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Abnormally warm and dry weather over most parts of China is seriously affecting crops the New China News Agency said. It said the drought has made rice planting difficult in eight provinces including Guangxi Sichuan and Hunan. Plant diseases and insect pests have increased in wheat-producing areas it said. The agency said some areas of Guangxi Hubei Shanxi and other provinces have been suffering a drought for more than seven months. The agency said the dry weather had reduced the amount of water stored by more than 20 pct compared with last March lowered the water level of many rivers reduced hydroelectric power supplies and caused water shortages for industry and consumers. The upper reaches of the Yangtze are at their lowest levels in a century causing many ships to run aground and making harbour manoeuvres difficult it said. The drought has also increased the number of forest fires. More than 1000 fires in southern China had destroyed 13340 hectares of forest by mid-February it said. REUTER
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UNUSUALLY DRY WEATHER AFFECTS CHINA'S AGRICULTURE
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Taiwans state-owned China Shipbuilding Corp (CSBC) plans to seek joint production agreements with Japan and further diversify into ship repairing to try to trim its debts chairman Louis Lo said. He told Reuters in an interview that CSBCs first joint production venture to build two hulls for <Onomichi Dockyard Co Ltd> was a success. Talks on similar projects have been held with other Japanese firms including Mitsubishi Heavy Industries Co Ltd <MITH.T> and Ishikawajima-Harima Heavy Industries Co Ltd <JIMA.T> he said. Lo said CSBC delivered the hulls of two 2200-TEU (twenty foot equivalent unit) container ships this year to Onomichi which would complete production. We expect the successful cooperation between us and Onomichi will pave the way for further cooperation with other Japanese shipbuilders in the future Lo said. He said Japanese firms would gain from the lower cost of shipbuilding in Taiwan while CSBC would benefit from Japanese technology and marketing. This would pose a challenge to competitors in Europe and South Korea. Lo said CSBC has made losses of about 100 mln U.S. Dlrs since beginning operations in 1975. Its total debt now stands at about 500 mln dlrs with annual interest payments of nearly three mln dlrs. But he said the company which is Taiwans largest shipbuilder still has full government support and had begun diversifying into ship repairing and manufacture of pipes and other machinery. We hope we can survive and prosper through diversification he said. Lo said income from ship repairing almost doubled to 20 mln U.S. Dlrs in the year ended June 1986 compared with the previous financial year. He estimated income would rise to more than 25 mln dlrs in 1986/87. CSBC has orders to build 10 ships totalling 460000 dead weight tons (dwt) this financial year compared with 11 ships of 462000 dwt in 1985/86 he said. Lo said the prospects for shipbuilding were gloomy at least until 1991 due to overtonnage but the outlook for ship repairing was bright. REUTER
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TAIWAN SHIPBUILDER LOOKS FOR JAPANESE VENTURES
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<Hyundai Motor Co> exported 49822 cars in the first two months of 1987 up from 37272 in the same period of last year mainly due to booming sales in the U.S. And Canada company officials said. They told reporters Hyundai Motor expects to export 450000 cars in 1987 including 250000 to the U.S. After a record total last year of 300200 in large part due to 168900 initial U.S. Sales of the Pony Excel sub-compact. They said the company plans to lift annual output capacity to 750000 cars by end-year from 600000 now. Net profit hit a record 38.3 billion won in 1986 from 28.8 billion in 1985. REUTER
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HYUNDAI MOTOR'S CAR EXPORTS RISE SHARPLY
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A group of creditor banks hopes to work out a rescue package for Japan Line Ltd <JLIT.T> one of the worlds largest tanker operators by the end of Japans business year on March 31 a spokesman for the Industrial Bank of Japan Ltd <IBJT.T> (IBJ) said. Japan Lines cumulative debt was 68.98 billion yen at the end of September which exceeded shareholders equities and reserves totalling 63.40 billion. In December Japan Line asked banks to shelve repayment of about 124 billion yen in outstanding loans and about 153 billion in loans to its subsidiaries. Japan Line said then that the yens steep rise and the world shipping recession had hit the company hard. The Japanese daily Asahi Shimbun said today that IBJ and three other banks plan to abandon a total of 16 billion yen in loans to Japan Line and a group of creditor banks plans to buy seven billion yen of new Japan Line shares. The spokesman for IBJ Japan Lines largest creditor said the package may write off part of the outstanding loans and will be worked out before long. Commenting on the article he said the details of the package have not yet been settled. REUTER
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CREDITORS SEEK SWIFT RESCUE PACKAGE FOR JAPAN LINE
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Argentina will tell its creditors it needs an extension of deadlines for payment of capital and interest on its 50 billion dlr foreign debt Industry and Foreign Trade Secretary Roberto Lavagna told reporters. We the developing countries are going to insist on the application of contingency clauses to extend deadlines for the payment of capital as well as interest he said. He said this could bring about what he called a possible automatic capitalisation of those parts of debt interest that could not be paid and even the elimination of a portion of the debt. REUTER
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ARGENTINA SEEKS NEW DEBT DEADLINES, OFFICIAL SAYS
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Indonesia heads for general elections in six weeks time with its economy in the worst shape in 20 years economists and officials said. The government expects no spillover of people power from the neighbouring Philippines to unsettle the 20-year rule of President Suharto victory for whose ruling Golkar party in the coming parliamentary elections is assured. However Western diplomats said it is the countrys deteriorating economic position that is the main threat to its stability. Last years collapse in oil prices dealt a heavy blow to Indonesia halving its revenue from oil and gas exports to 6.5 billion dlrs last year from 12.4 billion in 1985. Oil and gas account for 70 pct of export income. The result is that in the run-up to April 23 elections Suharto far from wooing his 168 mln countrymen with pay increases or tax cuts is busy slashing budget spending. The government has also recently increased transport fares and frozen the pay of the civil service and the army for the second year running despite inflation now estimated at 8.8 pct. The current account deficit rose to 4.09 billion dlrs in 1986 from 1.8 billion in 1985 while the debt service ratio widened to 33.2 pct for 1987 from 25 pct in 1986. Foreign debt repayments of 4.6 billion dlrs account for almost a third of the 1987/88 budget. A recent U.S. Embassy report on the economy said 1986 gross domestic product growth was the lowest since the mid-1960s when Suharto came to power. Western economists said GDP registered nil growth or contracted last year after 1.9 pct growth in 1985 and predicted only a one pct rise this year. In its efforts to return to growth seen in the oil-boom years of the 1970s when the economy grew an average seven pct the government is now relying more on foreign borrowings. Indonesia has asked foreign governments to finance its share of new projects being built with overseas money because it cannot afford even to meet local costs. In the last three months Indonesia has taken out new loans totalling 1.55 billion dlrs on top of its external debt of 37 billion dlrs. Western bankers said more will be needed and the country now ranks sixth among Third World debtors. A 350 mln dlr commercial loan signed in Tokyo in December was followed in the first week of February with a 300 mln dlr loan from the World Bank to support the balance of payments. Last month Japans Export-Import Bank agreed a 900 mln dlr loan to meet Indonesias share of 21 World Bank projects which would otherwise have been scrapped or postponed. More loans are on the way including two more from the World Bank worth a total 300 mln dlrs for roads and irrigation. U.S. Ambassador Paul Wolfowitz said in a recent speech that economic growth remains the key to preserving Indonesias fundamental stability. The largest Moslem nation in the world Indonesia has so far avoided some of the more extreme paths of other Moslem countries. But the World Bank has warned that mounting unemployment could start causing severe social strains unless it is tackled. It said in its annual report on Indonesia last June that unless economic growth is revived unemployment could reach what it termed unacceptable levels. Unemployment was officially put at 4.8 pct at the end of last year but those considered underemployed number around 35 pct. What path to take appears to be a matter of some dispute within Suhartos government with his Western-trained technocrats advocating more of the classic remedies supported by the international financial community. But another group supports a protected economy with more import substitution the U.S. Embassy report said. The government devalued the rupiah by 31 pct against the dollar last September to help exports and curb imports and is currently working on a series of measures to further encourage foreign investment and boost exports outside the oil sector. The direction Suharto takes could affect Indonesias ability to raise new loans in the future Western bankers say. So far despite three packages of economic measures over the past nine months he has not touched key monopolies that are linked to businesses controlled either by his family or by business associates diplomats and bankers say. Diplomats and investors are now looking for action on monopolies and the loss-making state sector as signs that Suharto is serious about tackling the countrys problems. REUTER
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ECONOMIC SPOTLIGHT - INDONESIA'S ECONOMY
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Australian wheat shipments rose to 1.33 mln tonnes in February from 1.01 mln in January an Australian Wheat Board official said. Februarys shipments were down on the 1.54 mln tonnes shipped in February 1986. Cumulative shipments for the first five months of the October/September wheat year were 6.12 mln tonnes as against 6.54 mln a year earlier the official said. The major destinations in February were: China (419196 tonnes) Egypt (301909) Iraq (142055) Japan (110261) South Korea (100847) and the Soviet Union (100056 tonnes). REUTER
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AUSTRALIAN WHEAT EXPORTS RISE IN FEBRUARY
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Republicans in Congress hailed President Reagans speech on the Iran arms scandal as candid and constructive while Democrats who control both houses said Reagan would now have to match his words with action. Senate Majority Leader Robert Byrd (Democrat) of West Virginia said in a television interview he was heartened that Reagan had acknowledged some of his mistakes. But one speech is not enough to rebuild trust. President Reagan told the American people what they needed to hear that mistakes were made and he made them Senate Republican Leader Robert Dole of Kansas said. Reagan responding to the Tower Commission report criticising his role in the Iran arms scandal said for the first time the Iran arms policy and not just its implementation was a mistake and accepted responsibility for the diversion of profits to the Nicaraguan contra rebels. Senator Bill Bradley (Democrat) of New Jersey said the administration would remain under a cloud until several key figures in the scandal including fired National Security Council (NSC) aide Oliver North and his boss Adm. John Poindexter have told the whole truth. Republicans and Democrats praised the appointment on Friday of former Senate Republican leader Howard Baker to replace Donald Regan as chief of staff and the replacement of Poindexter with Frank Carlucci to head the NSC. Assistant House Republican Leader Trent Lott of Mississippi said he believed Reagan took the right measure in admitting mistakes without apologising for them. Some House Democrats including Speaker James Wright of Texas said earlier they would delay their reaction until tomorrow in order to study the speech overnight and assess its impact. REUTER
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REAGAN SPEECH WINS MIXED REACTION FROM CONGRESS
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OPEC countries are all sticking firmly to official crude oil prices but the volatility of spot prices is likely to continue into the third quarter Indonesian Minister of Mines and Energy Subroto told Reuters. Subroto attending a Pacific Energy Cooperation conference blamed recent rapid spot price changes on unbalanced supply and demand. If we stick to the production limitation the third quarter will be in better balance. He said the market is in a period of transition while the impact of OPECs December agreement to cut output and fix prices at an average 18 dlrs a barrel is worked through. Asked whether OPEC members of the Gulf Cooperation Council (GCC) had any concrete proposals to help Qatar sell its crude oil in the face of strong resistance to its official prices Subroto said: Apparently they have taken care of that. They (the GCC) meet very often among themselves. I think theyll help each other he said. Subroto said that as he was not a member of OPECs Price Differentials Committee he did not know why the meeting had been postponed from its scheduled April 2 date. Maybe they find it is better not to have the meeting because ... Everyone is sticking to official prices he said. REUTER
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OPEC STICKING FIRM ON OFFICIAL PRICES - SUBROTO
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Thai coffee exports rose to 22068 tonnes in 1986 from 20430 a year earlier the Customs Department said. REUTER
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THAI COFFEE EXPORTS RISE IN 1986
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The easing of rules governing overseas use of the yen has caused an explosion of Euroyen bond activity but has failed to turn the yen into a truly international currency bond managers and traders said. Although yen bonds now rank second only to dollar issues in the Eurobond market few foreigners are interested in keeping the yen they borrow and no one wants the yen bonds but the Japanese they said. This lack of real yen demand through the freer Euroyen market is undermining the 1984 U.S. And Japanese accord to internationalise the yen they said. The borrowers want to take advantage of low Japanese interest rates but have no need for yen. They arrange primarily with Japanese banks to exchange yen funds into other currencies mainly dollars bond managers said. More than 85 pct of Euroyen bond issues are swap driven they added. The borrowers dont care which currency they use. They are only after attractive money one bond trader said. Issues doubled to more than 150 in 1986 from the previous year boosting Euroyen offerings to more than nine pct of the total Eurobond market Koichi Kimura managing director of Daiwa Securities Co Ltd said recently. Traders said some of the activity stems from battles among Japanese and foreign securities companies and banks for the prestige of placing a larger share of issues. Many even resort to harakiri swaps those with unprofitable pricing. But the fever continues and the number of offerings could double again in 1987 said Naoki Yokoyama manager of Nikko Securities Co Ltds international capital markets operation. The Euroyen bonds once issued are mostly picked up by Japanese trust banks one trader said. After a 90 day waiting period the bonds flow back to Japan where investor appetite is strong he added. Foreign investors are reluctant to invest in yen when more attractive yields are offered on dollar and other currency investments traders said. Even aggressive foreign investors have stopped investing (in yen) said Masaki Shimazu manager of Daiwas bond department. While few foreigners are interested in the secondary market Japanese commercial banks regional banks life insurers and other financial institutions are eager to buy the bonds and await their flow back to Japan since they offer little currency risk traders said. The Finance Ministry last April shortened the waiting period before issues could flow back to Japan to 90 days from 180. A ministry official said it verified through sampling that reflow was fairly small. We believe the Euroyen bond should remain mainly in the Euroyen market he said. One trader said that although demand from Japanese investors is heavy it may prove to be only short-term. He said many investors plan to sell their bonds if Japanese or U.S. Interest rates decline further. To encourage further international use of the yen the ministry is considering allowing the issue of Euroyen commercial paper the official said adding that it is studying demand from potential borrowers. Securities company sources believe the ministry will permit non-residents to issue Euroyen commercial paper within the next few months. But they expect it to continue to ban domestic participation in the market for some time to come. Japanese banks object to the short-term paper market which they see encroaching on their business territory. Traders said Euroyen commercial paper could spur more demand overseas for the yen by allowing opportunities to shift into shorter-term securities if need be. Commercial paper might encourage fewer swaps one bond manager said. If more financial instruments were available there might be more trades in yen he added. Euroyen bonds must now carry a five-year maturity though some recent issues which are callable in three years work as if they had shorter maturities traders said. The ministry is expected to allow four-year Euroyen bond maturities within a few months. One yen bond manager said Japanese financial authorities are giving up a lot of their control in liberalising the rules governing international transactions of the yen. But freer use of the yen could encourage more trade settlements in the Japanese currency he said. If exporters or importers can raise funds in yen they will be more willing to agree to using the Japanese yen as a settlement currency he added. The Finance Ministry official said the government must constantly consider ways to improve markets for the benefit of borrowers and investors. No major market can keep its status without change he said. REUTER
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ECONOMIC SPOTLIGHT - EUROYEN BOND ISSUES INCREASE
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South Koreas M-2 money supply rose 0.39 pct to 33992.0 billion won in February from 33858.4 billion in January when it fell a revised 0.04 pct from December provisional Bank of Korea figures show. The February figure was up 18.89 pct from a year earlier. M-1 money supply rose 4.13 pct to 8492.1 billion won in February from January when it fell 7.82 pct from December. The February figure marked a year-on-year rise of 18.45 pct. The bank previously said M-2 fell 0.06 pct in January. REUTER
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SOUTH KOREAN MONEY SUPPLY RISES IN FEBRUARY
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Pakistans foreign exchange reserves fell to 8.43 billion rupees in February from 8.96 billion in January compared with 12.97 billion in February 1986 the State Bank of Pakistan said. The bank gave no reason for the fall but local bankers said big import bills had affected the reserves. The Federal Bureau of Statistics has not yet released last months import and export figures. REUTER
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PAKISTAN'S FOREIGN EXCHANGE RESERVES FALL
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Austria has decided to redeem six years early a 20 billion yen 12-year 8.5 pct samurai bond due on August 18 1993 Daiwa Securities Co Ltd said as lead manager. It will redeem 18.4 billion yen at 103.00 and the rest at par this August 18 under an annual redemption obligation probably because of declining yen interest rates Daiwa said. REUTER
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AUSTRIA DECIDES EARLY REDEMPTION OF SAMURAI BOND
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Thailands main paddy crop is expected to fall to 15.4 mln tonnes in the 1986/87 (Nov/Oct) season from a previous 15.68 mln estimate in November and an actual 17.35 mln a year ago the Thai Rice Mills Association said. It said a joint field survey late last month by the association the Commerce Ministry and the Bank of Thailand indicated that paddy output in Thailands northeast region is lower than expected because of a drought in several provinces. The association said rice growing areas in Nakhon Ratchasima Chaiyaphum Khon Kaen and Mahasarakam were especially affected by low rainfalls in the second half of 1986. It said last November that the drought reduced total national areas sown with paddy to some 8.25 mln hectares this year down from 8.84 mln a year ago. The main crop represents about 85 pct of Thailands paddy output. REUTER
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THAILAND REDUCES MAIN RICE CROP PROJECTION
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New Zealand clearing house <DataBank Systems Ltd> said it will know tomorrow what services it will be able to provide during a strike by bank officers against trading banks and DataBank set for March 9 and 10. Trading banks polled by Reuters said their ability to offer money market services during the strike depends on whether Databank remains open and whether the banks have enough staff to process transactions. A spokesman for the New Zealand Foreign Exchange Association said dealers would be able to trade during the strike. But the spokesman added that from March 6 to 10 the value date of currency transactions will be March 16. Trading bank spokesmen told Reuters they will try to honour transactions in which an offshore party sought payment on March 9 or 10 but they could not guarantee settlement. The Futures Exchange said trading members and their clients will be able to continue trading provided they have made suitable financial arrangements. The trading banks affected are the <Bank of New Zealand> Australia and New Zealand Banking Group Ltd <ANZA.S> Westpac Banking Corp <WSTP.S> and <National Bank of New Zealand Ltd>. REUTER
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N. ZEALAND MARKETS PREPARE FOR TRADING BANK STRIKE
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Hoechst AG <HFAG.F> said its group pre-tax profit in 1986 would be slightly lower than the 3.16 billion marks posted in 1985 while parent company pre-tax profits rose slightly from the 1.62 billion in 1985. Group turnover fell slightly to 38 billion marks from 42.72 billion in 1985 and parent company turnover fell to around 14 billion marks from 15.35 billion the company said in a statement. REUTER
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HOECHST GROUP PRE-TAX PROFIT FALLS IN 1986
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The Broken Hill Pty Co Ltd <BRKN.S> (BHP) said it plans a renounceable one-for-three issue of rights to float a new company <BHP Gold Mines Ltd> (BHPGM) which will hold most of BHPs gold interests. In a statement BHP said the 25-cent par rights would be priced at 50 cents for 430 mln of the BHPGM shares on offer. BHP will subscribe for the remaining 540 mln shares or 56 pct of issued capital on the same terms. BHPGM will pay 440 mln dlrs for BHPs gold interests excluding its stake in Papua New Guineas <Ok Tedi Mining Ltd> and those interests held by BHPs <Utah International Inc>. The BHP statement said the issue will be made to shareholders registered on March 27. It opens April 4 and closes April 29 and is underwritten by <J.B. Were and Son>. Rights will be traded on Australian stock exchanges from March 23 to April 22 and the new shares will be quoted from June 4. BHP said the new company will be one of Australias larger gold producers with annual output exceeding 170000 ounces. It said there are plans to boost production to 300000 ounces by the early 1990s. BHPGMs portfolio will include several Australian mines -- 30 pct of Telfer 100 pct of Ora Banda and Browns Creek and 20 pct of the new Boddington development. The statement said BHPGM would also hold BHPs 45 pct stake in the Coronation Hill Property in the Northern Territory and its 55 pct stake in a new venture near Gympie Queensland. BHPGM chairman-designate John Gough said it was a quality gold stock. The diversity and depth of BHP Golds portfolio ... Give the company a sound foundation in current gold production and an exciting potential for growth he said. REUTER
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BHP TO FLOAT GOLD UNIT WITH ONE-FOR-THREE ISSUE
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The Hongkong and Shanghai Banking Corp <HKBH.HK> is likely to show a rise in profit of between 10 and 13 pct for 1986 reflecting stronger than expected loan growth share analysts polled by Reuters said. Their estimates of the banks net earnings for last year ranged from 2.99 to 3.1 billion H.K. Dlrs. Results will be announced on Tuesday. The 1985 net profit was 2.72 billion. They forecast a final dividend of 29 cents for a total of 42 cents for the year against 38 cents in 1985 adjusted for a one-for-five bonus issue. Analysts said they expected the bank to recommend a bonus issue this year probably one for three or one for five. The banks 61.5 pct subsidiary Hang Seng Bank Ltd <HSGH.HK> is to report its 1986 results on Friday. Analysts expect Hang Seng to announce net profit of more than one billion dlrs for the first time an increase of 10 to 12 pct. They expect Hang Seng to pay a final dividend of 1.37 dlrs for a total of 1.75 dlrs for the year against 1.60 in 1985. Analysts said that while the use of undisclosed inner reserves by banks here makes forecasting very imprecise Hongkong Bank benefited from the unexpected strength of the Hong Kong economy in 1986 when gross domestic product grew by nearly nine pct against an initial forecast of 4.5 pct. They benefited considerably from the pickup in loan demand as their loan portfolio is well balanced an analyst at Mansion House Securities (F.E.) Ltd said. Government figures show that total loans and advances rose by 13.8 pct in 1986 compared with a 4.5 pct increase in 1985. Loans to finance Hong Kongs visible trade the mainstay of the local economy rose by 15.1 pct against a decline of five pct in 1985. Low interest rates also helped the bank. Interest received on loans was low with the prime rate at 6.5 pct at end-1986 but interest paid on savings was two pct. Hongkong Bank and Hang Seng Bank control half of all deposits in the banking system giving them access to a large base of low-cost funds. The strength of the real-estate market was another major income source for the bank group. Loans to finance property development and instalment mortgages rose sharply. The Hongkong Bank group is still the leader in mortgage business despite tough competition from the Bank of China group and other foreign banks one analyst said. The high level of activity on the capital and equities markets in 1986 contributed to a sharp improvement in Hongkong Bank subsidiaries Wardley Ltd <WAIA.HK> and <James Capel and Co> analysts said. Wardley had a tremendous year acting as financial adviser and underwriter an analyst said. Wardley was underwriter for last years billion-dlr flotation of <Cathay Pacific Airways Ltd> of which Hongkong Bank owned 30 pct at the time. The banks stake has since been cut to 16.4 pct in return for 1.57 billion dlrs. It also sold its entire 48.8 pct stake in <South China Morning Post Ltd> the larger of two English-language daily newspapers here for 1.18 billion dlrs. The proceeds will go to reserves for acquisitions and will not show up in the profit and loss accounts analysts said. Analysts said the bank had also been helped by a reduced need to write off bad debts. The need for provisions was much lower than the year before said Tony Measor of Hong Leong Securities Co Ltd. Last years profits should have been 2.8 to 2.9 billion dlrs if not for the huge provisions. Former Hongkong Bank chairman Michael Sandberg said the bank wrote off hundreds of millions of dollars against its shipping exposure in 1985. Lesley Nickolds of County Securities Asia Ltd said she saw no major shipping writeoffs in 1986. She forecast profit of 2.99 billion dlrs. The banks Latin American exposure mainly through its 51-pct owned Marine Midland Banks Inc <MM> appears to have improved substantially analysts said. Marine Midlands 1986 fourth-quarter loan-loss provisions fell to 44.1 mln U.S. Dlrs from 89.2 mln a year before. Its 1986 net profit rose to 145 mln U.S. Dlrs from 125 mln in 1985. REUTER
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HK BANK EXPECTED TO POST 10 TO 13 PCT PROFIT RISE
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The directors of Hughes Tool Co <HT> said they would recommend to shareholders that they reject a merger with Baker International Corp <BKO> today. Hughes vice-president Ike Kerridge said the recommendation would be put to shareholders at a meeting scheduled for 10 A.M. Local time (1600 GMT) to discuss the proposed merger. Kerridge said the board met yesterday to discuss the merger but decided against it. The Hughes board objected to a U.S. Department of Justice requirement that Baker sell off several specialised subsidiaries in businesses related to oil-drilling. The Hughes board last week indicated that it might cancel the merger because of the Department of Justice requirement. The board of directors of the California-based Baker had approved the merger. On February 17 Baker said it had signed an agreement to sell one of the subsidiaries. The companies had been given until April 22 to comply with the Justice Department requirement Kerridge said. REUTER
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HUGHES TOOL DIRECTORS REJECT MERGER WITH BAKER
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The Bank of Japan will sell tomorrow 500 billion yen of financing bills it holds to help absorb a projected money market surplus money market traders said. Of the total 300 billion yen will yield 3.9989 pct on the sales from money houses to banks and securities houses in 27-day repurchase agreement due April 2. The remaining 200 billion yen will yield 3.9994 pct in a 39-day repurchase pact maturing on April 14 they said. The repurchase agreement yields compare with the 4.0625 pct one-month commercial bill discount rate today and the 4.50/43 pct rate on one-month certificates of deposit. Tomorrows surplus in the money market is estimated at 420 billion yen mainly due to payment of national annuities money traders said. The operation will put the outstanding bill supply at about 1300 yen. REUTER
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BANK OF JAPAN TO SELL 500 BILLION IN BILLS
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McDonalds Corp is raising 75 mln Australian dollars through a 14-5/8 pct bullet eurobond priced at 101-1/4 and maturing November 5 1991 lead manager Bayerische Vereinsbank AG said. Investors will pay for the bond on May 5 1987 and the bond pays annual interest on November 5 beginning in 1988. There will be a 1-3/8 point fee for selling and 5/8 for management and underwriting combined. Listing is in Luxembourg. Denominations are 1000 and 5000 dlrs. REUTER
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MCDONALDS LAUNCHES 75 MLN AUS DLR EUROBOND
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Gunze Sangyo Inc of Tokyo is launching a 25 mln Swiss franc convertible notes issue due May 31 1992 with a coupon indication of 1-5/8 pct lead manager Swiss Volksbank said. Conditions will be set on March 11 and payment date is March 30. REUTER
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GUNZE SANGYO SETS 25 MLN SWISS FRANC NOTES ISSUE
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Group shr 18.34 yen vs 58.72 Net 10.73 billion yen vs 37.06 billion Pretax 27.76 billion yen vs 84.78 billion Operating 30.06 billion yen vs 88.81 billion Sales 889.22 billion vs 955.78 billion Note - The company attributed the profit fall largely to the yens appreciation during the period. Domestic sales rose 0.4 pct to 274.17 billion yen from a year earlier while exports declined 9.9 pct to 615.04 billion. REUTER
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CANON INC (CANN.T) YEAR ENDED DECMEBER 31
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Oesterreichische Draukraftwerke AG of Klagenfurt is launching a 100 mln Swiss franc 4-3/4 pct 10-year bond priced at 100-1/4 pct lead manager Swiss Bank Corp said. The issue is guaranteed by the Austrian state. Subscriptions close March 20. REUTER
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OESTERREICHISCHE DRAUKRAFTWERKE SETS SFR BOND
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The highly visible drama involving the yens sharp rise against the U.S. Dollar is obscuring the fact that the Japanese currency has hardly budged against major European currencies thus creating a new set of exchange rate distortions Japanese and European research officials said. The officials looking beneath the rhetoric of statements by the Group of Five (G-5) industrial nations told Reuters the currency movements of the past two years are also creating a fundamentally new world trade picture which is throwing up new trade tensions and imbalances. Trade figures show that the new currency alignments are already changing the Japan-U.S. Trade axis into a Japan- European Community (EC) axis to the discomfort of Europe. In many ways not least in terms of rare international cooperation the September 1985 New York Plaza pact between the U.S. Japan West Germany Britain and France to cut down the value of the dollar was a historic one. But it is the underlying peaks and troughs of the major currency movements which lay bare the real picture in which the Plaza pact appears as an event of prime importance but not necessarily central significance the officials said. The officials said that when the Plaza agreement took place the dollar was already on its way down. The agreement simply helped it on its way. Senior EC financial expert in Tokyo Tomas de Hora has watched the movements closely. You have to look at the dollars peak compared with now and that was well before Plaza he said. On February 25 1985 the dollar peaked against the yen at 263.15 yen. On September 20 the Friday before Plaza it was 242. Since then despite massive Bank of Japan intervention and periodic market frights about further G-5 concerted action the dollar trend has been down down down. Yet the ECU is now around 173.4 yen. The historical cross rates for sterling and the mark tell much the same story. The European currencies are moving back up against the yen. The close relationship between exchange rates and trade flows makes it difficult to see which is driving which but undoubtedly the trade equation between the big three is changing. In 1986 Japanese imports and exports with the EC both grew by around 50 pct in dollar terms five pct in yen. This gave Japan a 16 billion dlr trade surplus. Last January Japanese exports to the EC totalled half of of sales to the U.S against about a third in recent years. Trade with the U.S in 1986 rose 23 pct for exports and 12 pct for imports in dollar terms but fell 13 pct for exports and 21 pct for imports in yen terms. The basic meaning for Europe is that Japanese firms have a tremendous interest in exporting to Europe where every unit sold maximises profits in yen terms which is what is important to them. Suddenly instead of the U.S. It is Europe that is laying the golden egg said de Hora. The EC is worried. EC business also had a remarkable year in Japanese sales but this can be explained partly due to its start from a small base compared with total Japan-U.S. Trade. The Japanese think EC firms are now more competitive than U.S. Firms a factor which is aggravating the exchange rate imbalance and which will cause problems. This currency alignment between Japan and the EC is reflecting the excellent performance of the EC countries. But therefore Japanese goods may keep their price competitive edge said Azusa Hayashi Director of the First International Economic Affairs Division of the Foreign Ministry. If you want my objective view I dont expect a drastic improvement in our trade imbalance. Last year we asked for moderation in exports and this year we may have to do so again he said. REUTER
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NEW CURRENCY PROBLEM SEEN AMONG U.S, EUROPE, JAPAN
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Australian Prime Minister Bob Hawke and Treasurer Paul Keating said the governments 1986/87 Budget deficit could hit four billion dlrs against the official forecast of 3.5 billion. Hawke told a Sydney radio station the deficit may turn out at four billion. He and Keating last week warned that the budget deficit was running above target and vowed sharp decisions on spending in a May 14 economic statement. A four billion dollar Budget deficit would be in line with private economists forecasts and compares with a 1985/86 shortfall of 5.73 billion dlrs. Hawke said the 1986/87 deficit would be equal to 1.5 pct of forecast Gross Domestic Product against five pct when he took office during the 1982/83 year. In money terms (the deficit has been reduced) from the 9.6 billion dlrs that we inherited ... Down to about 3.6 billion it may turn out at four billion dlrs Hawke said. In a separate interview Keating said: The deficit for this year projected was 3.5 billion .... It is in fact running ... Over four billion and we will be trying to bring that in close to target. REUTER
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HAWKE SEES FOUR BILLION DLR BUDGET DEFICIT
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The Commonwealth Bank of Australia is issuing a novel 100 mln Australian dlr eurobond due April 6 1992 paying an initial coupon of 16 pct and priced at 101 pct lead manager Swiss Bank Corporation International said. The coupon will then be re-fixed annually at the one-year Australian Treasury rate. There will also be an investor put option annually at par. The selling concession is 3/4 pct while management and underwriting combined pays 3/8 pct. The non-callable bond is guaranteed by Australia and will be listed in Luxembourg. It is available in denominations of 1000 and 10000 Australian dlrs and the payment date is April 6. REUTER
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COMMONWEALTH BANK OF AUSTRALIA ISSUES NOVEL BOND
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Thailand exported 1816 tonnes of tin metal in January up from 1731 in December and 1330 a year ago the Mineral Resources Department said. It said major buyers last month were Singapore Japan Britain the Netherlands Malaysia and the U.S. REUTER
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THAI TIN EXPORTS RISE IN JANUARY
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Caisse Centrale de Credit Cooperatif is launching a privately-placed 1.2 billion franc bond issue in three tranches of 400 mln francs and with maturities of seven eight and ten years respectively lead-managers Credit Lyonnais and Banque Francaise de Credit Cooperatif said. Interest on the three variable-rate tranches issued at par will be based on annualised money market rates (TAM) for the February preceeding each payment. The settlement date is March 23 1987. REUTER
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CENTRALE DE CREDIT COOPERATIF ISSUE DETAILED
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The Bank of England said it had invited an early round of bill offers from the discount houses. The Bank forecast the shortage in the system today at around 1.15 billion stg. Among the main factors affecting liquidity bills maturing in official hands and the take-up of treasury bills will drain some 732 mln stg and exchequer transactions some 245 mln. In addition bankers balances below target and a rise in note circulation will drain a further 135 mln stg and 30 mln stg respectively. REUTER
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U.K. MONEY MARKET OFFERED EARLY ASSISTANCE
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The Belgo-Luxembourg Economic Union (BLEU) moved into a narrow trade surplus of 4.7 billion francs in 1986 after a 140.4 billion franc deficit in 1985 figures given by a spokesman for the National Statistics Institute show. He said imports fell last year to 3061.8 billion francs from 3304.1 in 1985 while exports were also lower at 3066.6 billion francs against 3163.7 billion. In December the BLEU had an 11.9 billion franc trade surplus after a 10.9 billion franc surplus in November and a 2.3 billion franc surplus in December 1985. REUTER
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BELGOLUX TRADE MOVES INTO SURPLUS IN 1986
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The Bank of Spain said it raised the reserve requirement for banks and savings banks to 19 pct of deposits from 18 pct to drain excess liquidity which threatened money supply and inflation targets. In a statement issued late last night the central bank said the measure would take effect from March 13. In recent weeks there has been excess liquidity in the Spanish economy which if not controlled would threaten the monetary and inflation targets set by the government the statement said. Banking sources said the measure would drain about 200 billion pesetas from the system. The maximum reserve requirement allowed by law is 20 pct. The move follows a half-point increase yesterday in the Bank of Spains key overnight call money rate which now stands at 13.5 pct. At todays auction however the bank left the rate unchanged. Spains principal measure of money supply the broad-based liquid assets in public hands (ALP) grew at annualised rate of 8.3 pct in January compared with 11.4 pct during the whole of 1986 and a target of eight pct for 1987. Banking sources said that although the January money supply figures were good compared with annualised rates of 13.9 pct in December and 10.2 pct in January 1986 ALP growth appeared to have accelerated in February raising government concern. Regarding inflation recent figures have suggested that prices were under control. Secretary of State for Trade Miguel Angel Fernandez Ordonez said this week that the annualised inflation rate for February not yet officially announced fell to 5.5 pct from six pct in January compared with inflation of 8.3 pct during 1986 and a government target of five pct for this year. REUTER
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SPAIN RAISES BANKS' RESERVE REQUIREMENT
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The state-owned Minerals and Metals Trading Corp will send a team to Japan next week to negotiate an iron ore export contract for 1987/88 beginning April 1 trade sources said. Japan the biggest buyer of Indian iron ore with imports of around 23 mln tonnes a year has asked India to reduce prices from the current average of 18 dlrs a tonne the sources said. Japan has said it may be forced to reduce ore imports from India next year if New Delhi fails to reduce the price one source said but declined to give further details. REUTER
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INDIA AND JAPAN TO DISCUSS IRON ORE PRICES
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Japanese creditor banks are close to a decision to jointly establish an offshore firm to which they will transfer part of their title to possibly unrecoverable debts owed by developing nations international financial sources told Reuters. Details of the deal are likely be decided next week and the firm set up before the end of the month they said. The scheme is intended to improve financial management at the banks and reduce the risk of problems in the event of debts turning bad the sources said. Last weeks announcement by Brazil that it would indefinitely suspend interest payments on an estimated 68 billion dlrs owed to commercial banks prompted Japanese creditors to finalise the project the sources said. Major Japanese banks have been considering a plan to avoid a debt crisis since the start of the year they said. There are likely to be at least 10 participating banks and perhaps as many as 28 they said. About 30 Japanese commercial banks have outstanding loans totalling over 10 billion dlrs to Brazil accounting for about 15 pct of all commercial loans to that country. The most likely venue for the envisaged firm is the Caribbean tax haven of the Cayman Islands the sources said. The idea is to create a pool of funds in the firm with participating creditor banks holding the firms stock. The firm will then use the funds to buy from its stock-holding banks title to repayments of specified foreign loans which are potentially bad the sources said. The stock-holding banks will draw up a list of such loans. Subject to the scheme would be loans extended to debt-ridden countries such as Mexico and Argentina they said. The financial sources said interest payments to the firm would not be taxed because of its location. Japanese banks have asked the finance ministry to increase tax breaks on loan loss reserves but the ministry has not yet complied. A senior ministry official welcomed the scheme and said it may encourage new lending to developing countries. The ministry instructs banks to establish reserves for up to five pct of their loans to 35 financially troubled countries but it only grants tax breaks on reserves accounting for one pct of the loans. REUTER
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JAPANESE BANKS SEEN AGREEING DEBT RISK SCHEME
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The Ministry of International Trade and Industry has not yet set a car export quota for <Daihatsu Motor Co Ltd> which is scheduled to start exports to the U.S. Later this year a ministry official said. Several local newspapers said the ministry had set a quota of about 10000 cars. Daihatsu is owned 15.1 pct by Toyota Motor Corp <TOYO.T>. Quotas for nine car makers including Daihatsu are likely to be set before the end of March the official said. REUTER
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JAPANESE MINISTRY DENIES EXPORT QUOTA FOR DAIHATSU
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CSR Ltd <CSRA.S> said it will sell its head office group of five buildings in central Sydney as part of plans to decentralise. The 2750 square metre site will be repurchased under existing lease-back agreements and then sold by public tender it said in a statement. CSRs sugar and oil divisions have already moved to Brisbane and the company said it plans further moves from central Sydney to reduce its head office staff to about 100 from 550. REUTER
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CSR LTD SAYS IT WILL SELL HEAD OFFICE BUILDINGS
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Iran said its troops repulsed heavy Iraqi counter-attacks and continued their advance through the rugged mountains of Iraqi Kurdistan in overnight fighting on the northern war front. Iran launched the new offensive codenamed Karbala-7 on Tuesday night among the snow-capped peaks of the Haj Omran border area of northeast Iraq. The Iranian news agency IRNA received in London said the troops continued their successful advance ... With more thrusts into enemy positions. It said remnants of Iraqi Brigade 604 was shattered and 200 of its personnel killed or wounded. One battalion of the 25th Divisions Third Brigade thrown into counter-attacks today suffered 70 pct losses the agency added. Some 208 prisoners of war had been taken from the front. IRNA said the Iranian forces backed by heavy artillery fire were continuing to advance. No Iranian casualties were given. The area between Haj Omran and the Kurdish town of Rawandiz some 65 km inside Iraq was the scene of heavy fighting in 1983. Iran has backed dissident Kurds in the area in attacks on government positions and installations in northern Iraq. IRNA said the Iranian forces captured large amounts of munitions in the latest fighting. The Iraqis have made no comment so far on the Kurdistan fighting or on advances Tehran reported yesterday on the southern war front east of the strategic Iraqi port of Basra. IRNA said today a group of its reporters visited newly-captured areas on the southern front and found the battlefield littered with the bodies of Iraqi soldiers and burnt military equipment. They quoted an Iranian soldier Hamid Dehqani as saying heavy rainfall during the past few days had paralysed the Iraqi enemy from embarking on any action against the attacking Iranians. IRNA referred to the Fish Canal -- the man-made Fish Lake -- made by the Iraqis as a defensive barrier on the eastern side of the Shatt al-Arab waterway. The agency yesterday said infantry and armour of the Revolutionary Guards had captured strong defences west of the canal in bitter fighting with Iraqi troops. REUTER
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IRAN REPORTS HEAVY FIGHTING IN IRAQI KURDISTAN
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Rank Organisation says it launching 100 mln stg commercial paper program
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Taiwans foreign exchange reserves hit a new high of more than 51 billion U.S. Dlrs on March 4 compared with 50 billion in mid-February and 25.1 billion a year earlier the central bank said. Bank governor Chang Chi-Cheng told reporters the increase came mainly from the banks purchases of more than one billion U.S. Dlrs on the local interbank market between February 18 and March 4. He said the rise showed signs of slowing however because Taiwan has liberalised import policy and expects its trade surplus to decline over the next few months as a result. Chang declined to predict how high the reserves might rise but local economists have forecast they will hit 60 billion U.S. Dlrs by the end of 1987. In January Taiwan reduced import tariffs of up to 50 pct on some 1700 foreign products. It had been under growing U.S. Pressure to cut its 1986 record 13.6 billion dlr trade surplus with the U.S. Taiwans 1985 surplus with the U.S. Was 10.2 billion according to official statistics. Wang Chang-Ming Vice Chairman of the Council for Economic Planning and Development told Reuters the government is planning another round of deep tariff cuts in the second half of this year. The reserves could support imports of more than two years for Taiwan compared with about three months for Japan and the U.S. REUTER
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TAIWAN FOREIGN EXCHANGE RESERVES HIT NEW HIGH
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Mitsui and Co Ltd said it plans to issue 300 mln Eurodollar warrant bonds in two tranches with payment on March 30 through a syndicate led by Nomura International Ltd. One tranche is of five-year 150 mln dlr bonds while the rest is of seven-year 150 mln dlr bonds but other issue terms have not yet been decided. REUTER
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MITSUI AND CO TO ISSUE EURODOLLAR WARRANT BONDS
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A limited Belgian issue of silver Ecu coins with a face value of five Ecus will go on sale from March 23 at a price of 500 Belgian francs each a Finance Ministry spokesman said. Gold Ecu coins with a face value of 50 Ecus will be sold from the same day. The spokesman told Reuters the price for these would be fixed just before they go on sale but was likely to be between 8500 and 9000 francs. At least two mln silver coins and several hundreds of thousands of the gold coins will be minted he said. They will be sold both in Belgium and abroad. The coins will be the first ever denominated in the Ecu the basket comprised of the 12-nation European Communitys currencies except the Spanish peseta and the Portuguese escudo. The issue is being made to mark the 30th anniversary of the ECs founding Treaty of Rome this month. Finance Minister Mark Eyskens who currently presides over the ECs council of economic and finance ministers has called the issue a political act of symbolic value which aimed to make the Communitys goal of monetary integration more concrete. The coins will be legal tender in Belgium but most demand is expected to come from coin collectors. REUTER
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BELGIAN ECU COIN ISSUE PRICED, SALE DATE SET
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The Bank of England said it provided just 17 mln stg assistance to the money market in response to an early round of bill offers. Earlier the Bank had estimated the shortage in the system today at around 1.15 billion stg. The central bank purchased bills for resale to the market on April 2 at an interest rate of 10-15/16 pct. REUTER
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U.K. MONEY MARKET GIVEN 17 MLN STG EARLY HELP
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The Chinese state-owned Bank of Communications Ltd Hong Kong branch is planning a 200 mln H.K. Dlr certificate of deposit issue banking sources said. They said the five year issue which matures March 23 1992 carries a 7.05 pct coupon payable quarterly. Management fee is 10 basis points. Payment date is March 23. China Development Finance Co (H.K.) Ltd a Bank of China unit is lead manager of the issue. A group is now being formed. REUTER
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BANK OF COMMUNICATIONS PLANS 200 MLN H.K. DLR CD
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The Rank Organisation Plc said it has appointed County Natwest Capital Markets Ltd Samuel Montagu and Co Ltd and Swiss Bank Corporation International as dealers in a 100 mln stg commercial paper program. The notes will be issued in any maturity of between seven and 364 days and the funds will be used for the companys general financing requirements. Arranger for the facility is County Natwest Capital Markets Ltd while National Westminster Bank Plc will act as issuing and paying agent Rank added. REUTER
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RANK ORGANISATION HAS 100 MLN STG CP PROGRAM
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The French sugar market intervention board FIRS raised its estimate of 1986/87 beet sugar production in the 12-member European Community to 13.76 mln tonnes white equivalent in its end-February report from 13.74 mln a month earlier. Its forecast for total EC sugar production including cane and molasses rose to 14.10 mln tonnes from 14.09 mln. Portugal which joined the Community in January 1986 was estimated at 12.75 mln tonnes white equivalent unchanged from the previous forecast and compared with 12.41 mln tonnes for 1985/86. Production for the current campaign in Spain was higher than reported last month at 1.03 mln tonnes compared with 997000 tonnes. Beet sugar production expressed as white equivalent was estimated at 3.44 mln tonnes in France 3.17 mln tonnes in West Germany 1.72 mln in Italy 1.30 mln in Britain 1.22 mln in the Netherlands 936000 tonnes in Belgium/Luxembourg 499000 in Denmark 287000 in Greece 183000 in Ireland and 4000 in Portugal. REUTER
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FIRS SLIGHTLY RAISES EC BEET SUGAR OUTPUT ESTIMATE
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Sri Lankas largest bank the government-owned Bank of Ceylon plans to adopt a more aggressive and selective interest rate policy to reduce excess liquidity estimated at some 500 mln rupees and enlarge the countrys export manufacturing base the banks new chairman Nimal Sandaratne told Reuters in an interview. The bank aims to reduce terms for prime customers and is holding talks with the Export Development Board on details to be announced later he said. Sandaratne was head of research at the Central Bank of Ceylon the nations central bank until January. A Swiss-based non-governmental group which Sandaratne declined to identify has agreed in principal to guarantee export credits he said but refused to elaborate further. The bank may also consider more actively participating in the foreign exchange markets in light of its substantial non-resident foreign currency holdings of about 473 mln rupees or about 70 pct of the total market he said. Sandaratne said the bank may sell 60 pct of its shares in its wholly-owned subsidiary Merchant Bank of Sri Lanka Ltd. The Asian Development Bank and a foreign bank operating here have already expressed interests in acquiring a stake in MBSL Sandaratne said. He tentatively estimated the Bank of Ceylons net profits for calendar 1986 at 163 mln rupees up from 133 mln the previous year. The increase was eroded by increased provisions for bad debts he said. About 50 mln was written off and 17 mln allotted for general provisions he added. REUTER
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BANK OF CEYLON TO ADOPT NEW POLICIES
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The Papua New Guinea Government will establish a public corporation to invest in resources projects Minerals and Energy Minister John Kaputin said. We intend to provide a means through which less privileged individuals can become part owners and beneficiaries from the development of mining and petroleum projects he told Parliament. Existing policy allowing the state up to 30 pct equity in major mining projects and 22.5 pct in oil and gas projects would be maintained he said. The planned agency could take over the states equity in current developments. Kaputin said Papua New Guinea was experiencing a boom with exploration companies spending about 60 mln kina annually on about 150 mining and 23 petroleum projects. The Government is determined to ensure that Papua New Guinean ownership in minerals and petroleum projects increases in an orderly way he said. Kaputin did not say when the corporation would be established or exactly what form it would take but said the government would study whether it should be directly involved in exploration or development. REUTER
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PAPUA NEW GUINEA PLANS RESOURCES INVESTMENT AGENCY
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The Nigerian naira firmed 2.6 pct against the dollar after 17 banks were disqualified from bidding at todays weekly foreign exchange auction the central bank said. The naira finished at 3.8050 to the dollar against 3.9050 last week. Only 38.39 mln dlrs of the 50 mln dlrs on offer was sold with all 27 bidding banks successfully obtaining hard currency. The effective rate including a central bank levy for transactions in the coming week was 3.8241 against 3.9246 last week. The failure to sell the whole allocation was due to the central banks unprecedented disqualification of 17 banks as punishment for inadequate documentation in previous transactions. Banks are required to submit proof that their bids are based on valid commercial transactions and the central bank has complained in the past that many are failing to produce the right paperwork within the specified time. REUTER
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NIGERIAN CURRENCY FIRMS AT LATEST AUCTION
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Canada Zero a sole purpose company incorporated in the Cayman Islands is issuing a zero coupon eurobond with a total redemption amount of 150 mln Canadian dlrs lead manager CIBC Ltd said. The issue matures on May 1 2001 and is priced at 30 pct. It is secured with Canadian government bonds. The selling concession is 3/4 while management and underwriting each pay 1/4 pct. The payment date is April 30. Listing is in Luxembourg. A CIBC spokesmn said the issue yields 49 basis points over equivalent Canadian Treasury bonds. It is available in denominations of 5000 and 100000 Canadian dlrs. REUTER
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CANADA ZERO ISSUES CANADIAN DLR ZERO COUPON BOND
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U.S. Undersecretary of State for Economic Affairs Allen Wallis said he had urged Japan to do much more to reduce its large trade surplus with the United States. Our central message to Japan this week was that while we have made progress in some areas much needs to be done he told a press conference after three days of talks. What we need is a resolution of trade issues we need visible efforts to restructure the economy to encourage more imports and we need greater domestic-led growth. Forecasting sluggish economic growth in Japan this year Wallis urged Tokyo to stimulate domestic demand to help reduce its trade surplus which hit a record 83 billion dlrs in 1986. He named several areas of particular concern to Washington -- computer microchips supercomputers Kansai airport agricultural products and car telephones. He warned that the U.S./Japan agreement governing trade in semiconductors was in jeopardy. Despite the pact Japanese producers are still dumping microchips in foreign markets other than the United States while U.S. Penetration of the Japanese market has not increased he said. REUTER
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U.S. TELLS JAPAN TO DO MORE TO CUT TRADE SURPLUS
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The joint committee of Taiwans maize importers has awarded contracts to two U.S. Companies to supply two shipments of maize totalling 60000 tonnes a committee spokesman told Reuters. Continental Grain Co of New York received the first 30000 tonne cargo contract priced at 93.86 U.S. Dlrs per tonne while Peavey Co of Minneapolis won the second shipment also 30000 tonnes at 93.36 dlrs per tonne. Both shipments are c and f Taiwan and are set before March 16 the spokesman said. REUTER
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TAIWAN BUYS 60,000 TONNES OF U.S. MAIZE
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BANK OF FRANCE SELLS 11.05 BILLION FRANCS OF TREASURY TAP STOCK - OFFICIAL
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President of the Japan Chamber of Commerce and Industry (JCCI) Noboru Gotoh called on the Government to issue additional construction bonds as an emergency measure to stimulate domestic demand. Gotoh told a press conference that increased fiscal spending is the only alternative to prop up the economy as credit conditions are easy enough a JCCI spokesman said. Japan faces serious unemployment unless more construction bonds to raise cash for public works are issued but Japan should continue to carry out fiscal reform programmes Gotoh said. REUTER
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JAPAN'S CHAMBER OF COMMERCE URGES FISCAL SPENDING
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Japanese private plant and equipment investment will grow 0.1 pct in fiscal 1987 starting April 1 from 1986 due mainly to a continued slump in manufacturing sector spending the Japan Development Bank said. Capital spending by manufacturing industries hit hard by the rise of the yen will fall 5.6 pct a survey said. Planned investment by non-manufacturing firms will grow four pct as industries like leasing and transport that have benefitted from the yens rise will remain robust it said. The 0.1 pct overall increase compares to the 3.1 pct rise the bank projected for the current fiscal year. In the manufacturing sector iron and steel companies are the most pessimistic with an estimated 18.0 pct spending cut. Investment by precision machinery and textile firms will decline by 18 pct and 11.2 pct respectively the survey said. In the non-manufacturing sector transport and leasing service industries are expected to increase their spending by 15.7 pct and 10.6 pct respectively. The banks survey conducted in early February was based on questionnaires from 1738 corporations in all sectors having a business relationship with the bank. REUTER
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JAPANESE CAPITAL INVESTMENT SEEN SLUGGISH IN 1987
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Economy and finance ministers of the Gulf Cooperation Council (GCC) states will meet in Abu Dhabi on March 17 and 18 to discuss their unified economic agreement officials said. The semi-official United Arab Emirates (UAE) daily al-Ittihad said they would discuss two clauses effective from March 1 opening up wholesale trade and industrial loans in GCC states to all GCC citizens. The six states - Bahrain Kuwait Oman Qatar Saudi Arabia and the UAE - agreed in 1981 to integrate their economies and eliminate barriers to the movement of people and goods. REUTER
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GULF ARAB FINANCE MINISTERS TO MEET IN ABU DHABI
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Japans ruling Liberal Democratic Party started moves to push through the delayed draft budget for 1987/88 through Parliament deepening a clash with the opposition which called the move rash and unforgivable. In the absence of the opposition LDP members of parliament decided at a meeting of the Lower House Steering Committee to hold a public hearing on the draft budget on March 13 and 14 parliamentary officials said. The step came after Parliament resumed deliberations last Tuesday following a month-long opposition boycott over a controversial government-proposed sales tax plan. Four opposition parties led by the Socialists have been delaying budget deliberations in a bid to shelve the sales tax on which the budget plan is based. A Socialist spokesman said the opposition would again boycott parliament unless the LDP changed its mind. Prime Minister Yasuhiro Nakasone who has vowed to push through the tax reforms told reporters: Watching closely negotiations between the ruling and opposition parties I would like to avoid ... Passing (the budget) singlehandedly. The five pct tax part of Nakasones tax reform plan is planned to start next January to help offset cuts in individual income and corporate tax. The opposition objected to fixing a date for the hearing because the LDP could technically stop deliberations on the budget and ram it through the budget committee and then a Lower House plenary session political analysts said. The four opposition parties called the LDP move an unforgivable rash act and said they would fight to scrap the sales tax. REUTER
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JAPAN RULING PARTY FIXES DATE OF BUDGET HEARING
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The Bank of France said it sold a total of 11.05 billion francs of Treasury tap stock in an issue of two fixed-rate tranches and one variable rate tranche. It sold 8.25 billion francs of 8.50 pct June 1997 tap stock at a top accepted price of 96.30 pct giving an average yield of 8.72 pct. Demand totalled 18.45 billion francs at prices between 94.70 and 97.10 pct. The Bank also sold 1.8 billion francs worth of 8.50 pct December 2012 tap stock at a top accepted price of 93.60 pct. Demand totalled 5.25 billion francs and the average yield was 9.13 pct. In addition it sold one billion francs worth of floating rate 1999 tap stock at a top accepted price of 96.90 pct on total demand of five billion francs. REUTER
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BANK OF FRANCE SELLS TAP STOCK
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The outlook for the West German economy is relatively bright with gross national product expected to expand by three pct this year Kiel Universitys Institute for World Economy said. The GNP forecast by the institute one of five leading economic research bodies in West Germany is more optimistic than that of the other institutes some of which have recently reduced their GNP forecasts to between two and 2.5 pct. In a report the Kiel institute said West Germanys export outlook has not deteriorated fundamentally despite the marks strength against the dollar and other major currencies. The danger that exports will slump in 1987 appears all in all limited the report said. On the contrary a slight rise in exports can be expected. The institute said past experience has shown West German exporters will move to counterbalance currency factors by cutting costs trying to penetrate new markets and adjusting their product ranges. They will be aided in 1987 by an expected slight rise in economic growth in industrial countries. At the same time the decline in exports to oil producing countries looks set to slow this year. West German GNP growth in 1987 will be led by renewed advances in domestic consumption and investment spending both of which will in turn be buoyed by an expansionary monetary policy the institute said. However it said the labour market would see only a slight improvement because companies will be reluctant to hire additional workers due to higher labour costs caused partly by agreed reductions in working hours. The institute cautioned that the expansionary stance of monetary policy in West Germany was likely to bring a marked acceleration of inflation. It also warned that what it called the worldwide synchronization of monetary policy heightened the risk of a new global recession. It said central banks in industrialized countries including the Bundesbank had followed the Federal Reserve Boards expansionary course. The institute said this in turn was bound to lead eventually to a rise in worldwide inflation and a shift in U.S. Policy towards a more restrictive policy. Other central banks were likely to follow suit causing a recession that could aggravate the debt crisis of developing countries as well as increase protectionism around the world. Although Germany cannot entirely shield itself from the negative effects of the global synchronization of monetary policy it should do all it can to strengthen the forces of growth at home. The institute said this could be done by ensuring that fiscal policy fosters a willingness to work and invest. Taxes should be cut by a greater amount than currently planned and wage increases in 1987 and 1988 should be markedly lower than in 1986. It also said the Bundesbank should reduce inflationary pressures by cutting the current rate of growth in money supply to about four pct. REUTER
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GERMAN ECONOMIC OUTLOOK SEEN FAIRLY BRIGHT
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The nine creditor banks of the Singapore coffee trader <Teck Hock and Co (Pte) Ltd> are thinking of buying a controlling stake in the company themselves a creditor bank official said. Since last December the banks have been allowing the company to postpone loan repayments while they try to find an overseas commodity company to make an offer for the firm. At least one company has expressed interest and negotiations are not yet over banking sources said. However the banks are now prepared to consider taking the stake if they find an investor willing to inject six to seven mln dlrs in the company but not take control the banking sources said. Teck Hocks financial adviser Singapore International Merchant Bankers Ltd (SIMBL) will work on the new proposal with the creditor banks they said. Major holdings are likely to be held by the two largest creditor banks Standard Chartered Bank <STCH.L> and Oversea-Chinese Banking Corp Ltd <OCBM.SI> they added. Teck Hock owes over 100 mln Singapore dlrs and the creditor banks earlier this week agreed to let Teck Hock fufill profitable contracts to help balance earlier losses. The nine banks are Oversea-Chinese Banking Corp Ltd United Overseas Bank Ltd <UOBM.SI> <Banque Paribas> <Bangkok Bank Ltd> <Citibank NA> Standard Chartered Bank Ltd Algemene Bank Nederland NV <ABNN.AS> Banque Nationale De Paris <BNPP.PA> and <Chase Manhattan Bank NA.> REUTER
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CREDITOR BANKS MAY BUY INTO SINGAPORE COFFEE FIRM
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U.K. 4TH QTR TRADE DEFICIT 2.6 BILLION STG, CURRENT ACCOUNT DEFICIT 760 MLN - OFFICIAL
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A strong earthquake measuring an estimated 8.0 on the open-ended Richter scale hit northern Chile around 0936 the Meteorological Agency here reported. The agency said the information had been received from Honolulu. It gave no further details. REUTER
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STRONG EARTHQUAKE REPORTED IN NORTHERN CHILE
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Poland says U.S. Sanctions have cost its economy 15 billion dlrs and has made clear it wants Washington to take a lead in repairing the damage after lifting remaining restrictions two weeks ago. Polish officials are unable to provide a precise breakdown of the figure saying it takes into account a number of hypothetical losses. Some of them are too sophisticated to convert into financial terms one banking source said. But Western economic experts say the effect of sanctions is impossible to calculate. They say it is blurred by the poor performance of Polands economy and dismiss the 15 billion dlr figure as illusory. Sanctions have provided a very useful excuse for under- achieving. They did have a bad effect yes but they only contributed to largely internal economic problems one said. The U.S. Imposed the measures and withdrew Most Favoured Nation (MFN) trading status from Poland in 1982 in retaliation for suppression of the Solidarity free trade union under martial law. The estimated cost to the Polish economy was originally devised several years ago by the Institute of National Economy an offshoot of the central planning commission. According to one Western envoy an expert on Polish economic affairs it extrapolated 1979 information on growth trends in trade with the United States as well as increases in credits from Western commercial and government lenders. But the calculations were based on a time when trade was booming and credits still flowed freely he said dismissing the estimate as a theoretical projection based on a high point which has no real scientific evaluation. A foreign trade ministry official said Polish exports to the U.S. In the late 1970s averaged around 400 mln dlrs annually and had fallen by half since the sanctions were imposed. Imports have suffered slumping from around 800 mln dlrs to 200 mln as credits ran out. Poland has a dwindling trade surplus with the West. Last year it was one billion dlrs against a targeted 1.6 billion official figures show. Acknowledging that sanctions have lost Poland important U.S. Markets -- including agricultural equipment textiles chemicals and some foodstuffs -- Western economists say credits dried up for economic not political reasons. Poland is accusing the West of letting economic relations deteriorate for political reasons said one expert. Its an illusion based on a misunderstanding of Western economy. Theres a limit to how much you can go on giving someone who has no hope of repaying it another said adding that Poland had benefited from a global phenomenon of easy credits in the 1970s which were no longer todays reality. Describing the 15 billion dlr assessment as nebulous one diplomat said it also included losses of hypothetical orders and setbacks to Polish research through the curbing of scientific links and exchanges. Western officials say the lifting of sanctions and new MFN status will have little impact on Poland which has a hard currency debt of 33.5 billion dlrs and lacks the means to modernise its industry. MFN doesnt really mean anything only that Poland will not be treated worse than other countries. It will be difficult to regain access to the U.S. Market because different forces are in play now said one Western envoy. He said Polish products were not competitive and their quality was too low. Trade wars and possible protectionist measures amongst the U.S. Japan and Europe would also hamper Polands efforts to regain entry. Deputy foreign trade minister Janusz Kaczurba recognised this fact recently. Kaczurba told the official PAP news agency recently Making up our lost position will take a long time and be uncommonly difficult and in certain cases impossible... In a period of two to three years it will be possible to increase the level of exports by only about 100 mln dlrs. While Poland is unlikely to seek compensation it says it has a moral right to assistance from the U.S. Which it says imposed the sanctions illegally. But a Western economist said The argument that U.S. Sanctions were a unilateral torpedoing of the Polish economy wont cut any ice. The Americans will just reply that the Poles acted immorally in crushing Solidarity. Nevertheless Polish National Bank head Wladyslaw Baka in talks in Washington last week with the International Monetary Fund (IMF) and World Bank made it clear that Poland was looking for a lead from the United States. He was quoted by PAP as saying that Poland would meet its financial obligations to the United States but not in a short time and not without a cooperative stand on the part of its foreign economic partners. He stressed that the U.S. had a particular opportunity to play a part in the cooperative policy of Polands partners interested in the settlement of Polish debt. Putting it more sharply one senior banking official blamed Washington for obstructing talks with the World Bank IMF and Paris Club of Western creditor governments in recent years and said it should now play a more positive role. As a major superpower the United States can influence international organisations he said citing recent meetings aimed at stabilising currencies as an example of the extent to which Western nations were prepared to cooperate. REUTER
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ECONOMIC SPOTLIGHT - POLISH SANCTIONS
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Britain had a visible trade deficit of 2.6 billion stg in the fourth quarter of 1986 against a revised deficit of 2.9 billion in the third quarter official statistics show. Seasonally-adjusted figures issued by the Central Statistical Office (CSO) show the current account was in deficit by 760 mln stg against an upwardly revised third quarter shortfall of 930 mln. For 1986 as a whole visible trade was in deficit by 8.3 billion stg sharply up from 1985s 2.2. Billion shortfall and a 4.4 billion deficit in 1984. Preliminary figures for invisible transactions in the fourth quarter show a surplus 1.8 billion stg to give an estimated surplus for 1986 of 7.2 billion. The fourth quarter figure was in line with CSO projections released on Friday. The third quarter invisibles surplus was revised down to 1.9 billion stg from 2.25 billion. In 1985 the invisibles surplus was 5.1 billion stg. The reduced deficit on visible trade in the fourth quarter was due to an increase in the surplus on oil of 200 mln stg and a reduction in the non-oil trade deficit of 100 mln the CSO said. However 1986s surplus on oil trade was 4.0 billion stg lower than in 1985 while the deficit on non-oil trade increased by 2.1 billion. The figures were broadly in line with market expectations. The CSO stressed that figures for invisible transactions particularly for the most recent quarters are liable to substantial revisions as later information becomes available. REUTER
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U.K. FOURTH QUARTER TRADE DEFICIT 2.6 BILLION STG
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Belgian wholesale prices fell by 5.9 pct in January from a year earlier after a 5.7 pct year on year fall in December figures from the economics ministry show. A ministry spokesman said the wholesale price index base 1953 and excluding value added tax stood at 250.9 in January. This compared with 251.9 in December 265.5 in Janua~y 1986 and 267.2 in December 1985. In January 1986 wholesale prices were 3.9 pct lower than a year earlier. REUTER
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BELGIAN WHOLESALE PRICES FALL IN JANUARY
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Talks set for today between management and unions to try to solve the labour dispute at Cargill U.K. Ltds Seaforth oilseed crushing plant have been rescheduled for Monday a company spokesman said. Oilseed processing at the mill has been at a standstill since December 19. REUTER
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CARGILL U.K. STRIKE TALKS POSTPONED TILL MONDAY
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The Bank of France is likely to cut its money market intervention rate by up to a quarter point at the start of next week. This follows a steady decline in the call money rate over the past 10 days and signals from the Finance Ministry that the time is ripe for a fall dealers said. The call money rate peaked at just above nine pct ahead of the meeting of finance ministers from the Group of Five industrial countries and Canada on February 22 which restored considerable stability to foreign exchanges after several weeks of turbulence. The call money rate dropped to around 8-3/8 pct on February 23 the day after the Paris accord and then edged steadily down to eight pct on February 27 and 7-3/4 pct on March 3 where it has now stabilised. Dealers said the Bank of France intervened to absorb liquidity to hold the rate at 7-3/4 pct. While call money has dropped by well over a percentage point the Bank of Frances money market intervention rate has remained unchanged since January 2 when it was raised to eight pct from 7-1/4 pct in a bid to stop a franc slide. The seven-day repurchase rate has also been unchanged at 8-3/4 since it was raised by a half-point on January 5. The Bank of France has begun using the seven-day repurchase rate to set an upper indicator for money market rates while using the intervention rate to set the floor. Sources close to Finance Minister Edouard Balladur said that he would be happy to see an interest rate cut and dealers said any fall in the intervention rate was most likely to come when the Bank of France buys first category paper next Monday although an earlier cut could not be excluded. A cut in the seven-day repurchase rate could come as early as tomorrow morning banking sources said. They said recent high interest rates have encouraged an acceleration in foreign funds returning to France discouraging the authorities from making a hasty rate cut. But they also pointed out that money supply is broadly back on target giving scope for a small fall in rates. M-3 money supply the governments key aggregate finished 1986 within the governments three to five pct growth target rising 4.6 pct compared with seven pct in 1985. REUTER
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FRENCH INTERVENTION RATE CUT LIKELY, DEALERS SAY
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The Hong Kong dollar fixed rate market was shut down this afternoon after a 200 mln H.K. Dlr certificate of deposit issue for the Chinese state-owned Bank of Communications Ltd Hong Kong branch suddenly surfaced bankers said. Disgruntled dealers said the market was slowly on the road to recovery after a bout of sell-off that began in early February but it was still too fragile to absorb a new issue. Brokers said the new deal took them by surprise and all major players stopped making markets in existing issues. The fixed rate market which consists mainly of CDs tied to swaps or asset repackaging began to fall about a month ago due to indigestion after 18 CD issues totalling 2.3 billion dlrs flooded the market in January. Bankers said the shake-up was a result of participants pushing the market up too fast in January amid intense speculation that the Hong Kong dollars 7.80 peg rate against the U.S. Dollar would soon be changed. The speculation depressed local interest rates and unleashed a flood of new issues. But the speculation faded in early February and interest rates climbed as the government remained adamant in maintaining the peg thus triggering an adjustment on the fixed rate capital market. By late February the market had recovered considerably but Dai-Ichi Kangyo Bank and Morgan Guaranty Trust Co of New York launched their issues and pushed the market down again. Since then there has been no new issues for nearly two weeks until China Development Finance Co (H.K.) Ltd (CDFC) a unit of the Bank of China launched the five-year deal at 7.05 pct with quarterly interest payment in mid-afternoon today. Brokers said the market was steady early this morning but began to slip marginally by late morning as rumours of a new issue circulated. When the deal was launched the major players quickly suspended trading and refused to quote prices for their own issues brokers said. We just dont know where the market is going said a European banker. They said the Bank of Communications issue traded at a low of 99.70 but was later pushed up to 99.90/95 within the 10 basis point fee adding that buying came mainly from sister banks in the Bank of China group. An official with one of the Chinese banks said the deal was launched at an effective yield of 7.26 pct in line with the market at that time. But a European banker said pricing was not an issue IN the present market conditionS the timing was just not right. If banks had more patience they wouldnt launch any issues now and then the market would be all right another dealer said. But there is no reason to be overly pessimistic he said. The effect of this issue on the market should not be as bad as what happened after the DKB and Morgan deals. Despite the criticism bankers said CDFC still managed to recruit more than 10 underwriters though the composition of the group has not yet been finalised. Any trader should recommend his bank against joining the deal said a dealer. But there are other considerations such as relationship. He admitted his bank has joined as co-manager. A banker said he saw no reason why the market makers decided to shut down if they were willing to join the new issue. Perhaps they were jealous that for the first time a Chinese entity has taken the sole lead position for a Chinese issue he said. Previously Chinese entities have always acted as co-lead managers whether for Chinese or foreign issues. REUTER
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HONG KONG CD MARKET SHUTS DOWN AFTER NEW ISSUE
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Bundesbank says it leaves credit policies unchanged
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Traded volumes for U.K. Grain and potato futures in February were down on the previous month while pigmeat and pig cash settlement futures were higher official figures show. Combined wheat and barley futures trade declined to 892700 tonnes from 1.19 mln in January and the value fell to 97 mln stg from 129 mln Grain and Feed Trade Association (GAFTA) figures show. A total of 984960 tonnes were registered for main crop potato futures in February valued at 157 mln stg versus 992760 and 164 mln stg in January. Soymeal futures trade totalled 76340 tonnes against 90680 in January and value declined to nine mln stg from 10 mln. Nine pigmeat contracts were traded in February six more than in the previous month representing 450 carcases against 150 valued at 29347 stg against 9847 stg. Pig cash settlement futures saw 201 contracts traded against 19 in January and the value rose to 659864 stg from 119610 stg. REUTER
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U.K. GRAIN/POTATO FUTURES VOLUME DOWN IN FEBRUARY
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The Bundesbank left credit policies unchanged after todays regular meeting of its council a spokesman said in answer to enquiries. The West German discount rate remains at 3.0 pct and the Lombard emergency financing rate at 5.0 pct. REUTER
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BUNDESBANK LEAVES CREDIT POLICIES UNCHANGED
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Mitsui and Co Ltd said it plans to issue 300 mln Eurodollar warrant bonds in two tranches with payment on March 30 through a syndicate led by Nomura International Ltd. One tranche is of five-year 150 mln dlr bonds while the rest is of seven-year 150 mln dlr bonds but other issue terms have not yet been decided. REUTER
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MITSUI AND CO TO ISSUE EURODOLLAR WARRANT BONDS
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The Bank of Japan will sell tomorrow 500 billion yen of financing bills it holds to help absorb a projected money market surplus money market traders said. Of the total 300 billion yen will yield 3.9989 pct on the sales from money houses to banks and securities houses in 27-day repurchase agreement due April 2. The remaining 200 billion yen will yield 3.9994 pct in a 39-day repurchase pact maturing on April 14 they said. The repurchase agreement yields compare with the 4.0625 pct one-month commercial bill discount rate today and the 4.50/43 pct rate on one-month certificates of deposit. Tomorrows surplus in the money market is estimated at 420 billion yen mainly due to payment of national annuities money traders said. The operation will put the outstanding bill supply at about 1300 yen. REUTER
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BANK OF JAPAN TO SELL 500 BILLION IN BILLS
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Argentina will tell its creditors it needs an extension of deadlines for payment of capital and interest on its 50 billion dlr foreign debt Industry and Foreign Trade Secretary Roberto Lavagna told reporters. We the developing countries are going to insist on the application of contingency clauses to extend deadlines for the payment of capital as well as interest he said. He said this could bring about what he called a possible automatic capitalisation of those parts of debt interest that could not be paid and even the elimination of a portion of the debt. REUTER
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ARGENTINA SEEKS NEW DEBT DEADLINES, OFFICIAL SAYS
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Turkey has announced a tender to import 100000 tonnes of white crystal sugar with an advertisement in local newspapers. Turkish Sugar Factories said in the advertisement there was a 50 pct option to increase or decrease the amount and bids should reach it before March 24. The semi-official Anatolian Agency recently quoted Turkish Minister of Industry and Trade Cahit Aral as saying Turkey will export 100000 tonnes of sugar this year and import the same amount. REUTER
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TURKEY TO IMPORT 100,000 TONNES OF CRYSTAL SUGAR
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The Bank of England said it provided the money market with a further 20 mln stg of assistance during the morning. It again bought bills for resale to the market on April 2 at a rate of 10-15/16 pct. Earlier this morning it bought 17 mln stg of bills at the same rate and for resale on the same date. The Bank has thus given a total of 37 mln stg so far today which leaves the bulk of a 1.15 billion stg shortage still in the system. Dealers noted that money market rates again eased this morning and the Bank may have refused bill offers from the discount houses at rates below its established dealing levels. REUTER
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U.K. MONEY MARKET GIVEN FURTHER SMALL ASSISTANCE
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Matushita Electric Trading Co Ltd is issuing a 100 mln dlr equity warrant eurobond due March 30 1992 paying an indicated coupon of 2-3/4 pct and priced at par lead manager Nomura International Ltd said. Final terms on the non-callable bond will be fixed on March 12. The selling concession is 1-1/2 pct while management and underwriting combined pays 3/4 pct. The payment date is March 30 while listing will be in Luxembourg. The issue is available in denominations of 5000 dlrs. The warrant exercise period is from April 15 1987 until March 17 1992. REUTER
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MATSUSHITA ELECTRIC TRADING ISSUES WARRANT BOND
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The Gunma Bank Ltd is issuing a 50 mln dlr convertible eurobond due March 31 2002 paying an indicated 2-1/4 pct and priced at par lead manager Nomura International Ltd said. The issue is callable from March 31 1990 at 104 pct declining by 1/2 pct per annum to par thereafter but is not callable until 1992 unless the share price exceeds 150 pct of the conversion price. The selling concession is 1-1/2 pct while management and underwriting combined pays one pct. Final terms will be fixed on March 12. The issue is available in denominations of 5000 dlrs and will be listed in Luxembourg. The payment date is March 31. The conversion period is from April 13 1987 until March 22 2002. REUTER
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GUNMA BANK ISSUES 50 MLN DLR CONVERTIBLE EUROBOND
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General Motors Corp said it ordered temporary layoffs of 5500 hourly workers to cut production and thereby reduce inventories of cars built at two plants later this month. A spokesman said 2000 workers would be laid off one week beginning March 9 at GMs Detroit-Hamtramck luxury car plant. Another 3500 will be laid off a week effective March 23 at GMs Lansing Mich plant which builds the companys N-body compact cars. Reuter
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GM <GM> LAYING OFF 5,500 AT TWO PLANTS
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Ice conditions are unchanged at the Soviet Baltic oil port of Ventspils with continuous and compacted drift ice 15 to 30 cms thick the latest report of the Finnish Board of Navigation said. Icebreaker assistance to reach Ventspils harbour is needed for normal steel vessels without special reinforcement against ice the report said. It gave no details of ice conditions at the other major Soviet Baltic export harbour of Klaipeda. Reuter
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ICE UNCHANGED AT SOVIET OIL PORT OF VENTSPILS
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Hughes Tool Co said its board has appointed a committee to search for a chief operating officer in the event that it does not complete its merger with Baker International Corp <BKO>. Last night Hughes directors said it would terminate its agreement to merge with Baker because Baker would only proceed if Hughes signed a consent decree with the U.S. Justice Department that the Hughes board had determined to be unreasonable. The post of chief operating officer is now vacant at Hughes. Chairman W.A. Kistler Jr. is chief executive officer. Hughes said it proposed to Baker that the companies ask the Justice Department to allow them to proceed with the merger on condition that they find a buyer approved by the Department for the domestic oilfield tricine rock bit assets of Bakers Reed subsidiary its Singapore plant and Baker Lifts domestic electrical submersible pump business by April 22 the last date the merger of Baker and Hughes could occur under their agreement. Hughes said its proposal would have been conditioned on it not being required to license the purchaser with any Hughes technology and on the imposition of no more adverse conditions. Hughes said For reasons Hughes does not fully understand Baker declined to proceed in this fashion and insisted that it would proceed only if Hughes signed the consent decree. The company said its board found the consent decree to be unreasonable because some unusual terms in the decree posed a substantial risk that control of the divestiture of Reed would be passed to a trustee owing no duties to the shareholders of the combined company which would have been called Baker Hughes Inc and would include all of Reeds international assets and its coring and diamond bit assets. Hughes said the board also found unacceptable the consent decree condition that the merged company fund ongoing losses of Reed and Reed capital expenditures for as long as it took to sell Reed. The company said the board decision to adopt its own divestiture plan and terminate the merger agreement if Baker did not accept was unanimous. Reuter
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HUGHES TOOL <HT> SEEKS CHIEF OPERATING OFFICER
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The Swiss Finance Ministry is inviting tenders for a new series of three-month money market certificates to raise about 150 mln Swiss francs the Swiss National Bank said. Bids would be due on March 10 and payment on March 12. The last issue of three-month paper conducted on February 12 yielded 2.969 pct. REUTER
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SWISS OFFERS NEW SERIES OF MONEY MARKET PAPER
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Egypts Central Bank today set the dollar rate for commercial banks for March 6 at 1.373/87 dollars unchanged from the previous rate. REUTER
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EGYPTIAN CENTRAL BANK DOLLAR RATE UNCHANGED
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A tremor hit northern Chile early today but there were no immediate reports of victims or of damage to the countrys vital mining industry the National Bureau for Emergencies ONEMI said. The effects of the tremor at 0620 hrs (0920 GMT) registered four to six degrees on the 12-degree Mercalli scale in Antofagasta 1000 km north of Santiago and five to six degrees in Chuquicamata and Calama at the centre of Chiles mining region. The tremor was followed by a milder aftershock at 0758 hrs. An ONEMI spokesman said windows had been broken and a number of cornices had fallen off buildings in the worst-hit areas. These effects are described as up to seven degrees on the Mercalli scale. The tremor caused a partial power cut in northern Chile the spokesman added. Quoting from the latest report from the area received at 8.37 A.M. He said the effects of the tremor registered two to three degrees on the Mercalli scale in Arica on the northern border with Peru and three to four in Copiapo 700 km north of Santiago. ONEMI could not provide a reading on the Richter scale. REUTER
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NO MINES DAMAGE REPORTED AFTER CHILE TREMOR
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State-run Tanzania Railway Corporation (TRC) has secured 25.6 mln dlrs aid from banks and European countries for a one-year emergency repair program Transport Minister Mustafa Nyanganyi said. Nyanganyi told Reuters on his return from a World Bank sponsored donors conference in New York that the aid would enable TRC to buy spares for 32 locomotives overhaul 800 wagons and replace 67000 sleepers over the next 12 months. The World Bank African Development Bank European Community Canada Belgium West Germany Britain Sweden Italy and Denmark had contributed to the package he said. TRC runs a rail network linking Dar es Salaam and the northern port of Tanga with the coffee-growing area around Mount Kilimanjaro and ports on Lake Victoria and Lake Tanganyika. It is under separate administration from the Tanzania-Zambia railway linking Dar es Salaam with the Zambian copperbelt and the railway system of southern Africa which has already received substantial aid as part of international efforts to ease the dependence of landlocked African states on trade routes through South Africa. But this is the first international aid package for TRC which also carries cargo for Uganda Zaire and Burundi. REUTER
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TANZANIAN RAILWAYS SECURE 25.6 MLN DLRS AID
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The two 150 mln dlr equity warrant eurobonds for Mitsui and Co Ltd reported earlier today from Tokyo have now been formally launched lead manager Nomura International Ltd said. The first tranche matures on March 30 1992 and has an indicated coupon of 2-3/4 pct while the second tranche matures on March 30 1994 and has a fixed coupon of three pct. Both deals have an indicated pricing of par. The selling concession for both deals is 1-1/2 pct while management and underwriting combined pays 3/4 pct. Final terms on the deals will be fixed on March 12. Reuter
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MITSUI AND CO EUROBONDS FORMALLY LAUNCHED
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BAKER INTERNATIONAL CORP SUES HUGHES TOOL SEEKING MERGER COMPLETION
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CARTER HAWLEY HALE STORES FEBRUARY SALES UP 7.6 PCT
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USAIR GROUP REJECTS TRANS WORLD AIRLINES TAKEOVER BID
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OPEC crude oil output in the first few days of March was running at about 14.7 mln bpd down from a 16 mln bpd average for February and well below the 15.8 mln bpd ceiling the group adopted in December a Reuter survey shows. The figures were polled by Reuters correspondents from oil traders industry executives and analysts in Europe the Middle East Africa Latin America and Asia. They back recent statements by OPEC ministers that the group is producing within its ceiling to support the return to a fixed price system which came into effect last month. OPEC output for the whole of February was about 200000 bpd above the ceiling largely because of overproduction by the United Arab Emirates and Kuwait the figures show. The UAE together with the much smaller producer Ecuador was also producing above quota in the first days of March the survey reveals. But such overproduction was compensated for by a sharp fall in Saudi Arabian output together with Irans inability to export as much as its quota allows. Iraq rejected its OPEC quota of 1.466 mln bpd and produced 1.75 mln bpd in February and early March the figures showed. Saudi output -- excluding movements into stocks -- fell to 3.1 mln bpd in early March from 3.5 mln bpd in February against a 4.133 mln bpd quota. The Saudi figures include a 200000 bpd share of Neutral Zone production. Kuwait which has consistently denied quota violations was estimated to be pumping 1.4 mln bpd in February and 1.15 in early March -- both figures including 200000 bpd as its share of Neutral Zone output -- against its 948000 bpd quota. Reports of customer resistance to fixed prices set by some OPEC states were reflected in output from Qatar and Nigeria both substantially under quota in February and early March. Qatars February output was 230000 bpd and this fell to 180000 bpd in early March compared with its 285000 bpd quota. Industry sources say Japanese buyers are resisting Qatars prices and Gulf Arab oil states have pledged to make up for any shortfall in sales which a fellow Gulf state suffers. Nigerias early March output was about one mln bpd down from 1.14 mln bpd in February and its quota of 1.238 mln bpd. Industry sources say Nigerias customers believe its Bonny grades are overpriced compared with compatible Brent crudes from the U.K. North Sea. Country-by-country production figures are as follows in mln bpd - COUNTRY CURRENT FEBRUARY QUOTA ALGERIA 0.64 0.64 0.635 ECUADOR 0.26 0.26 0.210 GABON 0.15 0.15 0.152 INDONESIA 1.16 1.16 1.133 IRAN 1.80 2.20 2.255 IRAQ 1.75 1.75 1.466 KUWAIT 1.15 1.40 0.948 LIBYA 0.95 0.95 0.948 NIGERIA 1.00 1.14 1.238 QATAR 0.18 0.23 0.285 SAUDI ARABIA 3.10 3.50 4.133 UAE 1.10 1.15 0.902 VENEZUELA 1.50 1.50 1.495 TOTAL 14.7 16.0 15.8 REUTER Reuter
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EARLY MARCH OPEC OUTPUT SEEN WELL BELOW CEILING
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Bethlehem Steel Corp has investigated the ramifications of a filing for reorganization under Chapter 11 of the federal bankruptcy laws but has no present plans to file a company spokesman told Reuters. The spokesman said the investigation was made some time ago and was undertaken as a precaution in the interest of prudent management. He said while Bethlehem which has been losing money for several years does not intend to seek protection from creditors now it could do so if conditions worsened particularly if it ran out of cash. But the spokesman said Bethlehem ended 1986 with over 460 mln dlrs in cash on hand partly due to the sale of assets over the year and expects to maintain its cash position at around that level through 1987. At the end of 1985 Bethlehem had less than 100 mln dlrs in cash. Reuter
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BETHLEHEM <BS> HAS INVESTIGATED CHAPTER 11
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The City of Quebec is issuing a 40 mln Canadian dlr nine pct bond due April 1 1997 at 100-1/2 pct sole lead manager Societe Generale said. The non-callable issue is of direct unsecured unsubordinated debt. Fees are 1-1/4 pct for selling and 3/8 pct each for management and underwriting. Payment date is April 1 denominations are of 1000 and 10000 dlrs and listing is in Luxembourg. REUTER
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CITY OF QUEBEC ISSUES 40 MLN CANADIAN DLR EUROBOND
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Carter Hawley Hale Stores Inc said sales for the four weeks ended February 28 were up 7.6 pct to 240.8 mln dlrs from 223.8 mln dlrs a year before with same-store sales up 5.6 pct. Sales for the prior year exclude John Wanamaker stores sold at the end of 1986. Reuter
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CARTER HAWLEY HALE <CHH> FEBRUARY SALES RISE
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Baker International corp said it has filed suit in state court in Houston to compel Hughes Tool Co to complete its proposed merger with Baker. Late yesterday Hughes said it had terminated the merger agreement because Baker would not agree to an alternative divestiture plan devised by Hughes. Hughes board had previously found unacceptable a U.S. Justice Department consent decree that would have required broader divestitures. Baker said it has not obtained any satisfactory explanation from Hughes of its objections to the provisions of the Justice Department consent decree. Hughes yesterday adjourned the special meeting at which shareholders were to vote on the merger without permitting the counting of votes on the deal. Baker said it believes the vote was overwhelmingly in favor of the merger. Baker said the new terms that Hughes proposed for the merger as an alternative to the consent decree were more burdensome than those of the consent decree themselves. Baker said divestitures under the consent decree would reduce revenues for the combined company by about 65 mln dlrs or three pct. Baker said it will continue to pursue the divestitures of the units named in the consent decree. It said its suit names as defendants Hughes and certain of its directors and seeks either an injunction forcing Hughes to live up to the merger agreement or substantial monetary damages it did not name. Baker said it believes the merger to be in the best interests of shareholders of both companies. Reuter
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BAKER <BKO> SUES TO FORCE HUGHES <HT> MERGER
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Spains Finance Ministry deregulated bank deposit rates in an effort to raise competition among banks and bring legislation into line with the European Community (EC) a ministry spokesman said. The measure was published today in the Official State Gazette. It takes effect tomorrow and lifts restrictions on rates now limited to six pct on deposits of up to 180 days. The government also enacted a decree cutting to one pct from 13 pct the proportion of total assets which banks must lend at favourable rates to industries classified of public interest. Some bankers expect the deregulation of rates to result in a 20 pct drop in profits this year. Secretary of State for the Economy Guillermo de la Dehesa told Reuters in a recent interview the reduction in fixed asset investments would offset losses from the rate liberalisation. REUTER
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SPAIN DEREGULATES BANK DEPOSIT INTEREST RATES
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USAir Group Inc said its board has rejected Trans World Airlines Incs offer to acquire USAir for 52 dlrs per share in cash as grossly in adequate and not in the best interests of USAir shareholders employees or passengers. The company said the unsolicited bid by the Carl C. Icahn-led TWA was highly conditional. USAir said its board and that of Piedmont Aviation Inc <PIE> met separately yesterday to consider USAirs offer to acquire 50.1 pct of Piedmont for 71 dlrs per share and remaining shares for 1.5 to 1.9 common shares each valued at about 73 dlrs per share based on the average closing price of USAir common during a period just before the merger. The company said it is continuing talks with Piedmont on arriving at a definitive merger agreement and the two companies hope to reach one very shortly. USAir said In light of the highly conditional nature and other terms of the TWA offer the timing of the offer and the circumstances under which it was made USAir Group believes that the purpose of the TWA offer is to interfere with USAir Groups proposed acquisition of Piedmont. TWAs proposal is nothing more than an attempt by Carl Icahn to disrupt at the eleventh hour USAir Groups acquisition of Piedmont a transaction which the USAir Group board views as most beneficial to USAir Group shareholders employees and passengers and which Mr. Icahn obviously regards as contrary to his own personal interests. USAir said its board has authorized counsel to explore all appropriate legal remedies against what it called TWAs last-minute attempt to interfere with USAir Groups acquisition of Piedmont. The company said conditions to the TWA offer include TWA obtaining financing the USAir board redeeming defensive rights issued to shareholders last year and acting to render the fair price provision contained in USAirs charter inapplicable to the TWA offer and Transportation Department approval. Reuter...
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USAIR <U> REJECTS TWA <TWA> TAKEOVER BID
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Payless Cashways Inc said its sales for the four weeks ended February 28 rose six pct on a comparable store basis to 108.6 mln dlrs from 89.3 mln dlrs a year ago. Year to date it said sales advanced to 332.1 mln dlrs from 274.5 mln dlrs. Reuter
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PAYLESS CASHWAYS INC <PCI> FEBRUARY SALES RISE
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Sterivet Laboratories Ltd said it is proceeding with development of a new drug to treat navicular disease in horses. The company said it received an unspecified financial contribution from the National Research Council of Canada to help develop the drug for treating navicular disease which affects horses feet. Sterivet said the drug has produced promising results in limited clinical trials conducted over the past 18 months in Ontario. Reuter
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STERIVET <STVTF> TO DEVELOP NEW HORSE DRUG
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The U.S. economy is facing several serious problems which threaten its continued expansion according to a Congressional report released today. The report by the Democratic majority of the Congressional Joint Economic Committee said the outlook was for sluggish growth in the U.S. and the rest of the world for the near future. Committee Republicans released a separate more optimistic report predicting continued stable growth with low inflation. Democrats have a 12 to eight majority on the committee which is made up of 10 Senators and 10 Representatives. The annual report of the committee surveys a 3.7 trillion dlr economy whose tranquil appearance obscures the danger signals that lie just below the surface Committee chairman Sen. Paul Sarbanes said in a statement. A close inspection of the economy reveals that the current recovery while long is fragile and we are skating on thin ice the Maryland Democrat said. He said the danger signals included a decline in investment increased demand for borrowing which was straining the financial system a possible increase in inflation fueled by higher oil prices and the depressed condition of the nations farmers. Republicans said most private economists saw no likelihood of a recession and were predicting a growth rate of around three pct for this year and next similar to Administration forecasts. The economy appears to be on a path of stable growth. Were comfortable with the current low rate of inflation hopeful that interest rates will continue to decline optimistic that employment opportunities will continue to improve and confident in this nations resilient innovative and diversified economy the Republican report said. The greatest economic challenge facing the 100th Congress is reducing the federal deficit the Republicans added. Democrats said the budget deficit should be reduced but also wanted the government to spend more on education job training research and development and health care. They said pressures on the dollar might make it difficult for the Federal Reserve to use monetary policy to stimulate the economy if this becomes necessary. There is now substantial concern about the inflationary effects of a declining dollar and the buildup of monetary pressure arising from the recent rapid growth in the money supply the Democrat report said. At the same time the increased reliance on foreign sources of capital in American investment markets means that the Federal Reserve can no longer be as aggressive as in the past in lowering interest rates and driving the dollar down. Taken together the outlook for fiscal and monetary policy is thus not very encouraging the Democrats said. The Democrats called on the Administration to be more aggressive in removing foreign trade barriers and in seeking new initiatives to solve the international debt problem. The Democrats said much of the U.S. trade deficit had been caused by misalignment of the worlds currencies especially the overvaluation of the dollar that began in 1982. Both Democrats and Republicans called for policies to increase American productivity including incentives for saving and investment in plant and equipment and development of a better educated work force. Reuter
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U.S. EXPANSION THREATENED - CONGRESSIONAL REPORT
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New applications for unemployment insurance benefits fell to a seasonally adjusted 332900 in the week ended Feb 21 from 368400 in the prior week the Labor Department said. The number of people actually receiving benefits under regular state programs totaled 3014400 in the week ended Feb 14 the latest period for which that figure was available. That was up from 2997800 the previous week. Reuter
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U.S. FIRST TIME JOBLESS CLAIMS FALL IN WEEK
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