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Euronext joins bid battle for LSE Pan-European stock market Euronext has approached the London Stock Exchange (LSE) about a possible takeover bid. "The approach is at an early stage and therefore does not require a response at this point," LSE said. Talks with the European stock market and with rival bidder Deutsche Boerse will continue, the LSE said. Last week, the group rejected a £1.3bn ($2.5bn) takeover offer from Deutsche Boerse, claiming that it undervalued the business. LSE saw its shares surge 4.9% to a new high of 583p in early trade, following the announcement on Monday. The offer follows widespread media speculation that Euronext would make an offer for LSE. Experts now widely expect a bidding war for Europe's biggest stock market, which lists stocks with a total capitalisation of £1.4 trillion, to break out. Commentators say that a deal with Euronext, which owns the Liffe derivatives exchange in London and combines the Paris, Amsterdam and Lisbon stock exchanges, could potentially offer the LSE more cost savings than a deal with Deutsche Boerse. A weekend report in the Telegraph had quoted an unnamed executive at Euronext as saying the group would make a cash bid to trump Deutsche Boerse's offer. "Because we already own Liffe in London, the cost savings available to us from a merger are far greater than for Deutsche Boerse," the newspaper quoted the executive as saying. Euronext chief executive Jean-Francois Theodore is reported to have already held private talks with LSE's chief executive Clara Furse. Further reports had suggested that Euronext could make an offer in excess of the LSE's 533p a share closing price on Friday. However, Euronext said it could not guarantee "at this stage" that a firm offer would be made for LSE. There has been extensive speculation about a possible takeover of the company since an attempted merger with Deutsche Boerse failed in 2000.

Air China in $1bn London listing China's national airline is to make its overseas stock market debut with a dual listing in London and Hong Kong, the London Stock Exchange (LSE) has said. Air China plans to raise $1bn (£514m) from the flotation. Share trading will begin on 15 December, the LSE said. For China's aviation authorities, the listing is part of the modernisation of its airline sector to cope with soaring demand for air travel. No further details of the share price or number of shares were given. The LSE has been working hard to woo Chinese companies to choose London, rather than New York for their listings. It opened an Asia-Pacific office in Hong Kong last month. "We are delighted that Air China has chosen London for its listing outside China," said LSE chief executive Clara Furse. "The London Stock Exchange offers ambitious Chinese companies access to the world's most international equity market combined with high regulatory and corporate governance standards," she said. A spokesman for the LSE said: "We've been engaged with them (Air China) for about 18 months, two years now." As part of its pitch to bring listings to London, the LSE is thought to be highlighting the extra costs and red-tape imposed by new US laws passed since the Enron scandal, whilst stressing London's strong regulatory environment. Germany's Chancellor Gerhard Schroeder began a three-day visit to Beijing on Monday by signing a deal worth 1bn euros ($1.3bn; £690m) for Airbus to sell 23 new planes to Air China, the Deutsche Welle radio station reported. China's booming economy has created huge demand for air travel among middle-class Chinese, turning the country into a sales battleground between rival plane makers Airbus and Boeing. Air China's long-awaited flotation is part of a strategy to modernise a dozen state-owned carriers, which have been reorganised into three groups under Air China, China Southern and China Eastern. Merrill Lynch are sole bookrunners for Air China's flotation, which will take the form of a share placing with institutional investors in London, though retail investors may be able to buy Air China shares in Hong Kong. Air China's primary listing will be in Hong Kong, with a secondary listing in London. The shares will be denominated in Hong Kong dollars. However, investors may be wary of Chinese stocks. The collapse last week of China Aviation Oil, the Singapore-listed arm of a Chinese jet fuel trader, has cast the spotlight on corporate governance shortcomings at Chinese firms.

China continues breakneck growth China's economy has expanded by a breakneck 9.5% during 2004, faster than predicted and well above 2003's 9.1%. The news may mean more limits on investment and lending as Beijing tries to take the economy off the boil. China has sucked in raw materials and energy to feed its expansion, which could have knock-on effects on the rest of the world if it overheats. But officials pointed out that industrial growth had slowed, with services providing much of the impetus. Growth in industrial output - the main target of government efforts to impose curbs on credit and investments - was 11.5% in 2004, down from 17% the previous year. Still, consumer prices - at 2.4% - rose faster than in 2004, adding to concern that a sharp rise in producer prices of 7.1% could stoke inflation. And overall investment in fixed assets was still high, up 21.3% from the previous year - although some way off the peak of 43% seen in the first quarter of 2004. The result could be higher interest rates. China raised rates by 0.27 percentage points to 5.8% - its first hike in nine years - in October 2004. Despite the apparent rebalancing of the economy the overall growth picture remains strong, economists said. "There is no sign of a slowdown in 2005," said Tim Congdon, economist at ING Barings. China's economy is not only gathering speed thanks to domestic demand, but also from soaring sales overseas. Figures released earlier this year showed exports at a six-year high in 2004, up 35%. Part of the impetus comes from the relative cheapness of the yuan, China's currency. The government keeps it pegged close to a rate of 8.28 to the US dollar, - much to the chagrin of many US lawmakers who blame China for lost jobs and competitiveness. Despite urging to ease the peg, officials insist they are a long way from ready to make a shift to a more market-set rate. "We need a good and feasible plan and formulating such a plan also needs time," National Bureau of Statistics chief Li Deshui told Reuters. "Those who hope to make a fortune by speculating on a renminbi revaluation will not succeed in making a profit."

Brewers' profits lose their fizz Heineken and Carlsberg, two of the world's largest brewers, have reported falling profits after beer sales in western Europe fell flat. Dutch firm Heineken saw its annual profits drop 33% and warned that earnings in 2005 may also slide. Danish brewer Carlsberg suffered a 3% fall in profits due to waning demand and increased marketing costs. Both are looking to Russia and China to provide future growth as western European markets are largely mature. Heineken's net income fell to 537m euros ($701m; £371m) during 2004, from 798m euro a year ago. It blamed weak demand in western Europe and currency losses. It had warned in September that the weakening US dollar, which has cut the value of foreign sales, would knock 125m euros off its operating profits. Despite the dip in profits, Heineken's sales have been improving and total revenue for the year was 10bn euros, up 8.1% from 9.26bn euros in 2003. Heineken said it now plans to invest 100m euros in "aggressive" and "high-impact" marketing in Europe and the US in 2005. Heineken, which also owns the Amstel and Murphy's stout brands, said it would also seek to cut costs. This may involve closing down breweries. Heineken increased its dividend payment by 25% to 40 euro cents, but warned that the continued impact of a weaker dollar and an increased marketing spend may lead to a drop in 2005 net profit. Carlsberg, the world's fifth-largest brewer, saw annual pre-tax profits fall to 3.4bn Danish kroner (456m euros). Its beer sales have been affected by the sluggish European economy and by the banning of smoking in pubs in several European countries. Nevertheless, total sales increased 4% to 36bn kroner, thanks to strong sales of Carlsberg lager in Russia and Poland. Carlsberg is more optimistic than Heineken about 2005, projecting a 15% rise in net profits for the year. However, it also plans to cut 200 jobs in Sweden, where sales have been hit by demand for cheap, imported brands. "We remain cautious about the medium-to-long term outlook for revenue growth across western Europe for a host of economic, social and structural reasons," investment bank Merrill Lynch said of Carlsberg.

'Strong dollar' call halts slide The US dollar's slide against the euro and yen has halted after US Treasury Secretary John Snow said a strong dollar was "in America's interest". But analysts said any gains are likely to be short-lived as problems with the US economy were still significant. They also pointed out that positive comments apart, President George W Bush's administration had done little to stop the dollar's slide. A weak dollar helps boost exports and narrow the current account deficit. The dollar was trading at $1.2944 against the euro at 2100GMT, still close to the $1.3006 record level set on 10 November. Against the Japanese yen, it was trading at 105.28 yen, after hitting a seven-month low of 105.17 earlier in the day. Policy makers in Europe have called the dollar's slide "brutal" and have blamed the strength of the euro for dampening economic growth. However, it is unclear whether ministers would issue a declaration aimed at curbing the euro's rise at a monthly meeting of Eurozone ministers late on Monday. Higher growth in Europe is regarded by US officials as a way the huge US current account deficit - that has been weighing on the dollar - could be reduced. Mr Snow who is currently in Dublin at the start of a four-nation EU visit, has applauded Ireland's introduction of lower taxes and deregulation which have helped boost growth. "The eurozone is growing below its potential. When a major part of the global economy is below potential there are negative consequences... for the citizens of those economies... and for their trading partners," he said. Mr Snow's comments may have helped shore up the dollar on Monday, but he was careful to qualify his statement. "Our basic policy, of course, is to let open, competitive markets set the values," he explained. "Markets are driven by fundamentals and towards fundamentals." US officials have also said that other economies need to grow, so the US is not the main global growth engine. Economists say that the fundamentals, or key indicators, of the US economy are looking far from rosy. Domestic consumer demand is cooling, and heavy spending by President Bush has pushed the budget deficit to a record $427bn (£230bn). The current account deficit, meanwhile, hit a record $166bn in the second quarter of 2004. For many analysts, a weaker dollar is here to stay. "No end is in sight," said Carsten Fritsch, a strategist at Commerzbank . "It is only a matter of time until the euro reaches $1.30." Some analysts maintain the US is secretly happy with a lower dollar which helps makes its exports cheaper in Europe, thus boosting its economy.

Barclays profits hit record level Barclays, the UK's third-biggest bank, has seen annual pre-tax profits climb to record levels boosted by a sharp rise in business at its investment arm. Profits for the year to 31 December rose 20% to £4.6bn ($8.6bn). Barclays' chief John Varley said the bank had "caught the winds" of a very strong world economy. Earnings at Barclays Capital investment bank rose 25% to £1.04bn, but investment in branch operations held back growth in its UK retail business. The group is the first of Britain's five big banks to report 2004 results. According to analysts' forecasts, HSBC, the biggest UK bank by stock market valuation, will report profits of £9.4bn later this month. Barclays results were in line with market expectations. Its Global Investors wing made £347m, an 82% jump on 2003 figures. Profits at Barclaycard rose by 5% to £801m but were said to have been affected by a series of interest rate rises and investment to grow its customer base. The bank also blamed margins pressure on its mortgage business and spending on its branches over the past year for a 1% fall in profits in its UK retail division to £1.13bn. "The outlook for 2005 is good as a result of balance sheet growth and investments made in 2004," Mr Varley said. Barclays cautioned that growth this year may be slower than in 2004 on the back of softer US and Chinese economies and the impact of interest rate rises on household spending in the UK. It added its bid to acquire a controlling stake in South Africa's leading retail bank Absa, was being considered by regulatory authorities. Speaking on BBC Radio 4, Mr Varley declined to be drawn on reports that Barclays had held merger talks with US bank Wells Fargo. A tie-up between Barclays and California-based Wells Fargo would create the world's fourth biggest bank, valued at $180bn. At 1405 GMT, shares in Barclays were trading down 0.67% at 590 pence. "The headline numbers are in line, but the story is costs," said analyst Alex Potter at Lehman Brothers. "They are a bit more aggressive than we had expected. The cost overshoot is not in Barclays Capital but in the UK bank."

Asian banks halt dollar's slide The dollar regained some lost ground against most major currencies on Wednesday after South Korea and Japan denied they were planning a sell-off. The dollar suffered its biggest one-day fall in four months on Tuesday on fears that Asian central banks were about to lower their reserves of dollars. Japan is the biggest holder of dollar reserves in the world, with South Korea the fourth largest. The dollar was buying 104.76 yen at 0950 GMT, 0.5% stronger on the day. It also edged higher against both the euro and the pound, with one euro worth $1.3218, and one pound buying $1.9094. Concerns over rising oil prices and the outlook for the dollar pushed down US stock markets on Tuesday; the Dow Jones industrial average closed down 1.6%, while the Nasdaq lost 1.3%. The dollar's latest slide began after a South Korean parliamentary report suggested the country, which has about $200bn in foreign reserves, had plans to boost holdings of currencies such as the Australian and Canadian dollar. On Wednesday, however, South Korea moved to steady the financial markets. It issued a statement that "The Bank of Korea will not change the portfolio of currencies in its reserves due to short term market factors". Japan, too, steadied nerves. A senior Japanese Finance Ministry official told Reuters "we have no plans to change the composition of currency holdings in the foreign reserves, and we are not thinking about expanding our euro holdings". Japan has $850bn in foreign exchange reserves. At the start of the year, the US currency, which had lost 7% against the euro in the final three months of 2004 and had fallen to record lows, staged something of a recovery. Analysts, however, pointed to the dollar's inability recently to extend that rally despite positive economic and corporate data, and highlighted the fact that many of the US's economic problems had not disappeared. The focus has been on the country's massive trade and budget deficits, and analysts have predicted more dollar weakness to come.

Venezuela and China sign oil deal Venezuelan president Hugo Chavez has offered China wide-ranging access to the country's oil reserves. The offer, made as part of a trade deal between the two countries, will allow China to operate oil fields in Venezuela and invest in new refineries. Venezuela has also offered to supply 120,000 barrels of fuel oil a month to China. Venezuela - the world's fifth largest oil exporter - sells about 60% of its output to the United States. Mr Chavez's administration, which has a strained relationship with the US, is trying to diversify sales to reduce its dependence on its largest export market. China's quick-growing economy's need for oil has contributed to record-high oil prices this year, along with political unrest in the Middle East and supply bottlenecks. Oil prices are finishing the year roughly 30% higher than they were in January 2004. In 2004, according to forecasts from the Ministry of Commerce, China's oil imports will be 110m tons, up 21% on the previous year. China has been a net importer of oil since the mid 1990's with more than a third of the oil and gas it consumes coming from abroad. A lack of sufficient domestic production and the need to lessen its dependence on imports from the Middle East has meant that China is looking to invest in other potential markets such as Latin America. Mr Chavez, who is visiting China, said his country would put its many of its oil facilities at the disposal of China. Chinese firms would be allowed to operate 15 mature oil fields in the east of Venezuela, which could produce more than one billion barrels, he confirmed. The two countries will also continue a joint venture agreement to produce stocks of the boiler fuel orimulsion. Mr Chavez has also invited Chinese firms to bid for gas exploration contracts which his government will offer next year in the western Gulf of Venezuela. The two countries also signed a number of other agreements covering other industries including mining.

UK homes hit £3.3 trillion total The value of the UK's housing stock reached the £3.3 trillion mark in 2004 - triple the value 10 years earlier, a report indicates. Research from Halifax, the country's biggest mortgage lender, suggests the value of private housing stock is continuing to rise steadily. All regions saw at least a doubling in their assets during the past decade. But Northern Ireland led the way with a 262% rise, while Scotland saw the smallest increase of just 112%. The core retail price index rose by just 28% in the same period, underlining how effective an investment in housing has been for most people during the past decade. More than a third of the UK's private housing assets - representing more than a trillion pounds in value - are concentrated in London and the South East, the Halifax's figures indicate. Tim Crawford, Group Economist at Halifax, said: "The value of the private housing stock continues to grow and the family home remains, by a large margin, the most valuable asset of the majority of households in the UK." Halifax's own monthly figures on house sales - issued on Thursday - suggest the average price of a British property now stands at £163,748 after a 0.8% rise in January. Housing experts are split on prospects for the market, with some saying price growth will slow but not fall, while others predict a sharp drop in values.

China's Shanda buys stake in Sina Chinese online game operator Shanda Interactive Entertainment has bought a 20% stake in Sina, the country's biggest internet portal firm. The move may be a precursor to a full takeover, with analysts saying that a better-known international firm may also now show an interest in Sina. Shanda said that it may boost its stake in Sina, even buying it outright. A merger would create a firm that offers online role-playing games, news, entertainment and wireless messaging. Sina said that the purchase of a stake by Shanda would have no impact on its business. The board of directors said in a statement that it would "continue to act in the best interests of all the company stakeholders, including shareholders, employees and customers". Both companies are listed on the New York Stock Exchange's (NYSE) technology-dominated Nasdaq index. In a filing with the US Securities and Exchange Commission, Sina said its shares were purchased between 12 January and 10 February for about $230m. Rumours about a possible takeover boosted Sina's shares by more than 10% on Friday. They added an extra 6.4% to $27.24 in electronic trading after the trading session had finished. And there may be more gains amid bid speculation when trading resumes in New York on Tuesday after Monday's public holiday, analysts forecast. "There could still be some potential parties that could still counter bid," said Wallace Cheung, an analyst at DBS Vickers. "Even though Shanda has 20% of Sina, they still have quite a long way to take full control." However, Mr Cheung noted that a foreign company trying to take control of a Chinese internet portal firm, with its ability to filter and pass on news, may not be viewed very favourably by Beijing.

EU 'too slow' on economic reforms Most EU countries have failed to put in place policies aimed at making Europe the world's most competitive economy by the end of the decade, a report says. The study, undertaken by the European Commission, sought to assess how far the EU has moved towards meeting its economic targets. In 2000, EU leaders at a summit in Lisbon pledged the European economy would outstrip that of the US by 2010. Their economic targets became known as the Lisbon Agenda. But the Commission report says that, in most EU countries, the pace of economic reform has been too slow, and fulfilling the Lisbon ambitions will be difficult - if not impossible. Only the UK, Finland, Belgium, Denmark, Ireland and the Netherlands have actually followed up policy recommendations. Among the biggest laggards, according to the report, are Greece and Italy. The Lisbon Agenda set out to increase the number of people employed in Europe by encouraging more older people and women to stay in the workforce. It also set out to raise the amount the private sector spends on research and development, while bringing about greater discipline over public spending and debt levels. Combined with high environmental standards and efforts to level the playing field for businesses throughout the EU, the plan was for Europe to become the world's most dynamic economy by 2010. Next week, the Commission will present revised proposals to meet the Lisbon goals. Many people expect the 2010 target to be quietly dropped.

Economy 'strong' in election year UK businesses are set to prosper during the next few months - but this could trigger more interest rate rises, according to a report. Optimism is at its highest since 1997 and business will reap the benefits of a continuing rise in public spending, say researchers at BDO Stoy Hayward. The Bank of England is expected to keep rates on hold this week - but they could go up later in the year. Rates are likely to rise after the anticipated general election in May. The BDO optimism index - a leading indicator of GDP growth two quarters ahead edged up in January to 102.5, from 102.2 in October. The rise is due, in part, to an increase in public spending and increased merger and acquisition activity. The only thing blighting business optimism this year will be uncertainties associated with the general election, BDO said. Its BDO's output index - which predicts GDP movements a quarter in advance - remained at 100.8 for January, implying GDP growth at 2.9% in the second quarter of 2005. However, the output index is being held back by recent interest rate rises, sterling's strength against the dollar and high oil prices, the group noted. Its inflation index, which has risen continuously over the last 8 months, climbed to 110.0 in January from 108.0 in October last year. "The UK is looking strong going into the general election, but businesses need to prepare themselves for a jolt ahead as the Bank of England reacts to growth and inflationary pressures," said Peter Hemington, partner at BDO Stoy Hayward. "Growth will probably slow by the end of 2005 and it is likely that we will see higher interest rates or a sharp drop in demand for products and services."

Saab to build Cadillacs in Sweden General Motors, the world's largest car maker, has confirmed that it will build a new medium-sized Cadillac BLS at its loss-making Saab factory in Sweden. The car, unveiled at the Geneva motor show, is intended to compete in the medium-sized luxury car market. It will not be sold in the US, said GM Europe president Carl-Peter Forster. As part of its efforts to make the US marque appeal to European drivers, the car will be the first Cadillac with a diesel engine. GM's announcement should go some way to allay fears of the Saab factory's closure. The factory in Trollhaettan has been at the centre of rumours about GM's planned severe cutbacks in its troubled European operations. But the group's new commitment to the Swedish factory may not be welcomed by the group's Opel workers in Ruesselsheim, Germany. They may now have to face a larger proportion of GM's cuts. Neither will the announcement be seen as unalloyed good news in Sweden, since it reflects Saab's failure to make significant inroads into the lucrative European luxury car market. For years, Saab has consistently said it is competing head-on with BMW, Mercedes and Jaguar. The segment's leaders do not agree. GM's plans to build the American marque in Sweden is part of its efforts to push it as an alternative luxury brand for European drivers. In the US, it has long been established as an upmarket brand - even the presidential limousine carries the badge. Yet it could prove tough for Cadillac to steal market share from the majors in Europe. Other luxury car makers, most notably the Toyota subsidiary Lexus, have enjoyed tremendous success in the US without managing to make significant inroads in Europe. There, German marques Mercedes Benz and BMW have retained their stranglehold on the luxury market. Bringing Cadillac production to Sweden should help introduce desperately-needed scale to the Saab factory, which currently produces fewer than 130,000 cars per year. That is about half of what major car makers consider sufficient numbers for profitable operations, and Saab is losing money fast - albeit with losses halved in 2004 to $200m (£104m; 151m euros) from $500m the previous year. Beyond the 12,000 job cuts announced last year at its European operations, GM is reducing expenditure by building Saabs, Opels - badged as Vauxhalls in the UK - and now Cadillacs on the same framework, and by allowing the different brands to share parts. Another way to further reduce Saab's losses could be to shift some of the production of Saabs to the US, a market where drivers have adopted it as an upmarket European car. Doing so would remove the exposure to the weak US dollar, which is making Saabs more expensive to US consumers. But not everyone in the industry agree that it would be the best way forward. "We know that in five years the US dollar will be stronger than it is today," the chief executive of a leading European car maker told BBC News. The current trend towards US production was "stupid", he said. In a separate announcement, GM unveiled a new scheme to allow European consumers the chance to test drive its Opel and Vauxhall models. It is to deploy a fleet of 35,000 test cars across 40 countries, inviting potential buyers to try out a vehicle for 24-hours. It follows a similar initiative by GM in the US. GM said it wanted to change "customers' perceptions" about Opel and Vauxhall cars, showing them that the quality had improved in recent years.

Bad weather hits Nestle sales A combination of bad weather, rising raw material costs and the sluggish European economy has hit sales at Swiss food and drink giant Nestle. Revenue dipped 1.4% to 86.7bn Swiss francs ($74.6bn; £39.1bn) in 2004 as sales of ice cream and mineral water were dampened by the wet summer. However, Nestle's profits margins were helped by a strong performance in the Americas and China. Nestle is to raise its dividend by 11% after paying back some of its debt. Nestle said that the strength of the Swiss franc against the US dollar, the disposal of businesses and challenging trading conditions in Europe all dented sales. A poor summer across the continent - in contrast to the prolonged heat wave in 2003 - "severely affected" demand for ice cream. Sales of bottled water also fell, although chocolate, coffee, frozen goods and petcare products performed better. Elsewhere, Nestle said it had enjoyed an "exceptional" year in North America, outperforming the market in terms of sales growth. Nestle added that it had performed strongly in Africa and Asia despite the impact of high oil prices and political instability. Nestle's total earnings before interest remained broadly flat over the past year, despite the company managing to boost profit margins. As well as increasing its dividend, Nestle plans to buy back shares worth 1bn Swiss francs ($861m; £451m). Looking forward, Nestle forecasts organic earnings growth of about 5% in 2005, although it warned that trading would remain just as competitive. Uncertainty remains over the future of Perrier, the iconic French mineral water owned by Nestle. Perrier has been locked in a long-standing dispute with unions about productivity levels at the business, which has lead Nestle to consider selling the firm. "The option of selling is Perrier is still on the table," chief executive Peter Brabeck-Letmathe confirmed on Thursday.

US Ahold suppliers face charges US prosecutors have charged nine food suppliers with helping Dutch retailer Ahold inflate earnings by more than $800m (£428m). The charges have been brought against individuals as well as companies, alleging they created false accounts. Ahold hit the headlines in February 2003 after it emerged that there were accounting irregularities at its US subsidiary Foodservice. Three former Ahold top executives last year agreed to settle fraud charges. Ahold has admitted that it fraudulently inflated promotional allowances at Foodservice, improperly consolidated joint ventures and also committed other accounting errors and irregularities. The nine now charged, who worked as suppliers to Ahold, are accused of signing false documents relating to the amount of money they paid the retailer for promoting their products in its stores. Food companies pay supermarkets and retailers for prime shelf space. The suppliers in question are said to have inflated the amount of money they paid, providing auditors with signed letters that allowed Ahold to inflate its earnings. US Attorney David Kelley said he expects the nine vendors will plead guilty to the charges. He added that there may be more court actions in the future. "I don't want to leave you with the impression that these were the only ones involved," he said. Among those facing charges are John Nettle, a former employee of General Mills; Mark Bailin of Rymer International Seafood; Tim Daly of Michael Foods and Kenneth Bowman, who worked as an independent contractor for Total Foods. Others include Michael Hannigan of Sugar Foods; Peter Marion of Maritime Seafood Processors and First Choice Foods; Gordon Redgate of Commodity Manager and Private Label Distribution; Bruce Robinson of Basic American Foods and Michael Rogers, formerly of Tyson Foods. Pasquale D'Amuro of the FBI called the nine vendors the key ingredients in "the process of cooking the books" at Ahold. At the time of the scandal, Ahold was seen by many as Europe's Enron. Ahold shares tumbled on the news and many market observers predicted that the fall out could damage investor confidence across Europe. It was less severe than many had envisaged, however, and since then Ahold has worked hard at rebuilding its reputation and investor confidence. Ahold is the world's fourth-largest supermarket chain. Its other US businesses include Stop & Shop, and Giant Food.

Banker loses sexism claim A former executive at the London offices of Merrill Lynch has lost her £7.5m ($14.6m) sex discrimination case against the US investment bank. An employment tribunal dismissed Stephanie Villalba's allegations of sexual discrimination and unequal pay. But the 42-year-old won her claim of unfair dismissal, resulting from her sacking in August 2003. Her partial victory is likely to cap her compensation to about £55,000, a tiny fraction of what she asked for. The extent of damages will be assessed in the New Year. The action - the biggest claim heard by an employment tribunal in the UK - had been viewed as something of a test case. The tribunal decided that Ms Villalba had been unfairly dismissed because, having been removed from a senior post, she was entitled to wait to see if a suitable alternative position could be found in the organisation. Ms Villalba, the former head of Merrill's private client business in Europe, has made no decision on whether to appeal. A spokesman for her lawyers described the decision as "very disappointing", but pointed to some criticism of Merrill's procedures within the lengthy judgement. The tribunal upheld Ms Villalba's claim of victimisation on certain specific issues, including bullying e-mails in connection with a contract, but said it found no evidence of "laddish culture" at the bank. "We said from the start that this case was about performance not gender," Merrill said in a statement. "Ms Villalba was removed by the very same person who had promoted her into the position and who then replaced her with another woman. "Merrill Lynch is dedicated to creating a true meritocracy where every employee has the opportunity to advance based on their skills and hard work." Based in London's financial district, Ms Villalba worked for Merrill's global private client business in Europe, investing funds for some of Merrill's most important customers. But in 2003 her employers told her she had no future after 17 years with the company, and she was made redundant. Merrill Lynch denied Ms Villalba's claims and said she was removed from her post because of the extensive losses the firm was suffering on the continent. The firm had told the tribunal that Ms Villalba's division had been losing about $1m a week. Merrill said Ms Villalba lacked the leadership skills to turn around the unit.

EC calls truce in deficit battle The European Commission (EC) has called a truce in its battle with France and Germany over breaching deficit limits. The move came after France and Germany vowed to run their budget deficits below the EU cap in 2005 - for the first time in four years. But, the EC did warn the two were under close scrutiny and it would act if their fiscal situations deteriorated. Under EU rules, member countries must keep their deficits below 3%. France and Germany will breach that this year. It will be the third year in a row that the two countries have broken the European Union's Stability and Growth Pact rules. The eurozone's two biggest economies left the pact in tatters in November 2003 when they persuaded fellow EU members to put the threat of penalties for deficit breaches on hold. The commission then took the pair to the European Court of Human Justice - which ruled EU countries could not put the pact "in abeyance", and confirmed the EC's right to launch "excessive debt procedures". After announcing its decision to erase France and Germany from its list of deficit rule breakers, the EU said that the time lag created by the ruling meant that 2005 should be the target year for the pair to bring their budget's below 3%. "The commission concludes that the two countries appear to be on track to correct their excessive deficits by 2005," it said in a statement. The EU expects the German deficit to fall to fall to 2.9% of GDP next year from 3.9% this year, while France's is forecast to drop to 3% from an expected 3.7% this year. The forecasts are based on EC predictions of GDP growth of 1.5% in Germany next year and 2.2% in France. Berlin welcomed the decision, with finance minister Hans Eichel saying it showed that the EC recognised Germany's fiscal policy was "on the right track even amid very difficult economic conditions". However Paris was more subdued, with finance minister Herve Gaymard telling parliament: "We must continue along this path of saving money." However, the move still had its critics, with the European People's Party (EPP) attacking the EC for backing down from punitive action. "The Commission is buckling under the pressure from Germany and France, " EPP spokesman Alexander Radwan said. "The scary fact is that budget sinners, despite having repeatedly exceeded the 3% deficit limit, do not have to fear any sanctions." Despite the commission delivering its decision on the two biggest eurozone economies, it refused to comment on similar action against Greece which has also broken the 3% deficit ceiling. Monetary Affairs Commissioner Joaquin Almunia said that it was a matter for next week.

Japanese growth grinds to a halt Growth in Japan evaporated in the three months to September, sparking renewed concern about an economy not long out of a decade-long trough. Output in the period grew just 0.1%, an annual rate of 0.3%. Exports - the usual engine of recovery - faltered, while domestic demand stayed subdued and corporate investment also fell short. The growth falls well short of expectations, but does mark a sixth straight quarter of expansion. The economy had stagnated throughout the 1990s, experiencing only brief spurts of expansion amid long periods in the doldrums. One result was deflation - prices falling rather than rising - which made Japanese shoppers cautious and kept them from spending. The effect was to leave the economy more dependent than ever on exports for its recent recovery. But high oil prices have knocked 0.2% off the growth rate, while the falling dollar means products shipped to the US are becoming relatively more expensive. The performance for the third quarter marks a sharp downturn from earlier in the year. The first quarter showed annual growth of 6.3%, with the second showing 1.1%, and economists had been predicting as much as 2% this time around. "Exports slowed while capital spending became weaker," said Hiromichi Shirakawa, chief economist at UBS Securities in Tokyo. "Personal consumption looks good, but it was mainly due to temporary factors such as the Olympics. "The amber light is flashing." The government may now find it more difficult to raise taxes, a policy it will have to implement when the economy picks up to help deal with Japan's massive public debt.

Tate & Lyle boss bags top award Tate & Lyle's chief executive has been named European Businessman of the Year by a leading business magazine. Iain Ferguson was awarded the title by US publication Forbes for returning one of the UK's "venerable" manufacturers to the country's top 100 companies. The sugar group had been absent from the FTSE 100 for seven years until Mr Ferguson helped it return to growth. Tate's shares have leapt 55% this year, boosted by firming sugar prices and sales of its artificial sweeteners. "After years of a sagging stock price and a seven-year hiatus from the FTSE 100, one of Britain's venerable manufacturers has returned to the vaunted index," Forbes said. Mr Ferguson took the helm at the company in 2003, after spending most of his career at consumer goods giant Unilever. Tate & Lyle, which was an original member of the historic FT-30 index in 1935, operates more than 41 factories and 20 more additional production facilities in 28 countries. Previous winners of the Forbes award include Royal Bank of Scotland chief executive Fred Goodwin and former Vodafone boss Chris Gent.

Stock market eyes Japan recovery Japanese shares have ended the year at their highest level since 13 July amidst hopes of an economic recovery during 2005. The Nikkei index of leading shares gained 7.6% during the year to close at 11,488.76 points. In 2005 it "will rise toward 13,000", predicted Morgan Stanley equity strategist Naoki Kamiyama. The optimism in the financial markets contrast sharply with pessimism in the Japanese business community. Earlier this month, the quarterly Tankan survey of Japanese manufacturers found that business confidence had weakened for the first time since March 2003. Slower economic growth, rising oil prices, a stronger yen and weaker exports were blamed for the fall in confidence. Despite this, traders expect strength in the global economy to benefit Japan, which has been close to sliding into recession in recent months. Structural reform within Japan and an anticipated end to the banking sector's bad debt problems should also help, they say.

India opens skies to competition India will allow domestic commercial airlines to fly long haul international routes, a move it hopes will stoke competition and drive down prices. However, only state controlled carriers will be able to fly the lucrative Gulf routes, to countries such as Kuwait and Saudi Arabia, for at least three years. Jet Airways and Air Sahara are the two companies that will benefit initially. India is looking to develop its airline industry as booming economic growth drives demand for travel. Monica Chadha, BBC Delhi reporter, said air travel in India had increased by almost 20% from the previous year and was expected to rise even further. Infrastructure development is lagging demand, however, and will have to improve. "Most international airports in the country are shabby and ill-equipped to handle heavy air traffic," Ms Chada said, adding that while the Civil Aviation minister has promised to modernise and privatise airports little progress has been made. Steps have been take to move things forward and the government recently changed legislation that limited foreign investment in domestic airlines. It raised the maximum stake holding allowed to 49% from 40%. Local press, meanwhile, have reported that the US and India will start negotiations about adding more routes in January. Jet Airways is India's premier private domestic carrier; Air Sahara is ranked third in the category.

Yukos bankruptcy 'not US matter' Russian authorities do not have to abide by any US court decisions taken with regard to troubled oil giant Yukos, a Houston court has been told. Legal expert William Butler said there was no treaty between the US and Russia to recognise the other's legal rulings. That meant Moscow would not have to adhere to US rulings in the Yukos case. Yukos says a US court was entitled to declare it bankrupt before its Yugansk unit was sold, since it has a US subsidiary and local bank accounts. Yukos made its surprise Chapter 11 bankruptcy filing in Houston in December in an unsuccessful attempt to halt the auction of Yugansk, its main oil producing unit, by Russian authorities. Yugansk was sold to help pay off a $27.5bn (£14.5bn) back tax bill. It was bought for $9.4bn by a previously unknown group, which was in turn bought by state-controlled oil company Rosneft. The US court's jurisdiction has been challenged by Deutsche Bank and Gazpromneft, a former unit of Russian gas monopoly Gazprom which is due to merge with Rosneft. Deutsche Bank maintains the case has no place in a US court because Yukos has no assets in the US, apart from two bank accounts and a house in Houston owned by its chief finance officer Bruce Misamore. Deutsche Bank is involved in the case because it is itself being sued by Yukos. It had agreed to loan Gazpromneft the money to bid for Yugansk. US bankruptcy judge Letitia Clark, who issued an injunction in December to try and prevent the Yugansk sale, has said she will rule "pretty promptly, however I do not anticipate ruling on it before next Tuesday". Yukos has claimed it sought help in the US because other forums - Russian courts and the European Court of Human Rights - were either unfriendly or offered less protection. It has claimed that Russia imposed the huge tax bill and forced the sale of Yugansk as part of a campaign to destroy Yukos and its former owner Mihkail Khodorkovsky, who is facing a 10-year prison term in Russia for fraud and tax evasion. Yukos' parent company, the Gibraltar-based Menatep Group, is suing Russia in Europe for $28.3bn in financial damages. The company is also seeking $20bn in a separate US lawsuit against Rosneft and Gazprom for their role in the sale of Yugansk.

Survey confirms property slowdown Government figures have confirmed a widely reported slowdown of the UK's housing market in late 2004. House prices were 11.8% higher on the year in the last quarter of 2004, down from 16.3% in the July-to-September quarter, the Land Registry said. The average house price in England and Wales was £182,920, down from £187,971 in July-September. The volume of sales between October and December dropped by nearly a quarter from the same period in 2003. The government figures are the first official confirmation of falls in the market at the end of 2004. Land Registry figures are less up to date than those of banks and building societies, since they record completions not mortgage approvals. However, the figures are viewed as the most accurate measure of house prices as they include all property transactions, including cash sales. The cost of buying a home fell in seven out of 10 regions between the third and fourth quarters of 2004. The biggest annual gains were made in Wales, where house prices were up by 23% in the fourth quarter. House prices rose the slowest in Greater London, being up by 6%. In the capital, the volume of sales fell by 23% from 36,185 in 2003 to 28,041 for the same period in 2004. There was also a decline in the number of million-pound properties sold in the capital, with 436 properties over £1m sold compared to 469 for the same period in 2003. Although the figures point to a slowdown in the market, the most recent surveys from Nationwide and Halifax have indicated the market may be undergoing a revival. After registering falls at the back end of 2004, Halifax said house prices rose by 0.8% in January and Nationwide reported a rise of 0.4% in the first month of the year. Members of the Bank of England's rate-setting committee will make their latest decision on interest rates on Thursday.

High fuel prices hit BA's profits British Airways has blamed high fuel prices for a 40% drop in profits. Reporting its results for the three months to 31 December 2004, the airline made a pre-tax profit of £75m ($141m) compared with £125m a year earlier. Rod Eddington, BA's chief executive, said the results were "respectable" in a third quarter when fuel costs rose by £106m or 47.3%. BA's profits were still better than market expectation of £59m, and it expects a rise in full-year revenues. To help offset the increased price of aviation fuel, BA last year introduced a fuel surcharge for passengers. In October, it increased this from £6 to £10 one-way for all long-haul flights, while the short-haul surcharge was raised from £2.50 to £4 a leg. Yet aviation analyst Mike Powell of Dresdner Kleinwort Wasserstein says BA's estimated annual surcharge revenues - £160m - will still be way short of its additional fuel costs - a predicted extra £250m. Turnover for the quarter was up 4.3% to £1.97bn, further benefiting from a rise in cargo revenue. Looking ahead to its full year results to March 2005, BA warned that yields - average revenues per passenger - were expected to decline as it continues to lower prices in the face of competition from low-cost carriers. However, it said sales would be better than previously forecast. "For the year to March 2005, the total revenue outlook is slightly better than previous guidance with a 3% to 3.5% improvement anticipated," BA chairman Martin Broughton said. BA had previously forecast a 2% to 3% rise in full-year revenue. It also reported on Friday that passenger numbers rose 8.1% in January. Aviation analyst Nick Van den Brul of BNP Paribas described BA's latest quarterly results as "pretty modest". "It is quite good on the revenue side and it shows the impact of fuel surcharges and a positive cargo development, however, operating margins down and cost impact of fuel are very strong," he said. Since the 11 September 2001 attacks in the United States, BA has cut 13,000 jobs as part of a major cost-cutting drive. "Our focus remains on reducing controllable costs and debt whilst continuing to invest in our products," Mr Eddington said. "For example, we have taken delivery of six Airbus A321 aircraft and next month we will start further improvements to our Club World flat beds." BA's shares closed up four pence at 274.5 pence.

US trade gap hits record in 2004 The gap between US exports and imports hit an all-time high of $671.7bn (£484bn) in 2004, latest figures show. The Commerce Department said the trade deficit for all of last year was 24.4% above the previous record - 2003's imbalance of $496.5bn. The deficit with China, up 30.5% at $162bn, was the largest ever recorded with a single country. However, on a monthly basis the US trade gap narrowed by 4.9% in December to £56.4bn. The US consumer's appetite for all things from oil to imported cars, and even wine and cheese, reached record levels last year and the figures are likely to spark fresh criticism of President Bush's economic policies. Democrats claim the administration has not done enough to clamp down on unfair foreign trade practices. For example, they believe China's currency policy - which US manufacturers claim has undervalued the yuan by as much as 40% - has given China's rapidly expanding economy an unfair advantage against US competitors. Meanwhile, the Bush administration argues that the US deficit reflects the fact the America is growing at faster rate than the rest of the world, spurring on more demand for imported goods. Some economists say this may allow an upward revision of US economic growth in the fourth quarter. But others point out that the deficit has reached such astronomical proportions that foreigners many choose not to hold as many dollar-denominated assets, which may in turn harm growth. For all of 2004, US exports rose 12.3% to $1.15 trillion, but imports rose even faster by 16.3% to a new record of $1.76 trillion. Foreign oil exports surged by 35.7% to a record $180.7bn, reflecting the rally in global oil prices and increasing domestic demand. Imports were not affected by the dollar's weakness last year. "We expect the deficit to continue to widen in 2005 even if the dollar gets back to its downward trend," said economist Marie-Pierre Ripert at IXIS.