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To: Alex who wrote (24301)	12/15/1998 8:00:00 PM
From: goldsnow	Respond to of 116955

Commerzbank sees Fed, ECB rate cut Q1 1999 08:03 a.m. Dec 15, 1998 Eastern FRANKFURT, Dec 15 (Reuters) - Economists at Germany's Commerzbank AG expect both U.S. and euro zone interest rates to come down 25 basis points in the first quarter of 1999, the former on fundamentals and latter as a precautionary measure. The U.S. is likely to see a slowdown in mid-1999 because of deteriorating consumer demand, the main driver behind the country's economic strength, Peter Dixon, a senior economist at Commerzbank, told reporters late on Monday. ''The outlook for the United States is not positive. We do not see a recession but definitely a sharp slowdown,'' Dixon said at the presentation of Commerzbank's annual market review. Analysts at Deutsche Bank have also said they were expecting a 25 basis point cut in U.S. rates in the first quarter of 1999 while Morgan Stanley expects a similar move from the European Central Bank (ECB). Dixon said there had been ''no good reason'' on fundamentals for the euro zone cut two weeks ago when 10 of the 11 countries adopting a single currency from January reduced short-term rates to 3.0 percent, but said the ECB had needed to be seen to act. For similar motives, Dixon said, the ECB could cut a further 25 basis points off rates in the first quarter as a ''precautionary'' measure. ''But then once stabilisation occurs in Euroland by the middle of 1999 they will again raise rates,'' Dixon said, adding he expected Germany's key repo rate to be three percent in twelve months. In Germany, the largest economy in the euro zone, Commerzbank predicted a slowdown in gross domestic product (GDP) growth because of the government's new tax plans which aim to shift fiscal burdens more onto companies than personal taxation. Germany's GDP grew at 2.8 percent year-on-year in the third quarter compared with a 1.6 percent rise in the second quarter. But the slowdown could be cushioned by an acceleration in consumer demand as falling inflation raises real disposable income, Dixon added. Copyright 1998 Reuters Limited

To: Alex who wrote (24301)	12/15/1998 8:08:00 PM
From: goldsnow	Respond to of 116955

Australians may regret euro snub By Sheryle Bagwell The birth of a single currency in Europe in just two weeks' time may be the biggest global economic event since the collapse of fixed exchange rates in the 1970s. But for Australian business, it has yet to even register on the radar screens. At least, that's the conclusion being drawn by Charles O'Hanlon, Austrade's executive general manager for Europe. Mr O'Hanlon says his Frankfurt office wasn't exactly inundated with inquiries about the implications of the euro for Australians doing business in Europe. Nor was its website: since Austrade posted a webpage about the euro, it has hardly registered any hits at all. Says Mr O'Hanlon: "The euro is certainly not an issue that Australian business has been knocking down our doors seeking information about." Deutsche Bank's chief economist in London, Mr Steven Bell, puts Australia's lack of interest in the single currency down to British-style scepticism and the tyranny of distance. A Deutsche survey of the world's leading money managers in October found those located in Australia to be the most dubious about the euro's chances of emerging as a strong currency on world markets and as a major rival to the US dollar. "Australia is even more sceptical about the euro than the Brits," Mr Bell told an international conference on the single currency in London recently. "They see anything that Europe does as soft and flabby." If Mr Bell's diagnosis is correct, then the Australian business and investment community may be in for a rude shock. For as the euro approaches, even once sceptical market economists are coming around to the view that the single currency will be a major catalyst for change in Europe. Not only will the elimination of currency risks make it easier and cheaper for local and overseas companies to do business across the 11 euro-using nations, the creation of a highly liquid and unified financial market in the eurozone will also open up opportunities for shrewd investors as well as corporates seeking new frontiers in which to raise credit. Greater price transparency and ease of movement for factories and goods across Europe could also force European companies to become more competitive and attractive to investors. It may even prompt a shake-out in some sectors -- and some buying opportunities for Australian companies seeking a beachhead in the eurozone. "This sort of rationalisation is going to have implications for Australian business," says Charles O'Hanlon. "Their market entry tactics will need to adjust a bit." Yet the lack of awareness of Australian about the single currency would seem to belie their increasing interest in Europe as a market for their goods and services. The value of Australian exports to Europe has risen sharply in the 12 months to June this year -- a reflection, says Austrade, not only of the declining value of the Australian dollar but of a shift by exporters away from the depressed markets of Asia to those of Europe and North America, where the cheaper Australian dollar is making Australian exports more competitive. These Australian exporters are also taking advantage of a greater openness on the part of the European Union towards trade with the rest of the world -- a fact that may come as a surprise to Australians who still see the EU as a protectionist trade bloc rather than an open, single market. In areas like agriculture -- specifically, the EU's insistence on extending hefty export subsidies to its farmers while using tariff walls to keep out more competitive farm products from overseas -- Europe is still very protectionist. Yet indicative of Australia's maturing if schizophrenic relationship with the EU, both sides have been working together to dismantle high tariffs in other sectors around the world, says Australia's ambassador to the EU, Mr Don Kenyon. "Agriculture remains the key sore point between the European community and Australia," says Mr Kenyon. "But we do have a greater identity of interest in these areas of getting industrial tariffs down around the world and in liberalising services trade." Indeed, economic union in Europe might even hold out some hope for Australia that the EU's Common Agricultural Policy will eventually fall by the wayside. Modest reforms of the CAP are currently on the table as part of the EU's drive to get its finances in better shape before it admits five former communist countries of Eastern and Central Europe into its community. In short, a realisation is dawning that an enlarged EU won't be able to subsidise its farmers in the next millennium. Unfortunately, it's just not dawning fast enough for Australian farmers who want to sell more beef, cereals, butter and sugar into Europe. Says Mr Kenyon: "We support what the EU is trying to do in this next stage of reforms. But we don't think its enough, and we are not shy about telling the Community that . . . but it's certainly a step in the right direction." afr.com.au

To: Alex who wrote (24301)	12/16/1998 6:41:00 PM
From: goldsnow	Respond to of 116955

Toronto stocks climb by close on gold, oil gains 05:50 p.m Dec 16, 1998 Eastern By Lydia Zajc TORONTO, Dec 16 (Reuters) - Strength in gold and oil stocks boosted Toronto's resource-heavy share market at Wednesday's close as investors eyed bargains and rising tension in Iraq. The Toronto Stock Exchange's benchmark 300 Composite Index rose 47.16 points or 0.76 percent to 6283.83 points, outperforming New York's bourse. In New York, the Dow Jones Industrial Average lost 32.70 points, or 0.37 percent, to 8790.60 as players focused on the looming threat of a military action against Iraq. A ''substantial'' strike against Baghdad was launched after the markets closed, according to the U.S. and British governments. Canada's largest equities market, heavily weighted in commodity-based issues, climbed as underlying gold and oil prices headed higher. In New York, February bullion prices rose $2.20 to $296.50 an ounce on Comex. The February price for Brent crude rose $0.77 to $11.38. ''It's one of the times that we've done well because we have a strong resource component,'' said Todd Kapala, investment specialist at Priority Brokerage. Investors finally tired of beating up gold and oil issues and instead climbed aboard, Kapala said. Also, tensions between Iraq and the United Nations over weapons inspections helped oil prices surge, analysts said. Both gold and oil groups, which make up more than 10 percent of the 300 Composite Index, rose more than 3.5 percent each. ''They tend to be volatile but that's what really drove our market,'' Kapala added. ''There's speculation that there's some value there.'' They led 10 of Toronto's 14 sub-indexes upward, including utilities, base metals and transportation. Slumping sectors included conglomerates, financial services and media. Turnover was hot and heavy at 127 million shares worth C$1.7 billion. Kapala noted that many fund managers are juggling their portfolios as the end of the year drew near. In the precious minerals group Barrick Gold Corp. (ABX.TO), one of the world's largest gold miners, rose C$1.80 to C$31.55 while briskly traded Placer Dome Inc. (PDG.TO) increased C$0.10 to C$19.25. Oil and gas firm Canadian Natural Resources Ltd. (CNQ.TO) added C$1.60 or 7.3 percent to C$23.45. ($1-$1.54 Canadian) Copyright 1998 Reuters Limited