Friday, April 4, 2003 07:54 PM ET  Printer-friendly version <a href=www.quicken.com>A Wall Street Journal Online News Roundup

Americas markets closed mostly higher Friday, with Toronto stocks flat as investors exercised caution ahead of the weekend, which could see U.S. troops drive into the heart of Iraq's capital.

Even as coalition forces captured Baghdad's airport, a purported appearance by Saddam Hussein on Iraqi television stirred debate about the leader's fate. In addition, Iraq's information minister warned his troops were preparing to launch an "unconventional" counterattack that wouldn't involve chemical or other weapons of mass destruction.

War worries, along with negative U.S. employment data, left Canadian investors reluctant to assume large equity positions ahead of the weekend.

Venezuelan shares also ended mostly unchanged, with the market's biggest stock, CA Nacional Telefonos de Venezuela, up one bolivar to 2,426 bolivars.

Argentine stocks rose, with much of the attention focused on market-leader Perez Companc and its local holdings, after the government went public with its doubts about aspects of the energy giant's sale to Brazilian oil company Petrobras. On Thursday, presidential spokesman Luis Verdi said President Eduardo Duhalde was unhappy about Petrobras's gaining a large stake in Perez Companc's electricity holding Transener, as part of the sale.

Despite the uncertainties surrounding the deal, Perez Companc closed 0.5% higher at 2.06 Argentine pesos. Meanwhile, Transener rose 10% to 73.8 centavos. Another Perez Companc holding -- natural gas distributor TGS -- also proved immune to the government's doubts -- lifting 4.6% to 1.36 pesos.

Analysts said investors were discounting that Argentina's antitrust body would eventually give the thumbs up to the sale of Perez Companc -- even if that requires some compromise over Transener's fate.

Further gains in the Brazilian real as global equity markets traded sideways ahead of a war-filled weekend helped to boost the country's Bovespa Index. Brazil's real gained 1.1% Friday to 3.22 reals. The currency gained about 5% this week, which is helping ease the inflation outlook and reduce the chances of a central bank interest-rate increase.

Mexican stocks rallied to their highest level since Jan. 20 as the market played catch-up on gains in blue-chip shares. Leading the rally, Walmex's Class V shares rose 3.7% to 28 Mexican pesos, while its Class C shares added 4.3% to 25.02 pesos.

<a href=www.mortgage101.com>Source Friday, April 04, 2003 By Lou Barnes Inman News Features

In a shoving match between awful economic reports pushing interest rates down and good news from Iraq pushing them up, Iraq won.

Mortgages have settled today just under six percent, above Freddie Mac's early-week survey finding of "5.79 percent plus .6 percent origination fee" released yesterday.

One week ago (seems like a month), war-watchers here and elsewhere thought our blitz to Baghdad had stalled, and the bond market reversed from wild optimism to fear that war would stretch for months. Rates fell on Monday, looking like they might break below 5.75 percent, needing only a push from some poor economic news.

We got the poor news, and then some. The ISM manufacturing index (a survey of purchasing managers) for March dropped to 46.2 from the 50.5 break-even economy in February, and the companion index for the service sector collapsed to its worst reading in two years, down to 47.7 from 53.9. New claims for unemployment insurance soared last week to a post-9/11 level, and this morning the Labor Department reported the loss of 108,000 jobs in March, double the forecast contraction -- triple, including downward-revised numbers for February.

The ISM reports and job data are the best indicators available each month. Were it not for Iraq, financial headlines everywhere would today be shouting, "New Recession!!!"

But there is Iraq. The news there has been nothing short of splendid. Those of us who worried about the war plan and the size of the force deployed need not have bothered, as the brilliant race to Baghdad International has made the force issue a historical curiosity. Pre-war dread of pitched battles with the Republican Guard and widespread destruction of Iraq's infrastructure are behind us. Last week's worry about a guerilla war is dwindling with the Fedayeen, who seem to have had little civilian support, and there is no evidence of large-scale humanitarian crisis anywhere in the country. Even in extremis, Saddam (like Hitler) has not (yet) used WMD. The Iraqi failure to detonate explosives in place in oil fields, terminals, dams and bridges says Saddam's subordinates are less dedicated to scorched earth than he.

Baghdad and Basra remain, but it looks less and less as though there is a Republican Guard trap waiting in either place. The zoomies said they have "degraded" those forces, and it looks as though they have. Winning the peace also lies ahead, including relations with allies current and former, and dealing with other dangerous places. But -- incredibly to many -- the Iraq adventure may have some of the greater benefits claimed by its proponents. One can't prove cause and effect, but news this morning says that China last week cut off North Korea's oil spigot for three days, and that that action has had a clarifying effect on Pyongyang.

When the financial markets awarded victory to Iraq over economic data, they told us all we need to know about interest rates in the near term. The overwhelming bet placed in the markets: the sinking economy in March was not a new recession, it was a national intake of breath, held for three weeks in front of CNN, Fox, CNBC -- war 24/7. Once the country exhales, gets the anxiety level down to tolerable, and begins normal respiration, then the economy will return to the recovery track it was on in January, and rates will begin to rise.

That's the bet. I don't believe it, but I'm just a typical, bond market worrywart. Oil has trouble beyond Iraq (Venezuela and Nigeria); Japan and Europe are sinking to recession; and corporate America and Wall Street still have post-bubble trouble.

If the deep breathers are right, we should get quick news of tension relief: some hiring, and increased consumer confidence and spending. If we don't get something real, and quick, then it's just a stock-market crazy on the phone again.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colorado. He can be reached at lbarnes@boulderwest.com.

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MSN Money By Tom Costello 12:55 PM EST April 2, 2003

Already weak, the world's economy now is grappling with the war in Iraq and the SARS outbreak. "The global economy is relatively infirmed right now, relatively weak, and one more shock is not what the economy needs right now," says Steve East, the chief economist at Friedman Billings Ramsey. East has told his clients that they need to watch the SARS, or severe acute respiratory syndrome, outbreak closely if they're investing globally. If consumers in Asia stay away from crowded places such as shops, the implications could be profound. Tipping toward recession? "If that causes these economies in the Pac Rim to tip into recession at a time when the rest of the global economies are weak, we could end up with a rolling global recession," East says. There are plenty of worrisome signs. In Hong Kong, authorities are decontaminating schools and quarantining entire apartment blocks. In Canada, authorities say six people have died from SARS. "People are very frightened here in Hong Kong," says Mark Mobius, who runs the Templeton Emerging Markets Fund (EMF). "I would say it's almost a panic situation." The fear of SARS was put on display Tuesday when an American Airlines plane from Tokyo was briefly detained on fears several passengers had SARS. It turned out they didn't. Surrounded by uncertainty All of this comes at a time of tremendous global uncertainty. With the war in Iraq expected to last longer than originally thought, economists are taking stock of the world's trouble spots. European manufacturing shrank in March, with the German economy teetering near recession. Japanese business confidence also deteriorated, with yet another recession a distinct possibility there. War and civil strife in Nigeria and Venezuela have put even more stress on the world oil market, pushing oil prices to almost $30 a barrel. Even more troubling, the U.S. consumer, the backbone of the nation's economy, is starting to put away the checkbook. Still, economists say we've been through worse. For instance, the 1970s are considered a more difficult time for the global economy. But in this case, the war in Iraq remains a major variable. For some, however, this turmoil represents a buying opportunity. Says Templeton's Mobius, "Right now what we're doing is investing and keeping invested, not only here in Asia but in other parts of the world."

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<a href=www.sfgate.com>SFGate.com Tuesday, April 1, 2003
(04-01) 15:55 PST MEXICO CITY (AP) --

Mexican stocks closed lower Tuesday despite U.S. market gains, as local interest rates rose following the central bank's latest monetary tightening.

The market's key IPC index closed down 0.3 percent or 18.27 points at 5,895.76. At the end of 2002, the IPC stood at 6,127.09.

Volume was a modest 56 million shares worth 723.5 million pesos, compared with Monday's 59.4 million shares worth 774.7 million.

A Mexico City trader said the monetary tightening pursued by the Bank of Mexico to keep inflation in check was negative for local stocks.

Among the most active issues Tuesday, phone company Telmex L shares fell 1.4 percent to 15.76 pesos, retailer Walmex V shares fell 0.8 percent to 26 pesos, and banking group BBVA-Bancomer B shares fell 0.6 percent to 8.23.

Wireless phone service provider America Movil L shares rose 0.3 percent to 7.29, and brewer Modelo C shares rose 1.8 percent to 22.26.

SAO PAULO, Brazil (AP) -- Brazil's stock prices ended higher Tuesday as the country's C-bond and real rallied and global equity markets recovered slightly from war-induced gloom.

The main Sao Paulo index finished 2.8 percent ahead at 11,592 points, compared with 11,273 points at Monday's close.

Stocks rose as Brazil's real strengthened about 1 percent Tuesday to its best level since Jan. 14. The country's foreign bonds hit their best levels since May 2002 on signs Congress is getting ready to pass some key reforms the government has promised the market.

On the stocks front, key fixed-line telecoms saw heavy interest. Bellwether Telemar rose 5.3 percent to 29 reals. Jet-maker Embraer rose 4.7 percent on news American Airlines, a key client, has struck a deal with unions to stave off bankruptcy.

Oil giant Petrobras gained 2.6 percent to 47.60 and retail companies like supermarkets chain CBD rose 3 percent to 44.

SANTIAGO, Chile (AP) -- Share prices on the Santiago Stock Exchange closed lower Tuesday, with uncertainty about the Iraq war weighing along with lower utilities share prices and a plunge in copper cable maker Madeco, traders said.

Chile's blue-chip Ipsa index dropped 0.2 percent to 1,006.93 points from 1,008.64. The narrower Inter-10 index of more liquid, internationally traded Chilean shares lost 0.3 percent to 98.83, compared to 99.04.

Volume plummeted to a low 4.54 billion pesos from 10.13 billion as uncertainty drove investors out of the market, traders said.

Liquidity will also be reduced by the capital increase approved by shareholders in utilities heavyweight Enersis, which in a first phase will see its Spanish parent, Endesa, raise its stake in the company above 65 percent.

Enersis' shares will trade close to the 60.42 issue price for new shares and also limit liquidity at its Endesa Chile unit. Enersis ended down 1.7 percent at 57, while Endesa Chile lost 0.2 percent to 172.

CARACAS, Venezuela (AP) -- Venezuelan shares ended a bit higher Tuesday, with the IBC General Stock Index closing at 8,570 points, up about 0.7 percent.

The market's biggest stock, telephone giant CA Nacional Telefonos de Venezuela, or CANTV, closed 45 bolivars, or about 2 percent, higher at 2,350.

CANTV's American Depositary Receipts, worth seven common shares each, were down 7 cents at US$8.91 each in late afternoon trade on the New York Stock Exchange.

BUENOS AIRES, Argentina (AP) -- Argentine stocks closed mixed Tuesday, with exporters falling back as the peso strengthened against the dollar and a late rally took the market back to near its opening levels.

The large-cap Merval Index closed down 0.62 point, or 0.1 percent, at 565.84 points, while the broader General Index finished 87.25 points or 0.3 percent higher at 27,008.56 points.

Despite last Friday's announcement that President Eduardo Duhalde had signed a decree ordering a year-old banking freeze to be lifted over the next four months, the peso gained ground Tuesday, closing at 2.965 per dollar, compared with 2.985 Friday.

Among the hardest hit of the export stocks were petrochemical company Indupa, which closed down 3.3 percent at 1.77, aluminum firm Aluar, which was 2.3 percent lower at 4.30, and carmaker Renault, which weakened 1.5 percent to 1.32.

<a href=www.eubusiness.com>EUBusiness.com

WASHINGTON, April 1 (AFP) - The United States on Tuesday chided major trading partners, including the European Union, Japan and China, for regulations and laws that it says thwart expanded global trade.

"American workers, businesses, and farmers expect a level playing field abroad," said US Trade Representative Robert Zoellick in the annual assessment of the practices of US trading partners.

The 422-page report, known as the 2003 National Trade Estimate Report on Foreign Trade Barriers, summarizes the US view on trade policies of some 56 trading partners.

It comes on the heels of a setback in negotiations for the new round of global trade talks launched in Doha, Qatar in 2001 that are slated to be completed by 2005.

The USTR said that the EU's de facto ban on genetically modified foods has hindered US exports of corn and threatens exports of soybeans.

"Biotechnology continues to be more of a political than a scientific issue in Europe and prospects for improvement remain dim," the report stated.

In recent weeks, Zoellick has said he hopes President George W. Bush's administration will "soon" take formal action to challenge the EU on its position in the WTO.

"The Bush administration is committed to identifying unfair barriers to US exports and to working aggressively with our trading partners to eliminate those barriers," Zoellick said in a statement released with the report.

The US again called on Japan to revive its sluggish economy through increased deregulation that it said impedes "economic growth and restricts market access for US companies."

"Japan still has much work to do," the report said, adding "in large part because it has not moved more aggressively to deregulate, the Japanese economy remains mired in stagnation -- output has grown by only 0.5 percent since 1998."

And it called on the Japanese government to reduce its overall capacity of its domestic steel market and cited allegations that Japanese steelmakers were involved in price-fixing schemes.

"With respect to Japan's domestic market, it has been alleged that Japan's integrated producers have coordinated output, pricing, and market allocation goals," the report said.

"In addition, it has been alleged that Japanese mills have entered into arrangements with foreign counterparts to regulate bilateral steel trade," the report said.

The US said imports of Japanese steel are down as a result of President George W. Bush's steel tariffs imposed in March 2001. Those tariffs were ruled inconsistent with global trading rules by a WTO panel of experts last month.

The US praised China's entry into the WTO and said that "in the long run," it will "promote the rule of law throughout China."

"Nevertheless, China's membership in the WTO will not remove all commercial problems," the report stated.

Specifically, the report said US firms have had trouble obtaining patents for pharmaceuticals and that its insurance market is not growing as quickly as its potential.

"A wide range of foreign firms also emphasized that China's regulations remain vague and do not reflect fully China's WTO commitments," the report said.

The report was especially harsh on the question of agricultural trade barriers.

"US agricultural producers are among the most competitive in the world ... yet US agricultural exports would be even greater without the NTBs (non-tariff barriers) that are used against them," it said.

The EU moratorium, it said, has led to a 55 percent drop in US corn exports to EU nations while US poultry exports to Russia have decreased by almost 45 percent since import restrictions imposed by Moscow.

The report also cited Chinese tariff-rate quotas on many grains and farm products, Mexican anti-dumping duties on beef, rice, pork, and apples; and other measures by Australia, Japan, Taiwan and Venezuela.