over the next 20 years. Giants such Boeing and Airbus - on the civil aviation front - as well as Lockheed Martin and France's Snecma - on the military side - are some of the firms attending the show. ""There is tremendous scope for outsourcing from India in areas where the companies are competitive,"" said Mr Mukerjee. ""We are keen to welcome international collaborations that are in conformity with our national goals.""
 
 Lockheed said it had signed an agreement with state-owned Hindustan Aeronautics (HAL) to share information on the P-3 Orion maritime surveillance aircraft.
 
 In fact, the Indian Armed Force is considering the buying of used P-3 Orion as well as F-16 fighter jets from Lockheed. The US military industry has show a strong interest to open a link with India, now that relations between the two countries have improved a lot. In fact, it is the first time the US Air Force will attend the air show since sanctions imposed in 1998 after India's nuclear tests were lifted. But the Indian Air Force is also considering proposals from other foreign firms such as France's Dassault Aviation, Sweden's Saab and Russia's Mikoyan-Gurevich. Meanwhile, France's Snecma has also said it plans a joint venture with HAL to make engine parts, with an initial investment of $6.5m.
 
 On the civilian front, Boeing announced a deal with India's HCL Technologies to develop a platform for the flight test system of its 787 Dreamliner aircraft. The US company also said it had agreed with a new Indian budget airline the sale of 10 737-800 planes for $630m. The airline, SpiceJet, will also have the option to acquire 10 more aircraft. Airbus has also recently signed fresh deals with two Indian airlines - Air Deccan and Kingfisher. In addition, the European company has plans to open a training centre in India. Meanwhile, flag carrier Air India is considering to buy 50 new aircraft from either Boeing or Airbus. ""No other market is going to see the growth that will be seen here in the coming years,"" said Dinesh Keskar, senior vice president Boeing.
",business
"Brussels raps mobile call charges
 
 The European Commission has written to the mobile phone operators Vodafone and T-Mobile to challenge ""the high rates"" they charge for international roaming.
 
 In letters sent to the two companies, the Commission alleged the firms were abusing their dominant market position in the German mobile phone market. It is the second time Vodafone has come under the Commission's scrutiny. The UK operator is already appealing against allegations that its UK roaming rates are ""unfair and excessive"". Vodafone's response to the Commission's letter was defiant. ""We believe the roaming market is competitive and we expect to resist the charges,"" said a Vodafone spokesman. ""However we will need time to examine the statement of objections in detail before we formally respond.""
 
 The Commission's investigation into Vodafone and Deutsche Telekom's T-Mobile centres on the tariffs the two companies charge foreign mobile operators to access their networks when subscribers of those foreign operators use their mobile phones in Germany.
 
 The Commission believes these wholesale prices are too high and that the excess is passed on to consumers. ""The Commission aims to ensure that European consumers are not overcharged when they use their mobile phones on their travels around the European Union,"" the Commission said in a statement. Vodafone and O2, Britain's other big mobile phone operator, were sent similar statements of objections by the Commission in July last year. Vodafone sent the Commission a response to those allegations in December last year and is now waiting for a reply. The Vodafone spokesman said a similar process would be set in motion with these latest statement of objections about its operations in Germany.
 
 The companies will have three months to respond to the Commission's allegations and the process ""may go on for some time yet"", the spokesman said. The Commission could charge the companies up to 10% of their annual turnover, though in practice that sort of figure is rarely demanded. The Commission's latest move comes just a few months after national telecoms regulators across Europe launched a joint investigation which could lead to people being charged less for using their mobile phone when travelling abroad. The investigation involves regulators assessing whether there is effective competition in the roaming market.
",business
"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.
",business
"Newest EU members underpin growth
 
 The European Union's newest members will bolster Europe's economic growth in 2005, according to a new report.
 
 The eight central European states which joined the EU last year will see 4.6% growth, the United Nations Economic Commission for Europe (UNECE) said. In contrast, the 12 Euro zone countries will put in a ""lacklustre"" performance, generating growth of only 1.8%. The global economy will slow in 2005, the UNECE forecasts, due to widespread weakness in consumer demand.
 
 It warned that growth could also be threatened by attempts to reduce the United States' huge current account deficit which, in turn, might lead to significant volatility in exchange rates.
 
 UNECE is forecasting average economic growth of 2.2% across the European Union in 2005. However, total output across the Euro zone is forecast to fall in 2004 from 1.9% to 1.8%. This is due largely to the faltering German economy, which shrank 0.2% in the last quarter of 2004. On Monday, Germany's BdB private banks association said the German economy would struggle to meet its 1.4% growth target in 2005.
 
 Separately, the Bundesbank warned that Germany's efforts to reduce its budget deficit below 3% of GDP presented ""huge risks"" given that headline economic growth was set to fall below 1% this year. Publishing its 2005 economic survey, the UNECE said central European countries such as the Czech Republic and Slovenia would provide the backbone of the continent's growth. Smaller nations such as Cyprus, Ireland and Malta would also be among the continent's best performing economies this year, it said. The UK economy, on the other hand, is expected to slow in 2005, with growth falling from 3.2% last year to 2.5%.
 
 Consumer demand will remain fragile in many of Europe's largest countries and economies will be mostly driven by growth in exports. ""In view of the fragility of factors of domestic growth and the dampening effects of the stronger euro on domestic economic activity and inflation, monetary policy in the euro area is likely to continue to 'wait and see', the organisation said in its report. Global economic growth is expected to fall from 5% in 2004 to 4.25% despite the continued strength of the Chinese and US economies. The UNECE warned that attempts to bring about a controlled reduction in the US current account deficit could cause difficulties. ""The orderly reversal of the deficit is a major challenge for policy makers in both the United States and other economies,"" it noted.
",business
"Millions 'to lose textile jobs'
 
 Millions of the world's poorest textile trade workers will lose their jobs under new trade rules to be introduced in the new year, a charity has warned.
 
 The World Trade Organisation (WTO) is to end its Multi-Fibre Agreement (MFA) on midnight of 31 December. Christian Aid condemned the move, saying it would see almost a million jobs in Bangladesh alone being axed. However, supporters of the change claim it will mean increased efficiency and lower costs for Western consumers.
 
 It will also see more jobs created in India and China, advocates argue. The WTO said that many developing countries support the end of quotas and stressed that funding was available to countries such as Bangladesh to help them make the transition to a fully liberalised market. ""There will be a period of adjustment required,"" said WTO spokesman Keith Rockwell. ""Some countries will do better than others but there is no one who is suggesting that no developing country will do well out of this. ""Some countries where it may appear that orders will dry up have seen orders surging and there are many companies who will continue with existing trading relationships.""
 
 Christian Aid has called on British firms not to simply ""cut and run"" but look after their workers, in a new report called Rags To Riches To Rags.
 
 It added that with few employment alternatives available many sacked garment workers could end up in far worse jobs - with some of the mainly female workers forced into the sex trade. The WTO itself has warned that as many as 27 million jobs could be lost as a result of liberalisation in the textile industry. Some of the world's fastest developing countries which rely on textile exports to build growth - for example in Bangladesh textiles account for almost 85% of the country's exports and the industry employs around 1.5 million people. The MFA pact has helped developing countries get a bigger share of the world market. ""The losers in this new trade landscape will be some of the most vulnerable workers in countries such as Bangladesh, Cambodia, Sri Lanka and Nepal,"" Andrew Pendleton, Christian Aid's head of Trade Policy, said. ""They will be hard-pressed to cope when garment industries there lose their protection. ""We are deeply concerned that the New Year will spell misery for huge numbers of garment workers."" The WTO said there was no consenus among its members to retain the quotas and emphasised that funding was available to countries such as Bangladesh to help them adjust to the liberalised market.
 
 It added that the impact of the changes for workers most affected by the shake-up had not been considered, adding such seismic changes to policy should ""put the interests of poor people first - rather than simply aiming to liberalise markets at any cost"". While the current MFA was not perfect, its did allow Third World countries like Bangladesh to get onto the first rung of industrial development, Christian Aid said. ""International trade must not be governed by a 'race to the bottom' that pitches one set of poor people against another,"" Mr Pendleton added.
",business
"Yukos sues four firms for $20bn
 
 Russian oil firm Yukos has sued four companies for their role in last year's forced state auction of its key oil production unit Yuganskneftegas.
 
 Yukos is claiming more than $20bn (£11bn) in damages after Yugansk was sold in December to settle back taxes. The four companies named in the law suit are gas giant Gazprom, its unit Gazpromneft, investment company Baikal, and state oil firm Rosneft. Yukos submitted the suit in Houston, where it filed for bankruptcy. As well as suing for damages, Yukos has asked the US court to send its tax dispute with the Russian government to an international arbitrator. It also has submitted a reorganisation plan as part of its Chapter 11 bankruptcy filing.
 
 The clash between Yukos and the Kremlin came to a head last year when Yukos was hit with a bill of more than $27bn in back taxes and unpaid fines. To settle the bill, Russia forced Yukos to sell off Yuganskneftegas.
 
 Yukos called the sale illegal and has turned to courts in the US in an effort to regain control of the oil production business. It also has vowed to use all legal means at its disposal to go after any firm that tries to buy or take control of its assets. Earlier this month it sued the Russian government for $28.3bn. Analysts have questioned whether a US court has any jurisdiction over Russian companies, while Moscow officials have dismissed Yukos' legal wrangling as meaningless. In Houston, bankruptcy Judge Letitia Clark will start a two-day hearing on 16 February to hear arguments on whether a US court is the proper forum for the case.
 
 The threat of legal action from Yukos and its bankruptcy filing in Houston did have an effect on last year's auction, however. Concerned that it would be caught up in a court battle, Gazprom and Gazpromneft withdrew from the auction, and Yuganskneftegas was sold to little-known investment firm Baikal Finance Group. A few days later, Baikal gave control of the company to state-run oil group Rosneft for $9.3bn. Rosneft, meanwhile, has agreed to merge with Gazprom, bringing a large chunk of Russia's very profitable oil business back under state control. Yukos claims that the rights of its shareholders have been ignored and that is has been punished for the political ambitions of its founder Mikhail Khodorkovsky. Mr Khodorkovsky, once Russia's richest man, is in prison, having been charged with fraud and tax evasion and repeatedly denied bail.
",business
"US to rule on Yukos refuge call
 
 Yukos has said a US bankruptcy court will decide whether to block Russia's impending auction of its main production arm on Thursday.
 
 The Russian oil firm has filed for bankruptcy protection in the US in an attempt to halt the forced sale. However, Judge Letitia Clark said the hearing would continue on Thursday when arguments in the case would be heard. Russian authorities are due to auction off Yuganskneftegas on 19 December to pay a huge tax bill sent to Yukos.
 
 Russian prosecutors are forcing the sale of the firm's most lucrative asset Yuganskneftegas to help pay a $27bn (£14bn) back tax bill, which they claim is owed by Yukos.
 
 Filing for bankruptcy protection in the US was ""a last resort to preserve the rights of our shareholders, employees and customers,"" said Yukos chief executive Steven Theede. The company added it had opted to take action through American courts as US bankruptcy law gives worldwide jurisdiction over a debtor company's property and because it was seeking a judiciary willing to protect the value of shareholders' investments. However, as the firm is based in Russia and has no significant US assets, lawyers are unsure of the outcome of the case. ""We are here to stop 60% of our body from being cut off on Sunday,"" Zack Clement, a lawyer for Yukos, told Judge Clark in an emergency hearing in Houston, Texas, on Wednesday. As well as the bid to get Chapter 11 bankruptcy - which protects firms from creditors, allowing them to continue trading as they restructure their finances - the group also made a claim for damages against the Russian government. Yukos asked the Houston court to order Russia to arbitration so that it can press claims for billions of dollars in damages over a ""campaign of illegal, discriminatory and disproportionate"" tax claims. Mr Clement said that under Russian law, the Russian government was obliged to enter into arbitration as set out in international law.
 
 He added that the opening bid for the firm's Yuganskneftgas unit was $8bn - less than half of the $20bn that Yukos advisers say it is worth. ""We believe the only significant bidder at the auction on Sunday is Gazprom,"" he said, referring to Russia's natural gas giant. Yukos maintains that the forced auction is illegal and ""will cause the company to suffer immediate and irreparable harm."" Many commentators believe the Russian government's aggressive pursuit of Yukos is a politically-motivated response to the political ambitions of its former chief executive, Mikhail Khodorkovsky. Mr Khodorkovsky, who had funded liberal opposition groups, was arrested in October last year on fraud and tax evasion charges and is still in jail Analysts believe that if its production unit is auctioned off, it is likely to be bought up by a government-backed firm, like Gazprom, effectively bringing a large chunk of Russia's lucrative oil and gas industry back under state control.
",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.
",business
"Stormy year for property insurers
 
 A string of storms, typhoons and earthquakes has made 2004 the most expensive year on record for property insurers, according to Swiss Re.
 
 The world's second biggest insurer said disasters around the globe have seen property claims reach $42bn (£21.5bn). ""2004 reinforces the trend towards higher losses,"" said Swiss Re. Tightly packed populations in the areas involved in natural and man-made disasters were to partly to blame for the rise in claims, it said. Some 95% of insurance claims were for natural catastrophes, with the rest attributed to made-made events.
 
 The largest claims came from the US, which was struck by four hurricanes, and Japan, which suffered the highest concentration of typhoons for decades plus a major earthquake.
 
 Europe suffered fewer natural disasters, but 191 people were killed and more than 2,000 injured in March after the terrorist attack on train stations in Madrid. The damages claimed in 2004 eclipsed previous years, including 2001 when the 11 September attacks pushed claims up to $37bn. Swiss Re said it had registered about 300 natural and man-made disasters around the world in 2004. Twenty-one thousand people lost their lives in the catastrophes with a cost to the global economy of around $105bn (£54bn).
",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.
",business
"Virgin Blue shares plummet 20%
 
 Shares in Australian budget airline Virgin Blue plunged 20% after it warned of a steep fall in full year profits.
 
 Virgin Blue said profits after tax for the year to March would be between 10% to 15% lower than the previous year. ""Sluggish demand reported previously for November and now December 2004 continues,"" said Virgin Blue chief executive Brett Godfrey. Virgin Blue, which is 25% owned by Richard Branson, has been struggling to fend off pressure from rival Jetstar. It cut its full year passenger number forecast by ""approximately 2.5%"". Virgin Blue reported a 22% fall in first quarter profits in August 2004 due to tough competition. In November, first half profits were down due to slack demand and rising fuel costs. Virgin Blue was launched four years ago and now has roughly one third of Australia's domestic airline market. But the national carrier, Qantas, has fought back with its own budget airline, Jetstar, which took to the skies in May 2004. Sydney-listed Virgin Blue's shares recovered slightly to close 12% down on Wednesday. Shares in its major shareholder, Patrick Corporation - which owns 46% of Virgin Blue - had dropped 31% by the close.
",business
"Turkey-Iran mobile deal 'at risk'
 
 Turkey's investment in Iran's mobile industry looks set to be scrapped after its biggest mobile firm saw its investment there slashed by MPs.
 
 Iran's parliament voted by a large majority to cut Turkcell's stake in a new mobile network from 70% to 49%. The move, which was justified on national security grounds, follows an earlier vote by MPs to give themselves a veto over foreign investments. Turkcell said the decision ""increases the risks"" attached to the project. Although the company's statement said it would continue to monitor developments, observers said they thought Turkcell was set to pull out of the $3bn deal. ""The possibility of carrying out this project is next to zero,"" said Atinc Ozkan, analyst at Finans Investment in Istanbul. If Turkcell does back out, MTN - the South African firm which lost out in the original tender - may well be back in the running. The company has said it is prepared to accept a minority stake if Iran will award it the mobile deal.
 
 Turkcell's mobile deal is the second Turkish investment in Iran to run into trouble. Turkish-Austrian consortium TAV was chosen to build and run Tehran's new Imam Khomeini International Airport - but the army closed it just hours after it opened in May 2004. In both cases, the justification has been national security, amid allegations that the Turkish firms are too close to Israel. The hardline posture taken by parliament, which is dominated by religious conservatives, could yet impact other inward investments.
",business
"Germany nears 1990 jobless level
 
 German unemployment rose for the 11th consecutive month in December - making the year's average jobless total the highest since reunification.
 
 The seasonally adjusted jobless total rose a higher than expected 17,000 to 4.483 million, the Bundesbank said. Allowing for changes in calculating statistics, the average number of people out of work was the highest since 1990 - or a rate of 10.8%. Bad weather and a sluggish economy were blamed for the rise. The increase ""was due primarily to the onstart of winter"", labour office chief Frank-Juergen Weise said.
 
 Unadjusted, the figures showed unemployment rose 206,900 to 4.64 million - with many sectors such as construction laying off workers amid bad weather. ""The three years of stagnation in the German economy came to an end in 2004. But the upturn is still not strong enough"" to boost the labour market, Mr Weise added. News of the rise came as government welfare reforms came into force, a move that is expected to see unemployment swell still further in coming months. Under the Hartz IV changes, the previous two tier system of benefits and support for the long term unemployed has been replaced with one flat-rate payout. In turn, that means more people will be classified as looking for work, driving official figures higher.
 
 ""Be prepared for a nasty figure for January 2005, about five million unemployed on a non-seasonally adjusted basis,"" warned HVB Group economist Andreas Rees. But he did add that the numbers should ""subside"" throughout the year, to remain near 2004's level of 4.4 million jobless. ""I don't expect a strong and lasting turnaround until 2006,"" German Economy minister Wolfgang Clement said. By 2010, however, the Hartz IV reforms should help cut the average jobless rate to between 3% and 5%, he added. Europe's biggest economy has been too weak to create work as it struggles to shake off three years of economic stagnation. In recent months companies such as Adam Opel - the German arm of US carmaker General Motors - and retailer KarstadtQuelle have slashed jobs.
",business
"US Ahold suppliers face charges
 
 US prosecutors have charged nine food suppliers with helping Dutch retailer Ahold inflate earnings by more than $800m (£428m).
 
 The charges have been brought against individuals as well as companies, alleging they created false accounts. Ahold hit the headlines in February 2003 after it emerged that there were accounting irregularities at its US subsidiary Foodservice. Three former Ahold top executives last year agreed to settle fraud charges.
 
 Ahold has admitted that it fraudulently inflated promotional allowances at Foodservice, improperly consolidated joint ventures and also committed other accounting errors and irregularities.
 
 The nine now charged, who worked as suppliers to Ahold, are accused of signing false documents relating to the amount of money they paid the retailer for promoting their products in its stores. Food companies pay supermarkets and retailers for prime shelf space. The suppliers in question are said to have inflated the amount of money they paid, providing auditors with signed letters that allowed Ahold to inflate its earnings. US Attorney David Kelley said he expects the nine vendors will plead guilty to the charges. He added that there may be more court actions in the future. ""I don't want to leave you with the impression that these were the only ones involved,"" he said. Among those facing charges are John Nettle, a former employee of General Mills; Mark Bailin of Rymer International Seafood; Tim Daly of Michael Foods and Kenneth Bowman, who worked as an independent contractor for Total Foods.
 
 Others include Michael Hannigan of Sugar Foods; Peter Marion of Maritime Seafood Processors and First Choice Foods; Gordon Redgate of Commodity Manager and Private Label Distribution; Bruce Robinson of Basic American Foods and Michael Rogers, formerly of Tyson Foods. Pasquale D'Amuro of the FBI called the nine vendors the key ingredients in ""the process of cooking the books"" at Ahold. At the time of the scandal, Ahold was seen by many as Europe's Enron. Ahold shares tumbled on the news and many market observers predicted that the fall out could damage investor confidence across Europe. It was less severe than many had envisaged, however, and since then Ahold has worked hard at rebuilding its reputation and investor confidence. Ahold is the world's fourth-largest supermarket chain. Its other US businesses include Stop & Shop, and Giant Food.
",business
"Barclays shares up on merger talk
 
 Shares in UK banking group Barclays have risen on Monday following a weekend press report that it had held merger talks with US bank Wells Fargo.
 
 A tie-up between Barclays and California-based Wells Fargo would create the world's fourth biggest bank, valued at $180bn (£96bn). Barclays has declined to comment on the report in the Sunday Express, saying it does not respond to market speculation. The two banks reportedly held talks in October and November 2004.
 
 Barclays shares were up 8 pence, or 1.3%, at 605 pence by late morning in London on Monday, making it the second biggest gainer in the FTSE 100 index. UK banking icon Barclays was founded more than 300 years ago; it has operations in over 60 countries and employs 76,200 staff worldwide. Its North American divisions focus on business banking, whereas Wells Fargo operates retail and business banking services from 6,000 branches. In 2003, Barclays reported a 20% rise in pre-tax profits to £3.8bn, and it has recently forecast similar gains in 2004, predicting that full year pre-tax profits would rise 18% to £4.5bn. Wells Fargo had net income of $6.2bn in its last financial year, a 9% increase on the previous year, and revenues of $28.4bn. Barclays was the focus of takeover speculation in August, when it was linked to Citigroup, though no bid has ever materialised. Stock market traders were sceptical that the latest reports heralded a deal. ""The chief executive would be abandoning his duty if he didn't talk to rivals, but a deal doesn't seem likely,"" Reuters quoted one trader as saying.
",business
"Asia shares defy post-quake gloom
 
 Indonesian, Indian and Hong Kong stock markets reached record highs.
 
 Investors seemed to feel that some of the worst-affected areas were so under-developed that the tragedy would have little impact on Asia's listed firms. ""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,"" said ABN Amro's Eddie Wong. ""[But] it's not necessarily a really big thing in the economic sense.""
 
 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 part, this is because of its scale, and because delivering aid and recovering the dead remain priorities. ""Calculators will have to wait,"" said an IMF official in a briefing on Wednesday. ""The financial and world community will be turning toward reconstruction efforts and at that point people will begin to have a sense of the financial impact.""
",business
"Watchdog probes Vivendi bond sale
 
 French stock market regulator AMF has filed complaints against media giant Vivendi Universal, its boss and another top executive.
 
 It believes the prospectus for a bond issue was unclear and that executives may have had privileged information. AMF has begun proceedings against Vivendi, its chief executive Jean-Rene Fourtou and chief operating officer Jean-Bernard Levy. Vivendi advisor Deutsche Bank was also the subject of a complaint filing. Deutsche Bank, which was responsible for selling the convertible bonds to investors, could face penalties if the complaint is upheld.
 
 Vivendi has said it believes there is ""no legal basis"" for the complaints. The watchdog is said to believe the executive pair were party to ""privileged information"" surrounding the issue of the bonds. Both men bought some of the bonds, the Associated Press news agency reported. AMF is investigating claims that the duo were aware of an interest in Vivendi's US assets from investor Marvin Davis, at the time of the bond sale. Vivendi, however, has said that the information was public knowledge as Mr Davis' offer for the US assets had already been rejected by Vivendi's board. AMF is also looking into whether the executives knew that Vivendi was considering exercising its right to buy British Telecom's shares in Cegetel. Vivendi has rejected the charge, saying the decision to buy the Cegetel shares was ""no more than a possibility, of which the public was perfectly aware"" at the time of the bond issue. Back in December, Vivendi and its former chief executive Jean-Marie Messier were each fined 1m euros ($1.3m; £690,000) by AMF. The fines came after a 15-month probe into allegations that the media giant misled investors after a costly acquisition programme went wrong.
",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.
",business
"Japan economy slides to recession
 
 The Japanese economy has officially gone back into recession for the fourth time in a decade.
 
 Gross domestic product fell by 0.1% in the last three months of 2004. The fall reflects weak exports and a slowdown in consumer spending, and follows similar falls in GDP in the two previous quarters. The Tokyo stock market fell after the figures were announced, but rose again on a widespread perception that the economy will recover later this year. On Wednesday, the government revised growth figures from earlier in 2004 which, when taking into account performance in the most recent period, effectively tips Japan into recession.
 
 A previous estimate of 0.1% growth between July and September was downgraded to a 0.3% decline. A recession is commonly defined as two consecutive quarters of negative growth, although the Japanese government takes other factors into account when judging the status of its economy.
 
 Figures released by the government's Cabinet Office showed that GDP, on an annualised basis, fell 0.5% in the last three months of 2004. However, politicians remain upbeat about prospects for an economic boost later in the year. ""The economy has some soft patches but if you look at the bigger picture, it is in a recovery stage,"" said Economic and Fiscal Policy Minister Heizo Takenaka. Gross domestic product measures the overall value of goods and services produced in a country. ""The economy must be assessed comprehensively and we cannot look at GDP alone,"" Mr Takenaka stressed.
 
 Ministers pointed to the fact that consumer spending had been depressed by one-off factors such as the unseasonably mild winter. Analysts said the figures were disappointing but argued that Japan's largest companies had been recording healthy profits and capital spending was on the rise. Japan's economy grew 2.6% overall last year - fuelled by a strong performance in the first few months - and is forecast to see growth of 2.1% in 2005. However, the economy's fragile recovery remains dependent on an upturn in consumer spending, a fall in the value of the yen and an improvement in global economies. ""The results came in at the lower end of expectations but we shouldn't be too pessimistic about the current state and the outlook for the economy,"" said Naoki Iizuka, senior economist at the Dai-ichi Life Research Institute. Japan's economy has seen stretches of moderate growth over the past decade but has periodically slipped back into recession.
",business
"No seasonal lift for house market
 
 A swathe of figures have provided further evidence of a slowdown in the UK property market.
 
 The Council of Mortgage Lenders (CML), British Bankers Association (BBA) and Building Societies Association (BSA) all said mortgage lending was slowing. CML figures showed gross lending fell by 4% in November as the number of people buying new homes fell. Elsewhere, the BBA added underlying mortgage lending rose by £4m in November, compared to October's £4.29m. The CML said that loans for new property purchases fell 25% year-on-year to 85,000 - the lowest total seen since February 2003.
 
 Data from the CML showed lending fell to just over £25bn in November, from £25.5bn a year earlier. Separate figures from the Building Societies Association showed the value of mortgage approvals -- loans agreed but not yet made -- stood 32% lower than at the same time last year, at a seasonally-adjusted £2.98bn. The figures come hot on the heels of new data from property website Rightmove which suggested owners must indulge in a ""winter sale"" and slash prices by up to 8%. Miles Shipside, commercial director at Rightmove, said sellers would have to be ""more realistic with their asking prices"" to tempt buyers. The average asking price of a home fell by more than £600 from £190,329 in November to £189,733 in December, while the length of time it takes to sell a home rose to 81 days from 53 in the summer.
 
 Rightmove said estate agents were set to enter 2005 with a third more properties on their books than a year ago. ""Even once the quieter holiday period is over, sellers will find themselves competing with a lot of other properties on the market. In any business, excess supply and low demand means one thing - cut prices,"" Mr Shipside said.
 
 ""The proof is that some properties that have been appropriately discounted are selling, even in the current market."" Overall, asking prices have fallen 3.3% from their July peaks as the equivalent of £6,500 has been cut from an average property. A host of mortgage lenders and economists have predicted that property prices will either fall or stagnate in 2005. ""What is apparent is a picture of a slowing market, but one that should remain stable as we return to more normal volumes of lending over 2005 as a whole,"" CML director general Michael Coogan said. ""It's a fairly consistent picture, showing that mortgage demand has fallen back again, which is consistent with a continuing correction in the housing market,"" Investec economist Philip Shaw said. ""However, the figures do suggest only a modest weakening, and we stand by our view that the property market will remain in the doldrums for some time, though a collapse is still unlikely.""
",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.
",business
"Millions go missing at China bank
 
 Two senior officials at one of China's top commercial banks have reportedly disappeared after funds worth up to $120m (£64m) went missing.
 
 The pair both worked at Bank of China in the northern city of Harbin, the South China Morning Post reported. The latest scandal at Bank of China will do nothing to reassure foreign investors that China's big four banks are ready for international listings. Government policy sees the bank listings as vital economic reforms. Bank of China is one of two frontrunners in the race to list overseas. The other is China Construction Bank. Both are expected to list abroad during 2005.
 
 They shared a $45bn state bailout in 2003, to help clean up their balance sheets in preparation for a foreign stock market debut.
 
 However, a report in the China-published Economic Observer said on Monday that the two banks may have scrapped plans to list in New York because of the cost of meeting regulatory requirements imposed since the Enron scandal. Bank of China is the country's biggest foreign exchange dealer, while China Construction Bank is the largest deposit holder. China's banking sector is burdened with at least $190bn of bad debt according to official data, though most observers believe the true figure is far higher. Officially, one in five loans is not being repaid. Attempts to strengthen internal controls and tighten lending policies have uncovered a succession of scandals involving embezzlement by bank officials and loans-for-favours. The most high-profile case involved the ex-president of Bank of China, Wang Xuebing, jailed for 12 years in 2003. Although, he committed the offences whilst running Bank of China in New York, Mr Wang was head of China Construction Bank when the scandal broke. Earlier this month, a China Construction Bank branch manager was jailed for life in a separate case.
 
 China's banks used to act as cash offices for state enterprises and did not require checks on credit worthiness. The introduction of market reforms has been accompanied by attempts to modernise the banking sector, but links between banks and local government remain strong. Last year, China's premier, Wen Jiabao, targeted bank lending practices in a series of speeches, and regulators ordered all big loans to be scrutinised, in an attempt to cool down irresponsible lending. China's leaders see reforming the top four banks as vital to distribute capital to profitable companies and protect the health of China's economic boom. But two problems persist. First, inefficient state enterprises continue to receive protection from bankruptcy because they employ large numbers of people. Second, many questionable loans come not from the big four, but from smaller banks. Another high profile financial firm, China Life, is facing shareholder lawsuits and a probe by the US Securities and Exchange Commission following its 2004 New York listing over its failure to disclose accounting irregularities at its parent company.
",business
"Profits stall at China's Lenovo
 
 Profits at Chinese computer firm Lenovo have stood still amid slowing demand at home and stiffening competition.
 
 The firm is in the international spotlight after last year signing a deal to buy the PC division of personal computer pioneer IBM. Lenovo's profit for the three months to December was HK$327m (US$42m; £22m), less than 1% up on the year before. Chinese PC sales have risen by a fifth in each of the past two years, but are now growing more slowly. The company is still by far the biggest player in China, with more than a quarter of the market. But Western firms such as Dell and Hewlett-Packard are also mounting a more solid fight for market share in China, and Lenovo's sales were down 3.7% by revenue to HK$6.31bn.
 
 If the $1.75bn agreement Lenovo signed with IBM on 8 December goes through, it will mark the end of an era. IBM pioneered the desktop PC market in the early 1980s, although strategic mis-steps helped lose it its early dominance. In any case, margins in PC market are now wafer thin, and profits have been hard to come by for most vendors except direct-sales giant Dell. But investors have been less than impressed with Lenovo's move, designed to take it out of China and further onto the world stage. Its shares are down 20% since the announcement two months ago, largely because of the unprofitability of the unit it is buying. There have been rumours that the deal could be in trouble because US government agencies fear it could offer China opportunities for industrial espionage. The reports of the possibility of an investigation into the risk sent Lenovo's shares up 6% in late January.
",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.
",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.
",business
"Cuba winds back economic clock
 
 Fidel Castro's decision to ban all cash transactions in US dollars in Cuba has once more turned the spotlight on Cuba's ailing economy.
 
 All conversions between the US dollar and Cuba's ""convertible"" peso will from 8 November be subject to a 10% tax. Cuban citizens, who receive money from overseas, and foreign visitors, who change dollars in Cuba, will be affected. Critics of the measure argue that it is a step backwards, reflecting the Cuban president's desire to increase his control of the economy and to clamp down on private enterprise. In a live television broadcast announcing the measure, President Castro's chief aide said it was necessary because of the United States' increasing ""economic aggression"". ""The ten percent obligation applies exclusively to the dollar by virtue of the situation created by the new measures of the US government to suffocate our country,"" he said.
 
 The Bush administration has taken an increasingly harsh line on Cuba in recent months. President Bush's government, which has been a strong supporter of the 40-year-old trade embargo on Cuba, introduced even tighter restrictions on Cuba in May.
 
 Cubans living in the US are now limited to one visit to Cuba every three years and they can only send money to their immediate relatives. A leading expert on the Cuban economy says that Castro's tax plan smacks more of a desperate economic measure than a political gesture. ""I think it is primarily an effort to raise some cash,"" says Jose Barrionuevo, head of strategy for Latin American emerging markets for Barclays Capital. ""It underscores the fact that the economy is in very bad shape and the government is looking for sources of revenue.""
 
 The tax will hit the families of Cuban exiles hardest as they benefit from the money their displaced relatives send home. This money, known as remittances, can amount to as much as $1bn a year. Those remaining in Cuba will have to pay the tax. Their relatives abroad may choose to send money in other currencies which are not subject to the tax, such as euros, or increase their dollar payments to compensate. However, many of Cuban's poorest citizens could be worse off as a result. The tax will also affect the two million tourists who visit Cuba every year, particularly those Americans who continue to defy a ban on travel there.
 
 Cuba's tourist industry has been one of its few economic success stories over the last ten years and, according to the UN Economic Commission for Latin America, is now worth $3bn to the country.
 
 The tax is designed to provide much-needed revenue for Cuba's cash-strapped economy. Cuba badly needs dollars to pay for essential items such as food, fuel and medicine. Much of Cuba's basic infrastructure is in a state of disrepair. In recent weeks, Cuba has suffered its most serious power cuts in a decade and there have also been water shortages in parts of the island. Cuba's economy had staged a modest recovery during the mid 1990s as the collapse of the Soviet Union forced it to embrace foreign capital, decentralise trade and permit limited private enterprise. However, a decline in foreign tourism since 2002, periodic hurricanes and the increasing costs of importing oil have put a strain on the economy. It has however yet to be seen if the tax will provide a solution to the government's economic problems. The tax could fuel an active black market in currency trading, Mr Barrionuevo said. ""The main impact could be that it will create a black market which you typically see in countries, like Venezuela, which have restrictions on capital,"" he says. Mr Barrioneuvo says the measure could be dropped if it has a damaging effect on economic activity. ""It is intended to be a permanent measure but I am not sure it can last too long.""
",business
"BBC poll indicates economic gloom
 
 Citizens in a majority of nations surveyed in a BBC World Service poll believe the world economy is worsening.
 
 Most respondents also said their national economy was getting worse. But when asked about their own family's financial outlook, a majority in 14 countries said they were positive about the future. Almost 23,000 people in 22 countries were questioned for the poll, which was mostly conducted before the Asian tsunami disaster. The poll found that a majority or plurality of people in 13 countries believed the economy was going downhill, compared with respondents in nine countries who believed it was improving. Those surveyed in three countries were split. In percentage terms, an average of 44% of respondents in each country said the world economy was getting worse, compared to 34% who said it was improving. Similarly, 48% were pessimistic about their national economy, while 41% were optimistic. And 47% saw their family's economic conditions improving, as against 36% who said they were getting worse.
 
 The poll of 22,953 people was conducted by the international polling firm GlobeScan, together with the Program on International Policy Attitudes (Pipa) at the University of Maryland. ""While the world economy has picked up from difficult times just a few years ago, people seem to not have fully absorbed this development, though they are personally experiencing its effects,"" said Pipa director Steven Kull. ""People around the world are saying: 'I'm OK, but the world isn't'."" There may be a perception that war, terrorism and religious and political divisions are making the world a worse place, even though that has not so far been reflected in global economic performance, says the BBC's Elizabeth Blunt.
 
 The countries where people were most optimistic, both for the world and for their own families, were two fast-growing developing economies, China and India, followed by Indonesia. China has seen two decades of blistering economic growth, which has led to wealth creation on a huge scale, says the BBC's Louisa Lim in Beijing. But the results also may reflect the untrammelled confidence of people who are subject to endless government propaganda about their country's rosy economic future, our correspondent says. South Korea was the most pessimistic, while respondents in Italy and Mexico were also quite gloomy. The BBC's David Willey in Rome says one reason for that result is the changeover from the lira to the euro in 2001, which is widely viewed as the biggest reason why their wages and salaries are worth less than they used to be. The Philippines was among the most upbeat countries on prospects for respondents' families, but one of the most pessimistic about the world economy. Pipa conducted the poll from 15 November 2004 to 3 January 2005 across 22 countries in face-to-face or telephone interviews. The interviews took place between 15 November 2004 and 5 January 2005. The margin of error is between 2.5 and 4 points, depending on the country. In eight of the countries, the sample was limited to major metropolitan areas.
",business
"Mystery surrounds new Yukos owner
 
 The fate of Russia's Yuganskneftegas - the oil firm sold to a little-known buyer on Sunday - is the subject of frantic speculation in Moscow.
 
 Baikal Finance Group emerged as the auction winner, agreeing to pay 260.75bn roubles (£4.8bn; $9.4bn). Russia's newspapers claimed that Baikal was a front for gas monopoly Gazprom, which had been expected to win. The sale has destroyed Yukos, once the owner of Yuganskneftegas, said founder Mikhail Khodorkovsky. ""Yuganskneftegas has been sold in the best traditions of the 90s. The authorities have made themselves a wonderful Christmas present - Russia's most efficient oil company has been destroyed,"" the Interfax news agency quoted Mr Khodorkovsky as saying via his lawyers.
 
 Gazprom had been expected to win the auction but is thought to have failed to get finance for the deal after a US court injunction barred it from taking part. Last week, Yukos filed for Chapter 11 bankruptcy protection in the US in a last-ditch attempt to hang on to Yuganskneftegas, which accounts for 60% of its output. A US judge banned Gazprom from taking part in the auction and barred international banks from providing the firm with cash. ""They screwed up the financing,"" said Ronald Smith, an analyst at Renaissance Capital in Moscow. ""And Gazprom doesn't have this sort of money lying around.""
 
 Gazprom has denied that it is behind the purchase. ""It is a front for somebody but not necessarily for Gazprom,"" said Oleg Maximov, an analyst at Troika Dialog in Moscow. ""We don't know if this company is linked 100% to Gazprom.
 
 ""We tried to find it, but we couldn't and as far as I know, the papers had the same result."" The sale has however bought time for Gazprom to raise the money needed for the purchase, analysts said. One scenario is that Baikal will not pay when it is supposed to in two weeks time, putting Yuganskneftegas back in the hands of bailiffs and back within the reach of Gazprom. Yukos is not planning on letting go of its unit without a fight and has threatened legal action against any buyer. Menatep, Yukos main shareholders' group, has also threatened legal action. Yukos claims that it is being punished for the political ambitions of its founder, Mikhail Khodorkovsky, who is now in jail facing separate fraud charges. It has been hit with more than $27bn in taxes and fines and many observers now say that the break up of the firm that accounts for 20% of Russia's oil output is inevitable.
",business
"AstraZeneca hit by drug failure
 
 Shares in Anglo-Swedish drug have closed down 8% in UK trade after the failure of its Iressa drug in a major clinical trial.
 
 The lung cancer drug did not significantly prolong survival in patients with the disease. This setback for the group follows the rejection by the US in October of its anti-coagulant pill Exanta. Meanwhile, another of its major money spinners - cholesterol drug Crestor - is facing mounting safety concerns. ""This would be two of the three blockbuster drugs that were meant to power the company forward failing... and we've got risks on Crestor,"" said Nick Turner, analyst at brokers Jefferies.
 
 AstraZeneca had hoped to pitch its Iressa drug against rival medicine Tarceva. But Iressa proved no better than a placebo in extending lives in the trial involving 1,692 patients. Tarceva - made by OSI Pharmaceuticals, Genentech and Roche - has already proved to be successful in helping prolong the life of lung cancer patients. AztraZeneca has now appointed a new executive director to the board. John Patterson will be in charge of drug development. The company said Mr Patterson would make ""substantial changes to the clinical organisation and its processes"". ""I am determined to improve our development and regulatory performance, restore confidence in the company and value to shareholders,"" said chief executive Tom McKillop.
",business
"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.
",business
"BMW drives record sales in Asia
 
 BMW has forecast sales growth of at least 10% in Asia this year after registering record sales there in 2004.
 
 The luxury carmaker saw strong sales of its three marques - BMW, Mini and Rolls-Royce - in Asia last year after the launch of three new models. The company, which is vying with Mercedes-Benz for the title of leading premium carmaker, is confident about its prospects for the region in 2005. It is launching a revamped version of its 3-Series saloon class next month.
 
 BMW sold nearly 95,000 cars in Asia last year, up 2.6% on 2003.
 
 BMW-brand sales rose 2.3% to 80,600 while sales of Mini models rose 3.6% to 14,800. There was also a significant increase in sales of Rolls-Royces on the continent. BMW sold more than 100 of the iconic models compared with just ten the previous year. The German carmaker is aiming to boost annual sales in Asia to 150,000 by 2008. ""Here in Asia, we consider a double-digit increase in retail on the order of 10 to 15% to be realistic on the basis of current features,"" said Helmut Panke, BMW's group chief executive.
 
 China remains the main area of concern for BMW after sales there fell 16% last year. However, BMW is hopeful of a much better year in 2005 as its direct investment in China begins to pay dividends. The company only began assembling luxury high-powered sedans in China in 2003. 2004 was generally a good year for BMW, which saw revenues from its core car-making operations rise 11%.
",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.
",business
"S&N extends Indian beer venture
 
 The UK's biggest brewer, Scottish and Newcastle (S&N), is to buy 37.5% of India's United Breweries in a deal worth 4.66bn rupees ($106m:£54.6m).
 
 S&N will buy a 17.5% equity stake in United, maker of the well-known Kingfisher lager brand, and make a public offer to buy another 20% stake. A similar holding will be controlled by Vijay Mallya, chair of the Indian firm. The deal was a ""natural development"" of its joint venture with United, said Tony Froggatt, S&N's chief executive.
 
 Its top brands include Newcastle Brown Ale, Foster's, John Smith's, Strongbow and Kronenbourg. In 2002 S&N and United agreed to form a strategic partnership, one that would include a joint venture business and a UK investment in the Indian brewer. The joint venture was established in May 2003. with both parties having a 40% stake in the venture - Millennium Alcobev. Millennium Alcobev will now be merged with United, which expects post-merger to have about half of India's beer market.
 
 India, with a population of more than one billion, consumes about 1.2 billion bottles of beer every year. Kingfisher has market share of about 29%. In addition to the equity stake S&N is to invest 2.47bn rupees in United through non-convertible redeemable preference shares. Meanwhile, United's budget airline, Kingfisher Airlines, is to buy 10 A320 aircraft from Airbus and has the option to buy 20 more aircraft in a deal worth up to $1.8bn. The airline, the brainchild of Mr Mallya, expects to start its operations by the end of April. The new airline would break even in the very first year of operation, Mr Mallya said.
",business
"Iran budget seeks state sell-offs
 
 Iran's president, Mohammad Khatami, has unveiled a budget designed to expand public spending by 30% but loosen the Islamic republic's dependence on oil.
 
 The budget for the fiscal year starting on 21 March calls for the sell-off of 20% of the state's corporate holdings. Mr Khatami's second term as president ends on 1 August, making this his last budget. But opposition from members of parliament who have attacked previous privatisations could block his plans. Elections in May 2004 ousted many of Mr Khatami's supporters in parliament in favour of more hard-line religious conservatives. Late last year, they backed a law which would give parliament a veto over foreign investment. The ruling was a response to the involvement in telecoms and airport projects by Turkish companies, which hardliners accused of doing business with Israel. It came not long after the Expediency Council - Iran's ultimate decision-maker - blessed Mr Khatami's policy of selling stakes in sectors protected by the constitution such as energy, transport, telecoms and banking. Continued obstruction of foreign investment could get in the way not only of privatisation plans, but also of Mr Khatami's hope of modestly reducing the government's reliance on oil revenues.
 
 In an address to the Majlis, Mr Khatami predicted economic growth of 7.1% in 2005-6, up from 6.7% in the current year. He said he wanted to increase the 2005-6 budget to 1,546 trillion rials ($175.6bn; £93.6bn) from the previous year's 1,070 trillion. Within that figure, taxation would rise to $14.3bn, a rise of over 40% from what is expected from the current year. In contrast, oil revenues were expected to fall to $14.1bn from $16bn in the year to March 2005. ""Current government expenditure should come from tax revenues,"" Mr Khatami said. ""Oil revenues should be used for productive investment."" Mr Khatami has already been blocked by parliament from reducing the subsidies on many products including bread and petrol, reducing his room to manoeuvre.
",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.
",business
"News Corp makes $5.4bn Fox offer
 
 News Corporation is seeking to buy out minority investors in Fox Entertainment Group, its broadcasting subsidiary, for about $5.4bn (£3.7bn).
 
 The media giant, run by Rupert Murdoch, owns 82% of the shares in the company, home to the Fox television network and the 20th Century Fox film studio. The move follows News Corp's decision to register its business in the US. 20th Century Fox's recent film releases include I Heart Huckabees and I, Robot, while Fox puts out hit TV series 24.
 
 Under the terms of the offer, minority Fox shareholders will receive 1.90 News Corp shares in return for each Fox share they hold. Analysts said the decision to list News Corp in the US - which will result in the firm's shares trading in New York rather than Sydney- nullified the need to retain a separate stock market listing for Fox Entertainment shares. News Corp investors voted in October to approve the transfer of the company's corporate domicile from Australia to the US state of Delaware. The move is designed to help News Corp attract more investment from the largest US financial institutions, and make it easier to raise capital. Fox Entertainment Group generated revenues of $12bn last year. News Corp shares fell 25 cents to $17.65 after the share offer was announced while Fox shares were up 19 cents at $31.22.
",business
"Industrial output falls in Japan
 
 Japanese industrial output fell in October while unemployment rose, casting further doubt on the strength of the country's economic recovery.
 
 Production dropped 1.6% in October, reflecting a decline in exports, while unemployment levels edged up 0.1% to 4.7%, slightly higher than forecast. The economy has grown for six quarters but growth slowed dramatically in the last quarter amid weaker global demand. Japan's government remains optimistic due to strong domestic demand.
 
 Analysts had been forecasting a 0.1% rise in month on month industrial output.
 
 According to figures from the Ministry of Economy, Trade and Industry (METI), the decline was led by a fall in demand for electronic parts for mobile phones and digital televisions. Although inventories fell 0.7% month on month, they were 36% higher than a year ago. ""It's a sign that the economy's adjustment phase is stronger than expected,"" said Takashi Yamanaka, an economist with UFJ Bank. Japan downgraded its overall economic assessment earlier this month for the first time in a year.
 
 Growth slowed to 0.3% in the quarter ending September 30, down from 6.3% in the first quarter of 2004. Experts believe the economy -which stagnated for most of the 1990s -may be entering a softer patch on the back of rising oil prices and the falling dollar. Japanese government officials played down the latest data, arguing that domestic consumer demand was still resilient. ""The outlook for November is positive so I don't think one can say that conditions have worsened just because of the fall in October,"" said a METI official. Despite the rise in unemployment, jobless figures are still some way below historical highs of recent years. The comparatively weak economic date preyed on shares with the Nikkei down 1% in afternoon trade.
",business
"Iraq and Afghanistan in WTO talks
 
 The World Trade Organisation (WTO) is to hold membership talks with both Iraq and Afghanistan.
 
 But Iran's bid to join the trade body has been refused after the US blocked its application for the 21st time. The countries stand to reap huge benefits from membership of the group, whose purpose is to promote free trade. Joining, however, is a lengthy process. China's admission in 2001 took 15 years and talks with Russia and Saudi Arabia have been taking place for 10 years. Membership of the Geneva-based WTO helps guarantee a country's goods receives equal treatment in the markets of other member states - a policy which has seen it become closely associated with globalisation.
 
 Iraq's Trade Minister Mohammed Mustafa al-Jibouri welcomed the move, describing it as significant as November's decision by the Paris Club of creditor nations to write off 80% of the country's debts. Assad Omar, Afghanistan's envoy to the United Nations in Geneva, said accession would contribute to ""regional prosperity and global security"". There are now 27 countries seeking membership of the WTO. Prospective members need to enter into negotiations with potential trading countries and change domestic laws to bring them in line with WTO regulations. Before the process gets under way, all 148 WTO members must give their backing to applicant countries. The US said it could not approve Iran's application because it is currently reviewing relations. But several nations criticised the approach, and European Union ambassador to the WTO, Carlo Trojan, said Iran's application ""must be treated independently of political issues"".
",business
"Italy to get economic action plan
 
 Italian Prime Minister Silvio Berlusconi will unveil plans aimed at kickstarting the country's sputtering economy on Thursday night in Rome.
 
 He will present an ""Action Plan for the Development of Italy"" in a meeting with industrialists and trade union leaders. Mr Berlusconi is expected to table reforms aimed at boosting research and development (R&D) spending, and the competitiveness of small firms. Also in focus will be bankruptcy laws and the slow pace of the legal system. The prime minister is scheduled to start the meeting at 1830 GMT.
 
 The government has been accused of underfunding R&D, making it harder for Italy to compete with other European nations and leading to a ""brain-drain"" of the country's brightest talents. Analysts say that hiring and firing staff is still too difficult and expensive, hampering the development of small- and medium-sized businesses. As a result, they say, Italy's corporate landscape is filled with numerous smaller companies that are often reluctant to become bigger because of all the extra hassle that would accompany the running of a larger firm. At the same time, bankruptcy laws make it difficult for failed company directors to set up new businesses and emerge from their debts, a situation that is hampering Italy's entrepreneurial spirit.
 
 The government says that it has set about tackling the problems, adding that getting growth going was the responsibility of all of Italy's 60 million population. According to Il Sole 24 Ore, Italy's business newspaper, the government will focus on ""opening up markets, infrastructure, research, making more incentives available, bankruptcy law, the slow pace of the justice system"".
 
 Mr Berlusconi has previously promised to cut taxes by 6.5bn euros ($8.6bn; £4.5bn) this year in an effort to get people and companies to spend. He has also promised to cap spending on transport, education and health so as to trim the ballooning budget deficit. Italy plans to raise as much as 25bn euros from privatisations in 2005, including a partial flotation of the post office and utility Enel. Critics argue that these moves do not go far enough and could make Italy's problems worse. Limiting government spending will lead to job losses, they counter, while the income tax cuts will have a negligible effect on sentiment and ultimately favour the wealthy.
 
 The country has been one of the eurozone's worst economic performers in recent years. Growth was 1.1% in 2004, up from just 0.3% in 2003 and 0.4% in 2002 - an improvement but still a long way from ideal. At the same time, business and consumer confidence has dipped and analysts have raised concerns that what little spending there is stems from Italians dipping into their savings accounts or using credit cards. Without a pick up in national growth, they say, the money could eventually run out, bringing Italy's economy to a juddering halt. Consumer spending accounts for about two-thirds of Italy's economy.
",business
"Durex maker SSL awaits firm bid
 
 UK condom maker SSL International has refused to comment on reports it may be subject to a takeover early in 2005.
 
 A Financial Times report said business intelligence firm GPW was understood to be starting due diligence work on SSL International, for a corporate client. An spokesman for SSL, which makes the famous Durex brand of condom, would not to comment on ""market speculation"". However the news sent shares in SSL, which also makes Scholl footwear, up more than 6%, or 16.75 pence to 293.5p.
 
 The FT said most the high-profile firm that might woo SSL was Anglo-Dutch household products group Reckitt Benckiser. Eighteen months ago Reckitt Benckiser was at the centre of a rumoured takeover bid for SSL - but that came to nothing. Other firms that have been seen as would-be suitors include Kimberly-Clark, Johnson & Johnson, and private equity investors. Analysts have seen SSL as a takeover target for years. It sold off its surgical gloves and antiseptics businesses for £173m to a management team in May. SSL was formed by a three-way merger between Seton Healthcare, footwear specialists Scholl and condom-maker London International Group. Its other brands include Syndol analgesic, Meltus cough medicine, Sauber compression hosiery and deodorant products, and Mister Baby.
",business
"France Telecom gets Orange boost
 
 Strong growth in subscriptions to mobile phone network Orange has helped boost profits at owner France Telecom.
 
 Orange added more than five million new customers in 2004, leading to a 10% increase in its revenues. Increased take-up of broadband telecoms services also boosted France Telecom's profits, which showed a 5.5% rise to 18.3bn euros ($23.4bn; £12.5bn). France Telecom is to spend 578m euros on buying out minority shareholders in data services provider Equant.
 
 France Telecom, one of the world's largest telecoms and internet service providers, saw its full-year sales rise 2.2% to 47.2bn euros in 2004.
 
 Orange enjoyed strong growth outside France and the United Kingdom - its core markets - swelling its subscriber base to 5.4 million. France Telecom's broadband customers also increased, rising to 5.1 million across Europe by the end of the year. The firm said it had met its main strategic objectives of growing its individual businesses and further reducing its large debt. An ill-fated expansion drive in the late 1990s saw France Telecom's debt soar to 72bn euros by 2002. However, this has now been reduced to 43.9bn euros. ""Our results for 2004 allow us to improve our financial structure while focusing on the innovation that drives our strategy,"" said chief executive Thierry Breton.
 
 Looking ahead, the company forecast like-for-like sales growth of between 3% and 5% over the next three years. France Telecom is consolidating its interest in Equant, which provides telecoms and data services to businesses. Subject to approval by shareholders of the two firms, it will buy the shares in Equant it does not already own. France Telecom said it would fund the deal by selling an 8% stake in telephone directory company PagesJaunes.
",business
"Bank holds interest rate at 4.75%
 
 The Bank of England has left interest rates on hold again at 4.75%, in a widely-predicted move.
 
 Rates went up five times from November 2003 - as the bank sought to cool the housing market and consumer debt - but have remained unchanged since August. Recent data has indicated a slowdown in manufacturing and consumer spending, as well as in mortgage approvals. And retail sales disappointed over Christmas, with analysts putting the drop down to less consumer confidence.
 
 Rising interest rates and the accompanying slowdown in the housing market have knocked consumers' optimism, causing a sharp fall in demand for expensive goods, according to a report earlier this week from the British Retail Consortium. The BRC said Britain's retailers had endured their worst Christmas in a decade.
 
 ""Today's no change decision is correct,"" said David Frost, Director General of the British Chambers of Commerce (BCC). ""But, if there are clear signs that the economy slows, the MPC should be ready to take quick corrective action and cut rates. ""Dismal reports from the retail trade about Christmas sales are worrying, if they indicate a more general weakening in consumer spending.""
 
 Mr Frost added: ""The housing market outlook remains highly uncertain. ""It is widely accepted that, if house prices start falling more sharply, the risks facing the economy will worsen considerably."" CBI chief economist Ian McCafferty said the economy had ""slowed in recent months in response to rate rises"" but that it was difficult to gauge from the Christmas period the likely pace of activity through the summer. ""The Bank is having to juggle the emergence of inflationary pressures, driven by a tight labour market and buoyant commodity prices, against the risk of an over-abrupt slowdown in consumer activity,"" he said. ""Interest rates are likely to remain on hold for some time.""
 
 On Thursday there was more gloomy news on the manufacturing front, as the Office for National (ONS) statistics revealed British manufacturing output unexpectedly fell in November - for the fifth month in the past six. The ONS said manufacturing output dropped 0.1% in November, matching a similar unrevised fall in October and confounding economists' expectations of a 0.3% rise. Manufacturers' organisation, the EEF, said it expected the hold in interest rates to continue in the near future. It also said there was evidence that manufacturers' confidence may be waning as the outlook for the world economy becomes more uncertain.
 
 ""So far the evidence suggests that last year's rate increases have helped to rebalance the economy without damaging the recovery in manufacturing,"" said EEF chief economist, Steve Radley. ""However, should the business outlook start to deteriorate, the Bank should stand ready to cut rates."" Some economists have predicted rates will drop later in the year, although others feel the Bank may still think there is a need for a rise to 5% before that happens. The Bank remains concerned about the long-term risks posed by personal debt - which is rising at 15% a year - if economic conditions worsen.
",business
"India seeks to boost construction
 
 India has cleared a proposal allowing up to 100% foreign direct investment in its construction sector.
 
 Kamal Nath, Commerce and Industry Minister, announced the decision in Delhi on Thursday following a cabinet meeting. Analysts say improving India's infrastructure will boost foreign investment in other sectors too. The Indian government's decision has spread good cheer in the construction sector, according to some Indian firms.
 
 A spokesman for DLF Builders, Dr Vancheshwar, told the BBC this will mean ""better offerings"" for consumers as well as builders. He said the firm will benefit from world class ""strategic partnerships, design expertise and technology, while consumers will have better choice.""
 
 The government proposal states that foreign investment of up to 100% will be allowed on the 'automatic route' in the construction sector, on projects including housing, hotels, resorts, hospitals and educational establishments. The automatic route means that construction companies need only get one set of official approvals and do not need to gain clearance from the Foreign Investment Promotion Board, which can be bureaucratic. The government hopes its new policy will create employment for construction workers, and benefit steel and brick-making industries.
 
 Mr Nath also announced plans to allow foreign investors to develop a smaller area of any land they acquired. ""Foreign investors can enter any construction development area, be it to build resorts, townships or commercial premises but they will have to construct at least 50,000 square meters (538,000 square feet) within a specific timeframe,"" said Mr Nath, without specifying the timeframe. Previously foreign investors had to develop a much larger area, discouraging some from entering the Indian market. This measure is designed to discourage foreign investors from buying and selling land speculatively, without developing it. Anshuman Magazine, managing director, of CB Richard Ellis - an international real estate company - told the BBC this was ""a big positive step.""
 
 However, Chittabrata Majumdar, general secretary of the Centre of Indian Trade Unions (CITU), said allowing FDI in the country is compromising India's own ""self reliance"". He said, ""No country can develop on the basis of foreign investment alone."" Mr Majumdar also said an assessment should be made as to whether foreign investment is indeed beneficial to the country - in terms of employment and money generated - or just another way of international companies filling their deep pockets.
",business
"Yukos drops banks from court bid
 
 Russian oil company Yukos has dropped the threat of legal action against five banks it had accused of involvement in the sale of its key Yugansk unit.
 
 State-owned Rosneft bought the unit for $9.3bn (£5bn) after Yukos was forced to sell assets to meet a $27.5bn tax bill. Yukos says the sale was illegal and is pursuing damages in a US court. Its lawyers now accept ABN Amro, BNP Paribas, Calyon, JP Morgan Chase Bank, and Dresdner Kleinwort Wasserstein were not involved in the sale financing. However, Yukos still has an outstanding complaint against Deutsche Bank, which it alleges to be the leader of a consortium that was behind a bid for Yugansk by state gas monopoly Gazprom. The company has also accused Gazprom, the Russian Federation and two other Russian firms.
 
 Gazprom had been expected to win the December auction, but ended up not bidding. Yugansk was sold to a little-known shell company, which in turn was bought by Rosneft. Yukos claims its downfall was punishment for the political ambitions of its founder Mikhail Khodorkovsky. The firm, whose finance chief is now based in the US, filed for bankruptcy in Houston, Texas, and sought a court injunction against the sale. But Deutsche Bank has suggested Yukos artificially manufactured a legal case to stop the sale of its main asset. A hearing scheduled for February 16 and 17 will rule on whether the US court has jurisdiction in the case.
",business
"Bush to get 'tough' on deficit
 
 US president George W Bush has pledged to introduce a ""tough"" federal budget next February in a bid to halve the country's deficit in five years.
 
 The US budget and its trade deficit are both deep in the red, helping to push the dollar to lows against the euro and fuelling fears about the economy. Mr Bush indicated there would be ""strict discipline"" on non-defence spending in the budget. The vow to cut the deficit had been one of his re-election declarations. The federal budget deficit hit a record $412bn (£211.6bn) in the 12 months to 30 September and $377bn in the previous year.
 
 ""We will submit a budget that fits the times,"" Mr Bush said. ""It will provide every tool and resource to the military, will protect the homeland, and meet other priorities of the government."" The US has said it is committed to a strong dollar. But the dollar's weakness has hit European and Asian exporters and lead to calls for US intervention to boost the currency. Mr Bush, however, has said the best way to halt the dollar's slide is to deal with the US deficit. ""It's a budget that I think will send the right signal to the financial markets and to those concerned about our short-term deficits,"" Mr Bush added. ""As well, we've got to deal with the long-term deficit issues.""
",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.
",business
"G7 backs Africa debt relief plan
 
 G7 finance ministers have backed plans to write off up to 100% of the debts of some of the world's poorest countries.
 
 UK chancellor Gordon Brown said the London meeting of the world's seven richest nations would be remembered as ""the 100% debt relief summit"". Some 37 countries could benefit after a case-by-case review by bodies including the World Bank and the IMF, he said. But the US says it cannot support Mr Brown's International Finance Facility to boost aid to developing countries. BBC correspondents said the meeting had produced some movement towards the UK's ambitions, but much work was needed. Mr Brown said it was a major breakthrough for the international organisations to offer up to 100% multilateral debt relief - ""the vast bulk"" of money owed by the poorest countries.
 
 ""We could be at the beginning of the final stage of the process where the debts that were owed by the poorest countries, built up over 20 or 30 years, debts that are simply unpayable in the real world, are finally taken care of,"" he said. He added: ""It is the richest countries hearing the voices of the poor."" But he said they would insist on government reforms and the need for transparency, tackling corruption and openness from both the poorest and richest nations. BBC correspondent Patrick Bartlett said while it was an agreement in principle, the organisations involved now have to look at how it would work in practice. Oxfam senior policy adviser Max Lawson welcomed the statement and said G7 ministers had ""passed the first hurdle of 2005"".
 
 But he added: ""They need to move quickly to turn their proposals into real change for the world's poorest. ""Two million children will die needlessly between now and the next meeting in April. If rich countries are going to keep their promises to tackle obscene poverty they need deliver - and deliver quickly."" Talks are continuing on how to finance increased overseas development assistance. The International Monetary Fund (IMF) is to look at a proposal to use its gold supplies to help the debt relief effort when it meets in April. Mr Brown said G7 ministers had agreed to defer debt interest payments and repayments for some countries affected by the tsunami until the end of 2005. But UK plans for an International Finance Facility (IFF) to help deal with debt in the developing world have not been agreed. Mr Brown wanted to provide $10bn (£5.38bn) a year over a decade, using G7 backing so the money could be borrowed up front on financial markets.
 
 It is a key element of his proposals for a modern version of the Marshall Plan, which brought US aid to rebuild Europe after World War II, for the developing world. Mr Brown said it was ""winning support every day"" and said a programme had been agreed to draw up more details in time for the G8 summit in July. But US Treasury Under-Secretary John Taylor said the US could not support the IFF because of its ""legislative process"". ""The US is completely committed to poverty reduction and providing financing to do that,"" he said. ""But this particular mechanism does not work for the United States. It works for other countries, and that is fine."" Earlier, he told BBC Radio 4's Today programme the US had increased support for Africa in the past four years from $1.1bn per year to $4.6bn per year. But South Africa Finance Minister Trevor Manuel told the BBC's Talking Point programme what was needed was one approach, with all wealthy nations on board. He said much of the money pledged by the US had not yet been dispensed.
 
 The UK has made poverty in the poorest nations a key theme for its 2005 presidency of the Group of Eight (G8), which comprises the G7 and Russia. The G8 countries will meet at Gleneagles in Scotland. At a dinner on Friday night, former South African president Nelson Mandela backed Mr Brown's plan when he urged the finance chiefs to write-off African debt and provide an extra $50bn (£26.69bn) a year in aid for the next decade. Talks also centred on the impact of the rising economies of China and India, the US budget and trade deficits, how the US, Europe and Japan can act to boost global economic growth, and HIV/Aids. G7 ministers called for more flexibility in international exchange rates and said ""excess volatility"" would impede economic growth. Representatives from China, India, Russia, South Africa and Brazil were invited to attend some of the sessions. A G8 summit is set to take place in July.
",business
"Ban on forced retirement under 65
 
 Employers will no longer be able to force workers to retire before 65, unless they can justify it.
 
 The government has announced that firms will be barred from 2006 from imposing arbitrary retirement ages. Under new European age discrimination rules, a default retirement age of 65 will be introduced. Workers will be permitted to request staying on beyond this compulsory retirement age, although employers will have the right to refuse. Trade and Industry Secretary Patricia Hewitt said people would not be forced to work longer than they wanted, saying the default age was not a statutory, compulsory retirement age. She said employers would be free to continue employing people for as long as they were competent.
 
 Under age discrimination proposals from the Department of Trade and Industry last year workers were to be allowed to work on till 70 if they wished.
 
 Business leaders had opposed the plan as they said it would be too costly and cumbersome. The British Chambers of Commerce welcomed the latest proposal. ""This move today is the best of both worlds,"" it said. ""Employers have the ability to define the end point of the employer-employee relationship and employees have flexibility with a right to request to work past the age of 65."" But Age Concern said imposing a retirement age of 65 was ""cowardly"" and a ""complete u-turn"". ""This makes a mockery of the Government's so-called commitment to outlawing ageism, leaving the incoming age discrimination law to unravel,"" said Gordon Lishman, director general of Age Concern England . ""It is now inevitable that older people will mount legal challenges to the decision using European law."" The decision will have no impact on the age at which workers can collect their state pension, the government has said.
",business
"'Standoff' on Deutsche's LSE bid
 
 Deutsche Boerse investors unhappy with its London Stock Exchange bid will have no chance to throw out the exchange's management until May, Reuters says.
 
 The Sunday Times reported that hedge funds TCI and Atticus were planning to demand the removal of the group's chairman and chief executive. But Deutsche Boerse told news agency Reuters such a move would have to wait until May's annual general meeting. Investors want Deutsche to return cash to shareholders rather than bid. ""We are long-term investors and are experienced in removing management. We are not scared to take this to its conclusion this time,"" Atticus' David Slager told the Sunday Times. However, Deutsche Boerse told Reuters: ""TCI's request for the removal of the supervisory board will be considered at the annual general meeting on May 25.""
 
 The Sunday Times reported that TCI had been drawing up a list of heavyweight executives to replace Deutsche's chairman Rolf Breuer and chief executive Werner Seifert. The group owns more than 5% of Deutsche - more than enough to demand an extraordinary general meeting to call on shareholders to oust the German exchange's management. Under German law Deutsche does not need investor backing to make a takeover bid. TCI and Atticus have opposed the LSE bid for some time saying it would destroy shareholder value, and would be better spent on a share buyback. Deutsche is in competition with pan-European bourse Euronext to take over the London exchange. Many commentators have suggested a bidding war between the two could break out. However, any such move would have to wait until March when the Office of Fair Trading completes an investigation into the competition aspects of the pair's takeover proposals.
",business
"Swiss cement firm in buying spree
 
 Swiss cement firm Holcim has bid $800m (£429m) to buy two Indian cement firms and a holding company in the country.
 
 It plans to buy Associated Cement Companies (ACC), Ambuja Cement Eastern and the holding firm, Ambuja Cement India Ltd, a Holcim statement said. Shares in ACC fell 5.5% as investors, who thought the offer was underpriced, decided to sell. Meanwhile, UK-based firm Aggregate Industries said it had agreed a £1.8bn takeover by Holcim.
 
 The deal with Aggregates will give Holcim, the world's second-biggest cement maker, an entry into the UK market and boost its presence in the US. Peter Tom, who will remain as Aggregate chief executive, said the 138p a share offer provided ""significant value"" for shareholders. The Markfield, Leicestershire-based company runs 142 quarries in the UK and the US. It also has 164 ready-mixed concrete plants, 90 asphalt plants and 32 pre-cast concrete factories.
 
 If the Indian deals go ahead, it will give Holcim a major presence in the world's fastest-growing market behind China. ACC is India's second-largest cement maker with an annual capacity of 18.2 million tonnes and a market share of 13%. ""Holcim is looking to buy it (ACC) very cheap,"" said KK Mittal, a fund manager with Escorts Mutual Fund in New Delhi. ""The market is not impressed. If they want a substantial chunk, then they should be paying a premium over the market price."" Shares in Holcim rose by 2.3% on Thursday following news of the takeover.
",business
"Tsunami to cost Sri Lanka $1.3bn
 
 Sri Lanka faces a $1.3bn (£691m) bill in 2005 for reconstruction after the tsunami which killed more than 30,000 of its people, its central bank says.
 
 This estimate is preliminary, bank governor Sunil Mendis told reporters, and could rise in 2006. The island state is asking for about $320m from the International Monetary Fund to help pay for relief, he said. The bank has 5bn rupees ($50m; £27m) set aside to lend at a lower interest rate to those who lost property. According to Mr Mendis, half the IMF support could come from a freeze on debt repayments, which would free up resources immediately. The rest could come from a five-year emergency loan. Sri Lanka is hoping for a wider freeze from other creditors.
 
 The Paris Club of 19 creditors meets on 12 January to discuss a debt moratorium for the nations hit by the tsunami, which ravaged south and east Asia on 26 December.
 
 Some 150,000 people across the region are feared to be dead and millions have been left homeless and destitute. A full reckoning of the economic cost to Sri Lanka of the tsunami will not be clear for some time to come. But already it looks likely that growth in the first half of 2005 will slow, Mr Mendis told reporters, although he would not say by how much. One side-effect of the disaster has been that the value of the rupee has risen as foreign funds have flooded into the country. The currency has strengthened 4% since late December, coming close to 100 rupees to the US dollar for the first time in more than six months.
",business
"Police detain Chinese milk bosses
 
 Chinese police have detained three top executives at milk firm Yili, with reports suggesting that they are being investigated for embezzlement.
 
 Yili - full name Inner Mongolia Yili Industrial - confirmed its chairman, chief financial officer and securities representative were all in custody. The company, China's third-largest milk producer, is to hold an emergency meeting to debate the issue. A Yili spokesman said it may now move to oust chairman Zheng Junhuai. The spokesman did not say why the three had been detained by the police. The official Xinhua News Agency said the arrest was linked to alleged embezzlement.
 
 Yili has recently been the subject of intense media speculation over its financial operations. Executives are suspected of wrongly using 417m yuan ($50.4m; £26m) of company funds to support a management buyout back in July 2003. Yili's shares were suspended on Tuesday, having fallen by 10% on Monday. The company and its two main rivals - market leader Mengniu Dairy and second place Bright Dairy - dominate a Chinese milk market that has grown by almost 30% over the past five years. Analysts wondered if the scandal at Yili - the latest to befall Chinese companies this year - could be followed by further revelations of corporate wrongdoing. ""Investors wonder if Yili's scandal, one of a slew to be uncovered this year, isn't just the tip of the iceberg,"" said Chen Huiqin, an analyst at Huatai Securities.
",business
"Amex shares up on spin-off news
 
 Shares in American Express surged more than 8% on Tuesday after it said it was to spin off its less profitable financial advisory subsidiary.
 
 The US credit card to travel services giant said off-loading American Express Financial Advisors (AEFA) would boost its profitability. AEFA has more than 12,000 advisers selling financial advice, funds and insurance to 2.5 million customers. Over the years it has delivered poor profits and even some losses.
 
 ""This is an excellent move by American Express to focus on its core businesses, and sell off a laggard division, which has been a problem for quite some time,"" said Marquis Investment Research analyst Phil Kain. Analysts estimate that a stand-alone AEFA could have a market value of $10bn (£5.3bn). The unit was acquired by American Express 20 years ago as Investors Diversified Service, of Minneapolis, at a time when firms were amassing one-stop financial empires. However, the business of selling investments was never integrated with the rest of the group.
",business
"Bush budget seeks deep cutbacks
 
 President Bush has presented his 2006 budget, cutting domestic spending in a bid to lower a record deficit projected to peak at $427bn (£230bn) this year.
 
 The $2.58 trillion (£1.38 trillion) budget submitted to Congress affects 150 domestic programmes from farming to the environment, education and health. But foreign aid is due to rise by 10%, with more money to treat HIV/Aids and reward economic and political reform. Military spending is also set to rise by 4.8%, to reach $419.3bn. The budget does not include the cost of running military operations in Iraq and Afghanistan, for which the administration is expected to seek an extra $80bn from Congress later this year.
 
 Congress will spend several months debating George W Bush's proposal.
 
 The state department's planned budget would rise to just under $23bn - a fraction of the defence department's request - including almost $6bn to assist US allies in the ""war on terror"". However, the administration is keen to highlight its global effort to tackle HIV/Aids, the BBC's Jonathan Beale reports, and planned spending would almost double to $3bn, with much of that money going to African nations. Mr Bush also wants to increase the amount given to poorer countries through his Millennium Challenge Corporation. The scheme has been set up to reward developing countries that embrace what the US considers to be good governance and sound policies. Yet Mr Bush's proposed spending of $3bn on that project is well below his initial promise of $5bn.
 
 A key spending line missing from proposals is the cost of funding the administration's proposed radical overhaul of Social Security, the pensions programme on which many Americans rely for their retirement income.
 
 Some experts believe this could require borrowing of up to $4.5 trillion over a 20-year period. Neither does the budget include any cash to purchase crude oil for the US emergency petroleum stockpile. Concern over the level of the reserve, created in 1970s, has led to rises in oil prices over the past year. The Bush administration will instead continue to fill the reserve by taking oil - rather than cash - from energy companies that drill under federal leases.
 
 The outline proposes reductions in budgets at 12 out of 23 government agencies including cuts of 9.6% at Agriculture and 5.6% at the Environmental Protection Agency. The spending plan for the year beginning 1 October is banking on a healthy US economy to boost government income by 6.1% to $2.18 trillion. Spending is forecast to grow by 3.5% to $2.57 trillion. But the budget is still the tightest yet under Mr Bush's presidency. ""In order to sustain our economic expansion, we must continue pro-growth policies and enforce even greater spending restraint across federal government,"" Mr Bush said in his budget message to Congress. Mr Bush has promised to halve the US's massive budget deficit within five years. The deficit, partly the result of massive tax cuts early in Mr Bush's presidency, has been a key factor in pushing the US dollar lower. The independent Congressional Budget Office estimates that the shortfall could shrink to little more than $200bn by 2009, returning to the surpluses seen in the late 1990s by 2012. But its estimates depend on the tax cuts not being made permanent, in line with the promise when they were passed that they would ""sunset"", or disappear, in 2010. Most Republicans, however, want them to stay in place. And the figures also rely on the ""Social Security trust fund"" - the money set aside to cover the swelling costs of retirement pensions - being offset against the main budget deficit.
",business
"Takeover rumour lifts Exel shares
 
 Shares in storage and delivery firm Exel closed up 9% at a two-and-a-half year high on Tuesday on speculation it is to receive an imminent takeover bid.
 
 The talk in the City is that US giant United Parcel Services (UPS) is the most likely bidder for the firm. Yet other names mentioned in connection to buying Exel are DHL-owner Deutsche Post and finance firm GE Capital. With its shares closing Tuesday at 873p, Bracknell-based Exel is currently valued at £2.6bn ($6.3bn).
 
 Exel employs 109,000 people in more than 120 countries and has itself been active in the consolidation of the logistics sector, paying £328m to buy fellow UK firm Tibbett & Britten last August. Its customers include Boots, Burberry, Mothercare and consumer products giant Procter & Gamble. Andrew Beh, of brokers ING, said UPS and Deutsche Post were the most likely bidders and an offer of 950p a share would be fair if a bidding battle did not break out. ""It's a great strategic fit for both companies,"" he said. ""Both are interested in expanding in logistics and you can make a decent case for cost synergies which could justify the premium and that's before you make any argument about revenue synergies.""
",business
"Beer giant swallows Russian firm
 
 Brewing giant Inbev has agreed to buy Alfa-Eco's stake in Sun Interbrew, Russia's second-largest brewer, for up to 259.7m euros ($353.3m; £183.75m).
 
 Alfa-Eco, the venture capital arm of Russian conglomerate Alfa Group, has a one-fifth stake in Sun Interbrew. The deal gives Inbev, the world's biggest beermaker, near-total control over the Russian brewer. Inbev bought out another partner in August 2004. Inbev brands include Bass, Stella Artois, Hoegaarden and Staropramen. It employs 77,000 people, running operations in over 30 countries across the Americas, Europe and Asia Pacific.
 
 The Leuven-based brewery said it would own 97.3% of the voting shares and 98.8% of the non-voting shares of Sun Interbrew. The deal is expected to be completed in the first quarter of 2005. Inbev was formed in August 2004 when Belgium's Interbrew bought Brazilian brewer Ambev. Sun Interbrew, which employs 8,000 staff, owns breweries in eight Russian cities - Klin, Ivanovo, Saransk, Kursk, Volzhsky, Omsk, Perm and Novocheboksarsk. There are also three breweries in Ukraine, in the cities of Chernigov, Nikolaev and Kharkov.
",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.
",business
"US trade gap ballooned in October
 
 The US trade deficit widened by more than expected in October, hitting record levels after higher oil prices raised import costs, figures have shown
 
 The trade shortfall was $55.5bn (£29bn), up 9% from September, the Commerce Department said. That pushed the 10 month deficit to $500.5bn. Imports rose by 3.4%, while exports increased by only 0.6%. A weaker dollar also increased the cost of imports, though this should help drive export demand in coming months. ""Things are getting worse, but that's to be expected,"" said David Wyss of Standard & Poor's in New York. ""The first thing is that when the dollar goes down, it increases the price of imports. ""We are seeing improved export orders. Things seem to be going in the right direction.""
 
 Despite this optimism, significant concerns remain as to how the US will fund its trade and budget deficits should they continue to widen. Another problem highlighted by analysts was the growing trade gap with China, which has been accused of keeping its currency artificially weak in order to boost exports. The US imported almost $20bn worth of goods from China during October, exporting a little under $3bn. ""It seems the key worry that has existed in the currency market still remains,"" said Anthony Crescenzi, a bond strategist at Miller Tabak in New York. The trade deficit and the shortfall with China ""are big issues going forward"". The Commerce Department figures caused the dollar to weaken further despite widespread expectations that the Federal Reserve will raise interest rates for a fifth time this year. Borrowing costs are tipped to rise by a quarter of a percentage point to 2.25% at a Fed meeting later on Tuesday.
",business
"Air Jamaica back in state control
 
 The Jamaican government is regaining control of Air Jamaica in an bid to help the ailing company out of its financial difficulties.
 
 The firm has failed to make money since the state sold a majority stake to hotel tycoon Gordon Stewart in 1994. In common with many carriers, Air Jamaica, with debts of $560m (£291m), has been hit by high fuel costs and the impact of the 11 September attacks. The company will be restructured with the aim of finding a new buyer. ""The administration is committed to a viable national airline that will serve as a major catalyst for our economy,"" said Finance Minister Omar Davies. The 35-year-old airline transports about 55% of all passengers to the island and its pilots are reportedly among the best paid in the industry, with senior members of staff earning in excess of $234,000 a year.
",business
"Laura Ashley chief stepping down
 
 Laura Ashley is parting company with its chief executive Ainum Mohd-Saaid.
 
 The clothing and home furnishing retailer said Ms Mohd-Saaid had resigned for personal reasons. Her departure will come into effect on 1 February and follows the departure of co-chief executive Rebecca Navarednam on 1 January. Ms Mohd-Saaid is to be replaced by Lillian Tan, presently a non-executive director of the company and head of a Malaysian retailer.
 
 In a statement issued on Thursday, Laura Ashley thanked Ms Mohd-Saaid for her services to the company. Its shares were down 8.51% to 10.75p in late Thursday morning trading on the London Stock Exchange.
 
 Since 2002, Ms Tan has been managing director and chief executive of Metrojaya, one of the largest retail groups in Malaysia. Laura Ashley, which is due to issue its next trading statement in the next few weeks, has in recent months been hit by reports of poor sales. In October last year, it announced the closure of one of its two Welsh factories. In September, the company had said that its half-year clothing sales had been ""below expectations"". In recent times, it has put renewed focus on home furnishings rather than clothing, but last September it reported that interim six month losses had risen from £1m to £1.2m, while sales had fallen from £138m to £118m.
 
 Laura Ashley, which floated on the London Stock Exchange for £200m ($376m) in 1995, is majority-owned by Malaysia entrepreneur Dr Khoo Kay Peng. In 1996, its share price was more than 200p. It has long been reported that Dr Khoo intends to take the company private, but he has always denied this. ""Laura Ashley is a bit of a shrivelled husk of a company,"" said retail analyst Nick Bubb of Evolution Securities. ""It is all pretty odd with its Malaysian owners seemingly just shuffling the deckchairs."" Laura Ashley was founded by its late namesake in Kent in 1955, before moving to Mid Wales in 1961 where it still has its main UK factory.
",business
"Shares rise on new Man Utd offer
 
 Shares in Manchester United closed up 4.75% on Monday following a new offer from US tycoon Malcolm Glazer.
 
 The board of the football club is expected to meet early this week to discuss the latest proposal, which values the club at £800m ($1.5bn). Manchester United revealed on Sunday that it had received a detailed proposal from Mr Glazer, which looks set to receive more serious scrutiny. The club has previously rejected Mr Glazer's approaches out of hand. But a senior source at the club told the BBC: ""This time it's different."" Supporters' group Shareholders United, however, urged the club to reject the new deal.
 
 A spokesman for the Shareholders United said: ""I can't see any difference (compared to Mr Glazer's previous proposals) other than £200m less debt. ""He isn't bringing any money into the club; he'll use our money to buy it.""
 
 Mr Glazer's latest move is being led by Mr Glazer's two sons, Avi and Joel, according to the Financial Times. A proposal was received by David Gill, United's chief executive, at the end of last week, pitched at about 300p a share. David Cummings, head of UK equities for Standard Life Investments, said he believed a ""well funded"" 300p a share bid would be enough for Mr Glazer to take control of the club.
 
 ""I do not think there is anything that Manchester United fans can do about it,"" he told the BBC. ""They can complain about it but it is curtains for them. They may not want him but they are going to get him."" The US tycoon, who has been wooing the club for the last 12 months, has approached the United board with ""detailed proposals"", it has confirmed.
 
 Mr Glazer, who owns the Tampa Bay Buccaneers team, hopes this will lead to a formal bid being accepted. He is believed to have increased the amount of equity in the new proposal, though it is not clear by how much. For his proposal to succeed, he needs the support of United's largest shareholders, the Irish horseracing tycoons JP McManus and John Magnier. They own 29% of United through their Cubic Expression investment vehicle. Mr Glazer and his family hold a stake of 28.1%. But it is not yet known whether Mr McManus and Mr Magnier would support a Glazer bid. NM Rothschild, the investment bank, is advising Mr Glazer, according to the Financial Times. His previous adviser, JPMorgan, quit last year when Mr Glazer went ahead and voted against the appointment of three United directors to the board, against its advice. But the FT said it thought JP Morgan may still have had some role in financing Mr Glazer's latest financial proposal.
",business
"Karachi stocks hit historic high
 
 The Karachi Stock Exchange (KSE) has recorded its largest single day gain, surging 3.5% to a new high.
 
 The index rose 225.79 points in four hours of furious trading, with many investors optimistic that political stability could bring an economic boom. The KSE index closed at 6709.93 - an overall gain of nearly 400 points in the first two trading days of the week. Energy and telecommunication stocks performed particularly well, recording an 8%-10% rise since Monday morning.
 
 In 2002, the KSE was the world's best performing stock market, with the index rising 112%.
 
 Pakistani investors are expecting the KSE to repeat, if not improve on, its 2002 performance. Jubilant investors danced on the streets as the market closed for the day on Tuesday, confident that the boom will continue at least until the public holiday on 22 January. Others, however, who had stayed out fearing an imminent collapse because of prices overheating, continued to warn that the ""bubble may burst any time"". ""That's rubbish,"" KSE chairman Yaseen Lakhani told the BBC News website. ""Whenever the market reflects Pakistan's true economic reality, it is described as a bubble."" Mr Lakhani feels that the market has risen on the basis of solid economic growth and its current level rests on sound foundations.
 
 Market analysts are inclined to agree with Mr Lakhani, arguing that there are a number of major factors behind the KSE's performance. Analysts argue that a steady improvement in Pakistan's credit ratings by international credit rating agencies has finally begun to register in the market. Standard & Poor's upgraded Pakistan a few weeks ago. There are indications of yet another upgrade by the end of February.
 
 Then, say analysts, there is corporate profitability in the current fiscal year, which has gone up by 27% from last year. ""Coupled with the 7% GDP growth expected by June this year, I am least surprised at the market's performance,"" says Mr Lakhani. One leading Karachi broker said the real reasons may be political. ""If you file a $1.3 trillion case against Saudi money after 9/11, Arab money will not go to the US any more."" A lot of Arab money, he says, has already gone to Malaysia and Indonesia. Pakistanis are now hoping that energy and telecoms, two of the strongest sectors in Pakistan, draw some of the Arab money to the KSE.
 
 Locally, too, say analysts, recent political developments have worked to the market's advantage.
 
 An anti-Musharraf campaign threatened by the MMA, a countrywide alliance of religious parties, has fizzled out. The release of Asif Zardari, former Prime Minister Benazir Bhutto's husband, has eased political tensions between the military-backed government and the opposition Pakistan People's Party. Most importantly, say analysts, the failure of talks between India and Pakistan on the Baglihar dam in Indian-administered Kashmir has not automatically led to heightened tensions. This, they say, indicates that neither country is interested in raising the temperature at this stage, irrespective of the state of their disagreements. The market is abuzz with speculation that substantial investment may now start to flow in from the US, a country seen locally as deeply interested in defusing tensions between the South Asian neighbours. ""You can call it a peace dividend,"" smiles one broker. ""Let us see how long one can reap its benefits.""
",business
"Oil prices reach three-month low
 
 Oil prices have fallen heavily for a second day, closing at three-month lows after news that US crude stocks have improved ahead of winter.
 
 London Brent crude closed at $40.15 on Thursday - a drop of 5.1% - having dived below $40 a barrel for the first time since mid-September. US light crude traded in New York lost more than $2 to $43.25, its lowest close since 10 September. The price of both benchmark crudes has dropped 12% in two days. The falls were triggered when the Energy Information Administration (EIA) said on Wednesday that US crude stocks were 3.5% higher than a year ago. The news calmed worries about winter shortages. Weak US fuel and heating oil stocks have been a persistent factor in pushing up oil prices. ""It's amazing how quickly sentiment changed,"" said Rick Mueller, an analyst at Energy Security Analysis. Analysts also attributed the fall to mild early-winter weather, which has tempered demand for heating oil.
 
 The stronger fuel inventories helped boost US stock markets to nine-month highs on Wednesday, though only the Nasdaq index had hung onto those gains by the end of Thursday.
 
 In London, the FTSE 100 index closed 15 points higher at 4,751. The long-awaited drop in oil prices helped to ease persistent investor jitters over the impact of energy costs on company profits and economic growth. However, traders warned that the fall could be short-lived if there is a cold snap in North America this winter or any major supply problems in other parts of the world.
 
 The price of crude is still up about 30% on the start of 2004, but has fallen from the record of $55.67 set in late October. Opec nations have increased production to 25-year highs to meet global demand and this has helped rebuild US stocks hit by supply disruptions after Hurricane Ivan in September. Traders were also encouraged by comments on Wednesday from the energy minister of Opec member Algeria. Chakib Khelil said the cartel was likely to keep output unchanged when it meets next week. However, some analysts believe the sharp fall in crude prices may harden Opec's attitude to over-production, leading to a scaling back of oil output.
 
 Fears still remain over the level of US heating oil stocks, which are rising but remain down on 2004 levels. A cold spell in north America would start to deplete supplies and could spark further price rises. Analysts, however, say prices will fall further if inventories continue to rise. ""Mother Nature is going to be huge in the next several weeks,"" said Kyle Cooper, at Citigroup Global Markets. ""Long term I think we're headed to $30-35 but I don't think we're doing that yet. We have a lot of winter left."" John Person, president of National Futures Advisory Services, said the EIA data indicated there should be adequate supplies for the next three months in the US. .
",business
"Budget Aston takes on Porsche
 
 British car maker Aston Martin has gone head-to-head with Porsche's 911 sports cars with the launch of its cheapest model yet.
 
 With a price tag under £80,000, the V8 Vantage is tens of thousands of pounds cheaper than existing Aston models. The Vantage is ""the most important car in the history of our company"", said Aston's chief executive Ulrich Bez. Aston - whose cars were famously used by James Bond - will unveil the Vantage at the Geneva Motor Show on Thursday. Mr Bez - himself a former executive at rival Porsche - said the new car was the company's ""most affordable car ever and makes the brand accessible"". This in turn would make Aston Martin ""globally visible, but still very, very exclusive"", he added.
 
 First shown as a concept car at the 2003 North American International Auto Show in Detroit, the V8 Vantage will be available in the UK in late summer. Development costs for the Vantage have been kept low by sharing a platform with Aston's DB9, which Mr Bez described as ""the previous most important car for our company"". There is currently an 18 months waiting list for the DB9, Mr Bez said. The Vantage will be built at the new Aston factory in Gaydon, near Warwick, and should more than double Aston's total output from about 2,000 presently.
",business
"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.""
",business
"Building giant in asbestos payout
 
 Australian building products group James Hardie has agreed to pay $1.1bn (£568m) to victims of asbestos-related diseases.
 
 The landmark deal could see thousands of people suffering from lung diseases - caused by asbestos the company once made - receive compensation. The move follows angry protests after the firm said a previous compensation fund was running out of money. A subsequent New South Wales state inquiry criticised Hardie's actions. In September, the inquiry found that the company had misled the public about the amount of money set aside to cover its asbestos-related liabilities, sparking the resignation of its then chief executive, Peter MacDonald.
 
 Campaigners welcomed news of the preliminary agreement. ""This is a momentous day in the fight for victims and their families,"" said asbestosis sufferer Bernie Banton, who leads a victims' association. ""There is still a long way to go, but we are getting there."" James Hardie chairwoman, Meredith Hellicar, said the deal provided for a funding arrangement ""that is affordable, sensible and workable"". ""At the end of the day we are dealing with compensation for people who are terminally ill. We don't know exactly how many of them there will be, we don't know over what exact period they will fall ill,"" she said. However, the deal still has to receive the approval of Hardie's shareholders.
 
 Hardie, which currently makes more than 80% of its revenues in the US, was once Australia's biggest supplier of asbestos building materials. In 2001, the company set up a fund to compensate asbestos victims, but it later admitted the fund was running short of money. A decision by Hardie to move its headquarters to the Netherlands - while remaining a listed company in Australia - provoked a damaging public outcry. Victims groups accusing it of trying to escape its responsibilities by moving abroad, a charge the company denies. Australia's securities watchdog is currently investigating Hardie's former chief executive and former chief financial officer over allegations of misleading investors and the general public.
",business
"EC calls truce in deficit battle
 
 The European Commission (EC) has called a truce in its battle with France and Germany over breaching deficit limits.
 
 The move came after France and Germany vowed to run their budget deficits below the EU cap in 2005 - for the first time in four years. But, the EC did warn the two were under close scrutiny and it would act if their fiscal situations deteriorated. Under EU rules, member countries must keep their deficits below 3%. France and Germany will breach that this year. It will be the third year in a row that the two countries have broken the European Union's Stability and Growth Pact rules.
 
 The eurozone's two biggest economies left the pact in tatters in November 2003 when they persuaded fellow EU members to put the threat of penalties for deficit breaches on hold.
 
 The commission then took the pair to the European Court of Human Justice - which ruled EU countries could not put the pact ""in abeyance"", and confirmed the EC's right to launch ""excessive debt procedures"". After announcing its decision to erase France and Germany from its list of deficit rule breakers, the EU said that the time lag created by the ruling meant that 2005 should be the target year for the pair to bring their budget's below 3%. ""The commission concludes that the two countries appear to be on track to correct their excessive deficits by 2005,"" it said in a statement. The EU expects the German deficit to fall to fall to 2.9% of GDP next year from 3.9% this year, while France's is forecast to drop to 3% from an expected 3.7% this year. The forecasts are based on EC predictions of GDP growth of 1.5% in Germany next year and 2.2% in France.
 
 Berlin welcomed the decision, with finance minister Hans Eichel saying it showed that the EC recognised Germany's fiscal policy was ""on the right track even amid very difficult economic conditions"". However Paris was more subdued, with finance minister Herve Gaymard telling parliament: ""We must continue along this path of saving money."" However, the move still had its critics, with the European People's Party (EPP) attacking the EC for backing down from punitive action. ""The Commission is buckling under the pressure from Germany and France, "" EPP spokesman Alexander Radwan said. ""The scary fact is that budget sinners, despite having repeatedly exceeded the 3% deficit limit, do not have to fear any sanctions."" Despite the commission delivering its decision on the two biggest eurozone economies, it refused to comment on similar action against Greece which has also broken the 3% deficit ceiling. Monetary Affairs Commissioner Joaquin Almunia said that it was a matter for next week.
",business
"Japan's ageing workforce: built to last
 
 In his twenties he battled tuberculosis for eight years, then went on to run his own clothing business before marrying in his late thirties. And the 101-year-old Torao Toshitsune has eaten raw fish pretty much every day throughout his life.
 
 Mr Toshitsune is one of Japan's 23,000 centenarians - a club that is growing by 13% annually, and where the oldest member is 114. At his neat Osaka detached house, where he lives with one of his sexagenarian daughters, Mr Toshitsune keeps a regular routine of copying out Buddhist sutras and preparing the traditional Japanese tea ceremony. Between tasks, this remarkably active senior citizen reveals what his next goal is: ""Well, what's most important for me is to be Japan's number one."" Mr Toshitsune wants to outlive everyone. And when it comes to longevity, Japan, as a country, appears to be doing just that. Women can expect to live until 85, men until 78, four years longer than Americans and Europeans.
 
 On the outskirts of Kyoto, 83-year-old Yuji Shimizu contemplates this phenomenon during a round of golf with his younger friends, who are in their seventies.
 
 ""I think this is because the food industry and the environment have improved,"" he remarks. ""On average, we can live longer."" Whether it's the diet, or the traditional family structure where roles were clearly defined, or just something in the genes, Japan's elderly are remarkable. But while life may be a game of golf for Mr Shimizu, his grandchildren have huge problems ahead. Japan is the world's least fertile nation with childbirth rates of just two thirds of that in the US.
 
 By 2007, Japan's population is expected to peak at 127 million, then shrink to under 100 million by the middle of the century. This means 30 million fewer workers at a time when the number of elderly will have almost doubled.
 
 ""In the year 2050, if the birth rate remains the same people over 60 will make up over 30% of the population,"" explains Shigeo Morioka of the International Longevity Centre in Tokyo. So how will Japan's finances stay on track? After a decade of economic stagnation and huge deficit spending, the public sector debt is already about 140% of the country's gross domestic product (GDP), the highest rate among industrialised countries. The International Monetary Fund predicts that as the falling birth rate takes grip from 2010, the cost of running Japan's welfare state will double to more than 5% of GDP, while current account balances will deteriorate by over 2%. But unfortunately, Japan appears poorly prepared both financially and politically. Glen Wood, Vice President of Deutsche Securities Japan, asks; ""Who's going to fund the pension fund for the next generation and indeed who are going to be the new Japanese worker? ""Who is going to build the economy, who are going to be the leaders? Who are going to be the producers of the GDP going forward?"" One option is further welfare reform. Another is immigration, possibly from the Philippines and Indonesia. But so far, any emerging policy appears restricted to a limited number of nursing staff.
 
 Standing next to Tokyo harbour is a version of New York's Statue of Liberty. But, as yet, Japan is not ready for an Ellis Island.
 
 ""Japan has never really liked that option in its history and I think it's an option that's becoming more and more plausible and necessary,"" insists Mr Wood. In Japan, as in Europe which also faces a workforce decline, immigration is a very sensitive subject. But for the Japanese economy, facing 8% fewer consumers by 2050 means slumping domestic sales of cars, hi-tech kit and home appliances, perhaps even another property crash.
 
 Of course the Japanese could always have more children. The government is currently considering financial rewards for procreative couples similar to those in operation in Australia. But there would be no pay back until 2030, when today's babies are taxpayers, and the demographic crisis, like in Europe, starts to unfold in 2010. In contrast to Japan - and of course the European Union - the US population is expected to increase by 46% to 420 million by the middle of the century. Although President Bush must re-devise Social Security to take account of a 130% rise in America's over 65s, the IMF foresees a positive contribution to the US current account balance from the combined forces of fertility and immigration.
 
 Some voices in Japanese industry are calling for radical changes to the nature of the Japanese labour market. They want a shift towards financial services, though doubts persist over the country's ability, let alone willingness, to move away from manufacturing. ""Japan still has problems getting a viable banking system, let alone shifting their auto business or their semi-conductor business or the broad based tech manufacturing business overseas,"" says Mr Wood. Japan can either drive some radical reforms or else run the risk of a vicious ageing recession. Falling demand and a lower tax take could result in soaring budget pressures and a basket case currency. Come 2020, Japan could be more dependent on a shrinking workforce than any other industrialised power. There are fears that the world's number two economy is doomed to a permanent recession. But none of this is Mr Toshitsune's concern anymore. At 101, he chuckles that, he feels fine.
",business
"Profits slide at India's Dr Reddy
 
 Profits at Indian drugmaker Dr Reddy's fell 93% as research costs rose and sales flagged.
 
 The firm said its profits were 40m rupees ($915,000; £486,000) for the three months to December on sales which fell 8% to 4.7bn rupees. Dr Reddy's has built its reputation on producing generic versions of big-name pharmaceutical products. But competition has intensified and the firm and the company is short on new product launches. The most recent was the annoucement in December 2000 that it had won exclusive marketing rights for a generic version of the famous anti-depressant Prozac from its maker, Eli Lilly. It also lost a key court case in March 2004, banning it from selling a version of Pfizer's popular hypertension drug Norvasc in the US. Research and development of new drugs is continuing apace, with R&D spending rising 37% to 705m rupees - a key cause of the decrease in profits alongside the fall in sales. Patents on a number of well-known products are due to run out in the near future, representing an opportunity for Dr Reddy, whose shares are listed in New York, and other Indian generics manufacturers.
 
 Sales in Dr Reddy's generics business fell 8.6% to 966m rupees. Another staple of the the firm's business, the sale of ingredients for drugs, also performed poorly. Sales were down more than 25% from the previous year to 1.4bn rupees in the face of strong competition both at home, and in the US and Europe. Dr Reddy's Indian competitors are gathering strength although they too face heavy competitive pressures.
",business
"WMC says Xstrata bid is too low
 
 Australian mining firm WMC Resources has said it is worth up to 30% more than a hostile 7.4bn Australian dollar ($5.8bn; £3bn) bid by rival Xstrata.
 
 There is now pressure on Swiss-based Xstrata to increase its takeover offer. A report from investment firm Grant Samuel in WMC defence documents values WMC shares at A$7.17 to A$8.24, against Xstrata's bid of A$6.35 a share. Analysts said the defence documents provided more details on WMC, and may trigger a possible rival bid. ""If a bid is going to emerge it is probably likely in the next one to two weeks,"" said Daiwa Securities analyst Mark Pervan. He said the valuation would put increased pressure on Xstrata to look at ""sweetening"" its offer. Marc Gonsalves, an executive at Xstrata, said: ""We will review the information contained in the target's statement over the next week or so."" He added: ""While we will review the assumptions made by Grant Samuel in detail, we are extremely sceptical of their conclusion, and suggest that WMC shareholders take extreme care in presuming that these optimistic assumptions are capable of being realised.""
 
 Last month Australia's competition watchdog said it would not oppose the purchase of WMC by Zurich and London-based Xstrata. On Tuesday, WMC chairman Tommie Bergman said in a statement the directors believed it was in shareholders' best interest to reject the offer. He said WMC would pursue ""value-creating options"" provided by a portfolio of ""world class assets"". And WMC chief executive Andrew Michelmore claimed the Xstrata offer was aimed at creating value for Xstrata's shareholders, and was not being made for the benefit of WMC's shareholders. Grant Samuel said its valuation of WMC was based on lower average prices for nickel, copper and uranium than current market levels. ""Any longer term commodity price improvements would only improve our outlook,"" Mr Michelmore said.
 
 In 2003 Xstrata acquired Australia's largest copper miner - MIM Holdings. WMC Resources is the world's third-largest producer of concentrated nickel, and also a miner of copper and uranium. It owns the Olympic Dam mine in South Australia, which contains about one-third of the world's known uranium resources and is also the world's fourth largest copper mine. Xstrata is a global mining giant with operations in Australia, South Africa, Spain, Germany, Argentina and the UK. Its core products are copper, coking coal, thermal coal, ferrochrome, vanadium and zinc. It also has growing businesses in gold, lead and silver.
",business
"Arsenal 'may seek full share listing'
 
 Arsenal vice-chairman David Dein has said the club may consider seeking a full listing for its shares on the London Stock Exchange.
 
 Speaking at the Soccerex football business forum in Dubai, he said a full listing was ""one of the options"" for funding after the club moves to its new stadium. The club - which is currently listed on the smaller Ofex share exchange - is due to move into its new 60,000-seater Emirates Stadium at Ashburton Grove for the start of the 2006/07 season. Mr Dein also warned the current level of TV coverage of the Premiership may be reaching saturation level, with signs that match attendances have been dropping off in the first few months of this season.
 
 When Arsenal moves to its new stadium it will see its proportion of turnover from media earnings drop from 52% this season to 34% in two years' time. The club is hoping to increase matchday earnings from 29% to 40% of turnover, and has not ruled out other money-earning means, including a full share listing. ""When the new stadium opens we will go through a thorough financial review,"" Mr Dein said.
 
 ""Listing would be one option, but we are flexible and no decisions have been made on that issue yet. ""We want to be in the best financial health - maybe clubs can do it (listing), Manchester United have been a success.""
 
 Mr Dein said that, although television money and coverage had driven the English game forward in the past 10 years, he feared there might now be too many games being shown. Since the formation of the Premier League in season 1992/93, Premiership clubs have seen their income from television soar. ""Television has been the driving force over the past 10 years... but we must constantly improve if we want to remain as the world's leading league competition. ""We must monitor the quality of the product and ensure attendances do not decline, and we must balance that with the quantity of exposure on TV too. ""I think we have practically reached saturation point... sometimes I think less is more.""
 
 The club is funding its move to Ashburton Grove through a number of sources, including debt from banks, from money it already has and will receive in coming years from sponsors, and from the sale of surplus property, including its Highbury Stadium. It is also looking to create new revenue streams from overseas markets, including Asia. ""We have two executives travelling round Japan and China at the moment building relationships with organisations and clubs, and we know our supporters clubs are growing there too, as they are around the world. ""We have got a very good product, so it is very important we go and look at these markets, and make sure we are on the case.""
",business
"Metlife buys up Citigroup insurer
 
 US banking giant Citigroup has sold its Travelers Life & Annuity insurance arm to Metlife for $11.5bn (£6.1bn).
 
 The sale is a further move by Citigroup away from its 1990s strategy of offering every financial service - insurance, broking and banking. Profit growth in the insurance market has not matched expansion at Citigroup's other businesses. For Metlife, the US's leading insurance company, the purchase gives it access to a much larger distribution network.
 
 Robert Benmosche, Metlife's chairman and chief executive, said that it was a ""great opportunity for the brand of Metlife to be distributed through Citigroup"". Under the agreement, Metlife will be able to sell its products through Citigroup over the next 10 years. The deal includes Smith Barney retail brokerages and Citibank branches. The company will pay between $1bn and $3bn in Metlife stock with the rest being made up of cash. Travelers had sales of $5.2bn in 2004 and made a profit of $901m. It has total net assets of $96bn. ""This deal employs some of Metlife's excess capital in a potentially higher-return business and gives it more distribution,"" said Stuart Quint, an analyst at Gartmore.
",business
"Electrolux to export Europe jobs
 
 Electrolux saw its shares rise 14% on Tuesday after it said it would be shifting more of its manufacturing to low-cost countries.
 
 The Swedish firm, the world's largest maker of home appliances, said it is to relocate about 10 of its 27 plants in western Europe and North America. It did not say which facilities would be affected, but intends moving them to Asia, eastern Europe and Mexico. The company has two manufacturing sites in County Durham. It makes lawn and garden products in Newton Aycliffe, and cookers and ovens in Spennymoor. The Newton Aycliffe plant could also be affected by Electrolux's separate announcement that it is to spin-off its outdoor products unit into a new separate company.
 
 Electrolux's subsidiary brands include AEG, Zanussi and Frigidaire. The company said it was speeding up its restructuring programme, which aims to save between £190m and £265m annually from 2009. ""We see that about half the plants in high-cost countries - that is around 10 - are at risk,"" said Electrolux chief executive Hans Straberg. ""It looks pretty grim,"" said Swedish trades union official Ulf Carlsson. ""What are we going to end up producing in Sweden?""
",business
"Marsh executive in guilty plea
 
 An executive at US insurance firm Marsh & McLennan has pleaded guilty to criminal charges in connection with an ongoing fraud and bid-rigging probe.
 
 New York Attorney General Elliot Spitzer said senior vice president Robert Stearns had pleaded guilty to scheming to defraud. The offence carries a sentence of 16 months to four years in state prison. Mr Spitzer's office added Mr Stearns had also agreed to testify in future cases during the industry inquiry. ""We are saddened by the development,"" Marsh said in a statement. The company added it would continue to co-operate in the case, adding it was ""committed to resolving the company's legal issues and to serving our clients with the highest standards of transparency and ethics"".
 
 According to a statement from Mr Spitzer's office, the Marsh executive admitted he instructed insurance companies to submit non-competitive bids for insurance business between 2002 and 2004. Those bids were then ""conveyed to Marsh clients under false and fraudulent pretences"". Through the practice, Marsh was allowed to determine which insurers won business from clients, and so control the insurance market, Mr Spitzer's office added. It also protected incumbent insurers when their business was up for renewal and helped Marsh to maximise its fees, a statement said. In one case, an email showed Mr Stearns had instructed a colleague to solicit a non-competitive - or ""B"" - quote from AIG that was ""higher in premium and more restrictive in coverage"" and so fixed the bids in a way that would support the present provider Chubb. The company is also still being examined by US stock market regulator the Securities and Exchange Commission (SEC). Late last month the SEC asked for information about transactions involving holders of 5% or more of the firm's shares.
",business
"UK economy ends year with spurt
 
 The UK economy grew by an estimated 3.1% in 2004 after accelerating in the last quarter of the year, says the Office for National Statistics (ONS).
 
 The figure is in line with Treasury and Bank of England forecasts. The ONS says gross domestic product (GDP) rose by a strong 0.7% in the three months to 31 December, compared with 0.5% in the previous quarter. The rise came despite a further decline in production output and the worst Christmas for retailers in decades.
 
 The annual figure marked out the best year since 2000, and was also well ahead of the 2.2% recorded in 2003. Growth in the final three months of 2004 marked the 50th consecutive quarter of expansion. ""On the basis of the latest information the UK has entered 2005 on course to continue its record period of growth,"" said Paul Boateng, chief secretary to the Treasury in a statement.
 
 The ONS said the services sector, which accounts for nearly three-quarters of the UK economy, grew 1.0% in the quarter. The strong services figure was welcomed by analysts, given lacklustre retail sales in December and across the Christmas holiday period. ""The fact that other services components are doing so well suggests to me that we are back to trend (growth) and I am not particularly concerned about any further slowdown,"" said Ross Walker, UK economist at RBS Financial Markets.
 
 However, output in the production sector contracted 0.5%, the second quarterly fall in row and a state of affairs that some economists classify as a recession. However the ONS would not comment on the definition of a recession and whether the manufacturing recovery was over. But Steve Radley, chief economist at the manufacturers' organisation EEF, said: ""These figures remain at odds with what is actually happening on the ground. ""Whilst companies may be experiencing tougher conditions this year, 'recession' is not a word that manufacturers would currently recognise."" The ONS said a sharp fall in mining and quarrying, which was driven by oil and gas extraction, was primarily responsible for the overall contraction in manufacturing production figures.
 
 Simon Rubinsohn, chief economist at Gerrard, said: ""This outturn (of 0.7%) was well ahead of the market expectations and cast doubt on the scare stories doing the rounds surrounding the current state of the UK economy."" And he said the GDP figures may help to ""push interest rate expectations a little higher along the curve"". ""The suggestion from the money markets is that the next move is now more likely to be in an upward rather than a downward direction. This is consistent with our own thinking,"" said Mr Rubinsohn. The Bank of England's nine-strong rate-setting committee voted unanimously earlier this month to keep interest rates steady at 4.75%, minutes of the meeting showed on Wednesday.
",business
"Oil companies get Russian setback
 
 International oil and mining companies have reacted cautiously to Russia's decision to bar foreign firms from natural resource tenders in 2005.
 
 US oil giant Exxon said it did not plan to take part in a new tender on a project for which it had previously signed a preliminary agreement. Miner Highland Gold said it regretted any limit on privatisation while BP, a big investor, declined to comment. Only firms at least 51% Russian-owned will be permitted to bid.
 
 The Federal Natural Resources Agency said ""the government is interested in letting Russian companies develop strategic resources"". The foreign ownership issue will be dealt with according to Russia's competition law, natural resources minister Yuri Trutnev was quoted as saying by the Interfax news agency. No further details were given, with Mr Trutnev suggesting that Russia may decide on a case-by-case basis. Observers said that the move may represent a shift in policy, as the administration of Vladimir Putin puts the protection of national interests above free market dynamics. Russia recently wrested back control of a large chunk of its oil industry from stock-market listed company Yukos, a move that prompted calls of outrage from many investors.
 
 Analysts warned that it was still too early to draw too many conclusions from this new set of proposals.
 
 Companies echoed this sentiment, saying that they would require more information before ringing the alarm bells. ""It's not good. But it is very understandable,"" said Al Breach, an economist at UBS Brunswick. ""But if the investment climate is stable - that's much more important. ""Foreigners of course would like to have free entry but... this is not the end of the world."" A number of other nations, including Mexico, Saudi Arabia and Kuwait, protect their national resources from foreign firms. What has surprised observers is that since the collapse of communism Russia has been courting foreign investment.
 
 BP spent $7.5bn to create Russian-registered oil company TNK-BP, and has a partnership to develop the Sakhalin 5 petroleum field with state-owned Rosneft. Exxon, the world's largest oil company, has signed preliminary agreements to develop the Sakhalin 3 field. Company spokesman Glenn Waller said Exxon still considered the deal valid, despite Russia inviting new offers for the land block. According to Mr Waller, Exxon ""were not planning to bid at a new tender anyway"". ""We regret the ministry has taken such a decision,"" said Ivan Kulakov, deputy chairman of Highland Gold - a mining firm that has the motto ""Bringing Russia's Gold to Market"". ""It would be a shame if that has a negative impact on the investment climate."" Other firms that have been linked with investment in Russia include France's Total, the US-based ChevronTexaco, and miner Barrick Gold.
",business
"DaimlerChrysler's 2004 sales rise
 
 US-German carmaker DaimlerChrysler has sold 2.1% more cars in 2004 than in the previous year, as solid Chrysler sales offset a weak showing for Mercedes.
 
 Sales totalled 3.9 million units worldwide during 2004, the company said at the Detroit Motor Show. A switch to new models hit luxury marque Mercedes-Benz, with sales down 3.1% at 1.06 million. Chrysler avoided the fate of US rivals Ford and General Motors, both of whom lost ground to Japanese firms. Its sales rose 3.5% to 2.7 million units.
 
 Similarly on the up was the Smart brand of compact cars, with the division's sales jumping by 21.1% during 2004 to 136,000. The future of the brand - which is controlled by the Mercedes group within DaimlerChrysler - remains in question, however. Smart has consistently lost money since it started trading in 1998, and new model launches are now ""on hold"", said Mercedes chief executive Eckhard Cordes. In Europe, the Smart will now go on sale through regular Mercedes dealerships as well as its own dealer network, Mr Cordes said.
",business
"Yukos heading back to US courts
 
 Russian oil and gas company Yukos is due in a US court on Thursday as it continues to fight for its survival.
 
 The firm is in the process of being broken up by Russian authorities in order to pay a $27bn (£14bn) tax bill. Yukos filed for bankruptcy in the US, hoping to use international business law to halt the forced sale of its key oil production unit, Yuganskneftegas. The unit was however sold for $9.4bn to state oil firm Rosneft but only after the state auction had been disrupted.
 
 Yukos lawyers now say the auction violated US bankruptcy law. The company and its main shareholders have vowed to go after any company that buys its assets, using all and every legal means. The company wants damages of $20bn, claiming Yuganskneftegas was sold at less than market value. Judge Letitia Clark will hear different motions, including one from Deutsche Bank to throw out the Chapter 11 bankruptcy filing. The German lender is one of six banks that were barred from providing financing to Gazprom, the Russian state-owned company that was expected to win the auction for Yuganskneftegas. Deutsche Bank, which is also an advisor to Gazprom, has called on the US court to overturn its decision to provide Yukos with bankruptcy protection.
 
 Lifting the injunction would remove the uncertainty that surrounds the court case and clarify Deutsche Bank's business position, analysts said.
 
 Analysts are not optimistic about Yukos' chances in court. Russian President Vladimir Putin and the country's legal authorities have repeatedly said that the US has no jurisdiction over Yukos and its legal wranglings. On top of that, the firm only has limited assets in the US. Yukos has won small victories, however, and is bullish about its chances in court. ""Do we have an ability to influence what happens? We think we do,"" said Mike Lake, a Yukos spokesman. ""The litigation risks are real,"" said Credit Suisse First Boston analyst Vadim Mitroshin The dispute with the Russian authorities is partly driven by President Putin's clampdown on the political ambitions of ex-Yukos boss Mikhail Khodorkovsky. Mr Khodorkovsky is in jail on charges of fraud and tax evasion.
",business
"Profits jump at China's top bank
 
 Industrial and Commercial Bank (ICBC), China's biggest lender, has seen an 18% jump in profits during 2004.
 
 The increase in earnings has allowed the firm to write off bad loans and pave the way for a state bailout and eventual stock-market listing. China is trying to clean up its banking system, which is weighed down by billions of dollars of unpaid loans. It has already pumped $45bn (£24bn) into two of its largest banks, and has identified ICBC as a recipient of aid. ICBC's profits were 74.7bn yuan ($9bn; £4.8bn) in 2004, the bank said in a statement. The percentage of non-performing loans dropped to 19.1%, down about 2 percentage points. ICBC was founded in 1984 and had total assets of 5.3 trillion yuan at the end of 2003. China committed to gradually opening up its banking sector when it joined the World Trade Organisation in 2002.
",business
"ID theft surge hits US consumers
 
 Almost a quarter of a million US consumers complained of being targeted for identity theft in 2004, official figures suggest.
 
 The Federal Trade Commission said two in five of the 635,173 reports it had from consumers concerned ID fraud. ID theft occurs when criminals use someone else's personal information to steal credit or commit other crimes. Internet auctions were the second biggest source of fraud complaints, comprising 16% of the total. The total cost of fraud reported by consumers was $546m (£290m).
 
 The report marks the fifth year in a row in which identity fraud has topped the table. The biggest slice of the 246,570 ID fraud cases reported - almost 30% - concerned abuses of people's credit. Misusing someone's identity to claim new credit cards or loans comprised 16.5% of the total, with almost 12% coming from false claims on existing credit. Another 18% came from attempts to rip off people's bank accounts, while 13% of cases concerned attempts to defraud employers by abusing someone else's identity. Outside the field of ID theft, 53% of the near-400,000 complaints were internet-related. Among the 100,000 internet auction complaints, the failure of sellers to deliver or the supply of sub-standard goods were the most common woes reported. Catalogue and home-shopping frauds were next in line, accounting for 8% of total complaints, while concerns about internet services and computers - including spyware found on people's PCs and undisclosed charges for websites - amounted to 6% of complaints.
",business
"Making your office work for you
 
 Our mission to brighten up your working lives continues - and this time, we're taking a long hard look at your offices.
 
 Over the next few months, our panel of experts will be listening to your gripes about where you work, and suggesting ways to make your workspace more efficient, more congenial or simply prettier. This week, we're hearing from Marianne Petersen, who is planning to convert a barn in Sweden into a base for her freelance writing work. Click on the link under her photograph to read her story, and then scroll down to see what the panel have to say. And if you want to take part in the series, go to the bottom of the story to find out how to get in touch.
 
 Working from home presents a multitude of challenges. Understanding your work personality allows you to work in terms of your own style. Do you feel confident about your work output without conferring with others? Are you able to retain discipline and self motivate to get the job done? Do you build on the ideas of others - or are you a more introspective problem solver?. In order for a virtual office to succeed, keeping the boundary between work and home life is essential. It may be useful to be quite rigid about who is allowed to visit, and to keep strict office hours. Referring to the space as work will give those around you a clear message that this is professional space. It is imperative to consider how to bring the outside world into yours, keeping up to date with developments and maintaining a network. Isolated work environments mean this has to be carefully thought out, and a strategy has to be developed that suits both your personality and your industry. Joining professional groups or forming a loose association of like-minded people may assist. It is useful to structure these meetings in advance as often they get relegated to less important status when times are busy - with the danger that when the workload eases, they have to be resurrected.
 
 
 
 Prior to any interior work being undertaken it is essential to ensure that the roof and walls are made water-and-weather-tight, and the structure is checked for stability. It appears that the roof trusses may need repairs and additional bracing.
 
 Ideally, the roof should be replaced with an outer material in keeping with the character and location of the barn. This would also allow for a well-insulated inner skin to be provided which should be light coloured. It is likely that the most efficient way of heating the building is with electricity. In order to provide this the owner will need to have an electrical engineer calculate the potential heating, power and lighting load to make sure the mains supply and distribution capacity are adequate. Ideally, it would be good to have a mains water supply and some means of drainage for toilet and washing facilities. The walls should be dry lined with a single skin of plasterboard laid over rockwool slab which will allow good wall insulation and the power and lighting circuits to be concealed, and the walls should be painted in a light colour. The owner mentions she might lay a new floor over the existing planks; this will improve the insulation and offer a level surface. I would suggest laying new oak veneer planks which can work in with the character of the barn. As for lighting, consider a combination of floor mounted uplights, wall lights (wall washers) and selected downlights. Use a combination of mains voltage fluorescent fittings and dimmable units which can vary the light levels and the feel of the interior.
 
 
 
 Please click on the link to the right here to see my ideas for Marianne's barn.
 
 The layout of this office reflects the need to have a working area and a more relaxed meeting space. Large desk space and extensive storage would combine with tub chairs to maximise the space available. The finishes chosen for the furniture will need to reflect the unusual setting, while the lighting and temperature control mechanisms used will further influence the workplace.
 
 
 
 Regarding accessing the internet via the connection in the main house, your plan of going wireless is sensible. A wireless router/access point in the house with a wireless LAN card in the PC in the renovated area may be sufficient. However, important points to consider are the distance between the two buildings and the nature of the materials through which the signals have to pass, which could result in a weak signal strength. You may require an additional wireless access point in the renovated area. Your local IT supplier will be able to advise on this. If you haven't already invested in robust firewall and anti-virus software, it is essential to do so, to protect your investment. To really take advantage of wireless technology, you might consider a laptop computer and a docking station with external mouse and monitor. Or you could use one of the new Tablet computers, which allow you to write directly on the screen and convert into text with built-in hand recognition software. And finally, you will save money and space by considering a multi-function product for print, scan, copy and fax.
",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.
",business
"Nortel in $300m profit revision
 
 Telecoms equipment maker Nortel Networks has sharply revised downwards its profits for the 2003 fiscal year.
 
 In a long-awaited filing, Nortel said it had made $434m (£231m), compared to the previously reported $732m. But the figures - revised after an audit which led to the sacking of the Canadian firm's chief - showed revenue was about 4% higher than first thought. Nortel shares, which have lost nearly 50% of their value since last year, climbed 1.46% in Toronto on Tuesday. Nortel's head Frank Dunn and two other executives were fired in January last year after the company announced it had conducted the internal audit. Securities and police authorities in both the US and Canada are still conducting inquiries into the accounts.
 
 Nortel also issued new figures for the 2001-2002 period, which they had previously indicated had understated losses. ""With the completion of our restatements we have a solid foundation on which to move forward with our business,"" said Nortel president and chief executive Bill Owens. ""The restatement has been a monumental task, both complex and demanding."" The company also said 12 senior executives - none of whom were involved directly in the accounting of the revised figures - have voluntarily agreed to repay to bonuses awarded in 2003 totalling $8.6m. Nortel added: ""these members of the core executive team share the board's deep disappointment over the circumstances that led to the restatement.""
",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.
",business
"Wall Street cheers Bush victory
 
 The US stock market has closed higher in response to George W Bush's victory in the presidential elections.
 
 The benchmark Dow Jones share index closed more than 1% higher at 10,137, while the Nasdaq rose 0.9% to 2,004. Many investors believe that Mr Bush's policies are more business-friendly than those of his Democrat challenger, John Kerry. The higher share prices also reflect relief that a clear winner has emerged from what proved to be a tight poll.
 
 Investors had worried that the outcome of the poll would be inconclusive, paving the way for a repeat of the legal wrangling that marred the 2000 election.
 
 The Dow lost 5% of its value in the three weeks immediately after that election, when it was unclear who would occupy the White House. Mr Kerry conceded defeat on Wednesday, abandoning last-ditch hopes of carrying the vote in the swing state of Ohio. ""The relief for the markets may be that we have a decision and can move forward,"" said Tim Ghriskey, chief investment officer of Solaris Asset Management. Some analysts predicted that the jump in share prices would be short-lived, saying investors would quickly focus once again on the health of the US economy. ""I would look at the stock market rally for Bush as kind of a one-day event,"" said Ken Mayland at Clearview Economics. The US' recent economic performance has been mixed, with solid growth offset by disappointingly low job creation figures, and mounting worries over a record budget deficit. Elsewhere in the financial markets on Wednesday, the dollar dipped slightly against the euro and climbed against the yen, while US oil prices closed up $1.26 at $50.88 a barrel in New York. The rise in oil prices partly reflects the view that President Bush is less likely than Mr Kerry to release supplies from the US' strategic oil reserve. Share prices in London, Frankfurt and Paris also closed higher.
 
 Successive polls in the run-up to Tuesday's election had shown the two candidates running neck and neck.
 
 Economic issues, as well as the war in Iraq, were the forefront of the campaign. In key swing states such as Ohio, which has suffered substantial job losses in the past four years, President Bush's handling of the economy became a crucial election issue. Senator Kerry attacked President Bush's economic record during his campaign, hammering home the fact that a net 800,000 jobs were lost during his term in office. President Bush focused on the fact that two million jobs have been created in the past year, claiming that it has vindicated his tax-cutting agenda. As for future policies, both candidates pledged to bring America's $422bn federal budget deficit under control. Senator Kerry planned to increase taxes on those earning more than $200,000 a year. President Bush has placed reform of the pensions system at the heart of his economic agenda for a second term. However, economists have said both candidates' economic programmes rested on questionable assumptions about future growth.
",business
"'Golden economic period' to end
 
 Ten years of ""golden"" economic performance may come to an end in 2005 with growth slowing markedly, City consultancy Deloitte has warned.
 
 The UK economy could suffer a backlash from the slowdown in the housing market, triggering a fall in consumer spending and a rise in unemployment. Deloitte is forecasting economic growth of 2% this year, below Chancellor Gordon Brown's forecast of 3% to 3.5%. It also believes that interest rates will fall to 4% by the end of the year.
 
 In its quarterly economic review, Deloitte said the UK economy had enjoyed a ""golden period"" during the past decade with unemployment falling to a near 30 year low and inflation at its lowest since the 1960s.
 
 But it warned that this growth had been achieved at the expense of creating major ""imbalances"" in the economy. Deloitte's chief economic advisor Roger Bootle said: ""The biggest hit of all is set to come from the housing market which has already embarked on a major slowdown. ""Whereas the main driver of the economy in recent years has been robust household spending growth, this is likely to suffer as the housing market slowdown gathers pace.""
 
 Economic growth is likely to be constrained during the next few years by increased pressure on household budgets and rising taxes, Deloitte believes. Gordon Brown will need to raise about $10bn a year in order to sustain the public finances in the short term, the firm claims. This will result in a marked slowdown in growth in 2005 and 2006 compared to last year, when the economy expanded by 3.25%. However, Deloitte stressed that the slowdown was unlikely to have any major impact on retail prices while it expected the Bank of England to respond quickly to signs of the economy faltering. It expects a series of ""aggressive"" interest rate cuts over the next two years, with the cost of borrowing falling from its current 4.75% mark to 3.5% by the end of 2006. ""Although 2005 may not be the year when things go completely wrong, it will probably mark the start of a more difficult period for the UK economy,"" Mr Bootle.
",business
"Banker loses sexism claim
 
 A former executive at the London offices of Merrill Lynch has lost her £7.5m ($14.6m) sex discrimination case against the US investment bank.
 
 An employment tribunal dismissed Stephanie Villalba's allegations of sexual discrimination and unequal pay. But the 42-year-old won her claim of unfair dismissal, resulting from her sacking in August 2003. Her partial victory is likely to cap her compensation to about £55,000, a tiny fraction of what she asked for. The extent of damages will be assessed in the New Year. The action - the biggest claim heard by an employment tribunal in the UK - had been viewed as something of a test case.
 
 The tribunal decided that Ms Villalba had been unfairly dismissed because, having been removed from a senior post, she was entitled to wait to see if a suitable alternative position could be found in the organisation. Ms Villalba, the former head of Merrill's private client business in Europe, has made no decision on whether to appeal.
 
 A spokesman for her lawyers described the decision as ""very disappointing"", but pointed to some criticism of Merrill's procedures within the lengthy judgement. The tribunal upheld Ms Villalba's claim of victimisation on certain specific issues, including bullying e-mails in connection with a contract, but said it found no evidence of ""laddish culture"" at the bank. ""We said from the start that this case was about performance not gender,"" Merrill said in a statement. ""Ms Villalba was removed by the very same person who had promoted her into the position and who then replaced her with another woman. ""Merrill Lynch is dedicated to creating a true meritocracy where every employee has the opportunity to advance based on their skills and hard work.""
 
 Based in London's financial district, Ms Villalba worked for Merrill's global private client business in Europe, investing funds for some of Merrill's most important customers. But in 2003 her employers told her she had no future after 17 years with the company, and she was made redundant. Merrill Lynch denied Ms Villalba's claims and said she was removed from her post because of the extensive losses the firm was suffering on the continent. The firm had told the tribunal that Ms Villalba's division had been losing about $1m a week. Merrill said Ms Villalba lacked the leadership skills to turn around the unit.
",business
"Call to save manufacturing jobs
 
 The Trades Union Congress (TUC) is calling on the government to stem job losses in manufacturing firms by reviewing the help it gives companies.
 
 The TUC said in its submission before the Budget that action is needed because of 105,000 jobs lost from the sector over the last year. It calls for better pensions, child care provision and decent wages. The 36-page submission also urges the government to examine support other European countries provide to industry. TUC General Secretary Brendan Barber called for ""a commitment to policies that will make a real difference to the lives of working people.""
 
 ""Greater investment in childcare strategies and the people delivering that childcare will increases the options available to working parents,"" he said. ""A commitment to our public services and manufacturing sector ensures that we can continue to compete on a global level and deliver the frontline services that this country needs."" He also called for ""practical measures"" to help pensioners, especially women who he said ""are most likely to retire in poverty"". The submission also calls for decent wages and training for people working in the manufacturing sector.
",business
"US economy shows solid GDP growth
 
 The US economy has grown more than expected, expanding at an annual rate of 3.8% in the last quarter of 2004.
 
 The gross domestic product figure was ahead of the 3.1% the government estimated a month ago. The rise reflects stronger spending by businesses on capital equipment and a smaller-than-expected trade deficit. GDP is a measure of a country's economic health, reflecting the value of the goods and services it produces.
 
 The new GDP figure, announced by the Commerce Department on Friday, also topped the 3.5% growth rate that economists had forecast ahead of Friday's announcement. Growth was at an annual rate of 4% in the third quarter of 2004 and for the year it came in at 4.4%, the best figure in five years. However, the positive economic climate may lead to a rise in interest rates, with many expecting US rates to rise on 22 March. In the January-to-March quarter, the economy is expected to grow at an annual rate of about 4%, economists forecast. In the final quarter of 2004, businesses increased spending on capital equipment and software by 18%, up from 17.5% in the third quarter. Consumer spending grew 4.2% in the final quarter, down from the third quarter's 5.1%.
",business
"Shares hit by MS drug suspension
 
 Shares in Elan and Biogen Idec plunged on Monday as the firms suspended sales of new multiple sclerosis drug Tysabri after a patient's death in the US.
 
 On the New York Stock Exchange, shares in Ireland-based Elan lost 70% while US partner Biogen Idec shed 43%. The firms took action after the death from a central nervous system disease and a suspected case of the condition. The cases cited involved the use of both Tysabri and Avonex, Biogen Idec's existing multiple sclerosis drug. The companies said they have no reports of the rare condition - progressive multifocal leukoencephalopathy (PML) - in patients taking either Tysabri or Avonex alone. Tysabri was approved for use in the US last November and was widely tipped to become the world's leading multiple sclerosis treatment.
 
 ""The companies will work with clinical investigators to evaluate Tysabri-treated patients and will consult with leading experts to better understand the possible risk of PML,"" the two firms said in a statement. ""The outcome of these evaluations will be used to determine possible re-initiation of dosing in clinical trials and future commercial availability.""
 
 Analysts had believed the product would provide a new growth opportunity for Biogen Idec, which had faced increased competition from rivals to Avonex. Elan, once the biggest firm on the Irish stock exchange, was also expected to receive a boost, from the new product. An inquiry into Elan's accounts in 2002 brought the group close to bankruptcy but the firm has been rebuilding itself since, with its share price increasing by almost four-fold last year. ""Most of the value in the company was in Tysabri,"" said Ian Hunter at Goodbody Stockbrokers in Dublin. ""Now there's a question mark over it."" Elan finished down $18.90 at $8, while Biogen fell $28.63 to $38.65.
 
 - Shares in UK pharmaceutical firm Phytopharm closed down 19.84% at 151.5 pence on the London Stock Exchange on Monday, after it said a partner was set to pull out of a deal on an experimental Alzheimer's disease treatment. Phytopharm said Japan's Yamanouchi Pharmaceutical was likely to end a licensing agreement, prompting analysts to raise questions over the level of its future cash reserves.
",business
"Jarvis sells Tube stake to Spain
 
 Shares in engineering group Jarvis have soared more than 16% on news that it is offloading its stake in London underground consortium Tube Lines.
 
 The sale of the 33% stake to Spain's Ferrovial for £146m ($281m) is a lifeline to Jarvis, which was weighed down by debts of more than £230m. The company recently warned it could go under if it did not secure a refinancing deal by mid-January 2005. But now its banks have agreed to extend its credit facilities until March 2006.
 
 The company also said it had agreed terms over the completion of 14 of its biggest construction projects under the government's Private Finance Initiative (PFI).
 
 Jarvis wants to scale back the division, which has proved too costly and has been blamed for many of its problems. Instead, it plans to focus on UK rail renewal, roads and plant hire work. Madrid-based Ferrovial already holds a 33% stake in Tube Lines, which maintains the Jubilee, Northern and Piccadilly lines. The Spanish group has been keen to snap up more UK infrastructure assets, having bought Amey in 2003. Jarvis said the sale, which raked in more than the £100m analysts had expected, would ""substantially"" enhance its financial position. ""I am now confident that we can now move forward in 2005 towards rebuilding Jarvis and return it to growth as a profitable business,"" said chief executive Alan Lovell. Shares in Jarvis were up more than 16% to 18 pence by the close of trade on Friday.
",business
"Cairn shares up on new oil find
 
 Shares in Cairn Energy have jumped 6% after the firm said an Indian oilfield was larger than previously thought.
 
 Cairn said drilling to the north-west of its development site in Rajasthan had produced ""very strong results"". The company also said it now believed the development area would be able to produce oil for more than 25 years. Cairn's share price rose 300% last year after a number of oil finds, but its shares were hit in December following a disappointing drilling update. December's share fall means that Cairn is still in danger of being relegated from the FTSE 100 when the index is reshuffled next month. Cairn's shares closed up 64 pence, or 6%, at 1130p on Thursday.
 
 Before Christmas, Cairn revealed that drilling to the north of the field in Rajasthan had been disappointing, which caused its shares to lose 18% in one day.
 
 However, on Thursday, the group said its belief that the path of oil in the area actually moved further to the west had proved correct. ""This area does need more appraisal drilling but it looks very strong,"" Dr Mike Watts head of exploration said. Chief executive Bill Gammell added: ""The more we progress in Rajasthan the better we feel about it."" Cairn made the discovery after having been granted an extension to their drilling licence in January by Indian authorities. The firm has applied for a 30-month extension to scout for oil outside its main development area, which includes the Mangala and Aishwariya fields where Cairn has previously announced major discoveries. It also said production at its other fields across the globe was likely to surpass levels seen in 2004.
",business
"Stock market eyes Japan recovery
 
 Japanese shares have ended the year at their highest level since 13 July amidst hopes of an economic recovery during 2005.
 
 The Nikkei index of leading shares gained 7.6% during the year to close at 11,488.76 points. In 2005 it ""will rise toward 13,000"", predicted Morgan Stanley equity strategist Naoki Kamiyama. The optimism in the financial markets contrast sharply with pessimism in the Japanese business community. Earlier this month, the quarterly Tankan survey of Japanese manufacturers found that business confidence had weakened for the first time since March 2003.
 
 Slower economic growth, rising oil prices, a stronger yen and weaker exports were blamed for the fall in confidence. Despite this, traders expect strength in the global economy to benefit Japan, which has been close to sliding into recession in recent months. Structural reform within Japan and an anticipated end to the banking sector's bad debt problems should also help, they say.
",business
"Ailing EuroDisney vows turnaround
 
 EuroDisney, the European home of Mickey Mouse and friends, has said it will sell 253m euros (£175m; $328m) of new shares as it looks to avoid insolvency.
 
 The sale is the last part of a plan to restructure 2.4bn euros-worth of debts. Despite struggling since it was opened in 1992, EuroDisney has recently made progress in turning its business around and ticket sales have picked up. However, analysts still question whether it attracts enough visitors to stay open, even with the restructuring.
 
 EuroDisney remains Europe's largest single tourist attraction, attracting some 12.4 million visitors annually. A new attraction - Walt Disney Studios - has recently opened its site near Paris. The company's currently traded stock tumbled in Paris on the latest news, shedding 15% to 22 euro cents. EuroDisney will sell the new shares priced at 9 euros cents each. The US Disney Corporation and Saudi Arabian prince Al-Walid bin Talal, the firm's two main shareholders, will buy the new stock. The restructuring deal is the second in the firm's troubled financial history; its finances were first reorganised in 1994.
",business
"News Corp eyes video games market
 
 News Corp, the media company controlled by Australian billionaire Rupert Murdoch, is eyeing a move into the video games market.
 
 According to the Financial Times, chief operating officer Peter Chernin said that News Corp is ""kicking the tires of pretty much all video games companies"". Santa Monica-based Activison is said to be one firm on its takeover list. Video games are ""big business"", the paper quoted Mr Chernin as saying. We ""would like to get into it"".
 
 The success of products such as Sony's Playstation, Microsoft's X-Box and Nintendo's Game Cube have boosted demand for video games.
 
 The days of arcade classics such as Space Invaders, Pac-Man and Donkey Kong are long gone. Today, games often have budgets big enough for feature films and look to give gamers as real an experience as possible. And with their price tags reflecting the heavy investment by development companies, video games are proving almost as profitable as they are fun. Mr Chernin, however, told the FT that News Corp was finding it difficult to identify a suitable target. ""We are struggling with the gap between companies like Electronic Arts, which comes with a high price tag, and the next tier of companies,"" he explained during a conference in Phoenix, Arizona. ""These may be too focused on one or two product lines.""
",business
"Ford gains from finance not cars
 
 Ford, the US car company, reported higher fourth quarter and full-year profits on Thursday boosted by a buoyant period for its car loans unit.
 
 Net income for 2004 was $3.5bn (£1.87bn) - up nearly $3bn from 2003 - while turnover rose $7.2bn to $170.8bn. In the fourth quarter alone Ford reported net income of $104m, compared with a loss of $793m a year ago. But its auto unit made a loss. Fourth quarter turnover was $44.7bn, compared to $45.9bn a year ago.
 
 Though car and truck loan profits saved the day, Ford's auto unit made a pre-tax loss of $470m in the fourth quarter (compared to a profit of £13m in the year-ago period) and its US sales dipped 3.8%.
 
 Yesterday General Motor's results also showed its finance unit was a strong contributor to profits. However, Ford is working hard to revitalise its product portfolio, unveiling the Fusion and Zephyr models at the International Motor Show in Detroit. It also brought out a number of new models in the second half of 2004. ""In 2004, our company gained momentum, delivering...more new products, and more innovative breakthroughs, such as the Escape Hybrid, the industry's first full-hybrid sport utility vehicle,"" said chairman and chief executive officer Bill Ford.""
 
 ""We also confronted operating challenges with our Jaguar brand and high industry marketing costs,"" he added. But Ford declined to provide guidance for first quarter 2005. It will do so at a presentation in New York on 26 January. In addition, the company said 2004 net income was affected by a fourth-quarter pre-tax charge taken to reduce the value of a receivable owed to Ford by Visteon, a former subsidiary. Recent new models introduced by Ford include the Ford Five Hundred and Mercury Montego sedans, the Ford Freestyle crossover, the Ford Mustang, the Land Rover LR3/Discovery, and Volvo S40 and V50 in North America and Europe. Total company vehicle unit sales in 2004 were 6,798,000, an increase of 62,000 units from 2003. Fourth-quarter vehicle unit sales totalled 1,751,000, a decline of 133,000 units. For the full year, Ford's worldwide automotive division earned a pre-tax profit of $850m, a $697m improvement from $153m a year ago.
",business
"Chinese exports rise 25% in 2004
 
 Exports from China leapt during 2004 over the previous year as the country continued to show breakneck growth.
 
 The spurt put China's trade surplus - a sore point with some of its trading partners - at a six-year high. It may also increase pressure on China to relax the peg joining its currency, the yuan, with the weakening dollar. The figures released by the Ministry of Commerce come as China's tax chief confirmed that growth had topped 9% in 2004 for the second year in a row. State Administration of Taxation head Xie Xuren said a tightening of controls on tax evasion had combined with the rapid expansion to produce a 25.7% rise in tax revenues to 2.572 trillion yuan ($311bn; £165bn).
 
 According to the Ministry of Commerce, China's exports totalled $63.8bn in December, taking the annual total up 35.4% to $593.4bn. With imports rising a similar amount, the deficit rose to $43.4bn. The increased tax take comes despite healthy tax rebates for many exporters totalling 420bn yuan in 2004, according to Mr Xie. China's exporting success has made the trade deficit of the United States soar even further and made trade with China a sensitive political issue in Washington. The peg keeping the yuan around 8.30 to the dollar is often blamed by US lawmakers for job losses at home. A US report issued on Tuesday on behalf of a Congressionally-mandated panel said almost 1.5 million posts disappeared between 1989 and 2003. The pace accelerated in the final three years of the period, said the report for the US-China Economic and Security Review Commission, moving out of labour-intensive industries and into more hi-tech sectors. The US's overall trade deficit with China was $124bn in 2003, and is expected to rise to about $150bn for 2004.
",business
"MG Rover China tie-up 'delayed'
 
 MG Rover's proposed tie-up with China's top carmaker has been delayed due to concerns by Chinese regulators, according to the Financial Times.
 
 The paper said Chinese officials had been irritated by Rover's disclosure of its talks with Shanghai Automotive Industry Corp in October. The proposed deal was seen as crucial to safeguarding the future of Rover's Longbridge plant in the West Midlands. However, there are growing fears that the deal could result in job losses. The Observer reported on Sunday that nearly half the workforce at Longbridge could be under threat if the deal goes ahead.
 
 Shanghai Automotive's proposed £1bn investment in Rover is awaiting approval by its owner, the Shanghai city government and by the National Development and Reform Commission, which oversees foreign investment by Chinese firms. According to the FT, the regulator has been annoyed by Rover's decision to talk publicly about the deal and the intense speculation which has ensued about what it will mean for Rover's future. As a result, hopes that approval of the deal may be fast-tracked have disappeared, the paper said. There has been continued speculation about the viability of Rover's Longbridge plant because of falling sales and unfashionable models.
 
 According to the Observer, 3,000 jobs - out of a total workforce of 6,500 - could be lost if the deal goes ahead. The paper said that Chinese officials believe cutbacks will be required to keep the MG Rover's costs in line with revenues. It also said that the production of new models through the joint venture would take at least eighteen months. Neither Rover nor Shanghai Automotive commented on the reports.
",business
"Water firm Suez in Argentina row
 
 A conflict between the Argentine State and water firm Aguas Argentinas, controlled by France's Suez, is casting doubt on the firm's future.
 
 The firm, which serves the province of Buenos Aires, wants a tariff rise of 60% to fund water-supply improvements. The government has rejected the 60% rise and wants Aguas Argentinas to make an annual investment of 400m pesos ($136m; £72.3m) in improvements. Planning Minister Julio De Vido has offered State help but not for ""free"".
 
 Mr De Vido said that the Argentine state would not make a contribution ""in the form of a subsidy"".
 
 He has said a contribution could be made in return for a seat on the company's board. He added that the government is in discussions with Aguas Argentinas about what role it might take in the event that a State contribution is agreed. However, Aguas Argentinas told the Argentine newspaper Clarin it would not accept any change to its legal structure and, in practice, this rules out State participation on its board. The Planning Minister didn't rule out the possibility of cancelling Aguas Argentinas water concession. Yet he added that he didn't like to do ""futurology"". But last week, Argentine Economic Minister, Roberto Lavagna, told the French media in Paris that the government was considering allowing a 16% increase in tariffs and the possibility of a State contribution to Aguas Argentinas infrastructure investments. Speaking in Buenos Aires, Mr De Vido later denied the possibility of any tariff increase and insisted that the annual investment in water infrastructure was at the centre of the discussions. He added that in the coming weeks the future of Aguas Argentinas would be decided. Suez owns 40% of Aguas Argentinas (39.9%), while Spain's Aguas de Barcelona is its second biggest shareholder with 25.01%. Recently, Suez lost a water concession in Bolivia after mass protests in the city of El Alto (the poorest in the country), with citizens complaining of unfair water charges. This forced the government to cancel the contract.
 
 In Argentina, Suez's subsidiary, which has been fined for cutting the supply of water during a recent heat wave and allegedly failing to keep up investment to meet the demand for water, has maintained a tense relationship with the Argentine government. During the last financial crisis in Argentina, the firm sued the state alleging that converting its tariffs from US dollars to pesos, and then freezing them during devaluation, had affected the company and made it difficult for it to meet its contractual obligations. When President Nestor Kirchner of Argentina arrived in power he began to negotiate a solution to the disagreements with international utilities operating in Argentina. But he has rejected any tariff increases, alleging this will impoverish citizens further. He has also asked for more investments to meet the growing demand for water. On May 2004, Aguas Argentinas and the government signed an agreement to renegotiate its Buenos Aires water-concession contract. The firm agreed to invest 242m pesos. The issue has attracted European interest. Last week in Paris, President Kirchner discussed this problem and other issues with French president Jacques Chirac. The Argentine government is also under pressure from European Union countries and the International Monetary Fund (IMF) to raise utilities tariffs, because most of the utilities operating in Argentina are European.
",business
"Green reports shun supply chain
 
 Nearly 20% more UK top 250 firms produced non-financial reports on social and environment issues than last year.
 
 But of the 145 companies reporting, 76% didn't examine their supply chains, says the annual Directions survey. Green groups say putting pressure on supply chains is a major way companies can reduce their environmental impact. The survey is published by corporate social responsibility firm Context and branding firm SalterBaxter.
 
 Blake Lee-Harwood, campaigns director at Greenpeace in the UK, said: ""It's fairly meaningless to talk about your company's direction in terms of sustainability without having detailed knowledge of your supply chain. ""It's also important to get some kind of independent assessment of your reporting.""
 
 Less than a quarter of companies (24%) get their corporate social responsibility (CSR) reports independently verified to provide assurances they are accurate and complete, says the survey. To date there are no set standards for non-financial reporting, although the Global Reporting Initiative, an independent pro-sustainability institution, is planning to establish some. The reports surveyed by Directions are published voluntarily. They are usually called corporate social responsibility (CSR) reports, sustainability reports, or social and environmental reports.
 
 Peter Knight, director of Context, says 24 UK top 250 companies reported for the first time this year and, in general, the quality of reports has improved. ""The corporate lexicon of homilies, generalities and soft assurances - fluff - is on its way out. There are less pictures of smiling children and butterflies."" The UK government will soon require all quoted companies to report their social and environmental risks in a chapter in their annual reports, called the Operating and Financial Review. The regulation is not expected until 2005 and the first reports under this scheme will not be published before 2006. The US seems to lag Europe in producing corporate social responsibility reports. The majority of European top 50 companies (44) publish them and only 27 of the US top 50.
",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.
",business
"Optimism remains over UK housing
 
 The UK property market remains robust despite the recent slowdown, according to mortgage lender Bradford & Bingley and housebuilder George Wimpey.
 
 B&B said the buy-to-let market - in which the bank is a major player - would continue to grow much faster than the wider mortgage market. The comments came as it reported a 6% rise in profits to £280.2m ($532m). Wimpey reported a 19% rise in profits to £450.7m and said recent new home reservations were better than expected.
 
 Recent housing market surveys have indicated that the UK property market has cooled in recent months after several years of rapid growth. Last week, figures from the Council of Mortgage Lenders (CML) indicated that the popularity of buy-to-let mortgages - a key phenomenon of the housing boom - could be waning.
 
 But B&B - which has a 22% share of the UK buy-to-let mortgage market - said that while rates of growth were moderating, the sector ""continues to grow at a rate considerably above that of the whole mortgage market"". Overall, B&B said that ""housing market fundamentals remain strong"". ""Interest rates and unemployment are both likely to remain at historically low levels, real household incomes should continue to grow and housing demand is likely to outstrip supply into the medium-term."" Despite the upbeat tone, shares in B&B were down more than 4% at 325.5p in morning trade as analysts worried over future earnings growth.
 
 Wimpey's profit figures came in at the top of expectations, with the numbers helped by buoyant sales in the US offsetting a slight slowdown in the UK. Wimpey said the UK housing market had proved ""challenging"" last year. ""By late summer, the market in general had slowed sharply across the country and showed no real improvement during the autumn,"" it added. However, the first seven weeks of this year had produced promising signs, Wimpey said. ""Visitor levels and interest in this period have been encouraging and reservations have been at the stronger end of our expectations."" Shares in Wimpey were up 6% at 458.5p in morning trade.
",business
"US firm 'bids for Lacroix label'
 
 A US firm has said it is in final negotiations with luxury goods group LVMH to buy the loss-making Christian Lacroix haute-couture house.
 
 Paris-based LVMH has been selling non-core businesses and focusing on its most profitable labels including Moet & Chandon champagne and Louis Vuitton. Privately-held Falic Group bought two cosmetics brands, Hard Candy and Urban Decay, from LVMH in early 2003. The Florida company also own a chain of 90 duty free stores in the US. LVMH refused to comment on the reports. But one of the three brothers behind the Falic Group said the firm had also held talks with the designer Christian Lacroix, and wished to retain him. ""We are buying his name,"" Simon Falic told the Reuters news agency. ""We have plans to increase the exposure of the brand and increase the volume of business.""
",business
"Sales 'fail to boost High Street'
 
 The January sales have failed to help the UK High Street recover from a poor Christmas season, a survey has found.
 
 Stores received a boost from bargain hunters but trading then reverted to December levels, the British Retail Consortium and accountants KPMG said. Sales in what is traditionally a strong month rose by 0.5% on a like-for-like basis, compared with a year earlier. Consumers remain cautious over buying big-ticket items like furniture, said BRC director general Kevin Hawkins. Higher interest rates and uncertainty over the housing market continue to take their toll on the retail sector, the BRC said. But clothing and footwear sales were said to be generally better than December, while department stores also had a good month.
 
 In the three-months to January, like-for-like sales showed a growth rate of -0.1%, the same as in the three months to December, the BRC said. ""Following a relatively strong New Year's bank holiday, trading then took a downward turn,"" said Mr Hawkins. ""Even extending some promotions and discounts and the pay-day boost later in the month could not tempt customers."" The previous BRC survey found Christmas 2004 was the worst for 10 years for retailers. And according to Office for National Statistics data, sales in December failed to meet expectations and by some counts were the worst since 1981.
",business
"'Strong dollar' call halts slide
 
 The US dollar's slide against the euro and yen has halted after US Treasury Secretary John Snow said a strong dollar was ""in America's interest"".
 
 But analysts said any gains are likely to be short-lived as problems with the US economy were still significant. They also pointed out that positive comments apart, President George W Bush's administration had done little to stop the dollar's slide. A weak dollar helps boost exports and narrow the current account deficit. The dollar was trading at $1.2944 against the euro at 2100GMT, still close to the $1.3006 record level set on 10 November. Against the Japanese yen, it was trading at 105.28 yen, after hitting a seven-month low of 105.17 earlier in the day.
 
 Policy makers in Europe have called the dollar's slide ""brutal"" and have blamed the strength of the euro for dampening economic growth. However, it is unclear whether ministers would issue a declaration aimed at curbing the euro's rise at a monthly meeting of Eurozone ministers late on Monday. Higher growth in Europe is regarded by US officials as a way the huge US current account deficit - that has been weighing on the dollar - could be reduced. Mr Snow who is currently in Dublin at the start of a four-nation EU visit, has applauded Ireland's introduction of lower taxes and deregulation which have helped boost growth. ""The eurozone is growing below its potential. When a major part of the global economy is below potential there are negative consequences... for the citizens of those economies... and for their trading partners,"" he said. Mr Snow's comments may have helped shore up the dollar on Monday, but he was careful to qualify his statement.
 
 ""Our basic policy, of course, is to let open, competitive markets set the values,"" he explained. ""Markets are driven by fundamentals and towards fundamentals."" US officials have also said that other economies need to grow, so the US is not the main global growth engine. Economists say that the fundamentals, or key indicators, of the US economy are looking far from rosy. Domestic consumer demand is cooling, and heavy spending by President Bush has pushed the budget deficit to a record $427bn (£230bn). The current account deficit, meanwhile, hit a record $166bn in the second quarter of 2004. For many analysts, a weaker dollar is here to stay. ""No end is in sight,"" said Carsten Fritsch, a strategist at Commerzbank . ""It is only a matter of time until the euro reaches $1.30."" Some analysts maintain the US is secretly happy with a lower dollar which helps makes its exports cheaper in Europe, thus boosting its economy.
",business
"Giving financial gifts to children
 
 Your child or grandchild may want the latest toy this Christmas, but how about giving them a present that will help their financial future?
 
 Gifts of the financial variety might have a longer lasting impact. It may encourage children to save or start a fund which could count towards university costs, for example.
 
 The government is trying to encourage saving at an early age, through its new Child Trust Fund. The first vouchers, worth £250 or £500 for low-income families, will be distributed from January. All children born after 1st September 2002 will be eligible. Parents will need to decide which financial institution will manage this gift in time for the start of the scheme in April 2005.
 
 Parents and relatives will be able to top up the fund with up to £1,200 a year, which will grow free of income and capital gains tax. As the Child Trust Fund will not be in force in time for Christmas, relatives could invest their gifts in a higher rate children's deposit account, and use this as a feeder fund.
 
 There are accounts designed to start children off in the savings habit and they often pay a higher rate of interest. Some of the best instant-access accounts currently available include the Ladybird account from the Saffron Walden Building Society, paying 5.35% for a minimum balance of £1 and the Alliance & Leicester FirstSaver which pays 5.25%, also starting at £1.
 
 Interest earned by children is subject to income tax. However, children, like adults, have a personal income tax allowance (£4,745 for the current tax year).
 
 If the account holds money gifted by friends and relatives - but not parents - any interest earned from the savings account may be set against the allowance. As long as the total amount of interest falls within the allowance, then no tax will be payable. When the account is opened a form ""R85"", available from the bank or building society, should be completed. This confirms that the account holder is a non-taxpayer and allows interest to be received without the deduction of income tax.
 
 The tax rules are different for parents who save on behalf of a child. Only £100 of interest (per parent) can be tax-free. Where interest exceeds this level, the whole of the interest will be taxed on the parent. This is to prevent parents from holding their own cash savings in their children's names and taking advantage of the tax allowances. Where both parents and other relatives are saving on behalf of a child, consideration should be given to opening separate accounts - one for parents' gifts and one for gifts from other relatives. Therefore, it may be preferable for parents to contribute to the Child Trust Fund which is tax free, with any gifts from relatives that take the total above the annual £1,200 limit being directed to a deposit account.
 
 Another favourite solution is Premium Bonds. With the promise of riches far greater than a mere deposit account, they make great presents. The parent or guardian will be responsible for the Bonds and will receive notification of the purchase. Any prizes will be sent to the parent or child's guardian. The minimum for each purchase is £100 and Bonds are sold in multiples of £10.
 
 There are gift opportunities beyond cash accounts and these should not be ignored.
 
 Over the longer term, stock market funds have outperformed other types of investment, although in the shorter term they can be volatile. One of the benefits of investing for children is that investment is generally for the longer term - more than ten years - which helps to reduce the risks associated with investing in shares. One way to spread the risk is to invest in the stock market through a unit or investment trust. These are pooled investment funds which give access to a wide range of shares. These funds may be actively managed, where a fund manager picks individual stocks based on a view of their future potential, or passive, where a manager invests in all the shares that comprise a stock market index, for example, the FTSE 100. Exchange Traded Funds offer an alternative way to track a stock market. These are single shares that give the return of an underlying index (so are really another form of tracker). The difference is that the charges are quite low. The only drawback with all financial gifts is that the children gain an absolute right to the money at age 18, and parents will have no control over how it is spent. For larger gifts it may be worthwhile taking professional advice on the establishment of a suitable trust that will allow ongoing control over the capital and income.
",business
"Aids and climate top Davos agenda
 
 Climate change and the fight against Aids are leading the list of concerns for the first day of the World Economic Forum in the Swiss resort of Davos.
 
 Some 2,000 business and political leaders from around the globe will listen to UK Prime Minister Tony Blair's opening speech on Wednesday. Mr Blair will focus on Africa's development plans and global warming. Earlier in the day came an update on efforts to have 3 million people on anti-Aids drugs by the end of 2005. The World Health Organisation (WHO) said 700,000 people in poor countries were on life-extending drugs - up from 440,000 six months earlier but amounting to only 12% of the 5.8 million who needed them. A $2bn ""funding gap"" still stood in the way of hitting the 2005 target, the WHO said.
 
 The themes to be stressed by Mr Blair - whose attendance was announced at the last minute - are those he wants to dominate the UK's chairmanship of the G8 group of industrialised states. Other issues to be discussed at the five-day conference range from China's
 
 economic power to Iraq's future after this Sunday's elections. Aside from Mr Blair, more than 20 other world leaders are expected to attend including French President Jacques Chirac - due to speak by video link after bad weather delayed his helicopter - and South African President Thabo Mbeki, whose arrival has been delayed by Ivory Coast peace talks. The Ukraine's new president, Viktor Yushchenko, will also be there - as will newly elected Palestinian leader Mahmoud Abbas. Showbiz figures will also put in an appearance, from U2 frontman Bono - a well-known campaigner on trade and development issues - to Angelina Jolie, a goodwill campaigner for the UN on refugees.
 
 Unlike previous years, protests against the WEF are expected to be muted. Anti-globalisation campaigners have called off a demonstration planned for the weekend. At the same time, about 100,000 people are expected to converge on the Brazilian resort of Porto Alegre for the World Social Forum - the so-called ""anti-Davos"" for campaigners against globalisation, for fair trade, and many other causes.
 
 In contrast, the Davos forum is dominated by business issues - from outsourcing to corporate leadership - with bosses of more than a fifth of the world's 500 largest companies scheduled to attend. A survey published on the eve of the conference by PricewaterhouseCoopers said four in ten business leaders were ""very confident"" that their companies would see sales rise in 2005. Asian and American executives, however, were much more confident than their European counterparts. But the political discussions, focusing on Iran, Iraq and China, are likely to dominate media attention.
",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.
",business
"Hariri killing hits Beirut shares
 
 Shares in Solidere, the Lebanese company founded by assassinated former prime minister Rafik Hariri, fell 15% in renewed trading in Beirut.
 
 The real estate firm, which dominates Lebanon's stock exchange, ended the day down at $8.08. Traders said there was some panic selling during Friday's session, the first since a three-day market closure to mourn the death of Mr Hariri. Beirut's benchmark BLOM stock index closed down 7.9% at 642.80.
 
 Solidere, in which Mr Hariri was a major shareholder, was the major drag on the index. The company owns much of the property in central Beirut, which it restored and redeveloped following the end of Lebanon's bitter 15-year civil war. ""Solidere should be above $10 but because of this disaster it is falling,"" said one trader. ""If Solidere drops much lower I would consider it a buying opportunity. This is a very big company held by many Lebanese."" Critics had accused Mr Hariri of using Lebanon's post-war reconstruction drive for his personal financial gain. But his assassination on Monday sent shudders through Lebanon's business community, which saw the billionaire tycoon as the country's best hope for economic revival. Solidere posted profits of $12.5m in the first half of 2004, and its shares had been gaining in recent months.
",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.
",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.
",business
"Qantas sees profits fly to record
 
 Australian airline Qantas has posted a record fiscal first-half profit thanks to cost-cutting measures.
 
 Net profit in the six months ending 31 December rose 28% to A$458.4m ($357.6m; £191m) from a year earlier. Analysts expected a figure closer to A$431m. Qantas shares fell almost 3%, however, after it warned that earnings growth would slow in the second half. Sales will dip by at least A$30m after the Indian ocean tsunami devastated many holiday destinations, Qantas said.
 
 ""The tsunami affected travel patterns in ways that we were a bit surprised about,"" chief executive Geoff Dixon explained. ""It certainly affected Japanese travel into Australia. As soon as the tsunami hit we saw ... a lessening with bookings for Australia."" Higher fuel costs also are expected to eat into earnings in coming months. ""We don't have as much hedging benefit in the second half as we had in the first,"" said chief financial officer Peter Gregg. Qantas is facing increased pressure from rivals such as low-cost carrier Virgin Blue and the Australian government is in talks about whether to allow Singapore Airlines to fly between the Australia and the US - one of Qantas' key routes.
 
 Even so, the firm is predicting that full-year earnings will increase from the previous 12 months. Analysts have forecast full-year profit will rise about 11% to around A$720 million ($563 million). Qantas boss Mr Dixon also said he would be reviewing the group's cost-cutting measures. During the first six months of the fiscal year, Qantas made savings of A$245m, and is on track to top its target of A$500m for the full year. Last month, the company warned it may transfer as many as 7,000 jobs out Australia, with Mr Dixon quoted as saying that the carrier could no longer afford to remain ""all-Australian"".
",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.
",business
"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.
",business
"Yukos bankruptcy 'not US matter'
 
 Russian authorities do not have to abide by any US court decisions taken with regard to troubled oil giant Yukos, a Houston court has been told.
 
 Legal expert William Butler said there was no treaty between the US and Russia to recognise the other's legal rulings. That meant Moscow would not have to adhere to US rulings in the Yukos case. Yukos says a US court was entitled to declare it bankrupt before its Yugansk unit was sold, since it has a US subsidiary and local bank accounts.
 
 Yukos made its surprise Chapter 11 bankruptcy filing in Houston in December in an unsuccessful attempt to halt the auction of Yugansk, its main oil producing unit, by Russian authorities. Yugansk was sold to help pay off a $27.5bn (£14.5bn) back tax bill. It was bought for $9.4bn by a previously unknown group, which was in turn bought by state-controlled oil company Rosneft. The US court's jurisdiction has been challenged by Deutsche Bank and Gazpromneft, a former unit of Russian gas monopoly Gazprom which is due to merge with Rosneft. Deutsche Bank maintains the case has no place in a US court because Yukos has no assets in the US, apart from two bank accounts and a house in Houston owned by its chief finance officer Bruce Misamore. Deutsche Bank is involved in the case because it is itself being sued by Yukos. It had agreed to loan Gazpromneft the money to bid for Yugansk. US bankruptcy judge Letitia Clark, who issued an injunction in December to try and prevent the Yugansk sale, has said she will rule ""pretty promptly, however I do not anticipate ruling on it before next Tuesday"".
 
 Yukos has 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. It has claimed that Russia imposed the huge tax bill and forced the sale of Yugansk as part of a campaign to destroy Yukos and its former owner Mihkail Khodorkovsky, who is facing a 10-year prison term in Russia for fraud and tax evasion. Yukos' parent company, the Gibraltar-based Menatep Group, is suing Russia in Europe for $28.3bn in financial damages. The company is also seeking $20bn in a separate US lawsuit against Rosneft and Gazprom for their role in the sale of Yugansk.
",business
"News Corp eyes video games market
 
 News Corp, the media company controlled by Australian billionaire Rupert Murdoch, is eyeing a move into the video games market.
 
 According to the Financial Times, chief operating officer Peter Chernin said that News Corp is ""kicking the tyres of pretty much all video games companies"". Santa Monica-based Activison is said to be one firm on its takeover list. Video games are ""big business"", the paper quoted Mr Chernin as saying. We ""would like to get into it"".
 
 The success of products such as Sony's Playstation, Microsoft's X-Box and Nintendo's Game Cube have boosted demand for video games. The days of arcade classics such as Space Invaders, Pac-Man and Donkey Kong are long gone. Today, games often have budgets big enough for feature films and look to give gamers as real an experience as possible. And with their price tags reflecting the heavy investment by development companies, video games are proving almost as profitable as they are fun.
 
 Mr Chernin, however, told the FT that News Corp was finding it difficult to identify a suitable target. ""We are struggling with the gap between companies like Electronic Arts (EA), which comes with a high price tag, and the next tier of companies,"" he explained during a conference in Phoenix, Arizona. ""These may be too focused on one or two product lines."" Activision has a stock market capitalisation of about $2.95bn (£1.57bn), compared to EA's $17.8bn. Some of the games industry's main players have recently been looking to consolidate their position by making acquisitions. France's Ubisoft, one of Europe's biggest video game publishers, has been trying to remain independent since Electronic Arts announced plans to buy 19.9% of the firm. Analysts have said that industry mergers are likely in the future.
",business
"Low-cost airlines hit Eurotunnel
 
 Channel Tunnel operator Eurotunnel has seen sales fall in the face of the upsurge in European low-cost airlines.
 
 The firm said sales were down 4% in 2004 to 789m euros ($1.03bn; £548m). ""The impact of the development of no-frills airlines is being felt ever more strongly,"" said chief executive Jean-Louis Raymond. Income from its vehicle-carrying shuttle services fell 7%, although 15% more passengers meant a 2% rise in railway revenue.
 
 The cross-Channel truck market is improving, Eurotunnel said, but warned that it was not benefiting since much of the traffic was in containers destined for ports. The passenger-only trains which use the tunnel are run by a separate company, Eurostar.
 
 Eurotunnel is still struggling with debts of more than 6bn euros. The company is currently kept afloat by the 200-plus banks to whom it owes the money. A shareholder revolt threw out the old board in 2004. But the BBC's business editor, Jeff Randall, said the banks could yet step in and take over altogether. ""At the moment it can't even service the interest on its debt,"" he said. ""This is a company in the departure lounge of life.""
",business
"Ask Jeeves tips online ad revival
 
 Ask Jeeves has become the third leading online search firm this week to thank a revival in internet advertising for improving fortunes.
 
 The firm's revenue nearly tripled in the fourth quarter of 2004, exceeding $86m (£46m). Ask Jeeves, once among the best-known names on the web, is now a relatively modest player. Its $17m profit for the quarter was dwarfed by the $204m announced by rival Google earlier in the week. During the same quarter, Yahoo earned $187m, again tipping a resurgence in online advertising.
 
 The trend has taken hold relatively quickly. Late last year, marketing company Doubleclick, one of the leading providers of online advertising, warned that some or all of its business would have to be put up for sale. But on Thursday, it announced that a sharp turnaround had brought about an unexpected increase in profits. Neither Ask Jeeves nor Doubleclick thrilled investors with their profit news, however. In both cases, their shares fell by some 4%. Analysts attributed the falls to excessive expectations in some quarters, fuelled by the dramatic outperformance of Google on Tuesday.
",business
"Brazil approves bankruptcy reform
 
 A major reform of Brazil's bankruptcy laws has been approved by the country's Congress, in a move which it is hoped will cut the cost of borrowing.
 
 The bill, proposed in 1993, has finally been approved by the leadership of President Luiz Inacio Lula da Silva. The old law, dating from 1945, gave priority first to workers, second to tax revenue and finally to creditors. The new legislation changes this, giving priority to creditors and limiting payments to workers. The new regulations will limit payments to workers to 150 times the minimum monthly salary, which is currently $94. The law also makes it more difficult for a company to declare bankruptcy. However, when a firm is declared bankrupt it will gain protection from creditors for 180 days while a recovery plan is worked out.
 
 The proposals were opposed in the past by leftist parties, including Mr Lula's Worker Party. They considered that they undermined workers' rights. But President Lula became a defender of the reforms, arguing that the country's bank lending margins were among the highest in the world and were damaging the economy. According to Andreas Adriano of Latin Trade Magazine, the new bankruptcy law will help in reducing the spread - difference between the interest rates of the banks and federal bonds. Nevertheless, Mr Adriano said to reduce the basic interest rate the Central Bank needs to change its policy, focusing not only on inflation but also on economic growth.
",business
"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.
",business
"MCI shareholder sues to stop bid
 
 A shareholder in US phone firm MCI has taken legal action to halt a $6.75bn (£3.6bn) buyout by telecoms giant Verizon, hoping to get a better deal.
 
 The lawsuit was filed on Friday after Qwest Communications, which had an earlier offer for MCI rejected, said it would submit an improved bid. MCI's directors have backed Verizon, despite it tabling less money. They are accused of breaching their fiduciary duties by depriving MCI shareholders ""of maximum value"".
 
 According the legal papers filed in a Delaware court, Verizon is set to pay an """"unconscionable, unfair and grossly inadequate"" sum for MCI, which was formerly known as Worldcom. Qwest said on Wednesday that MCI had rejected a deal worth $8bn. A number of large MCI shareholders expressed unhappiness at the decision, saying that Verizon's offer, made up of cash, shares and dividends, undervalued the company. Friday's lawsuit argues that the Verizon offer makes no provision for future growth prospects and that consolidation in the US phone industry will put a premium on MCI's network, assets and clients. MCI's directors have argued that Verizon is bigger than Qwest, has fewer debts and has built a successful mobile division. Chief executive Michael Capellas spent last week meeting with shareholders in an effort to win their backing.
 
 In 2002, investors in the then-named Worldcom lost millions when the company filed for bankruptcy following an accounting scandal. However, the firm - now renamed MCI - has put its operations in order and emerged from bankruptcy protection last April. It is a long-distance and corporate phone firm, and would provide the buyer with access to a global telecommunications network and a large number of business-based subscribers. MCI shares jumped on Friday, hitting their highest level since April 2004 amid speculation that it would be the focus of a bidding war. A takeover of MCI would be the fifth billion-dollar telecoms deal since October as companies look to cut costs and boost client bases. Earlier this month, SBC Communications agreed to buy its former parent and phone pioneer AT&T for about $16bn.
",business
"BA to suspend two Saudi services
 
 British Airways is to halt its flights from London Heathrow to Jeddah and Riyadh in Saudi Arabia from 27 March.
 
 The airline said the decision was a commercial one due to reduced passenger demand for the services. BA currently operates four flights per week from Heathrow to Jeddah, and three weekly journeys to Riyadh. It suspended flights to Saudi Arabia for three weeks in autumn 2003 after a government warning about a ""threat to UK aviation interests in Saudi Arabia"".
 
 BA will now suspend the Saudi flights - which it says will remain ""under constant review"" - from 27 March. ""The decision to suspend flights between the UK and Saudi Arabia is a difficult one to make as we have enjoyed a long history of flying between the two countries,"" said BA director of commercial planning, Robert Boyle. ""However, the routes don't currently make a profitable contribution to our business and we are unable to sustain them while this remains the case."" Passengers with flights booked after the suspension date will be contacted by BA for alternative arrangements to be made.
",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.
",business
"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.
",business
"Wipro beats forecasts once again
 
 Wipro, India's third-biggest software firm, has reported a 60% rise in profit, topping market expectations.
 
 Net income in the last quarter was 4.3bn rupees ($98m; £52m), against 2.7bn a year earlier. Profit had been forecast to be 4.1bn rupees. Wipro offers services such as call centres to foreign clients and has worked for more than half of the companies on the Fortune 500 list. Wipro said demand was strong, allowing it to increase the prices it charged.
 
 ""On the face of it, the results don't look very exciting,"" said Apurva Shah, an analyst at ASK-Raymond James. ""But the guidance is positive and pricing going up is good news."" Third-quarter sales rose 34% to 20.9bn rupees. One problem identified by Wipro was the high turnover of its staff. It said that 90% of employees at its business process outsourcing operations had had to be replaced. ""We have to get that under control,"" said vice-chairman Vivek Paul. Wipro is majority owned by India's richest man Azim Premji.
",business
"Britannia members' £42m windfall
 
 More than 800,000 Britannia Building Society members are to receive a profit share worth on average £52 each.
 
 Members of the UK's second largest building society will share £42m, with 100,000 receiving a windfall of more than £100. Depending on how much they borrow or invest, members earn ""reward"" points which entitle them to a share of the society's profits. The payouts are bigger than last year, because of stricter eligibility rules. Last year, Britannia members shared £42m, but the average payment was only £38.
 
 To qualify for this year's payment, customers must have been members for at least two years on 31 December 2004. Britannia has also stopped making payments to members if they are worth less than £5.
 
 To qualify for the profit share, members must have either a mortgage, or an investment account other than a deposit account. Customers can also qualify if they have Permanent Interest Bearing Shares (PIBS). The profit share scheme was introduced in 1997 and has paid out more than £370m. Britannia will unveil its results on Wednesday.
",business
"Bombardier chief to leave company
 
 Shares in train and plane-making giant Bombardier have fallen to a 10-year low following the departure of its chief executive and two members of the board.
 
 Paul Tellier, who was also Bombardier's president, left the company amid an ongoing restructuring. Laurent Beaudoin, part of the family that controls the Montreal-based firm, will take on the role of CEO under a newly created management structure. Analysts said the resignations seem to have stemmed from a boardroom dispute. Under Mr Tellier's tenure at the company, which began in January 2003, plans to cut the worldwide workforce of 75,000 by almost a third by 2006 were announced. The firm's snowmobile division and defence services unit were also sold and Bombardier started the development of a new aircraft seating 110 to 135 passengers.
 
 Mr Tellier had indicated he wanted to stay at the world's top train maker and third largest manufacturer of civil aircraft until the restructuring was complete. But Bombardier has been faced with a declining share price and profits. Earlier this month the firm said it earned $10m (£19.2m) in the third quarter, down from a profit of $133m a year ago. ""I understand the board's concern that I would not be there for the long-term and the need to develop and execute strategies, and the need to reshape the management structure at this time,"" Mr Tellier said in a statement on Monday. Bombardier said restructuring plans drawn up by Mr Tellier's would continue to be implemented. Shares in Bombardier lost 65 Canadian cents or 25% on the news to 1.90 Canadian dollars before rallying to 2.20 Canadian dollars.
",business
"Japanese banking battle at an end
 
 Japan's Sumitomo Mitsui Financial has withdrawn its takeover offer for rival bank UFJ Holdings, enabling the latter to merge with Mitsubishi Tokyo.
 
 Sumitomo bosses told counterparts at UFJ of its decision on Friday, clearing the way for it to conclude a 3 trillion yen ($29bn) deal with Mitsubishi. The deal would create the world's biggest bank with assets of about 189 trillion yen ($1.8 trillion). Sumitomo's exit ends the most high profile fight in Japanese bank history.
 
 UFJ Holdings, Japan's fourth-largest bank, has been at the centre of a fierce bid battle over the last year. Sumitomo, Japan's third-largest bank, tabled a higher offer for UFJ than its rival, valuing the company at $35bn.
 
 However, UFJ's management was known to prefer the offer from Mitsubishi Tokyo Financial Group (MTFG), Japan's second-largest bank. Concerns were also raised about Sumitomo's ability to absorb UFJ and the former has now admitted defeat. ""We believe the market and most investors accept a UFJ-MTFG merger,"" Sumitomo said in a statement. ""Given the ongoing integration of UFJ and MTFG operations, persisting with our proposal may not be in the best interests of our shareholders or UFJ's.""
 
 Mitsubishi's takeover of UFJ - which will be Japan's largest-ever takeover deal - will still have to be approved by shareholders of the two firms. However, this is expected to be a formality. Sumitomo may now turn its attention to deepening its ties with Daiwa Securities, another Japanese financial firm. The two are set to merge their venture capital operations and there has been speculation that this could lead to a full-blown merger. Japanese banks are increasingly seeking alliances to boost profits.
",business
"Economy 'stronger than forecast'
 
 The UK economy probably grew at a faster rate in the third quarter than the 0.4% reported, according to Bank of England deputy governor Rachel Lomax.
 
 Private sector business surveys suggest a stronger economy than official estimates, Ms Lomax said. Other surveys collectively show a rapid slowdown in UK house price growth, she pointed out. This means that despite a strong economic growth, base rates will probably stay on hold at 4.75%. Official data comes from the Office for National Statistics (ONS). Though reliable, ONS data takes longer to publish, so now the BoE is calling for faster delivery of data so it can make more effective policy decisions. ""Recent work by the Bank has shown that private sector surveys add value, even when preliminary ONS estimates are available,"" Ms Lomax said in a speech to the North Wales Business Club.
 
 The ONS is due to publish its second estimate of third quarter growth on Friday. ""The MPC judges that overall growth was a little higher in the third quarter than the official data currently indicate,"" Ms Lomax said. The Bank said successful monetary policy depends on having good information. Rachel Lomax cited the late 1980s as an example of a time when weak economic figures were published, but substantially revised upwards years later.
 
 ""The statistical fog surrounding the true state of the economy has proved a particularly potent breeding ground for policy errors in the past,"" she said. Improving the quality of national statistics is the single the best way of making sure the Monetary Policy Committee (MPC) makes the right decisions, she said. The Bank of England is working in tandem with the ONS to improve the quality and speed of delivery of data. Her remarks follow criticism from the House of Lords Economic Affairs Committee, which said the MPC had held interest rates too high given that inflation was way below the 2% target.
 
 A slowdown in the housing market and this year's surge in oil prices has made economic forecasting all the more tricky, leading to a more uncertain outlook. ""This year rising oil prices and a significant slowdown in the housing market have awoken bad memories of the 1970s and 1980s,"" Ms Lomax said. ""The MPC will be doing well if it can achieve the same stability over the next decade as we have enjoyed over the past 10 years."" Decisions on interest rates are made after the MPC gathers together the range of indicators available every month. The clearest signals come when all indicators are pointing the same direction, Ms Lomax intimated. ""In economic assessment, there is safety in numbers.""
",business
"S Korea spending boost to economy
 
 South Korea will boost state spending next year in an effort to create jobs and kick start its sputtering economy.
 
 It has earmarked 100 trillion won ($96bn) for the first six months of 2005, 60% of its total annual budget. The government's main problems are ""slumping consumption and a contraction in the construction industry"". It aims to create 400,000 jobs and will focus on infrastructure and home building, as well as providing public firms with money to hire new workers.
 
 The government has set an economic growth rate target of 5% for next year and hinted that would be in danger unless it took action. ""Internal and external economic conditions are likely to remain unfavourable in 2005,"" the Finance and Economy Ministry said in a statement.
 
 It blamed ""continuing uncertainties such as fluctuating oil prices and foreign exchange rates and stagnant domestic demand that has shown few signs of a quick rebound"". In 2004, growth will be between 4.7% and 4.8%, the ministry said. Not everyone is convinced the plan will work. ""Our primary worry centres on the what we believe is the government's overly optimistic view that its front loading of the budget will be enough to turn the economy around,"" consultancy 4Cast said in a report.
 
 The problem facing South Korea is that many consumers are reeling from the effects of a credit bubble that only recently burst. Millions of South Koreans are defaulting on their credit card bills, and the country's biggest card lender has been hovering on the verge of bankruptcy for months. As part of its spending plans, the government said it will ask firms to ""roll over mortgage loans that come due in the first half of 2005"" . It also pledged to look at ways of helping families on low incomes.
 
 The government voiced concern about the effect of redundancies in the building trade. ""Given the economic spill over and employment effect in the construction sector, a sharp downturn in the construction industry could have other adverse effects,"" the ministry said.
 
 As a result, South Korea will give private companies also will be given the chance to build schools, hospitals, houses and other public buildings. It also will look at real estate tax system. Other plans on the table include promoting new industries such as bio-technology and nano-technology, as well as offering increased support to small and medium sized businesses. ""The focus will be on job creation and economic recovery, given that unfavourable domestic and global conditions are likely to dog the Korean economy in 2005,"" the ministry said.
",business
"Wal-Mart fights back at accusers
 
 Two big US names have launched advertising campaigns to ""set the record straight"" about their products and corporate behaviour.
 
 The world's biggest retailer Wal-Mart took out more than 100 full page adverts in national newspapers. The group is trying to see off criticism over it pay deals, benefits package and promotion strategy. Meanwhile, drugs group Eli Lilly is planning a campaign against ""false"" claims about its product Prozac. Wal-Mart kicked off the battle with adverts in newspapers like the Wall Street Journal, using an open letter from company president Lee Scott saying it was time for the public to hear the ""unfiltered truth"".
 
 ""There are lots of 'urban legends' going around these days about Wal-Mart, but facts are facts. Wal-Mart is good for consumers, good for communities and good for the US economy,"" Mr Scott said in a separate statement.
 
 Its adverts - and a new website - outlined the group's plans to create more than 10,000 US jobs in 2005. Wal-Mart's average pay is almost twice the national minimum wage of $5.15 (£3.90) an hour, while employees are offered health and life insurance, company stock and a retirement plan, the adverts say. Unions accuse Wal-Mart of paying staff less than its rivals do, with fewer benefits. In California, the company is fighting opposition to new stores amid allegations it forces local competitors out of business. Lawmakers in the state are also examining allegations that the firm burdens the state with an unfair proportion of employee health care costs. ""I think they are going to have a tough time suddenly overcoming the perceptions of some people,"" said Larry Bevington, chairman of Save Our Community - a group fighting to prevent Wal-Mart opening a store in Rosemead, California. Wal-Mart is also fighting two lawsuits - one accusing it of discriminating against women and another alleging it discriminates against black employees.
 
 Meanwhile Eli Lilly is launching a series of adverts in a dozen major newspapers, to present what is says are the true facts about its anti-depressant drug Prozac.
 
 The move is in response to a British Medical Journal article that claimed ""missing"" Lilly documents linked Prozac to suicide and violent behaviour. In the averts, entitled An Open Letter from chief executive Sidney Taurel, the company says the article continues to ""needlessly spread fear among patients who take Prozac"". ""It was simply wrong to suggest that information on Prozac was missing, or that important research data on the benefits and possible side effects of the drug were not available to doctors and regulators,"" the letter added. Eli Lilly's chief medical officer Alan Breier said that the article was ""false and misleading"" as the documents it referred to were actually created by officials at the US Food and Drug Administration (FDA) and presented to an FDA meeting in 1991. Later, FDA medical advisors agreed the claims were based on faulty data and there was no increased risk of suicide.
",business
"BP surges ahead on high oil price
 
 Oil giant BP has announced a 26% rise in annual profits to $16.2bn (£8.7bn) on the back of record oil prices.
 
 Last week, rival Shell reported an annual profit of $17.5bn - a record profit for a UK-listed company. BP added that it was increasing its fourth-quarter dividend by 26% to 8.5 cents, and that it would continue with share buybacks. BP chief executive Lord Browne said the results were strong ""both operationally and financially.""
 
 The company is earning about $1.8m an hour.
 
 Despite the record annual profits figure, BP's performance was below the expectations of some City analysts. However, BP's share price rose 4p or nearly 1% in morning trading to 548p. Its profit rise for the year included profits of $3.65bn (£1.97bn) for the final three months of 2004 - up from $2.89bn a year ago but below its third quarter.
 
 Speaking on the BBC's Today programme on Tuesday, Lord Browne said the profits were not solely down to the high oil price alone.
 
 ""The profits are up more than the price of oil is up,"" he said. Lord Browne pointed out that BP was reaping the benefits of its investment in oil exploration. ""We have spent many years buying (assets) when the price is low,"" he said. The company has made new discoveries in Egypt, the Gulf of Mexico and Angola.
 
 However, Lord Browne rejected calls for a windfall tax on his company's huge profits, saying that in the North Sea it paid progressively more tax, the more profits it made. Lord Browne believes oil prices will remain quite high. Currently above $40 a barrel, he said: ""The price of oil will be well supported above $30 a barrel for the medium term."" BP put production for the year at 3.997 billion barrels of oil, up 10% on 2003, but slightly lower than the four billion barrels it had initially aimed for.
",business
"Saudi ministry to employ women
 
 Women will be employed in Saudi Arabia's foreign ministry for the first time this year, Foreign Minister Prince Saud Al-Faisal has been reported as saying.
 
 The move comes as the conservative country inches open the door to working women. Last year, Crown Prince Abdullah, the de-facto ruler, told government departments to put plans in place for employing women. But progress has been slow, reports from the country say.
 
 Earlier this week, the local Arab News said Labour Minister Ghazi al-Gosaibi had ""caused uproar"" when he said his ministry was having difficulty hiring women because they demanded segregated offices. The newspaper said many Saudi women found his explanation ""a pitiful excuse for not employing women"". Women now make up more than half of all graduates from Saudi universities but only 5% of the workforce. ""Our educational reforms have created a new generation of highly-educated and professionally trained Saudi women who are acquiring their rightful position in Saudi society,"" Arab News quoted Prince Saud as saying. ""I am proud to mention here that this year we shall have women working in the Ministry of Foreign Affairs for the first time.""
",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.
",business
"Lacroix label bought by US firm
 
 Luxury goods group LVMH has sold its loss-making Christian Lacroix clothing label to a US investment group.
 
 The Paris-based firm has been shedding non-core businesses and focusing on its most profitable brands including Moet & Chandon champagne and Louis Vuitton. LVMH said the French designer's haute couture and ready-to-wear labels had been purchased by the Falic Group for an unspecified sum. The Falic Group bought two cosmetics labels from LVMH in 2003. The sale of the Lacroix label comes as many fashion houses are struggling to make money from their expensive haute couture ranges. The Florida-based Falic group, which also runs a chain of 90 duty free stores in the US, said it planned to expand the brand by opening new stores. Mr Lacroix said he planned to stay at the label he founded in 1987 although exact details are still to be confirmed.
",business
"Indonesians face fuel price rise
 
 Indonesia's government has confirmed it is considering raising fuel prices by as much as 30%.
 
 Millions of Indonesians use kerosene for basic cooking, and prices have been heavily subsidised for years. President Susilo Bambang Yudhoyono's government has said it wants to curb fuel subsidies and direct the money into aid programmes for the poor. But critics argue cutting subsidies will hurt the poorer families that his government says it wants to help. Millions of people were left homeless in Indonesia Aceh's region following the earthquake and tsunami disaster in late December.
 
 Indonesia pays subsidies to importers in order to stabilise domestic fuel prices, but higher oil prices have forced the government to spend more on holding prices down. It spent 59.2 trillion rupiah ($6.58bn; £3.5bn) on fuel subsidies in 2004, a sum far in excess of its original projection of 14.5 trillion rupiah. Since President Yudhoyono's government came to power in October, it has indicated its intention of raising domestic fuel prices by cutting subsidies. ""The (January to March) quarter of this year is the best time for us to increase fuel prices,"" said Sri Mulyani Indrawati, State Minister for National Development Planning. ""We are still considering if a 30% hike is suitable at the moment. The sooner the better for the state budget."" The BBC's correspondent in Jakarta, Rachel Harvey, told World Business Report that there was likely to be a strong public reaction to any price rise. ""The big question is whether they go for one big, short, sharp shock and raise prices between 20% and 30% or whether they try to stagger it,"" she said. Indonesia's previous government, led by President Megawati Sukarnoputri, also attempted to cut subsidies in 2003, but was forced to back down in the face of public protests.
",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.
",business
"Libya takes $1bn in unfrozen funds
 
 Libya has withdrawn $1bn in assets from the US, assets which had previously been frozen for almost 20 years, the Libyan central bank has said.
 
 The move came after the US lifted a trade ban to reward Tripoli for giving up weapons of mass destruction and vowing to compensate Lockerbie victims. The original size of Libya's funds was $400m, the central bank told Reuters. However, the withdrawal did not mean that Libya had cut its ties with the US, he added.
 
 ""We are in the process of opening accounts in banks in the United States,"" the central bank's vice president Farhat Omar Ben Gadaravice said. The previously frozen assets had been invested in various countries and are believed to have included equity holdings in banks. The US ban on trade and economic activity with Tripoli - imposed by then president Ronald Regan in 1986 after a series of what the US deemed terrorist acts, including the 1988 Lockerbie air crash - was suspended in April. Bankers from the two country's had been working on how to unfreeze Libya's assets.
",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.
",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.
",business
"Dollar hovers around record lows
 
 The US dollar hovered close to record lows against the euro on Friday as concern grows about the size of the US budget deficit.
 
 Analysts predict that the dollar will remain weak in 2005 as investors worry about the state of the US economy. The Bush administration's apparent unwillingness to intervene to support the dollar has caused further concern. However, trading has been volatile over the past week because of technical and automated trading and light demand. This has amplified reactions to news, analysts said, adding that they expect markets to become less jumpy in January.
 
 The dollar was trading at $1.3652 versus the euro on Friday morning after hitting a fresh record low of $1.3667 on Thursday. One dollar bought 102.55 yen.
 
 Disappointing business figures from Chicago triggered the US currency's weakness on Thursday. The National Association of Purchasing Management-Chicago said its manufacturing index dropped to 61.2, a bigger fall than expected. ""There are no dollar buyers now, especially after the Chicago data yesterday,"" said ABN Amro's Paul Mackel. At the same time, German Chancellor Gerhard Schroeder and Italian Prime Minister Silvio Berlusconi voiced concerns about the strength of the euro. Mr Berlusconi said the euro's strength was ""absolutely worrying"" for Italian exports. Mr Schroeder said in a newspaper article that stability in foreign exchange markets required a correction of global economic imbalances. Investors will now look towards February's meeting of finance ministers from the G7 industrialised nations in London for clues as to whether central banks will combine forces to stem the dollar's decline.
",business
"China's Shanda buys stake in Sina
 
 Chinese online game operator Shanda Interactive Entertainment has bought a 20% stake in Sina, the country's biggest internet portal firm.
 
 The move may be a precursor to a full takeover, with analysts saying that a better-known international firm may also now show an interest in Sina. Shanda said that it may boost its stake in Sina, even buying it outright. A merger would create a firm that offers online role-playing games, news, entertainment and wireless messaging.
 
 Sina said that the purchase of a stake by Shanda would have no impact on its business.
 
 The board of directors said in a statement that it would ""continue to act in the best interests of all the company stakeholders, including shareholders, employees and customers"". Both companies are listed on the New York Stock Exchange's (NYSE) technology-dominated Nasdaq index. In a filing with the US Securities and Exchange Commission, Sina said its shares were purchased between 12 January and 10 February for about $230m. Rumours about a possible takeover boosted Sina's shares by more than 10% on Friday. They added an extra 6.4% to $27.24 in electronic trading after the trading session had finished. And there may be more gains amid bid speculation when trading resumes in New York on Tuesday after Monday's public holiday, analysts forecast. ""There could still be some potential parties that could still counter bid,"" said Wallace Cheung, an analyst at DBS Vickers. ""Even though Shanda has 20% of Sina, they still have quite a long way to take full control."" However, Mr Cheung noted that a foreign company trying to take control of a Chinese internet portal firm, with its ability to filter and pass on news, may not be viewed very favourably by Beijing.
",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.
",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.
",business
"Burren awarded Egyptian contracts
 
 British energy firm Burren Energy has been awarded two potentially lucrative oil exploration contracts in Egypt.
 
 The company successfully bid for the two contracts, granted by government owned oil firms, covering onshore and offshore areas in the Gulf of Suez. Burren Energy already has a presence in Egypt, having been awarded an exploration contract last year. The firm, which floated in 2003, recently announced a deal to buy 26% of Indian firm Hindustan Oil Exploration. The £13.8m deal gives Burren Energy access to the Indian oil and gas industry. This latest contract expands Burren Energy's global exploration and production portfolio - it also holds contracts in Turkmenistan and the Republic of Congo. ""These assets significantly increase our exploration portfolio in Egypt and we continue to investigate further opportunities in this region,"" said chief executive Finian O'Sullivan.
",business
"FAO warns on impact of subsidies
 
 Billions of farmers' livelihoods are at risk from falling commodity prices and protectionism, the UN's Food & Agriculture Organisation has warned.
 
 Trade barriers and subsidies ""severely"" distort the market, the FAO report on the ""State of Agricultural Commodity Markets 2004"" said. As a result, the 2.5 billion people in the developing world who rely on farming face food insecurity. The most endangered are those who live in the least-developed countries. The FAO report said that support for farmers in industrialised nations was equivalent to 30 times the amount provided as aid for agricultural development in poor countries.
 
 The FAO has urged the World Trade Organisation to swiftly conclude negotiations to liberalise trade, easing developing countries' access to the world market. It also criticised the high tariffs imposed by both developed and developing nations. It recommends that developing countries reduce their own tariffs to encourage trade and take advantage of market liberalisation.
 
 According to the organisation, subsidies and high tariffs have a strong impact on the trade of products such as cotton and rice. Global exports of these products are mainly in the hands of the European Union and the US, who - thanks to subsidies - sell them at very low prices. In fact, almost 30 wealthy nations spend more than $300bn (£158.8bn; 230.9bn euros) in agricultural subsidies. The market situation has divided developing nations in two groups, the FAO said. The first group have a reasonably diverse range of agricultural products while in the second group, agriculture lies largely in the hands of small-scale producers. For 43 developing countries, more than 20% of their export incomes come from the sale of just one product. These countries are mainly situated in Sub-Saharan Africa, Latin America and the Caribbean.
",business
"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.
",business
"Buyers snap up Jet Airways' shares
 
 Investors have snapped up shares in Jet Airways, India's biggest airline, following the launch of its much anticipated initial public offer (IPO).
 
 The IPO for 17.3 million shares was fully sold within 10 minutes of opening, on Friday. Analysts expect Jet to raise at least 16.4bn rupees ($375m; £198m) from the offering. Interest in Jet's IPO has been fuelled by hopes for robust growth in India's air travel market.
 
 The share offer, representing about 20% of Jet's equity, was oversubscribed, news agency Reuters reported. Jet, which was founded by London-based travel agent Naresh Goyal, plans to use the cash to buy new planes and cut its debt. The company has grown rapidly since it launched operations in 1993, overtaking state-owned flag carrier Indian Airlines. However, it faces stiff competition from rivals and low-cost carriers. Jet's IPO is the first in a series of expected share offers from Indian companies this year, as they move to raise funds to help them do business in a rapidly-growing economy.
",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.
",business
"Latin America sees strong growth
 
 Latin America's economy grew by 5.5% in 2004, its best performance since 1980, while exports registered their best performance in two decades.
 
 The United Nations' Economic Commission for Latin America and the Caribbean said the region grew by 5.5% this year. The Inter-American Development Bank (IADB) said regional exports reached $445.1bn (£227bn;331bn euros) in 2004. Doubts about the strength of the US recovery and overheating of the Chinese economy do however pose risks for 2005. Both organisations also warned that high oil prices raise the risk of either inflation or recession.
 
 Nevertheless, the Economic Commission for Latin America and the Caribbean (ECLAC) still forecasts growth of 4% for 2005. Strong recovery in some countries, such as Venezuela and Uruguay, boosted the overall performance of the region. ECLAC also said that the six largest Latin American economies (Argentina, Brazil, Chile, Colombia, Mexico and Venezuela) grew by more than 3% for only the second time in 20 years. Chinese and US economic strength helped boost exports, as did strong demand for agricultural and mining products. In fact, Latin American exports to China grew 34%, to $14bn. Higher oil prices also helped boost exports, as Mexico and Venezuela are important oil exporters. Regional blocs as well as free trade agreements with the US contributed to the region's strong performance, the IADB said.
",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.
",business
"Troubled Marsh under SEC scrutiny
 
 The US stock market regulator is investigating troubled insurance broker Marsh & McLennan's shareholder transactions, the firm has said.
 
 The Securities and Exchange Commission has asked for information about transactions involving holders of 5% or more of the firm's shares. Marsh has said it is co-operating fully with the SEC investigation. Marsh is also the focus of an inquiry the New York attorney-general into whether insurers rigged the market. Since that inquiry was launched in October, Marsh has replaced its chief executive and held a boardroom shake-out to meet criticism by lessening the number of company executives on the board. Prosecutors allege that Marsh - the world's biggest insurance broker - and other US insurance firms may have fixed bids for corporate cover. This is the issue at the heart of the inquiry by New York's top law officer, Eliot Spitzer, and a separate prosecution of five insurers by the State of California. The SEC's investigation into so-called related party transactions includes dealings in the Trident Funds, managed by MMC Capital, the company's private equity firm. Marsh's new chief executive, Michael Cherkasky, is trying to negotiate a settlement with Mr Spitzer. Mr Spitzer has built up a reputation as a fierce critic and campaigner against corporate America's misdeeds.
 
 The uncertainty unleashed by the scandal has prompted three credit rating agencies - Standard & Poor's, Moody's and Fitch - to downgrade Marsh in recent weeks. According to the Financial Times, insurance analysts are now questioning whether Marsh will be able to maintain its strong record of earning growth as they draw up forecasts for the first quarter of next year. Doubts also exist over how much the company may have to pay regulators and lawyers to put the scandal behind.
",business
"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.
",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"".
",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.
",business
"Weak dollar trims Cadbury profits
 
 The world's biggest confectionery firm, Cadbury Schweppes, has reported a modest rise in profits after the weak dollar took a bite out of its results.
 
 Underlying pre-tax profits rose 1% to £933m ($1.78bn) in 2004, but would have been 8% higher if currency movements were stripped out. The owner of brands such as Dairy Milk, Dr Pepper and Snapple generates more than 80% of its sales outside the UK. Cadbury said it was confident it would hit its targets for 2005. ""While the external commercial environment remains competitive, we are confident that we have the strategy, brands and people to deliver within our goal ranges in 2005,"" said chief executive Todd Stitzer.
 
 The modest profit rise had been expected by analysts after the company said in December that the poor summer weather had hit soft drink sales in Europe.
 
 Cadbury said its underlying sales were up by 4% in 2004. Growth was helped by its confectionery brands - including Cadbury, Trident and Halls - which enjoyed a ""successful"" year, with like-for-like sales up 6%. Drinks sales were up 2% with strong growth in US carbonated soft drinks, led by Dr Pepper and diet drinks, offset by the weaker sales in Europe. Cadbury added that its Fuel for Growth cost-cutting programme had saved £75m in 2004, bringing total cost savings to £100m since the scheme began in mid-2003. The programme is set to close 20% of the group's factories and shed 10% of the workforce. Cadbury Schweppes employs more than 50,000 people worldwide, with about 7,000 in the UK.
",business
"WorldCom director admits lying
 
 The former chief financial officer at US telecoms firm WorldCom has admitted before a New York court that he used to lie to fellow board members.
 
 Speaking at the trial of his former boss Bernard Ebbers, Scott Sullivan said he lied to the board to cover up the hole in WorldCom's finances. Mr Ebbers is on trial for fraud and conspiracy in relation to WorldCom's collapse in 2002. He pleads not guilty. The firm had been overstating its accounts by $11bn (£8.5bn). Mr Sullivan, 42, has already pleaded guilty to fraud and will be sentenced following Mr Ebbers' trial, where he is appearing as a prosecution witness. Mr Ebbers, 63, has always insisted that he was unaware of any hidden shortfalls in WorldCom's finances.
 
 In the New York court on Wednesday, Mr Ebbers' lawyer Reid Weingarten asked Mr Sullivan: ""If you believe something is in your interest, you are willing and able to lie to accomplish it, isn't that right?""
 
 ""On that date, yes. I was lying,"" replied Mr Sullivan. Mr Weingarten has suggested that Mr Sullivan is implicating Mr Ebbers only to win a lighter sentence, something Mr Sullivan denies. Mr Sullivan also rejects a suggestion that he had once told fellow WorldCom board member Bert Roberts that Mr Ebbers was unaware of the accounting fraud at WorldCom. The trial of Mr Ebbers is now into its third week.
 
 Under 23 hours of questioning from a federal prosecutor, Mr Sullivan has previously told the court that he repeatedly warned Mr Ebbers that falsifying the books would be the only way to meet Wall Street revenue and earnings expectations. Mr Sullivan claims that Mr Ebbers refused to stop the fraud. Mr Ebbers could face a sentence of 85 years if convicted of all the charges he is facing. WorldCom's problems appear to have begun with the collapse of the dotcom boom which cut its business from internet companies. Prosecutors allege that the company's top executives responded by orchestrating massive fraud over a two-year period. WorldCom emerged from bankruptcy protection in 2004, and is now known as MCI.
",business
"Venezuela and China sign oil deal
 
 Venezuelan president Hugo Chavez has offered China wide-ranging access to the country's oil reserves.
 
 The offer, made as part of a trade deal between the two countries, will allow China to operate oil fields in Venezuela and invest in new refineries. Venezuela has also offered to supply 120,000 barrels of fuel oil a month to China. Venezuela - the world's fifth largest oil exporter - sells about 60% of its output to the United States. Mr Chavez's administration, which has a strained relationship with the US, is trying to diversify sales to reduce its dependence on its largest export market.
 
 China's quick-growing economy's need for oil has contributed to record-high oil prices this year, along with political unrest in the Middle East and supply bottlenecks. Oil prices are finishing the year roughly 30% higher than they were in January 2004.
 
 In 2004, according to forecasts from the Ministry of Commerce, China's oil imports will be 110m tons, up 21% on the previous year. China has been a net importer of oil since the mid 1990's with more than a third of the oil and gas it consumes coming from abroad. A lack of sufficient domestic production and the need to lessen its dependence on imports from the Middle East has meant that China is looking to invest in other potential markets such as Latin America. Mr Chavez, who is visiting China, said his country would put its many of its oil facilities at the disposal of China. Chinese firms would be allowed to operate 15 mature oil fields in the east of Venezuela, which could produce more than one billion barrels, he confirmed. The two countries will also continue a joint venture agreement to produce stocks of the boiler fuel orimulsion. Mr Chavez has also invited Chinese firms to bid for gas exploration contracts which his government will offer next year in the western Gulf of Venezuela. The two countries also signed a number of other agreements covering other industries including mining.
",business
"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.
",business
"Dollar drops on reserves concerns
 
 The US dollar has dropped against major currencies on concerns that central banks may cut the amount of dollars they hold in their foreign reserves.
 
 Comments by South Korea's central bank at the end of last week have sparked the recent round of dollar declines. South Korea, which has about $200bn in foreign reserves, said it plans instead to boost holdings of currencies such as the Australian and Canadian dollar. Analysts reckon that other nations may follow suit and now ditch the dollar. At 1300 GMT, the euro was up 0.9% on the day at 1.3187 euros per US dollar. The British pound had added 0.5% to break through the $1.90 level, while the dollar had fallen by 1.3% against the Japanese yen to trade at 104.16 yen.
 
 At the start of the year, the US currency, which had lost 7% against the euro in the final three months of 2004 and had fallen to record lows, staged something of a recovery.
 
 Analysts, however, pointed to the dollar's inability recently to extend that rally despite positive economic and corporate data, and highlighted the fact that many of the US's economic problems had not disappeared. The focus once again has been on the country's massive trade and budget deficits, with predictions of more dollar weakness to come. ""The comments from Korea came at a time when sentiment towards the dollar was already softening,"" said Ian Gunner, a trader at Mellon Financial. On Tuesday, traders in Asia said that both South Korea and Taiwan had withdrawn their bids to buy dollars at the start of the session. Mansoor Mohi-Uddin, chief currency strategist at UBS, said that there was a sentiment in the market that ""central banks from Asia and the Middle East are buying euros"". A report last month already showed that the dollar was losing its allure as a currency that offered rock-steady returns and stability. Compiled by Central Banking Publications and sponsored by the UK's Royal Bank of Scotland, the survey found 39 nations out of 65 questioned were increasing their euro holdings, with 29 cutting back on the US dollar.
",business
"Cannabis hopes for drug firm
 
 A prescription cannabis drug made by UK biotech firm GW Pharmaceuticals is set to be approved in Canada.
 
 The drug is used to treat the central nervous system and alleviate the symptoms of multiple sclerosis (MS). A few weeks ago, shares in GW Pharma lost a third of their value after UK regulators said they wanted more evidence about the drug's benefits. But now Canadian authorities have said the Sativex drug will be considered for approval.
 
 Approximately 50,000 people in Canada have been diagnosed with MS and 85,000 people are suffering from the condition in the UK. Many patients already smoke cannabis to relieve their symptoms.
 
 Now, GW Pharma's Sativex mouth spray could be legally available to MS sufferers in Canada within the next few months. This will be the first time a cannabis-based drug has been approved anywhere in the world, representing a landmark for GW Pharma and for patients with MS. Final approval in Canada should now be little more than a formality, analysts said, and the company expects full approval for Sativex early in 2005. ""We are delighted to receive this qualifying notice from Health Canada and look forward to receiving regulatory approval for Sativex in Canada in the early part of 2005,"" said GW Pharma executive chairman Dr Geoffrey Guy.
 
 The UK government granted GW Pharma a licence to grow the cannabis plant for medical research purposes. Satifex consists of a cannabis extract containing tetrahydrocannabinol and cannabidiol, a cocktail that has also proved effective in treating patients with arthritis. Thousands of plants are grown at a secret location somewhere in the English countryside. Despite hopes of regulatory approval last year, a series of delays has put back Sativex's launch in the UK. The latest news sent shares in GW Pharma up 8.5p, or 8.1%, to 113.5p.
",business
"Bat spit drug firm goes to market
 
 A German firm whose main product is derived from the saliva of the vampire bat is looking to raise more than 70m euros ($91m; £49m) on the stock market.
 
 The firm, Paion, said that it hoped to sell 5 million shares - a third of the firm - for 11-14 euros a share. Its main drug, desmoteplase, is based on a protein in the bat's saliva. The protein stops blood from clotting - which helps the bat to drink from its victims, but could also be used to help stroke sufferers. The company's shares go on sale later this week, and are scheduled to start trading on the Frankfurt Stock Exchange on 10 February. If the final price is at the top of the range, the company could be valued at as much as 200m euros. The money raised will be spent largely on developing the company's other drugs, since desmoteplase has already been licensed to one manufacturer, Forest Laboratories.
",business
"Nasdaq planning $100m share sale
 
 The owner of the technology-dominated Nasdaq stock index plans to sell shares to the public and list itself on the market it operates.
 
 According to a registration document filed with the Securities and Exchange Commission, Nasdaq Stock Market plans to raise $100m (£52m) from the sale. Some observers see this as another step closer to a full public listing. However Nasdaq, an icon of the 1990s technology boom, recently poured cold water on those suggestions.
 
 The company first sold shares in private placements during 2000 and 2001. It technically went public in 2002 when the stock started trading on the OTC Bulletin Board, which lists equities that trade only occasionally. Nasdaq will not make money from the sale, only investors who bought shares in the private placings, the filing documents said. The Nasdaq is made up shares in technology firms and other companies with high growth potential. It was the most potent symbol of the 1990s internet and telecoms boom, nose-diving after the bubble burst. A recovery in the fortunes of tech giants such as Intel, and dot.com survivors such as Amazon has helped revive its fortunes.
",business
"Euronext 'poised to make LSE bid'
 
 Pan-European group Euronext is poised to launch a bid for the London Stock Exchange, UK media reports say.
 
 Last week, the LSE rejected a takeover proposal from German rival Deutsche Boerse - the 530 pence-a-share offer valued the exchange at about £1.35bn. The LSE, which saw its shares rise 25%, said the bid undervalued the business. Euronext - formed after the Brussels, Paris and Amsterdam exchanges merged - is reportedly working with three investment banks on a possible offer. The LSE, Europe's biggest stock market, is a key prize, listing stocks with a total capitalisation of £1.4 trillion.
 
 Euronext already has a presence in London due to its 2001 acquisition of London-based options and futures exchange Liffe. Trades on the LSE are cleared via Clearnet, in which Euronext has a quarter stake.
 
 Euronext, which also operates an exchange in Lisbon, last week appointed UBS and ABN Amro as additional advisors. It is also working with Morgan Stanley. Despite the rejection of the Deutsche Boerse bid last week, Werner Seifert, chief executive of the Frankfurt-based exchange, may well come back with an improved offer. It has long wanted to link up with London, and the two tried and failed to seal a merger in 2000. Responding to the LSE's rebuff, Deutsche Boerse - whose market capitalisation is more than £3bn - said it believed it could show its proposal offered benefits, and that it still hoped to make a cash bid.
 
 Last week the LSE said not only was the bid undervalued, but that it had ""been advised that there can be no assurance that any transaction could be successfully implemented"". However, it has indicated it is open for further talks. Meanwhile, German magazine Der Spiegel said part of Mr Seifert's negotiations with the LSE were about where to base the future board of any merged exchange. While Mr Seifert has suggested a merged company would be run out of London, the mayor of Frankfurt has raised concerns that such a move could cost German jobs. Many analysts believe German Boerse has more financial firepower than Euronext if it came to a bidding war.
",business
"EU 'too slow' on economic reforms
 
 Most EU countries have failed to put in place policies aimed at making Europe the world's most competitive economy by the end of the decade, a report says.
 
 The study, undertaken by the European Commission, sought to assess how far the EU has moved towards meeting its economic targets. In 2000, EU leaders at a summit in Lisbon pledged the European economy would outstrip that of the US by 2010. Their economic targets became known as the Lisbon Agenda. But the Commission report says that, in most EU countries, the pace of economic reform has been too slow, and fulfilling the Lisbon ambitions will be difficult - if not impossible.
 
 Only the UK, Finland, Belgium, Denmark, Ireland and the Netherlands have actually followed up policy recommendations. Among the biggest laggards, according to the report, are Greece and Italy. The Lisbon Agenda set out to increase the number of people employed in Europe by encouraging more older people and women to stay in the workforce. It also set out to raise the amount the private sector spends on research and development, while bringing about greater discipline over public spending and debt levels. Combined with high environmental standards and efforts to level the playing field for businesses throughout the EU, the plan was for Europe to become the world's most dynamic economy by 2010. Next week, the Commission will present revised proposals to meet the Lisbon goals. Many people expect the 2010 target to be quietly dropped.
",business
"Parmalat to return to stockmarket
 
 Parmalat, the Italian dairy company which went bust after an accounting scandal, hopes to be back on the Italian stock exchange in July.
 
 The firm gained protection from creditors in 2003 after revealing debts of 14bn euros ($18.34bn; £9.6bn). This was eight times higher than it had previously stated. In a statement issued on Wednesday night, Parmalat Finanziaria detailed administrators' latest plans for re-listing the shares of the group.
 
 As part of the re-listing on the Italian stock exchange, creditors' debts are expected to be converted into shares through two new share issues amounting to more than 2bn euros. The company's creditors will be asked to vote on the plan later this year. The plan is likely to give creditors of Parmalat Finanziaria shares worth about 5.7% of the debts they are owed. This is lower than the 11.3% creditors previously hoped to receive. Creditors of Parmalat, the main operating company, are likely to see the percentage of debt they receive fall from 7.3% to 6.9%.
 
 Several former top Parmalat executives are under investigation for the fraud scandal. Lawmakers said on Wednesday night Enrico Bondi, the turnaround specialist appointed by the Italian government as Parmalat's chief executive, spoke positively about the company during a closed-door hearing of the Chamber of Deputies industry commission. ""Bondi supplied us with elements of positive results on the industrial positions and on the history of debt which will find a point of solution through the Parmalat group's quotation on the market in July,"" Italian news agency Apcom quoted several lawmakers as saying in a statement.
",business
"Economy 'strong' in election year
 
 UK businesses are set to prosper during the next few months - but this could trigger more interest rate rises, according to a report.
 
 Optimism is at its highest since 1997 and business will reap the benefits of a continuing rise in public spending, say researchers at BDO Stoy Hayward. The Bank of England is expected to keep rates on hold this week - but they could go up later in the year. Rates are likely to rise after the anticipated general election in May. The BDO optimism index - a leading indicator of GDP growth two quarters ahead edged up in January to 102.5, from 102.2 in October. The rise is due, in part, to an increase in public spending and increased merger and acquisition activity.
 
 The only thing blighting business optimism this year will be uncertainties associated with the general election, BDO said. Its BDO's output index - which predicts GDP movements a quarter in advance - remained at 100.8 for January, implying GDP growth at 2.9% in the second quarter of 2005. However, the output index is being held back by recent interest rate rises, sterling's strength against the dollar and high oil prices, the group noted. Its inflation index, which has risen continuously over the last 8 months, climbed to 110.0 in January from 108.0 in October last year. ""The UK is looking strong going into the general election, but businesses need to prepare themselves for a jolt ahead as the Bank of England reacts to growth and inflationary pressures,"" said Peter Hemington, partner at BDO Stoy Hayward. ""Growth will probably slow by the end of 2005 and it is likely that we will see higher interest rates or a sharp drop in demand for products and services.""
",business
"Winn-Dixie files for bankruptcy
 
 US supermarket group Winn-Dixie has filed for bankruptcy protection after succumbing to stiff competition in a market dominated by Wal-Mart.
 
 Winn-Dixie, once among the most profitable of US grocers, said Chapter 11 protection would enable it to successfully restructure. It said its 920 stores would remain open, but analysts said it would most likely off-load a number of sites. The Jacksonville, Florida-based firm has total debts of $1.87bn (£980m). In its bankruptcy petition it listed its biggest creditor as US foods giant Kraft Foods, which it owes $15.1m.
 
 Analysts say Winn-Dixie had not kept up with consumers' demands and had also been burdened by a number of stores in need of upgrading. A 10-month restructuring plan was deemed a failure, and following a larger-than-expected quarterly loss earlier this month, Winn-Dixie's slide into bankruptcy was widely expected. The company's new chief executive Peter Lynch said Winn-Dixie would use the Chapter 11 breathing space to take the necessary action to turn itself around. ""This includes achieving significant cost reductions, improving the merchandising and customer service in all locations and generating a sense of excitement in the stores,"" he said. Yet Evan Mann, a senior bond analyst at Gimme Credit, said Mr Lynch's job would not be easy, as the bankruptcy would inevitably put off some customers. ""The real big issue is what's going to happen over the next one or two quarters now that they are in bankruptcy and all their customers see this in their local newspapers,"" he said.
",business
"Salary scandal in Cameroon
 
 Cameroon says widespread corruption in its finance ministry has cost it 1bn CFA francs ($2m; £1m) a month.
 
 About 500 officials are accused of either awarding themselves extra money or claiming salaries for ""non-existent"" workers. Prime Minister Ephraim Inoni, who vowed to tackle corruption when he came to office last year, said those found guilty would face tough punishments. The scam is believed to have begun in 1994.
 
 The prime minister's office said the alleged fraud was uncovered during an investigation into the payroll at the ministry. In certain cases, staff are said to have lied about their rank and delayed their retirement in order to boost their earnings. The prime minister's office said auditors had found ""irregularities in the career structure of certain civil servants"". It added that the staff in question ""appear to have received unearned salaries, boosting the payroll"".
 
 Fidelis Nanga, a journalist based in the Cameroon capital Yaounde, said the government was considering taking criminal action against those found guilty and forcing them to repay any money owed. ""The prime minister has given instructions for exemplary penalties to be meted out against the accused and their accomplices if found guilty,"" he told the BBC's Network Africa programme.
 
 Mr Inoni launched an anti-corruption drive in December after foreign investors criticised a lack of transparency in the country's public finances. In one initiative designed to improve efficiency, civil servants who arrived late for work were locked out of their offices. The government now intends to carry out an audit of payrolls at all other government ministries. In a report compiled by anti-corruption body Transparency International in 2003, graft was said to be ""pervasive"" in Cameroon.
",business
"Five million Germans out of work
 
 Germany's unemployment figure rose above the psychologically important level of five million last month.
 
 On Wednesday, the German Federal Labour Agency said the jobless total had reached 5.037 million in January, which takes the jobless rate to 12.1%. ""Yes, we have effectively more than five million people unemployed,"" a government minister said earlier on ZDF public television. Unemployment has not been this high in Germany since the 1930s.
 
 Changes to the way the statistics are compiled partly explain the jump of 572,900 in the numbers. But the figures are embarrassing for the government. ""With the figures apparently the worst we've seen in the post-war period, these numbers are very charged politically,"" said Christian Jasperneite, an economist with MM Warburg. ""They could well put an end to the recent renaissance we've seen by the SPD [the ruling Social Democrats] in the polls, and with state elections due in Schleswig-Holstein and North Rhine-Westphalia, they may have an adverse effect on the government's chances there.""
 
 The opposition also made political capital from the figures. It said there are a further 1.5 million-2 million people on subsidised employment schemes who are, in fact, looking for real jobs. It added that government reforms, including unpopular benefit cuts, do not go far enough. Under the government's controversial ""Hartz IV"" reforms, which came into effect at the beginning of the year, both those on unemployment benefits and welfare support and those who are long-term unemployed are officially classified as looking for work. The bad winter weather also took its toll, as key sectors such as the construction sector laid off workers. Adjusted for the seasonal factors, the German jobless total rose by 227,000 in January from December.
",business
"Lloyd's of London head chides FSA
 
 The head of Lloyd's of London, the insurance market, has criticised Britain's financial watchdog, the Financial Services Authority (FSA).
 
 In a speech on Monday, Mr Prettejohn urged the FSA to force brokers to disclose the size of their commissions. ""The FSA should change, and change now"" said Mr Prettejohn, who wants it to move from ""disclosure on request"" to mandatory disclosure. The call came in a speech on improving the London insurance market.
 
 ""The FSA should not bide their time and 'wait and see'. They should seize the moment,"" Mr Prettejohn, Lloyd's chief executive said. The FSA took over regulation of the general insurance sector in January, but it sidestepped calls to require brokers to disclose the commissions they earn from insurers to their clients. Last week, the City watchdog gave brokers and insurers guidance on managing conflicts of interest. Brokers must give information on their commissions if, and only if, their customers request it, the FSA said.
 
 In the US, lack of transparency about brokers' commissions has led to problems. The world's biggest insurance broker Marsh & McLennan said last week it would pay $850m to settle charges, raised by New York Attorney General Eliot Spitzer in October, that it sought to rig bids in conjunction with insurers. The probe centred around so-called contingent commissions, whereby brokers were rewarded according to how much business they brought to an insurer, an arrangement that did not always benefit brokers' customers. All of the insurance business written in the Lloyd's market is placed via brokers.
",business
"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.
",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.
",business
"Deutsche attacks Yukos case
 
 German investment bank Deutsche Bank has challenged the right of Yukos to claim bankruptcy protection in the US.
 
 In a court filing on Tuesday, it said the Russian oil giant has few Texas ties beyond bank accounts and a Texas-based finance chief. Deutsche Bank claimed Yukos had artificially manufactured a legal case to stop the sale of its main asset. It had wanted to help fund Gazprom's plans for a $10bn (£5.18bn) bid for Yukos unit Yuganskneftegas.
 
 Deutsche Bank would have earned large fees from the deal, which could not be carried out because US chapter 11 bankruptcy rules made the Kremlin's auction of Yuganskneftegas on 19 December illegal under US law.
 
 But the US bankruptcy court judge in Texas granted Yukos an injunction that barred Gazprom and its lenders from taking part. Yuganskneftegas will ultimately end up with Gazprom. The winning bidder at the auction was a previously unknown firm, Baikal Finance Group, which was snapped up days later by Rosneft, a Russian oil firm that is in the process of merging with Gazprom. The effect of these transactions is to renationalise Yuganskneftegas. Deutsche Bank contends Yukos filed for bankruptcy earlier this month in Texas in a desperate and unsuccessful bid to stave off the 19 December auction of its top unit by the Russian government, which was in a tax dispute with Yukos.
 
 ""This blatant attempt to artificially manufacture a basis for jurisdiction constitutes cause to dismiss this case,"" Deutsche Bank said in its court filing. Mike Lake, a spokesman for Yukos' lawyers, said on Tuesday that the company stands by its legal action. Yukos is confident of its right to US bankruptcy protection, and ""we are prepared to be back in court defending that position again,"" he said. Yukos has said it intends to seek $20bn in damages from the buyer of Yuganskneftegas once the sale finally goes through. In its filing, Deutsche Bank said Houston was ""a jurisdiction in which Yukos owns no real or personal property and conducts no business operations.""
 
 It also said the US bankruptcy court should not become involved in ""a tax dispute between the Federation and one of its corporate citizens"". It suggested the European Court or an international arbitration tribunal were more appropriate jurisdictions for the legal fight between Russia and Yukos. The next hearing in the bankruptcy is expected on 6 January. Analysts believe the tax dispute between the Russian government and Yukos is partly driven by Russian president Vladimir Putin's hostility hostility to the political ambitions of ex-Yukos boss Mikhail Khordokovsky. Mr Khodorkovsky is in jail, and on trial for fraud and tax evasion.
",business
"Monsanto fined $1.5m for bribery
 
 The US agrochemical giant Monsanto has agreed to pay a $1.5m (£799,000) fine for bribing an Indonesian official.
 
 Monsanto admitted one of its employees paid the senior official two years ago in a bid to avoid environmental impact studies being conducted on its cotton. In addition to the penalty, Monsanto also agreed to three years' close monitoring of its business practices by the American authorities. It said it accepted full responsibility for what it called improper activities.
 
 A former senior manager at Monsanto directed an Indonesian consulting firm to give a $50,000 bribe to a high-level official in Indonesia's environment ministry in 2002. The manager told the company to disguise an invoice for the bribe as ""consulting fees"".
 
 Monsanto was facing stiff opposition from activists and farmers who were campaigning against its plans to introduce genetically-modified cotton in Indonesia. Despite the bribe, the official did not authorise the waiving of the environmental study requirement. Monsanto also has admitted to paying bribes to a number of other high-ranking officials between 1997 and 2002.
 
 The chemicals-and-crops firm said it became aware of irregularities at a Jakarta-based subsidiary in 2001 and launched an internal investigation before informing the US Department of Justice and the Securities and Exchange Commission (SEC). Monsanto faced both criminal and civil charges from the Department of Justice and the SEC. ""Companies cannot bribe their way into favourable treatment by foreign officials,"" said Christopher Wray, assistant US attorney general. Monsanto has agreed to pay $1m to the Department of Justice, adopt internal compliance measures, and co-operate with continuing civil and criminal investigations. It is also paying $500,000 to the SEC to settle the bribe charge and other related violations. Monsanto said it accepted full responsibility for its employees' actions, adding that it had taken ""remedial actions to address the activities in Indonesia"" and had been ""fully co-operative"" throughout the investigative process.
",business
"US manufacturing expands
 
 US industrial production increased in December, according to the latest survey from the Institute for Supply Management (ISM).
 
 Its index of national manufacturing activity rose to 58.6 last month from 57.8 in November. A reading above 50 indicates a level of growth. The result for December was slightly better than analysts' expectations and the 19th consecutive expansion. The ISM said the growth was driven by a ""significant"" rise in the new orders. ""This completes a strong year for manufacturing based on the ISM data,"" said chairman of the ISM's survey committee. ""While there is continuing upward pressure on prices, the rate of increase is slowing and definitely trending in the right direction.""
 
 The ISM's index of national manufacturing activity is compiled from monthly responses of purchasing executives at more than 400 industrial companies, ranging from textiles to chemicals to paper, and has now been above 50 since June 2003. Analysts expected December's figure to come in at 58.1. The ISM manufacturing index's main sister survey - the employment index - eased to 52.7 in December from 57.6 in November, while its ""prices paid"" index, measuring the cost to businesses of their inputs, also eased to 72.0 from 74.0. The ISM's ""new orders"" index rose to 67.4 from 61.5.
",business
"McDonald's boss Bell dies aged 44
 
 Charlie Bell, the straight-talking former head of fast-food giant McDonald's, has died of cancer aged 44.
 
 Mr Bell was diagnosed with colorectal cancer in May last year, a month after taking over the top job. He resigned in November to fight the illness. Joining the company as a 15-year-old part-time worker, Mr Bell quickly moved through its ranks, becoming Australia's youngest store manager at 19. A popular go-getter, he is credited with helping revive McDonald's sales. Mr Bell leaves a wife and daughter. ""As we mourn his passing, I ask you to keep Charlie's family in your hearts and prayers,"" chief executive James Skinner said in a statement. ""And remember that in his abbreviated time on this earth, Charlie lived life to the fullest."" ""No matter what cards life dealt, Charlie stayed centred on his love for his family and for McDonald's.""
 
 After running the company's Australian business in the 1990s, Mr Bell moved to the US in 1999 to run operations in Asia, Africa and the Middle East. In 2001, he took over the reins in Europe, McDonald's second most important market. He became chief operating officer and president in 2002. Mr Bell took over as chief executive after his predecessor as CEO, Jim Cantalupo, died suddenly of a heart attack in April. Having worked closely with Mr Cantalupo, who came out of retirement to turn McDonald's around, Mr Bell focused on boosting demand at existing restaurants rather than follow a policy of rapid expansion. He had promised not to let the company get ""fat, dumb and happy,"" and, according to Reuters, once told analysts that he would shove a fire hose down the throat of competitors if he saw them drowning. Mr Bell oversaw McDonald's ""I'm lovin' it"" advertising campaign and introduced successes such as McCafe, now the biggest coffee shop brand in Australia and New Zealand. Colleagues said that Mr Bell was proud of his humble beginnings, helping out behind cash tills and clearing tables when visiting restaurants.
",business
"Japan turns to beer alternatives
 
 Japanese brewers are increasingly making money from beer-flavoured drinks rather than beer itself
 
 Beer and spirits are heavily taxed in Japan, driving breweries to search for alternatives. Japan's long economic downturn helped drive the trend, as drinkers looked for cheaper opportunities to drown their sorrows. Now, according to Asahi Breweries, the market for so-called ""beer-like"" drinks is set to grow 84% this year.
 
 Asahi is predicting profits to rise 50% in 2005 as it launches a drink based on soybean peptides rather than malt. The chosen name, ""Shinnama"" or ""new draft"", disguises its non-beer nature. But despite a record profit in 2004 of 30.6bn yen ($291m; £154m), up 31.8% on the previous year, Asahi is coming late to the market. Key rival Sapporo is already well-established with the beer-flavoured ""Draft One"". Suntory, meanwhile, is doing well with ""Super Blue"", which combines happoshu - an existing low-cost beer alternative made with malt and seawater - and shochu, a distilled alcohol derived from sweet potatoes or barley. Happoshu has been a mainstay of brewery profits for years, taking over from beer thanks to its low tax and therefore low cost. Kirin, the fourth big name, is launching its own ""third-type"" drink in April.
",business
"French boss to leave EADS
 
 The French co-head of European defence and aerospace group EADS Philippe Camus is to leave his post.
 
 Mr Camus said in a statement that he has accepted the invitation to return full-time to the Lagardere group, which owns 30% of EADS. ""I will give up my role as soon as the board of directors asks me to do so,"" he said. Airbus head Noel Forgeard is now set to replace Mr Camus, bringing the company's power struggle to an end. Fighting between Mr Camus and Mr Forgeard has hit the headlines in France and analysts feared that this fighting could destabilise the defence and aerospace group. French finance minister Herve Gaymard is on record as saying that he ""deplored"" the infighting at the company. The company should now be able put this dispute behind it, with the departure of Mr Camus and with the clear support given to Mr Forgeard by the Lagardere group, the main French shareholder of EADS. The other main shareholders of EADS are the French government (15%) , who also support Mr Forgeard, and Germany's DaimlerChrysler (30%). Rainer Hertrich, the German co-head of EADS will also step down when his contract expires next year.
 
 Mr Camus recently came under pressure as it became clear that the A380 superjumbo was running over budget. EADS - Airbus' majority owner - admitted earlier this week that the project was running 1.45bn euros (£1bn; $1.9bn) over budget. But Mr Forgeard has denied this, telling French media that there is no current overrun in the budget. ""But for the sake of transparency, we told our shareholders last week that if we look at the forecast for total costs of the project up to 2010, there is a risk that we will go over by around 10%, which is about 1bn euros (£686m; $1.32bn),"" he told France's LCI Television. Due to enter service in 2006, the A380 will replace the Boeing 747 jumbo as the world's biggest passenger aircraft.
",business
"US budget deficit to reach $368bn
 
 The US budget deficit is set to hit a worse-than-expected $368bn (£197bn) this year, officials said on Tuesday.
 
 The cost of military operations still needs to be factored in, with analysts saying the deficit could end up a further $100bn in the red. Past Congressional Budget Office (CBO) forecasts said there would be a $348bn shortfall in the 2005 fiscal year. In recent months, the dollar has weakened amid market jitters about the size of the budget and trade deficits. In November, the gap between US exports and imports widened to more than $60bn, a record figure. The CBO says it envisages a further ""orderly"" decline in the greenback over the next two years as the twin deficit drives dollar investors away. But the non-partisan fiscal watchdog notes the declines will help exporters and boost US economic growth.
 
 The budget deficit hit a record $412bn in the 12 months to 30 September 2004, after reaching $377bn in the previous fiscal year. The CBO also forecast a total shortfall of $855bn for the years from 2006 to 2015, an improvement on previous projections. However, analysts say the new figures fail to take into account the potential $2-$3.8 trillion costs of the president's plan to revamp state pensions and extend tax cuts. The figure could also be worsened by any further military costs. Republicans have blamed the size of the deficit on slow economic conditions after the 11 September attacks and ongoing military operations in Iraq and Afghanistan. One of President George W Bush's election pledges was to halve the budget deficit within five years. But Democrats have accused the president of excluding Iraq-related costs from previous budgets to meet the aim of reducing the deficit, a charge which the administration denies. On Tuesday, the US administration asked Congress for additional funds for military operations.
",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.
",business
"Tate & Lyle boss bags top award
 
 Tate & Lyle's chief executive has been named European Businessman of the Year by a leading business magazine.
 
 Iain Ferguson was awarded the title by US publication Forbes for returning one of the UK's ""venerable"" manufacturers to the country's top 100 companies. The sugar group had been absent from the FTSE 100 for seven years until Mr Ferguson helped it return to growth. Tate's shares have leapt 55% this year, boosted by firming sugar prices and sales of its artificial sweeteners.
 
 ""After years of a sagging stock price and a seven-year hiatus from the FTSE 100, one of Britain's venerable manufacturers has returned to the vaunted index,"" Forbes said. Mr Ferguson took the helm at the company in 2003, after spending most of his career at consumer goods giant Unilever. Tate & Lyle, which was an original member of the historic FT-30 index in 1935, operates more than 41 factories and 20 more additional production facilities in 28 countries. Previous winners of the Forbes award include Royal Bank of Scotland chief executive Fred Goodwin and former Vodafone boss Chris Gent.
",business
"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.
",business
"India unveils anti-poverty budget
 
 India is to boost spending on primary schools and health in a budget flagged as a boost for the ordinary citizen.
 
 India's defence budget has also been raised 7.8% to 830bn rupees ($19bn). The priority for Finance Minister Palaniappan Chidambaram is to fight poverty and keep the government's Communist allies onside. But his options are limited by a new law which makes him cut the budget deficit, which he said would be 4.5% of GDP in the year to March 2005. The country's overall deficit is thought to be more than 10%, if the spending of India's 35 states and territories is included. Under the fiscal responsibility law, Mr Chidambaram has to trim the deficit by 0.3 percentage points each year, a target he says he has now met for the current year.
 
 But the heavy spending on poverty reduction means the 2005-6 target for the deficit will be 4.3%, Mr Chidambaram said - falling short of the new law's requirement. ""I was left with no option but to press the pause button vis a vis the act,"" he said. The following year, though, would have to be back on track, he warned.
 
 ""I may add that we are perilously close to the limits of fiscal prudence and there is no more room for spending beyond our means,"" he said. The coming year's reduction has meant bringing more of the businesses in India's burgeoning services sector into the tax system and restructuring the personal tax system, although there are numerous corporate tax and duty reductions built into the budget.
 
 Presenting his budget in the lower house of parliament, Mr Chidambaram said the Indian economy was performing strongly and that inflation has been reined in. He said India's economy grew 6.9% in 2004. In his budget Mr Chidambaram has:
 
 - Increased spending on primary education to 71.56bn rupees ($1.6bn) 
  - Increased spending on health to 102.8bn rupees ($2.35bn) 
  - Announced that 80bn rupees ($1.8bn) will be spent on building rural infrastructure 
  - Pledged 102.16bn rupees ($2.3bn) for tsunami victims 
  - Increased flow of funds to agriculture by 30% 
  - Announced a package for the sugar industry
 
 In addition, up to 100bn rupees ($2.3bn) to be spent on infrastructure will be sourced by borrowing against the country's foreign exchange reserves, keeping budgeted spending under control. ""Given the resilience of the Indian economy... it is possible to launch a direct assault on poverty,"" Mr Chidambaram said. ""The whole purpose of democratic government is to eliminate poverty."" The new Indian government, led by the Congress Party, was voted into power last May after it pledged to introduce economic reforms with a ""human face"".
 
 The finance minister says he is committed to continue reforming India's tax system while expanding the tax base. As part of his reforms he has announced:
 
 - Duty cuts on capital goods and raw materials 
  - Expanded service tax net 
  - Raised the income-tax threshold to 100,000 rupees ($2,300) 
  - Reduced income tax for those earning less than 250,000 rupees ($5,700) to 20% 
  - Reduced corporate tax rates to 30%
 
 An annual economic survey released on Friday said India needed to ease limit restriction on foreign investment, reform labour laws and cut duties apart from widening the tax base for long-term economic growth. But Mr Chidambaram is under pressure from the Communist parties to focus on increasing social spending. The Communists are also hostile to measures seeking to increase foreign investment and allow companies to hire and fire employees at will. In recent months, they have expressed their displeasure at the government's economic reform plans including increasing foreign direct investment in telecommunication and aviation. In his last budget, Mr Chidambaram had pledged billions of dollars for improving education and health services for the poor as well as special assistance for farmers.
",business
"US interest rate rise expected
 
 US interest rates are expected to rise for the fifth time since June following the US Federal Reserve's latest rate-setting meeting later on Tuesday.
 
 Borrowing costs are tipped to rise by a quarter of a percentage point to 2.25%. The move comes as a recovery in the US economy, the world's biggest, shows signs of robustness and sustainability. The dollar's record-breaking decline, meanwhile, has spooked markets and along with high oil prices has raised concerns about the pace of inflation. ""We are seeing evidence that inflation is moving higher,"" said Ken Kim, an analyst at Stone & McCarthy Research. ""It's not a risk, it's actually happening."" Mr Kim added that borrowing costs could rise further.
 
 The Fed has said that it will move in a ""measured"" way to combat price growth and lift interest rates from their 40-year lows that were prompted by sluggish US and global growth.
 
 With the economic picture now looking more rosy, the Fed has implemented quarter percentage point rises in June, August, September and November. Although the US economy grew at an annual rate of 3.9% in the three months to September, analysts warn that Fed has to be careful not to move too aggressively and take the wind out of the recovery's sails. Earlier this month figures showed that job creation is still weak, while consumer confidence is subdued. ""I think the Fed feels it has a fair amount of flexibility,"" said David Berson, chief economist at Fannie Mae. ""While inflation has moved up, it hasn't moved up a lot."" ""If economic growth should subside... the Fed would feel it has the flexibility to pause in its tightening. ""But if economic growth picked up and caused core inflation to rise a little more quickly, I think the Fed would be prepared to tighten more quickly as well.""
",business
"Strong quarterly growth for Nike
 
 Nike has reported its best second-quarter earnings, helped by strong demand for its athletic shoes and Converse sneakers.
 
 The global sports giant said it posted a profit of $261.9m (£135.6m), for the three months to 30 November, up from $179.1m in the same period last year. Revenues increased 11% to $3.1bn, from $2.8bn for the same period in 2003. Nike, whose products are endorsed by Tiger Woods among other sports stars, said ""demand continues to grow"". The results came after a strong first quarter of the year for the firm based in Beaverton, Oregon.
 
 Philip Knight, chairman and chief executive, said: ""Nike's second-quarter revenues and earnings per share reached all-time high levels as a result of solid performance across our global portfolio. ""Our businesses in the United States and emerging markets such as China, Russia and Turkey, combined with favourable European exchange rates, helped drive much of this growth."" He added: ""With the first half of our fiscal year in the books, we remain confident that our business strategy and consistent execution will allow us to deliver on our goals of healthy, profitable growth."" The firm reported worldwide futures orders for athletic footwear and gear, scheduled for delivery from December 2004 to April 2005, of $4.9bn. That is 9.1% higher than such orders reported for the same period last year.
",business
"Disney settles disclosure charges
 
 Walt Disney has settled charges from US federal regulators that it failed to disclose how family members of directors were employed by the company.
 
 The media giant was not fined by the Securities and Exchange Commission, but has agreed to refrain from any future violations of securities law. Disney failed to tell investors that between 1999 and 2001 it employed three adult children of three then directors. The firm has neither admitted nor denied wrongdoing in the settlement.
 
 The three Disney directors in question in the central matter of the SEC's investigation - Reveta Bowers, Stanley Gold and Raymond Watson - have all since left the company, with Ms Bowers and Mr Watson both retiring, and Mr Gold quitting in 2003. Their children were paid between $60,000 (£30,800) and $150,000 a year, with shareholders not being informed. The SEC also found that Disney did not disclose that a 50% Disney-owned subsidiary company - Lifetime - employed the wife of current Disney director John Bryson, and that she earned more than $1m a year. Louise Bryson remains with Lifetime.
 
 Disney also failed to disclose payments to Air Shamrock, an airline owned by Mr Gold and fellow former Disney directors Roy Disney. Finally, Disney also did not reveal that it provided more than $200,000 annually for office space, secretarial services, and a leased car and driver to former director Thomas Murphy. ""Shareholders have a significant interest in information regarding relationships between the company and its directors,"" said SEC deputy enforcement director Linda Thomsen. ""Failure to comply with the SEC's disclosure rules in this area impedes shareholders' ability to evaluate the objectivity and independence of directors.""
",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.
",business
"US retail sales surge in December
 
 US retail sales ended the year on a high note with solid gains in December, boosted by strong car sales.
 
 Seasonally adjusted sales rose 1.2% in the month, compared to 0.1% a month earlier, boosted by a surge in shopping just before and after Christmas. Sales climbed 8% for the year, the best performance since an 8.5% rise in 1999, the Commerce Department added. The gains were led by a 4.3% jump in auto sales as dealers used enhanced offers to get cars out of showrooms. Dealers were forced to cut prices in December to maintain sales growth in a tough quarter when the usual end-of-year holiday sales boom was slow to get started.
 
 The increase in sales during December pushed total spending for the month to $349.4bn (£265.9bn). Sales for the year also broke through the $4 trillion mark for the first time - with annual sales coming in at $4.06 trillion However, if automotives are excluded from December's data, retail sales rose just 0.3% on the month. Home furnishings and furniture stores also performed well, rising 2.2%. But as well as hitting the shops, more US consumers were going online or using mail order for their purchases - with non-store retailers seeing sales rise by 1.9%. However, analysts said that the strong figures were unlikely to put the Federal Reserve Bank off its current policy of measured interest rate rises. ""Consumers for now remain willing to spend freely, sustaining the US expansion. Given that attitude, the Fed remains likely to continue boosting the Fed funds rate at upcoming meetings,"" UBS economist Maury Harris told Reuters.
 
 Retail sales are seen as a major part of consumer spending - which in turn makes up two-thirds of economic output in the US. Consumer spending has been picking up in recent years after slumping during 2001 and 2002 as the country battled to recover from its first recession of the decade and the World Trade Centre attacks. During that time, sales grew a lacklustre 2.9% in 2001 and 2.5% a year later. Looking ahead, analysts now expect improvement in jobs growth to feed through to the High Street with consumer spending remaining strong. The belief comes despite the latest labor department report showing a surprise rise in unemployment. The number of Americans filing initial jobless claims jumped to 367,000, the highest rate since September. However, long-term claims slipped to their lowest level since 2001.
",business
"Mixed reaction to Man Utd offer
 
 Shares in Manchester United were up over 5% by noon on Monday following a new offer from Malcolm Glazer.
 
 The board of Man Utd is expected to meet early this week to discuss the latest proposal from the US tycoon that values the club at £800m ($1.5bn). Manchester United revealed on Sunday that it had received a detailed proposal from Mr Glazer. A senior source at the club told the BBC: ""This time it's different"". The board is obliged to consider this deal. But the Man Utd supporters club urged the club to reject the new deal. Manchester United past and present footballers Eric Cantona and Ole Gunnar Solskjaer, and club manager Sir Alex Ferguson, have lent their backing to the supporters' group, Shareholders United. They have all spoken out against the bid.
 
 A spokesman for the supporters club said: ""I can't see any difference (compared to Mr Glazer's previous proposals) other than £200m less debt. ""He isn't bringing any money into the club; he'll use our money to buy it.""
 
 Mr Glazer's latest move is being led by Mr Glazer's two sons, Avi and Joel, according to the Financial Times. A proposal was received by David Gill, United's chief executive, at the end of last week, pitched at about 300p a share. David Cummings, head of UK equities for Standard Life Investments, said he believed a ""well funded"" 300p a share bid would be enough for Mr Glazer to take control of the club. ""I do not think there is anything that Manchester United fans can do about it,"" he told the BBC. ""They can complain about it but it is curtains for them. They may not want him but they are going to get him."" The US tycoon, who has been wooing the club for the last 12 months, has approached the United board with ""detailed proposals"", it has confirmed.
 
 Mr Glazer, who owns the Tampa Bay Buccaneers team, hopes this will lead to a formal bid being accepted. He is believed to have increased the amount of equity in the new proposal, though it is not clear by how much. For his proposal to succeed, he needs the support of United's largest shareholders, the Irish horseracing tycoons JP McManus and John Magnier. They own 29% of United through their Cubic Expression investment vehicle. Mr Glazer and his family hold a stake of 28.1%. But it is not yet known whether Mr McManus and Mr Magnier would support a Glazer bid. NM Rothschild, the investment bank, is advising Mr Glazer, according to the Financial Times. His previous adviser, JPMorgan, quit last year when Mr Glazer went ahead and voted against the appointment of three United directors to the board, against its advice. But the FT said it thought JP Morgan may still have had some role in financing Mr Glazer's latest financial proposal.
",business
"Singapore growth at 8.1% in 2004
 
 Singapore's economy grew by 8.1% in 2004, its best performance since 2000, figures from the trade ministry show.
 
 The advance, the second-fastest in Asia after China, was led by growth of 13.1% in the key manufacturing sector. However, a slower-than-expected fourth quarter points to more modest growth for the trade-driven economy in 2005 as global technology demand falls back. Slowdowns in the US and China could hit electronics exports, while the tsunami disaster may effect the service sector.
 
 Economic growth is set to halve in Singapore this year to between 3% and 5%. In the fourth quarter, the city state's gross domestic product (GDP) rose at an annual rate of 2.4%. That was up from the third quarter, when it fell 3.0%, but was well below analyst forecasts. ""I am surprised at the weak fourth quarter number. The main drag came from electronics,"" said Lian Chia Liang, economist at JP Morgan Chase. Singapore's economy had contracted over the summer, weighed down by soaring oil prices. The economy's poor performance in the July to September period followed four consecutive quarters of double-digit growth as Singapore bounced back strongly from the effects of the deadly Sars virus in 2003.
",business
"Further rise in UK jobless total
 
 The UK's jobless total rose for the second month in a row in December, official figures show.
 
 The number of people out of work rose 32,000 to 1.41 million in the last three months of 2004, even as 90,000 more people were in employment. Average earnings rose by 4.3% in the year to December up from November's 4.2%, the Office for National Statistics (ONS) added. Meanwhile, the benefit claimant total fell 11,000 to 813,200 last month. Throughout 2004, the number of people in work increased by 296,000 to 28.52 million - the highest figure since records began in 1971.
 
 The apparent discrepancy between rising unemployment and record numbers in work can be explained by an increase in the working population and a fall in those who are economically inactive. While the UK's jobless rate rose to 4.7% from 4.6% in the previous quarter, the rate still remains one of the lowest in the world, compared with 12.1% in Germany, 10.4% in Spain and 9.7% in France. But, despite more people being in work, the manufacturing sector continued to suffer, with 104,000 workers axed during the last quarter of 2004 - pushing employment in the sector to a record low of 3.24 million by the end of last year. The figures prompted some analysts to forecast that the Bank of England will almost certainly raise rates this year. Marc Ostwald, a strategist at Monument Securities told Reuters that while no immediate market impact could be expected, ""it is enough to underline that they (the BoE) will be more hawkish on rates"".
",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.
",business
"Chinese dam firm 'defies Beijing'
 
 The China Three Gorges Project Corp is refusing to obey a government order to st