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To: scotty who wrote (250)	1/4/1998 7:55:00 AM
From: flickerful	Respond to of 2341

Top Business/Financial News Sun, 4 Jan 1998, 7:37am EST Greenspan Suggests Fed May Need to Combat Falling U.S. Prices Federal Reserve Chairman Alan Greenspan suggested Saturday the next battle for U.S. central bankers may be to combat the effects of falling prices -- a signal that the Fed's next move could be to cut borrowing costs. Greenspan didn't say whether he agrees with analysts who say deflation is coming, and he refrained as usual from any direct mention of the Fed's interest- rate policy. Instead, he noted that deflation the prices of goods and services -- which he defined as a momentary phenomenon triggered by ''a flight from goods to money'' -- can be as bad for the economy as inflation. IMF's Mussa Says Japanese Tax Cut Should Boost 1998 Growth Japan's announcement last month that it plans to cut taxes should help that nation's ''weak'' economy by boosting growth, said Michael Mussa, director of research at the International Monetary Fund. ''One would not expect miracles from a measure of modest proportions, but neither should one denigrate it by saying it will do no good at all,'' Mussa told reporters at the American Economic Association's annual conference. ''It's worth half a percent to a percent of (gross domestic product) in an economy that's pretty weak.'' Korean Stocks Rise as Bankruptcy Concerns Ease South Korea's benchmark stock index rose for a third consecutive trading day as the country made it through the year- end holidays without any major companies going bankrupt. The benchmark Kospi index of 779 companies rose 9.18 points, or 2.44 percent, to 385.49. Korea Electric Power Corp. and Kookmin Bank led the rise. An estimated 15,000 companies went bankrupt in 1997, and the Kospi index fell 43 percent. Korea Exchange Suspends Three Firms on Insolvency Concerns The Korea Stock Exchange said it suspended trading of three companies while it investigates speculation the companies may soon be insolvent. The companies are Choil Paper Manufacturing Co., Kyong Hyang Construction Co. and fabric maker Korea Moolsan Co. Lee Dong Kyu, an audit official at the exchange, said he heard that Kyong Hyang Construction has asked the court help it reschedule debt payments with creditors. Lee also said Choil Paper may have filed for court receivership, and Korea Moolsan may be declared bankrupt by its creditors. Soros to Meet Sunday With South Korean President-Elect Kim Billionaire investor George Soros will meet Sunday with South Korean President-elect Kim Dae Jung to discuss ways to restore investor confidence in the cash-strapped nation. The meeting comes after Kim and Soros spoke in mid-December, before the presidential election, said Park Sun Sook, a spokesman for Kim. Kim, a former dissident and leader of Korea's main opposition party, was elected president Dec. 18. U.S. Bonds Rise After Manufacturing Index Shows Drop U.S. bonds rallied, driving yields to the lowest level in more than four years, after a monthly manufacturing report suggested Asia's financial crisis is starting to drag on the U.S. economy. The benchmark 30-year Treasury bond rose about 1 1/4, or $12.50 per $1,000 bond, to 104 1/32. Its yield fell 8 basis points to 5.84 percent, the lowest since October 1993. U.S. Economy: NAPM Index Down as Asia Crisis Spreads A closely watched gauge of U.S. manufacturing cooled in December as Asia's economic crisis depressed exports. Factory orders and production also sagged from a month earlier. The National Association of Purchasing Management's index declined to 52.5 last month -- the lowest reading since January 1997 -- from 54.4 in November. Analysts expected a December reading of 54.0. A reading of 50 or more in the NAPM index means manufacturing is expanding, while a reading below 50 signals a contraction. Dollar Sets 5 1/2-Year High vs Yen on Japan Outlook The dollar rose to a 5 1/2-year high against the yen and gained against the mark amid expectations the Japanese and German economies will continue to sputter in the new year. The dollar rose to 132.32 yen, its highest since reaching 133 yen on May 12, 1992. It was the biggest one day advance in four months, climbing from 130.54 Wednesday. Last year, the dollar rose 13 percent against the Japanese currency, its best annual performance since 1989. ------------------------------------------------------------------------ <Picture>c Copyright 1998, Bloomberg L.P. All Rights Reserved.