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European Business News (EBN), 97-04-03

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

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

Page last updated April 3 1200 CET


CONTENTS

  • [01] European stocks marked down after another Wall Street tumble
  • [02] Eurotunnel says freight trains not responsible for Chunnel fire
  • [03] ING net profit jumps 25% to $1.8 billion
  • [04] Germany's Chancellor Kohl will run for an unprecedented fifth term in 1998
  • [05] Despite unexpectedly strong economic data, the Bundesbank leaves German rates unchanged
  • [06] Belgian court rules Renault's decision to close Vilvoorde plant closure illegal
  • [07] C-C Amatil and San Miguel create Coke bottling giant
  • [08] Lyonnaise des Eaux profit surges 49%, as earnings grow and losses are stemmed
  • [09] MCI shareholders approve Concert deal
  • [10] AOL, Netscape and ABC to launch twenty-four hour news service

  • [01] European stocks marked down after another Wall Street tumble

    European stocks are tumbling again today, after another relapse on Wall Street that was sparked by investor worries that U.S. interest rates may rise again.

    Wall Street continued to lead the City of London, as shares on both sides of the Atlantic continued consolidating.

    The blue chip FTSE 100 share index closed down 22.0 points at 4214.6, while the provisional volume for the whole market was 696.5 million shares. The FTSE 100 traded between 4233.2 and 4207.5 points.

    The pound slid further against the Deutsche mark in the afternoon in Europe, but good sterling buying was reported off its lows around 2.7300 marks.

    'Hedge funds are quite happy to buy sterling at these levels,' said John Blackley, senior treasury manager at Royal Bank of Scotland. At its lows, the pound was down more than three pfennigs from its highs in Tokyo earlier.

    Part of the weight on the pound came from a weaker dollar, which slid through support levels at 1.6700 marks and 1.6680 marks during the early afternoon in Europe before bouncing off support at 1.6660 marks; at 1700 GMT it was 1.6670 marks, down from 1.6705 marks at midday.

    Sterling was 2.7397 marks, down from 2.7431 marks at midday and 2.7502 marks late in London Wednesday. It was $1.6437, up from $1.6413 at midday but below $1.6440 late Wednesday.

    Bank of England Governor Eddie George Thursday called sterling's strength 'abnormal,' said the conditions which had brought it about were 'reversible, ' and renewed his call for a tightening of U.K. monetary policy.

    [02] Eurotunnel says freight trains not responsible for Chunnel fire

    Eurotunnel has said its freight trains were not responsible for a Channel Tunnel fire, but it promised new safety measures including tougher inspections and anti-smoke masks for passengers.

    Eurotunnel stopped short of ordering new, fully enclosed freight cars, an estimated 1 billion-franc ($178 million) option the operator originally rejected as unnecessary and too costly.

    'The Channel Tunnel was designed to be one of the safest transport systems in the world. The changes we have announced today will make the system even safer and give us the confidence to re-open our HGV shuttle services,' chairmen Patrick Ponsolle and Robert Malpas said in a statement.

    The cause of the November 18 fire, in which eight people suffered smoke inhalation, remains under investigation. Guards had spotted a truck on fire before the train entered the tunnel, and some French news reports pointed to arson.

    Despite the continuing probe, 'it's possible to exclude the rolling stock and technical equipment of Eurotunnel from the cause' of the fire, a Eurotunnel statement said.

    Aside from publishing the report into the Chunnel fire, Eurotunnel said tourist traffic on its Le Shuttle service in March totalled 153,796, down from 158,494 in March 1996.

    The latest month's figure is an improvement of 21% over February's traffic total of 126,360, Eurotunnel said, but last November's channel tunnel fire means the company still has yet to see any freight traffic on Le Shuttle in 1997, according to a statement.

    Traffic on the Eurostar train service, which isn't owned by Eurotunnel but also operates through the tunnel, climbed to 500,899 in March from 389,069 a year earlier.

    Unaccompanied rail freight rose to 230,753 tons in the month from 207,417 last March.

    [03] ING net profit jumps 25% to $1.8 billion

    ING reported a net profit rise of 25% in 1996 to 3.32 billion guilders ($1.8 billion) thanks to a rise in income from both insurance and banking activities. The dividend was raised to 2.00 guilders from 1.66 guilders.

    The Dutch bank-insurer said it was too early to make a forecast for 1997, but that it faces the future with confidence. The company also revealed for the first time how much money it has stashed away to cover major unspecified risks such as losses from derivatives trading or a sudden rise in non-performing loans.

    ING and other Dutch financial institutions, including bank ABN AMRO Holding, have decided to pre-empt changes in Dutch regulations by providing fuller accounting, an idea that follows similar moves by some German banks.

    ING said it has 2.55 billion guilders in the so-called VAR fund and that of this amount, some 1.25 billion guilders will be put into shareholder equity with 1.30 million guilders put into a new fund to cover risks.

    The result was higher than expected. Analysts surveyed by AP-Dow Jones had predicted a net profit of between 3.17 billion to 3.25 billion guilders for the full year.

    [04] Germany's Chancellor Kohl will run for an unprecedented fifth term in 1998

    German Chancellor Helmut Kohl, who steered the two German nations to reunification in 1990, will seek re-election next year to pursue his dream of bridging Europe's divisions.

    'I will run again because I believe the current situation requires this from me,' Europe's last Cold War leader said in a German television interview taped on his 67th birthday.

    Kohl, who has been in office since Oct. 1, 1982, last October surpassed Konrad Adenauer as the longest-serving postwar chancellor.

    Kohl's critics have been saying it's time for him to bow out because he's been helpless in the face of record-high joblessness and other economic maladies. According to German news media, Kohl's wife has been opposed to another term for her husband and would rather have him spend more time at home.

    But members of Kohl's three-party coalition have been urging him for weeks to announce he will seek another term because they have no other candidate with his political stature.

    During his annual weight-reduction vacation in Austria, Kohl said there is too much yet to be done for him to fade away.

    He may be hoping that another term could help keep the idea of closer European integration from losing more steam.

    After orchestrating German reunification seven years ago, Kohl has said his main goal is to bring European nations closer together. For that reason, Kohl is among the most vocal champions of the European Union's plans to launch a single currency in 1999.

    But calls have increased in some EU countries to focus more on fixing slumping economies and less on a pan-European dream.

    Many countries - Germany included - are struggling to fulfill budgetary criteria for joining the single-currency club and skeptics say the scheme will probably have to be postponed.

    In the TV interview, Kohl said Germany is standing before 'huge challenges in domestic and foreign policy,' and mentioned European integration as being among them.

    Kohl admitted that additional burdens placed on the German budget by record high joblessness will make it 'immensely difficult' for Germany to meet the single-currency criteria.

    Nonetheless, Kohl said he is confident the single currency will 'arrive on schedule and that Germany' will be part of it.

    Since becoming chancellor in 1982, Kohl has become a symbol of German reliability in the North Atlantic Treaty Organization and in the European Union.

    But his popularity is waning at home, mainly because of 4.7 million people are out of work and because of deep cuts in social welfare spending which Kohl says are needed to ensure Germany qualifies for the single European currency.

    The mainstream opposition Social Democrats are squabbling over who their own chancellor candidate will be in 1998, and with Kohl in the running, pressure will grow on them to come up with a strong one.

    [05] Despite unexpectedly strong economic data, the Bundesbank leaves German rates unchanged

    Industrial output in Germany rose 1.9 percent in February after a 1.5 percent decline the month before, but orders showed a smaller 0.2 percent rise.

    But the Bundesbank left key German interest rates unchanged after its fortnightly council meeting, taking no notice of this unexpectedly strong economic data which signals an acceleration of economic growth.

    As expected, the central bank said Germany's key discount rate would remain at 2.50 percent with the Lombard rate staying at 4.50 percent and the main money market, or repo, fixed at three percent for another two weeks.

    Calm on the currency markets meant the Bundesbank had no need to defend the mark by echoing last week's rise in U.S. interest rates, while the stronger output data left it with no need to lower rates to spur the economy, economists said.

    Orders to the manufacturing industry in Germany were also strong rising a price- and seasonally-adjusted 0.2% in February from January, the Federal Economics Ministry said in a preliminary report.

    In unadjusted terms, orders were 3.2% higher than in February 1996.

    Breaking the figures down, the economics ministry said western German orders fell 0.2% in the month while orders to eastern German manufacturers rose 4.9%, both compared with January.

    Analysts surveyed at the end of last week by Dow Jones Newswires had predicted a monthly rise of 0.7% in orders for all of Germany.

    The figures for both January and February are subject to revision.

    [06] Belgian court rules Renault's decision to close Vilvoorde plant closure illegal

    A Belgian court has ruled that Renault's decision to close a plant employing 3,100 people near Brussels broke Belgian labour regulations.

    The Brussels Labour Court upheld a complaint brought by a worker from Renault's Vilvoorde plant and backed by Belgian labour unions.

    They said the French auto maker's February announcement of the closure infringed an agreement stating that management should consult with the work force before announcing large-scale dismissals.

    The court ordered the company to open new talks with workers on the planned closure. Renault is free to appeal the decision.

    Belgian government officials last month said Renault risked maximum fines of 30 million Belgian francs if it is found to have infringed Belgian laws.

    Renault estimates closing the Vilvoorde factory will save the loss- incurring company BF5.2 billion a year.

    [07] C-C Amatil and San Miguel create Coke bottling giant

    Soft drink bottler Coca-Cola Amatil has agreed in principle to combine its soft drink operations with those of San Miguel of the Philippines.

    Under the proposal San Miguel's subsidiary, Coca-Cola Bottlers Philippines, will combine with Coca-Cola Amatil to create the largest Coca-Cola bottling group outside the United States.

    Coca-Cola Amatil will issue 293 million ordinary shares worth around $2.65 billion to San Miguel based on the average of Coca-Cola Amatil's share price for the month of March.

    Upon completion of the transaction San Miguel will hold 25% of Coca-Cola Amatil's shares and will be the second largest share holder after the Coca- Cola, which will have a stake of 33%.

    At its annual general meeting, chairman Dean Wills said the merger was a major development, bringing together two of the largest Coca-Cola bottling companies together.

    Wills said Coca-Cola Bottlers Philippines would add 'immediately and substantially to CCA's earnings and growth prospects.'

    [08] Lyonnaise des Eaux profit surges 49%, as earnings grow and losses are stemmed

    Lyonnaise des Eaux said its 1996 net profit rose 49% to 1.35 billion francs ($241 million) from 906 million due to strong earnings growth in environmental services and reduced real-estate losses.

    The French municipal services conglomerate also said its board of directors had unanimously backed the planned merger between Lyonnaise and Cie. de Suez.

    The Lyonnaise board will meet again on April 11 to formally approve the merger. Both companies had said last Friday that their boards would review the merger for approval on April 11.

    No new details on the long-awaited merger were disclosed.

    Looking to 1997, Lyonnaise said first-quarter 1997 strength in its water distribution division prompted the company to expect to post both revenue and profit growth for the full year 1997.

    Earnings per share rose 46% to 22.8 francs from 15.6 francs.

    [09] MCI shareholders approve Concert deal

    MCI shareholders meeting for probably the final time before MCI merges to become a new company called Concert, voted overwhelmingly to approve the $21 billion acquisition of MCI by one of the world's oldest telecom players, British Telecom - essentially the British equivalent of AT&T.

    The MCI brand name will live on in the US, but MCI stock - which went public at $10 a share in 1972 and is today valued at more than $290 apiece after splits and runups - will disappear.

    The 'new' MCI will be the U.S. property of an erstwhile monopolist. Together they will form one of the largest companies in the world: Concert PLC, with combined revenue of $43 billion a year, a presence in 72 countries, a total market value of more than $70 billion - bigger than AT&T Corp.'s $55 billion - and net income that will rank it No. 6 world-wide on the basis of profit.

    The new MCI will have 'more scope, more scale and more resources,' MCI Chairman Bert C. Roberts Jr. assured shareholders yesterday. And like MCI, the new, bigger Concert will be 'selective, adaptive and quick' world-wide, he vowed.

    [10] AOL, Netscape and ABC to launch twenty-four hour news service

    America Online, Walt Disney ABC News unit, Netscape Communications Co and Starwave Corp. created ABCnews.com, a 24-hour, online news service.

    In a press release, Walt Disney said the news service will provide up-to- the-minute national, international and local news, and sports, entertainment, business and technology news.

    The company said ABCnews.com will launch later this month Walt Disney said ABCnews.com will be headed by Jeff Gralnick. Gralnick, 58 years old, is an ABC News vice president and an executive producer in charge of special events and special programming, an ABC News spokesman said. The company said he will continue to be an executive producer of special events for ABC News.

    The company named Katherine Dillon vice president of ABCNEWS.com, and Bob Aglow, its executive producer. Dillon will be responsible for news production, Walt Disney said. The spokesman said Dillon was vice president of production and technology for ABC Online, and Aglow was producer of ABC News for last 18 years.

    Walt Disney named Tom Phillips president of the ABC News/Starwave ABCnews.com venture under which the partners will develop, design and operate the online service. Walt Disney said Phillips was formerly senior vice president of products and services for Starwave.

    As reported by The Wall Street Journal earlier, Walt Disney received antitrust clearance to buy a stake in World Wide Web content provider Starwave, a Bellevue, Wash., company owned by billionaire and high-tech entrepreneur Paul G. Allen.


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


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