European Business News (EBN), 96-10-03

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

Page last updated 1140 October 3 CET

CONTENTS

[01] P&O and Stena plan joint channel venture

[02] British Gas rejects price caps

[03] TNT options trading is probed

[04] Bank of Spain cuts key rate

[05] Tietmeyer praises US on dollar

[06] Mideast peace talks on Sunday

[07] Schneider posts 27% rise in first half net profit

[01] P&O and Stena plan joint channel venture

The two shipping companies have signed a memorandum of understanding to form a joint venture that will be called P&O Stena Line. The new venture is aimed at stepping up competition for passenger and freight traffice across the channel.

The venture will run 14 ships okys ibe fast craft betweeb England and France and Brussels. P&O will hold 60% of the new venture, with Stena owning the remaining 40%. P&O Steba Line will have gross assets of £410 million ($642 million).

P&O will contribute business and assets in return for the transfer of £173 million in debt and other liabilities and for £51 million in cumlative preference shares. Stena will swap business and assets for £134 million in debt.

A definitive agreement for the establishment of the company is expected to be entered into before the end of November, though it will be subject to regulatory approval by national authorities and the European Commission.

[02] British Gas rejects price caps

British Gas said it is now up to Ofgas, the industry regulator, to refer the case to the Monopolies and Mergers Commission for arbitration. 'It is regrettable that all our efforts to achieve an acceptable resolution have failed,' said Richard Giordano, chairman of British Gas.

[03] TNT options trading is probed

AS spokeswoman for the Australian Securities Commission said the regulatory body will meet with Australian Stock Exchange officials within the next two days to consider whether to conduct a full investigation.

'The exchange has identified anomalies but there's no real fuss yet,' she said.

[04] Bank of Spain cuts key rate

The move came at the banks regular repurchase tender.

The next tender is expected for October 15.

Economists expected the rate move since the Spanish government presented an austere 1997 budget to parliament on Monday. The budget is designed to cut the deficit to 3% of GDP,which would allow Spain to join European Monetary Union on time.

[05] Tietmeyer praises US on dollar

'It is gratifying to the international community to recognize that today the United States has not only the economic potential and the credibility to maintain a strong dollar, but also the political will to do so,' he said in a speech to The Economic Club of New York late Wednesday night.

Tietmeyer's comments came as the dollar on Wednesday reached its highest levels in three months against the Deutsche mark. But Mr. Tietmeyer wouldn't say when he though the dollar might be too strong. Tietmeyer observed that the foreign exchange and other financial markets have become more sensitive to any potential change in the stance of a country's monetary and fiscal policy.

'In this context,' he said, 'central banks' credibility has become a vital asset, contributing to lower interest rates and less undue price volatility in the financial markets.' 'A country's credibility depends not only on its monetary policy, but also on its economic and fiscal policy stance,' Tietmeyer continued. The German central bank president also said that European monetary officials will have to closely examine whether countries can sustain adherence to the fiscal and monetary criteria for joining a single European currency. 'Meeting the criteria at one point is not really a full basis for a decision on whether a country will be able to sustain the needed economic criteria, Mr. Tietmeyer said. European countries have been striving to meet the budget deficit and public debt targets that are necessary in 1997 to allow them membership into a single currency in 1999.

Speaking to reporters After the speech, Tietmeyer declined to comment on Italy's chances of joining European economic and monetary union in 1999. 'I have always said the race is open, the criteria are there, and at the beginning of 1998 we have to check' to see if Italy meets the criteria.

French President Jacques Chirac and Italian Prime Minister Romano Prodi are holding a two-day summit in Naples, at which EMU will top the agenda. Earlier this week Mr Chirac angered Italian officials by saying he doubted Rome's finances would be sufficiently in order to qualiafy for the single currency on time. The comments set off a diplomatic spat, which was settle with a late-night phone call from the French President to Mr Prodi. Mr Chirac now says Italy will join EMU on time in 1999.

[06] Mideast peace talks on Sunday

Two days of emergency talks between Yasser Arafat and Benjamin Netanyahu resulted in little progress. US President Clinton said the leaders had failed to settle their violent disagreements during the Washington Summit, but he pleaded with both Israelis and Palestiniance to give leaders of both sides a chance to make progress in the coming days.

[07] Schneider posts 27% rise in first half net profit

The company wasn't more specific about the full-year expectations. The French electrical-equipment maker said net profit in the first six months rose to 503 million francs ($100 million).

In France, a downturn in industrial and construction spending led to a 2.9% decrease in sales at Schneider Electric. In Europe overall, sales rose 9.3%, despite a 2% decline in Germany. Sales in North America rose 5.7%, boosted by sustained activity and gradual recovery of the Mexican economy. And troubled construction unit Spie Batignolles showed a very slight gain in sales to 8.2 billion francs from 8.1 billion francsrthe year earlier.

The unit said, however, it reported a net loss of 48 million francs for the period, down from breakeven results for the same period a year ago.

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

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