European Business News (96-07-17)

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

Page last updated July 17 8:35 CET

CONTENTS

[01] Cuba ridicules Helms-Burton delay

[02] Billionaire financier buys MGM from Credit Lyonnais

[03] UK government allows cross-channel ferry operators to merge

[04] UK's government deficit wider than expected

[05] European markets plunge following drop in Wall Street

[06] Western European car sales drop nearly 9%

[07] US CPI shows inflation under control

[08] France set to retaliate against Helms-Burton

[01] Cuba ridicules Helms-Burton delay

Foreign Minister Roberto Robaina said Clinton had sought to 'keep in with both God and the devil' with his decision, adding the move 'in no way alters the illegal and interventionist nature of the law'.

Clinton announced he would allow a controversial section of the Helms- Burton law, Title III, to formally go into effect on Aug. 1.

The section allows lawsuits to be filed in U.S. courts against foreign firms that own or operate properties nationalised from U.S. citizens and firms before the 1959 revolution which brought President Fidel Castro to power.

But Clinton, under pressure from foreign allies who have strongly criticised this as an unacceptable extra-territorial aspect, said he was suspending the right to file such lawsuits for six months.

[02] Billionaire financier buys MGM from Credit Lyonnais

In a press release, Consortium de Ralisation, an affiliate of state-owned Credit Lyonnais SA, the French bank that owns MGM, said P&F Acquisition Corp. is a Delaware corporation sponsored by Frank Mancuso, chairman of MGM.

[03] UK government allows cross-channel ferry operators to merge

The undertakings apply to Stena Line Ltd., Hoverspeed Ltd., and P&0 European Ferries, a unit of Peninsular & Oriental Steam Navigation Co.

The Director General of Fair Trading advised Lang that the companies should be released from 1979 undertakings made on fares and service pooling but shouldn't be released from undertakings that prevent P&O merging with Stena.

However, Lang said he would release the companies from the undertaking on a merger, but noted that this decision doesn't prejudice the normal application of competition law by the U.K. authorities to any future transactions in the cross-channel ferry market.

P&0 stock has rallied 5 pence to 497 pence, up 3 pence on the session, following the announcement.

[04] UK's government deficit wider than expected

May's PSBR, the amount the government needs to borrow to plug the gap between its income and expenditure, was revised up from the 3.21 billion pounds previously estimated.

The June shortfall was more than the consensus among economists for a deficit of 3.0 billion pounds.

[05] European markets plunge following drop in Wall Street

[06] Western European car sales drop nearly 9%

The Association of European Car Manufacturers said the decline hit most major manufacturers, with the notable exceptions of luxury car makers Mercedes and BMW, which boosted their figures and gained market share. The largest fall came in France and Austria, where sales shrunk by 32 and 28 percent respectively. Economists say the slump is a reflection of the weak European economy. For the whole of the first six months, new car registrations in Western Europe were up 4 point 8 percent on 1995.

[07] US CPI shows inflation under control

'It was a very good number. The best this year,' said Peter Kretzmer, senior economist at NationsBanc Capital Markets Inc. 'We're very upbeat about the inflation outlook.'

The June Consumer Price Index edged up by 0.1%, and core CPI, which excludes energy and food prices, rose by 0.2%. Consumer prices had been forecast to increase 0.2%, including or excluding food and energy, according to a survey of economists by Dow Jones News Services.

With these moderate numbers, Kretzmer believes the Federal Reserve will raise rates in August, but that it won't be the beginning of a series of tightening moves.

However, John Ryding, a senior economist at Bear Stearns & Co., believes that these numbers will have no influence on the Fed's stance because, 'this is yesterday's news.' Instead, the Fed will be more concerned with the 5.3% unemployment rate, capacity utilization and the recent rise in hourly earnings.

Ryding expects the Fed will increase interest rates by 25 to 50 basis points between now and August, unless there continues to be a protracted decline in interest rates.

The bond market reacted favorably to the news on consumer prices. The 30- year Treasury had traded down 9/32 to 86 13/32 to yield 7.11% just prior to the report. The long bond traded as high as 86 25/32, but at 13:28GMT it was quoted at 86 20/32, down 2/32.

[08] France set to retaliate against Helms-Burton

Speaking on French radio, de Charette said the possible retaliation would be via ''the same measures, of the same nature as the ones the Americans want to apply to international businesses, Canadian, French or European, but applied to American companies instead.''

De Charette noted that while the E.U. made suggestions for measures, each country can act as it chooses. He added that he was aware the U.K. was also working on possible counter-measures.

As reported, Foreign Ministers from the 15-nation E.U. decided yesterday to take immediate action against the Helms-Burton Act if U.S. President Clinton doesn't waive Title III of the law by tomorrow. Title III allows U.S. citizens to sue foreign companies that benefit from expropriated properties in Cuba.

The E.U. is also upset about Title IV of the law that empowers the U.S. government to refuse entry visas for foreign individuals that have investments, or work for companies that have investments, in Cuba.

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

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