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European Business News (EBN), 97-09-24

European Business News (EBN) Directory - Previous Article - Next Article

From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated Wed, September 24 6:06 PM CET


CONTENTS

  • [01] Travelers to buy Salomon Brothers in $9 billion deal
  • [02] EU plans to investigate $3.2 billion capital transfer to WestLB
  • [03] Paris projects 3% deficit to GDP ratio in 1998 budget
  • [04] Bundesbank will do all possible to prevent a weak Deutsche mark
  • [05] National Grid to float Energis telecommunications unit in December
  • [06] Spain to sell 260 million Endesa shares in October privatisation
  • [07] EU urges quicker consolidation in Europe's aerospace industry
  • [08] French July household consumption jumps 6.7%, August falls 3.4%
  • [09] German regional consumer data suggests that the Bundesbank may delay raising rates
  • [10] Yeltsin sees bigger government role in free market
  • [11] Hoechst profit falls 54% to $1.2 billion
  • [12] Lafarge announces a 39% increase in first-half earnings
  • [13] RWE shareholders recommend multiple rights loss
  • [14] Italy's motorway privatization likely to be put back to next year
  • [15] Korean appeals court upholds Hanbo Steel owner's prison term
  • [16] IMF Round-Up
  • [17] Corporate and Economic Briefs

  • [01] Travelers to buy Salomon Brothers in $9 billion deal

    The financial services giant Travelers has agreed to acquire the parent of Salomon Brothers, one of the nation's premier investment houses, in a deal valued at more than $9 billion.

    Travelers, which sells insurance, mutual funds and other financial, products, said it will combine Salomon with Smith Barney Holdings, the investment bank and brokerage that it already owns, to form a new unit, Salomon Smith Barney Holdings.

    'The complementary business strengths of these two organizations, combined with the impressive talent of the people on both sides, will create a financially powerful and formidable competitor in virtually every facet of the securities business, in any region of the world,' Travelers Group Chairman Sanford Weill said in a statement.

    The merger of investment bank Salomon Inc. and insurance/brokerage giant Travelers would combine two of the securities industry's best-known firms and create a financial-services powerhouse with a combined market capitalization of more than $55 billion.

    The new firm, whose securities subsidiary would be named Salomon Smith Barney Holdings Inc., would dwarf Wall Street's current top dog, Morgan Stanley, Dean Witter Discover & Co. which has a market cap of just under $33 billion, according to First Call. Travelers Group also named Charles Scharf chief financial officer of the new unit, although additional information on Scharf was not immediately available.

    Travelers, based in New York, also sells life and property and casualty insurance, annuities, and other financial products and services. Salomon owns the well known investment bank and is known for trading aggressively for its own account in securities and commodities.

    The deal is the latest by a bank or financial services company to acquire an investment house. Fleet Financial Group said last week it agreed to buy Quick & Reilly Group Inc., the nation's third-largest discount broker, for about $1.6 billion in a bid to offer more financial services.

    [02] EU plans to investigate $3.2 billion capital transfer to WestLB

    The European Commission said it plans to launch a preliminary investigation into suspected German subsidies to WestLB, the country's largest publicly- owned bank.

    'We will start the probe, probably next week,' Commission spokesman Willy Helin said.

    The move is a major setback for Germany which tried to secure protection for the bank against new EU competition rules establish last June.

    Helin said that the total subsidy amount of 5.9 billion Deutsche marks ($3.3 billion) isn't necessarily unlawful. The investigation will attempt to find out which part of that might represent a strike against fair competition. 'We want to check if in this amount, which corresponds to a capital increase in 1992, there may be state aid elements,' Helin said. 'The opening of proceedings, when it happens, is not a declaration of war.'

    The Commission has been looking for years into the broader German issue of the transfer of capital from state housing development agencies to the local-authority controlled banks, known as Landesbanken. This followed a complaint by the German association of private banks, which believes that the transfer amounted to subsidies giving their public rivals an unfair advantage.

    Aware of the political sensitivity of the case, which EU sources say concerns several banks in five German states, European Competition Commissioner Karel Van Miert has decided, as a first stage, to open formal infraction proceedings only into WestLB, which has received the greatest transfers.

    'Van Miert seems to have decided to start with the biggest case and depending on what will be decided he may or not look at the other banks,' one source said. Any state financial interventions in businesses susceptible to involvement in subsidies must get the prior approval of the Commission, the EU's anti-trust watchdog, which may set strict conditions to compensate for any distortions of fair competition.

    EU probes into suspected state aid to businesses usually take at least six months.

    Germany had so far succeeded in preventing the Commission from going ahead with the probe by arguing that the Landesbanken fulfilled services of general economic interest and that the state intervention compensated them for the costs connected with such services.

    Dominque Strauss-Kahn, French Finance Minister

    [03] Paris projects 3% deficit to GDP ratio in 1998 budget

    The French government has projected a budget deficit to gross domestic product ratio of 3% in its 1998 budget, but economists say that premise is based on an assumption for business investment that may be too optimistic.

    The government has based its assumption on an inflation-adjusted rise of 3.0% in gross domestic product, up from 2.2% in 1997.

    The faster pace of activity will be spurred by a doubling in the growth rate of household consumption to 2% from 1% in 1997. But the main boost will come from business investment, which is expected to grow by about 4%, compared to a timid 1.8% rise in 1997 and a decline of 1.5% in 1996.

    The 1998 investment projection comprises a 7% rise in industrial investment, a forecast that Stuart Thomson, chief market economist for Credit Agricole Indosuez describes as 'too optimistic.'

    'In recent years, successive French governments have consistently overestimated the prospects for industrial investment, and I don't think this year will be any different,' he said.

    While the law of averages says that official forecasters will eventually get it right, Thomson also notes wryly that 'a stopped clock also give the correct time twice a day.' Thomson said he's not fundamentally in disagreement with the government's overall 1998 growth forecast, which is at the high end of private economists' projections. But he said he would have preferred a stronger bias toward consumption.

    The 2% rise in household spending slated for next year 'is too cautious given the overhang that's expected in the second half of this year,' he noted.

    French growth will continue to be fuelled by a strong external trade performance, with exports slated to rise by 5.7% in 1998 compared to 6.9% growth in 1997. Import growth will also slow to 3.8% next year from 4.3% in 1997.

    The upshot is that France's trade surplus will continue to grow, reaching 146 billion francs ($24.33 billion) in 1998, up from 120 billion francs in 1997 and 90 billion francs in 1996.

    The government's budget assumes a 2.3 rise in purchasing power in 1998, faster than the 2.0% expected for 1997.

    Since the early 1990s, the French economy has grown at a puny average annual rate of only 1.5%, held back by anemic domestic demand.

    The result has been a steady rise in unemployment that peaked in June at a record high of 12.6% of the working population. As the jobless rate grew to alarming levels, consumer spending dried up as households chose to build up their nest-eggs rather than consume. The slack pace of economic activity meant that, over the years, France has been slipping behind its more dynamic trading partners in North America and Europe.

    A 3% rise in GDP in 1998 would be France's fastest annual growth rate since the turn of this decade and would also surpass that of the U.S. and the European Union.

    The EU is forecasting an average growth rate of 2.8% for its 15 member countries in 1998.

    Government economists note that domestic demand will contribute two-thirds of next year's projected 3% growth rate, a level not seen since 1990.

    The projection of a 2.0% rise in French household consumption next year is in line with the long-term trend.

    It also assumes that the planned cuts in state levies on households will provoke a psychological reaction that will send consumers hurrying into the stores.

    David G. Pearson, Dow Jones Newswires, Paris

    [04] Bundesbank will do all possible to prevent a weak Deutsche mark

    Bundesbank President Hans Tietmeyer said the central bank will do everything in its power to prevent the Deutsche mark from weakening too far against other major international currencies.

    In an interview with the Flensburger Tageblatt newspaper to be published Thursday, Tietmeyer said, 'We in Germany will do everything to ensure that the mark remains a strong currency and doesn't depreciate against the world's major currencies,'

    'There have been corrections in exchange rates in the past,' Tietmeyer said. 'These were partly necessary, but there must be no exaggerations in the other direction.'

    He added that a depreciation of the mark wouldn't be right for Germany, without specifying any levels he found acceptable or unacceptable. 'As long as we have responsibility for the (Deutsche) mark, we will do everything to maintain complete trust in it and bring this trust into the euro,' Tietmeyer told the newspaper.

    He noted that the markets have yet to be convinced of the long-term stability of the euro, which is scheduled to replace the mark and other European currencies in 1999. Tietmeyer acknowledged the strong political will to go ahead with economic and monetary union but warned that it isn't enough on its own to guarantee the success of EMU.

    'But it isn't a question of will, it's a question of ability to endure a common monetary policy,' he warned. 'It isn't a question of withstanding the first one or two years. We must have an enduringly stable euro.'

    He noted that this required the absence of conflicts between countries in the currency union and added that 'there is still quite a lot that needs to happen in order to secure a sustainable consolidation' of European Union member states' public finances.

    [05] National Grid to float Energis telecommunications unit in December

    National Grid Group plans to float its Energis telecommunications unit through a global offering in December, subject to market conditions.

    National Grid said it intended to retain a majority stake in Energis, which some analysts value at in excess of £800 million ($1.3 billion).

    'By floating Energis, we shall place a market value on our investment. National Grid will retain a majority interest, so as to continue to benefit directly from Energis' future development,' David Jones, National Grid chief executive, said.

    Energis, set up in 1993, deals only with the business marketplace, offering conventional voice services and new services including data and Internet transmission.

    'The state-of-the-art quality of our advanced network and low marginal operating cost base gives us a powerful competitive position. This is reflected in the more than doubling of our revenues last year, and the strong progress has continued this year,' said Energis chief executive Mike Grabiner.

    'We see strong growth prospects for Energis, and flotation will enable investors to share directly in the company's future,' he added in a statement.

    [06] Spain to sell 260 million Endesa shares in October privatisation

    The Spanish government said it's going to sell a minimum of 260.01 million shares in the state-run electricity company Empresa Nacional de Electricidad in its October privatisation. At current prices the flotation would be worth $53 billion.

    The sale will be the largest public offer yet in Spain. Currently, a government holding company owns 67% of the company, which is normally known as Endesa.

    In its privatisation prospectus, Endesa's majority shareholder, the State Industrial Holding, or SEPI, said the available shares account for 25% of Endesa's capital.

    Another 10% is also available through a call option for the deal's underwriters and an extra tranche in the case of excess demand, bringing the maximum amount of shares available to 35%, as expected.

    SEPI said it will set the price of the available shares on Oct. 20.

    At 1055 GMT, those shares in Endesa which are already listed on the stock market were trading at 3,100 pesetas, a rise of 10 pesetas. If the new shares were listed at that price, the offer would raise 8,062.03 billion pesetas ($53 billion).

    Of that, around 16.43 billion pesetas will cover the cost of the privatization process, with 13.44 billion pesetas going in commissions and 2.25 billion pesetas going on publicity.

    SEPI said Endesa will continue to invest in international diversification, maintaining its nuclear power plants, and environmental projects, as well as the group's ordinary activities.

    Endesa has been expanding aggressively in Latin America in the run-up to the privatization. In August, Endesa said it would pay $1.5 billion to become the majority shareholder of Enersis of Chile, the biggest private electricity company in Latin America.

    The offer will have two tranches, one for Spanish investors and another international investors.

    Around 67% of the shares will be available for domestic investors, with 133.90 million shares available for private investors, 15.60 million shares for employees and 26.00 million shares for institutional investors.

    [07] EU urges quicker consolidation in Europe's aerospace industry

    The European Union Commission called on the European aerospace industry to speed up its restructuring and consolidation efforts to meet the US challenge in the industry.

    EU Industrial Affairs Commissioner Martin Bangemann said European firms 'must regroup' in the way US aerospace companies have. The German official said restructuring in the 15-nation trade bloc 'is going too slowly.'

    The only way for Europe's aerospace industry to compete with the three US giants Boeing Co, which groups Boeing with the former McDonnell Douglas Corp, Lockheed Martin Northrop Grumman Corp, and Raytheon Corp, is by finding a 'trans-European solution,' said Bangemann.

    'What is needed is European clusters of firms with expertise in several sectors of the aerospace industry,' he said, adding such clusters would not necessarily be the Commission's target despite the threat of such companies having a dominating market position.

    'A market dominating position is a moving target - a company that dominates today may be in a different situation in five years time,' he said. Europe's fragmented aerospace industry includes some 40 large companies, and over 700 other small and medium size firms, which operate in specific sectors. The United States has just three aerospace firms, with industry- wide expertise.

    The three US companies share a US defense budget of $260 billion, while Europe's 40 large firms share a combined defense budget of only $125 billion in Europe. Bangemann said the aerospace market had become a global one, and that one European player that dominated the EU market should not be outlawed under European competition law.

    'If you grouped every European aerospace company together the result still wouldn't be as big as Boeing,' said Bangemann.

    [08] French July household consumption jumps 6.7%, August falls 3.4%

    French household consumption in July jumped 6.7% from June, but fell 3.4% in August, national statistics bureau Insee said.

    Retail consumption, excluding cars, automotive parts and pharmaceuticals, in July rose 4.5% from June and fell 3.9% in August. In addition, June household consumption was revised to show a decline of 1.8% from May, compared with an initial estimate of a 2.9% decline. The combined July- August household consumption data is up 0.4% from a year ago, while the narrower retail data is up 2.2% from a year ago. Economists on average had expected a 4.0% rise in household consumption in July and a 0.2% rise in August.

    The three-month-old leftist government is counting on increasing household consumption to help improve the economy, and has introduced several small measures to boost consumer spending.

    Credit Agricole estimates French consumer consumption will grow a healthy 2.5% in 1998, boosted by shifts in taxes and the other measures.

    This year, consumption is forecast to grow only 0.5%, hurt by a very weak first half, after having grown 1.9% in 1996.

    In July, consumption of durable goods, which includes cars, rose 12.3% from June, and rose another 0.6% in August.

    In June, such consumption had fallen 5.3%. Nevertheless, August spending for durable goods is down 7% from a year ago.

    Because of a six-week summer sale period which began in July, purchases of textiles and leather goods soared 9.2% in July from June and dropped 12.9% in August. In June, they fell 0.4%.

    Purchases of other manufactured goods rose 2.7% in July and fell 1.9% in August.

    [09] German regional consumer data suggests that the Bundesbank may delay raising rates

    Regional consumer price data released today suggests the Bundesbank may delay raising interest rates.

    In addition, the news out came earlier that Germany's trade surplus narrowed more than expected in July and that the current account swung to a deeper deficit than forecast. But the surplus data wasn't seen affecting the markets, dealers said.

    Consumer prices in the states of North Rhine-Westphalia and Bavaria fell 0.3% month-on-month after rising 0.1% in August, the state's statistics offices said.

    Meanwhile, Germany's July trade surplus narrowed to 11.1 billion Deutsche marks ($6.2 billion) from a revised 13.1 billion ($7.3 billion) marks in June.

    The current account swung to a deficit in July of 3.4 billion marks ($1.9 billion) from a surplus of 4.7 billion ($2.6 billion) marks in June.

    The July trade and current account figures were largely in line with economists' expectations.

    Economists said the CPI figures showed price pressures were not as strong as expected and indicated that German annual inflation is heading back below two percent. It rose to 2.1% in August, its highest level since January 1995.

    With the lid apparently firmly on inflation, the Bundesbank had no immediate need to raise interest rates, they said.

    Consumer inflation has become one of Germany's most closely watched indicators in recent months as the Bundesbank has warned that price pressures are mounting, fuelled in part by import price rises following the mark's depreciation this year.

    Some analysts said the Bundesbank was now more likely to wait until next year before raising the repo rate. Others still expect a slight rise in rate by the end of the year.

    'It's good news that the inflation rate for pan-Germany may go below 2% again. A hike in interest rates may be delayed,' said Petra Koehler, an economist at Dresdner Bank.

    She predicted the Bundesbank will increase interest rates in the final months of 1997.

    Preliminary consumer price data for west Germany are expected to be released on Wednesday or Thursday based on data from the four states Hesse, North Rhine-Westphalia, Baden-Wuerttemberg and Bavaria.

    Figures from Hesse and Baden-Wuerttemberg are due on Wednesday. September consumer data for the whole of Germany will be published next month.

    Before Tuesday's data economists on average predicted west German inflation would remain unchanged at 2.0% year-year with prices expected to fall marginally, by 0.1%.

    Now they see the rate for west Germany falling to 1.9% or even 1.8%, well below the two percent level the Bundesbank deems as the maximum acceptable level.

    [10] Yeltsin sees bigger government role in free market

    Boris Yeltsin called for restoring the Russian state's role in the economy, with the government setting priorities and enforcing the rules of the game. But the President stressed there was no going back on free market reforms.

    'At the dawn of reforms, the only force able to overcome the deep crisis was the free market,' Yeltsin said in a speech opening the autumn session of the upper house of parliament.

    'But for the transition to stable economic growth, economic freedom alone is not enough. A new economic order is needed and for that a strong and smart government is necessary, a strong state.'

    'The market alone isn't a panacea for all problems,' Yeltsin said in the 32- minute address, which was carried live on national television.

    'From a policy of non-intervention we're decisively shifting to the policy of preventive regulation of economic processes,' he said.

    At the same time, Yeltsin said, there is no turning back to Soviet-era regulation of the economy.

    'This is a restoration of the government to a thought-out economic strategy.' 'It is beginning to set the main directions of economic activity, ' he said.

    Yeltsin noted that while the government has no intention of interfering in the operations of private companies, attempts by new capitalists to pressure the government won't be tolerated.

    'The state sets rules of economic behaviour that are clear and equal for all and we'll require that these rules are obeyed by all - large capital, mid-sized companies, small business and the government itself.'

    [11] Hoechst profit falls 54% to $1.2 billion

    German chemicals company Hoechst saw profit for the latest six months falling 54% from the year-ago period to two billion marks ($1.12 billion).

    The drop stemmed from the high level of earnings boosted by extraordinary gains in the comparative period a year ago.

    Group sales rose 7% to 28 billion marks in the first half compared with the year-earlier period. If the figures are adjusted to strip out extraordinary earnings resulting from restructuring and spinning off company units in the first half of 1996, pretax profit rose 10%, Hoechst said.

    The company said first-half results are 'satisfactory,' with sales, operating profit, and pretax profit all slightly above year-earlier levels on an adjusted basis.

    Hoechst also said it sees its net income and sales for the full year falling from 1996, citing the sale of companies and shareholdings. 'Sales will decline markedly due to spin-offs,' particularly in speciality chemicals and polypropylene business divisions, Hoechst said.

    [12] Lafarge announces a 39% increase in first-half earnings

    French construction materials group Lafarge said that its consolidated net profit for the first six months of 1997 rose by 39% to 755 million ($124.2. million) from 545 million a year ago.

    Earnings per share also rose by 39% to 8.4 francs from 6.1 francs.

    Lafarge Chairman Bertrand Collomb said that Lafarge expects a 'significant' rise in full-year net profit, citing the continued favourable outlook for the group's activities in North America and newly industrialised countries.

    Lafarge said cash flow rose by 34% in the first half to 2.36 billion francs.

    The company said the sharp rise in its operating profit reflected the good performance of its cement and concrete business in western Europe, together with a strong rise in plaster sales, despite the generally weak economies of France and Germany.

    In North America, sales volumes and prices are moving in the right direction, helped by a good contribution from Lafarge's new plasterboard units.

    Eastern Europe and newly industrialising countries now account for nearly 30% of the group's operating profit.

    Lafarge said its debt stood at 11.9 billion francs at the end of June, up from 9.3 billion francs at the end of 1996.

    Total assets rose by 2.5 billion francs over the same period to reach 32.1 billion francs on June 30.

    [13] RWE shareholders recommend multiple rights loss

    Local governments owning stock in German diversified utility RWE are to recommend accepting RWE's proposal to strip them of their voting rights.

    The VkA association of RWE's local authority shareholders is facing the loss of some 135.7 million voting rights in a process by which their registered shares with multiple rights are swapped for ordinary shares with single voting rights.

    The deal depended on at least 1.15 billion marks being generated in a related deal in which holders of preferred stock swap these for ordinary shares by paying a premium.

    The premiums from the share swap are to be paid to the community shareholders to compensate them for the loss of their multiple rights.

    RWE said holders of preferred shares and other interested parties would be offered 'conversion certificates'.

    The correct market price for the certificates would be determined in a book- building process, the utility said.

    The VkA shareholder group is meeting to discuss the proposal. The recommendation to accept RWE's offer came from the group's administrative council.

    RWE announced the plan to scrap multiple voting rights in mid-August, sending its shares soaring.

    The multiple voting rights have long been viewed by analysts as an obstacle to institutional and private investors to buy RWE stock.

    [14] Italy's motorway privatization likely to be put back to next year

    The privatisation of motorway operator Autostrade, originally planned for later this year, looks set to be delayed until 1998 for judicial reasons.

    The sell-off has been stalled by the Court of Accounts, which is looking into a recent government decision to extend the concession granted to Autostrade to 2038 from the present 2018.

    Iri's chairman, Gian Maria Gros Pietro, told a parliamentary commission he hoped the court would make a ruling by mid- October. If this was the case, Iri would have time to install a stable core of shareholders at the company by the end of 1997.

    'The sale of the residual Autostrade stock still held by Iri could then be sold in a public offering in Italy alongside a private placement to Italian and foreign insitutions at the start of 1998,' Gros Pietro said.

    'It is clear that if the concession to 2038 is not granted in its present form, we will have to change the financial plan,' he added.

    Iri, which holds 87% of Autostrade, is planning to sell up to 30% of the group to a consortium of companies which will go on to form some sort of shareholder pact.

    Gros Pietro told the parliamentary commission that he thought the Treasury, which is sole owner of Iri, would agree to proposals to lift the amount any single investor could hold in Autostrade to 10% from five.

    He added that Iri did not yet have a list of possible buyers, but said advisors were seeking interested parties.

    A group of northern investors, including the Benetton clothing group, have previously expressed an interest in forming a stable core of shareholders at Autostrade -- Europe's largest motorway toll group.

    [15] Korean appeals court upholds Hanbo Steel owner's prison term

    An appeals court upheld a 15-year prison sentence for South Korean Hanbo Steel Industry owner Chung Tae-soo, convicted of embezzling company funds and bribing government officials.

    But the Seoul Appellate Court reduced prison terms handed down by a lower court against a former Cabinet minister and six others, while increasing the sentence of one of the defendants.

    They also were ordered to forfeit $3.9 million, equal to the amount they were accused of taking in bribes.

    Hanbo Steel, the nation's second largest steel company, collapsed in January under the weight of $6 billion in debt, most of it in low-interest, government-controlled loans.

    Chung, 73 years old, was found guilty of embezzling $213 million and using a portion of it to bribe government officials, politicians and bank officials.

    Chung's 43-year-old son, Chung Bo-kun, who ran the steel company on behalf of his father and was found guilty of helping his father embezzle the money, was given a suspended sentence. Prosecutors had demanded that Bo-kun, who was sentenced to three years by the lower court, be sentenced to six years.

    Former Home Minister Kim Woo-suk, sentenced to four years by the lower court, was given a suspended term, as was former ambassador to China Hwang Byong-tae.

    Hong In-kil, a lifetime personal aide to President Kim Young-sam, saw his sentence cut to six years from seven but the five-year prison term against opposition legislator Kwon Ro-gap was upheld. Kwon had adamantly denied having received bribes from Hanbo. Prison terms for two former bank presidents were also reduced to three years from four, while a third bank head saw his sentence raised from five to six years after being charged with additional counts of bribery by the prosecutors.

    [16] IMF Round-Up

    A proposal for an emergency fund to bail out troubled Asian nations may still work despite strong opposition from Western states and a wary reception from the International Monetary Fund, officials said.

    Finance ministers from the developing world scored significant points against richer nations, broadcasting a host of common concerns and gaining grudging support for an Asian safety net fund.

    A freeze on IMF loans to troubled Cambodia brings a recurrent theme of this year's annual World Bank/IMF meetings out into the open -- the ties between honest government and economic growth.

    The head of the Cambodian Finance Ministry, in a statement released after the IMF said it had frozen lending because it was worried about graft, said he was sad that development aid was slowing down.

    Underfinancing threatens the International Monetary Fund and World Bank's debt initiative for highly-indebted poorer countries, _Dutch finance minister Gerrit Zalm_ said.

    Australia's Treasurer said strong regional cooperation between Asian central banks and finance ministers could help ensure renewed stability following the recent economic crisis.

    The launch of the European single currency will be the biggest monetary event since the Bretton Woods fixed exchange rate system was abandoned in 1971, Belgian Finance Minister Philippe Maystadt said.

    Seoul supports North Korea's accession to the International Monetary Fund and the World Bank, South Korean finance minister Kang Kyong-shik said.

    China's economy is no longer on autopilot and the government now must step up reforms to extend the soaring growth of recent years, Yukon Huang, a leading World Bank economist said.

    African nations said they were being marginalised in the world economy, with a dearth of capital flows and trade opportunities hampering their efforts to improve their plight.

    The Philippines, struggling to recover from the effects of Thailand's economic crisis, promised to keep opening up the economy but asked financial markets in return to improve their analysis.

    Suspended Thai domestic financial institutions must prove their strength or be forced to merge, said Choedchai Khannabha, director of the loan policy and management division of Thailand's Ministry of Finance.

    Burma appealed to the IMF and World Bank to be allowed to benefit from their funding, saying its admission to ASEAN in July showed it was no longer a pariah. Reuters

    [17] Corporate and Economic Briefs

    Dutch producer confidence in August reached a record high, boosted by a high level of industrial orders, the Central Bureau for Statistics said. According to the CBS, the number of positive responses to its August survey outnumbered negative responses by 7.3%, up from 6.7% in July. The last record was reached in November 1994, when the producer confidence figure reached 7.0%.

    Scotia Holdings, a UK biotechnology concern, said that a strong performance by its Efamol nutritionals business boosted first-half sales by 38% to £10.1 million ($16.3 million). However, the company said its loss for the period widened to £12.8 million, from £7 million in the year- earlier half, because of increased spending on research and development.

    Spain's gross domestic product grew 3.1% in the second quarter of 1997 from the same period a year earlier, the national statistics institute said. In addition, GDP for the second quarter climbed 0.9% from the first quarter of 1997, the institute said.

    The revised estimate of capital expenditure by manufacturing industries in the UK rose 10% in the second quarter to £3.637 billion ($5.88 billion) from £3.308 billion in the first quarter. The Office for National Statistics said manufacturing now stands at its highest since the second quarter of 1990. Very few revisions were made from the previous estimates, though the category comprising other production went up £119 million in the second quarter, to a total of £2.347 billion, said the ONS.


    From the European Business News (EBN) Server at http://www.ebn.co.uk/


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