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REAGAN WARNS CONGRESS ON PROTECTIONISM

President Reagan warned the U.S. Congress in his weekly radio address against passing what he called dangerous, protectionist trade legislation that would tie his hands in trade negotiations with Japan and other countries. Reagan, who will hold talks with Japanese Prime Minister Yasuhiro Nakasone here this week, said he would lift tariffs imposed last week against some Japanese products as soon as Tokyo complied with a U.S.-Japanese pact on semiconductors. U.S. Officials gave the same message to former Japanese Foreign Minister Shintaro Abe in meetings in Washington last week. In his weekly radio address on Saturday, Reagan said he would tell Nakasone: "We want to continue to work cooperatively on trade problems and want very much to lift these trade restrictions as soon as evidence permits. Reagan said the 100 pct tariffs he imposed on some 300 mln dlrs worth of Japanese goods was a special case of trade retaliation and did not signal a shift in what he called his staunch anti-protectionist policies. "In imposing these tariffs we were just trying to deal with a particular problem, not begin a trade war," he said. But Congress is ready to approve tough trade legislation to try to turn round the record U.S. Trade deficit, which has cost millions of U.S. Jobs and closed thousands of factories. A vote on a trade bill sponsored by Congressman Richard Gephardt is expected to come during Nakasone"s visit. It would penalise nations with large trade surpluses and which are alleged to use unfair trade practices. Reagan warned Congress that such action would undercut his ability to negotiate on trade issues with Nakasone and others. "With my meeting with Prime Minister Nakasone and the Venice economic summit coming up, it"s terribly important not to restrict a president"s options in such trade dealings with foreign governments," he said. "Unfortunately, some in the Congress are trying to do exactly that," he said. Reagan said he would keep the American people "informed on this dangerous legislation because it"s just another form of protectionism and I may need your help to stop it." REUTER 

TRADE MINISTERS SAY GOVERNMENTS NEED CREDIBILITY

Four trade ministers ended a weekend meeting with a frank confession that their governments are losing credibility in world financial markets and will not regain it until they back their promises over trade and currencies with action. "Until today we have anounced policies, but when it came to action required it was done in a way that satisfied nobody," Japanese Trade Minister Hajime Tamura told a news conference. "From now on, if a government comes up with a certain policy, it must be followed by action," he said following two days of informal talks with the trade ministers of the United States, the European Community and Canada in central Japan. Last week, the dollar fell to a new record low below 140 yen, despite statements from the Group of Seven (G-7) leading industrial powers that currencies should be stabilised to underpin world trade. "We need credibility to gain confidence. When we have confidence, then we can have an impact," said Tamura. His colleagues agreed that when major trade nations fought over trade issues while calling for each other to honour free trade rules in general, it was not a sight which inspired confidence in the markets. "The time has come now to act in step with the talk. If you belong to a club, you have to act in concord with the rules, if you want to be credible," said EC external trade chief Willy de Clercq. Canadian Trade Minister Patricia Carney also agreed: "We are meeting in a time of great trade tension. What the world needs to see is that we have the political will to deal with these problems we face." She said that next month"s meeting of the Organisation of Economic Cooperation and Development and the meeting of leaders of the G-7 nations in Venice in the summer would be a forum to show this will existed. U.S. Trade Representative Clayton Yeutter reminded the news conference that the results of such high level meetings could lead to action which would only have an effect on smoothing out world trade imbalances perhaps years later. "The media typically has a tendency to evaluate meetings like this in terms of tangible results. That is not the way it should be pursued," he said. "What is achieved in an intangible way almost always exceeds what is achieved in a tangible way," he said. Progress in personal contacts and understanding each others" positions and policies was just as important toward reducing trade tensions, he said. Tamura read out an agreed summary of the joint talks: Currency stability was now essential, but currency movements alone would not correct a U.S. Trade deficit with Japan which hit 58 billion dlrs last year, an 18 billion dlr EC deficit with Japan in 1986, and a Japanese global trade surplus of almost 90 billion, he said. Trade retaliation, protectionism, and forcible export restraints which lead to a shrinkage in world trade flows were most dangerous, he said. The imbalances can only be solved by coordinated policies over a whole range of fiscal, monetary, trade and industrial measures, and in line with a body of internationally agreed rules, he said. In this regard, the policing role of the Geneva-based General Agreement on Tariffs and Trade world trade body must be strengthened, he said. The ministers reconfirmed their individual promises to solve the problem. The United States will try to reduce its large budget deficit and restore competitiveness within its industries. Japan will introduce early and effective measures to expand its domestic growth and rely less on exports. The EC must continue efforts for balanced growth and reduced unemployment. All felt satisfied at the new progress in the Canadian economy. REUTER 

EC FARM MINISTERS TO RESUME PRICE TALKS

European Community (EC) agriculture ministers resume discussions in Luxembourg tomorrow on tough 1987/88 farm price proposals from the bloc"s executive Commission with only thin hopes of reaching a quick agreement. Their current chairman, Belgium"s Paul de Keersmaeker, promised at the end of the group"s last meeting that if agreement appeared in sight this week, he would keep his colleagues at the negotiating table for long days and nights. But one diplomat told journalists: "I don"t think you need to worry about that. We are a long way from the crunch yet." The commission has tabled a series of proposals which farm experts say would together amount to the most swingeing attack on overspending on the bloc"s Common Agricultural Policy, and the biggest blow to farmers" incomes, in years. As well as cuts in common farm prices of 2.5 pct in the key cereals sector, quality standards for farm goods sold into EC surplus stores would be raised and the period of the year when such sales were allowed restricted. The experts say prices received by farmers would be cut by over 10 pct for many crops if such measures were agreed. The effects, however, would be mitigated by Commission proposals unveiled on April 14 for generous cash grants to farmers worst hit by the struggle to curb EC food surpluses. When ministers met on March 30 and 31 in Brussels for initial discussions on the farm price package, several, notably France"s Francois Guillaume and West Germany"s Ignaz Kiechle, said the proposals were unacceptably tough. Only the Dutch and British delegations gave general support to the Commission line that such drastic measures were necessary to curb surplus food production in the EC and to reduce the massive cost of the CAP. But even then, the British are among several delegations which oppose the Commission"s controversial plan to raise two billion European Currency Units through a tax on imported and EC-produced oilseeds and fats. In order to seek common ground, de Keersmaeker plans to spend the whole of tomorrow in bilateral meetings with each of his colleagues in turn. Diplomats said although the ministers will meet together on Tuesday, de Keersmaeker is likely to conclude that further talks at the level of officials are necessary and that the hard bargaining will have to wait until May. REUTER 

SAUDI RIYAL DEPOSITS STEADY IN DULL MARKET

Saudi riyal interbank deposits were mainly steady at yesterday"s higher levels in a market which saw little activity due to the European weekend, dealers said. They said banks in the kingdom offered two and three month deposits 1/16 of a percentage point lower, but there were few takers. Rates for short-dated and other fixed period funds were little changed following their sharp rise on Saturday brought on by higher eurodollar deposit rates. Spot-next and one-week deposits were relatively unchanged at 6-3/4, 1/2 pct. One-month deposits were steady at 6-3/4, 1/2 pct while three-month funds eased to 6-7/8, 5/8 pct from 6-15/16, 11/16. Six-month deposits also declined marginally to 7-5/16, 7-1/8 pct from quotes of 7-3/8, 1/8 at the close of trade on Saturday. The spot riyal was steady at 3.7499/7504 to the dollar. REUTER 

G-7 OFFICIALS TO DECIDE ON SUMMIT AGENDA

Senior officials from the Group of Seven (G-7) countries will meet next week to decide an agenda for the body"s June summit scheduled to be held in Venice, Japanese officials said. The meeting will provide senior government officials with their first chance to discuss the recent sharp drop of the dollar, although the main focus of the gathering is longer term, they said. Deputy Finance Ministers, including Japanese Vice-Finance Minister Toyoo Gyohten, will attend. The meeting will be held in Italy, they said, but gave no other details. The leaders of the G-7, the United States, Britain, Canada, France, Italy, Japan and West Germany, are expected to discuss ways of improving economic policy coordination in Venice. The hope is that increased coordination will help reduce the huge imbalances in world trade and calm volatile currency markets. But economists say the strategy has so far not worked. Japanese officials admitted there is little more they can do on their own to stem the dollar decline, which last week saw the currency plunge to a post-war low below 140 yen. The officials said they expected sentiment against the dollar to change soon, once the U.S. Trade deficit starts to fall and the Japanese surplus begins to shrink. "We have already seen some signs of improvement (in the trade picture), but the market does not appreciate it yet," one said. Last week"s passage of the Japanese government budget by parliament"s Lower House also paves the way for Tokyo to take additional action to stimulate its sagging economy and boost imports, the officials said. REUTER 

EC MINISTERS LIKELY TO CRITICISE FINANCE IDEAS

Plans for a new-style European Community (EC) free of damaging budget wrangles receive their first full review from EC foreign ministers today, but are unlikely to gather much support. Diplomats said key EC capitals would voice strong criticism of proposals that would lead to a sharp increase in EC budget payments by bringing member states" contributions more into line with national wealth. They said the EC"s current paymasters, Britain, France, and West Germany, would lead the opposition to the plans, designed to enable the community meet the challenges of the 1990s. Faced with a budget deficit this year of at least five billion dlrs, EC Commission President Jacques Delors called in February for a radical overhaul of the EC financing system. Such action was necessary, he argued, to end a damaging cycle of annual budget crises and ensure cash for technological research programs and regional and social spending projects. Ironically, diplomats said, the move could spark exactly the type of row it was intended to avoid with industrially developed northern states demanding assurances the new cash would not be swallowed up by the poorer southern members. Delors" plans, by linking a country"s contributions to its Gross National Product (GNP), would over the next five years add some 18 billion dlrs to the present budget of 34 billion. Currently, contributions are calculated on a percentage of Value Added Tax (VAT) returns. Under the new scheme, all countries would pay one pct of their VAT receipts to Brussels. Extra cash would then be raised in line with needs by a levy on the difference between a country"s total VAT receipts and its GNP. London is one of the most resolutely opposed countries to the scheme, arguing instead that money should be made available from deep cutbacks in the EC"s heavily-subsidised farm sector. Unofficially many EC capitals secretly support the wearisome budget wrangling, taking the line that the highly diverse 12-nation Community can only take tough decisions when forced to do so. The issue is further complicated by a possible general election in Britain and acceptance that the EC problems cannot seriously be addressed by London until those polls are out of the way. REUTER 

ADB DELEGATES GATHER IN JAPAN AMID CONTROVERSY

Delegates from 46 countries are gathering for the 20th meeting of the Asian Development Bank (ADB) amid concern over the bank"s role in aiding regional development. The three-day meeting, the first to be held in Japan since the bank"s inaugural meeting in Tokyo in 1966, will open tomorrow with political controversy dogging its heels. Taiwan, one of the ADB"s founders, will boycott the meeting for the second year in succession in protest against China"s admission last year. Taiwan, which borrowed only 100 mln dlrs or 0.51 pct of the ADB"s total lending of 19.4 billion dlrs over the past 20 years, is staying away because its name was changed by the bank to "Taipei, China." But the boycott is likely to be overshadowed by the presence of communist giants China and the Soviet Union. Moscow is attending an ADB meeting for the first time in what is widely seen as a first step to eventual full membership. China is expected to obtain its first loans from the bank in 1987. A senior ADB official said Peking, now the bank"s third largest shareholder after the United States and Japan, would also take one of the 12 seats on the bank"s board of governors. The official, who declined to be identified, expected sparks to fly when governors met in formal session on Tuesday. He said calls for expanded bank lending were expected from poorer countries in the Asia-Pacific region, hit by plunging commodity prices, tariff barriers in export markets, a growing resources crunch and balance of payments crises. But the U.S. Delegation was likely to repeat warnings ADB lending should stress quality over quantity, the official said. The debate over ADB lending is fuelled by the bank"s highly successful money management. With liquid reserves of about four billion dlrs, profits have been rising steadily and touched 287 mln dlrs last year. The key indicator of the ADB"s reduced role in regional development is its net transfer of resources -- loan disbursements less repayments made by borrowers -- which fell sharply to 237 mln dlrs in 1986 from 421 mln in 1985. In 1986, the bank approved loans totalling two billion dlrs, but only to 19 of its 29 developing members. ADB chief economist Kedar Nath Kohli told Reuters the bank"s ordinary lending had declined each year since 1984. "I"m afraid if you exclude India and China, it"s going to go down even further in 1987," Kohli said. Kohli said developing countries in the region were entering a period of painful adjustments. He said one country that seemed to be on the right track was South Korea, which had bucked the regional trend of rising indebtedness by cutting its foreign debt by about two billion dlrs last year. One country that has complained about the ADB's lending policies is Vietnam, which charged at last year's meeting that the bank had cut off its aid on political grounds. The bank abruptly halted loans to Hanoi after the fall of the Saigon government in 1975. Despite Moscow's presence, however, the bank is not expected to change its Vietnam policy. The Philippines, the ABD's second-largest borrower in 1986 with loans totalling 316 mln dlrs, is happy with the bank's role. Finance Minister Jaime Ongpin told Reuters he expected the figure would reach roughly the same level this year. REUTER 

BANK OF JAPAN INTERVENES IN TOKYO BUYING DOLLARS

The Bank of Japan intervened buying dollars shortly after the opening of 137.70 yen, dealers said. Strong selling from life insurance companies and investment trusts pressured the dollar downward, but the U.S. Unit steadied on profit-taking buying by petroleum companies and intervention by the central bank. The dollar's upward potential looks limited as forward dollar selling by exporters for commercial purposes is expected above 137.80, dealers said. REUTER 

SUMITA SAYS FURTHER YEN RISE UNLIKELY - JIJI PRESS

Japan's Jiji Press quoted Bank of Japan Governor Satoshi Sumita as telling Japanese reporters the central bank will continue determined market intervention to prevent a further rise in the value of the yen. Sumita, who is attending an annual meeting of the Asian Development Bank, also said he does not think the yen will continue to rise, Jiji reported. He said the Bank of Japan is keeping close contact with other major industrial nations on concerted market intervention, Jiji said. He said coordinated intervention is the only way to stop the dollar from dropping too fast, Jiji said. The dollar fell below 138 yen today. REUTER 

BUNDESBANK INTERVENES IN TOKYO VIA BANK OF JAPAN

The Bundesbank intervened in the Tokyo foreign exchange market to buy a small amount of dollars against marks through the Bank of Japan, dealers said. The West German central bank bought dollars when the dollar was at about 1.7770-80 marks. Dealers' estimates of the intervention amount varied from 100 mln to one billion dlrs. Some dealers said the Bank of Japan appeared to have undertaken small-lot mark-selling intervention on its own account. REUTER 

MIYAZAWA SAYS POLICY COORDINATION KEY TO CURRENCY

Japanese Finance Minister Kiichi Miyazawa told a press conference the basic solution to currency instability among major nations is economic policy coordination. He said that is a time-consuming process as coordination does not always proceed in a way policy makers envisage. "That is democracy," he said. Upon that foundation, Miyazawa said, there must be coordinated intervention. Major nations have sufficient funds to continue concerted intervention, he added. "Without doubt this set-up of coordinated intervention will continue to operate," Miyazawa said. Miyazawa said Prime Minister Yasuhiro Nakasone and U.S. President Ronald Reagan are likely to reaffirm the Louvre and Washington Group of Seven (G-7) agreements on currency stability when they meet later this week. Asked whether the dollar is declining against all major currencies, not only the yen, Miyazawa declined to make any comments. He reiterated that many major nations have undertaken coordinated intervention in recent weeks to prop up the dollar, including countries who are not members of the G-7. REUTER 

CSR PLANS TAKEOVER BID FOR MONIER

CSR Ltd <CSRA.S> said it plans to offer 3.50 dlrs a share cum-bonus for all the issued capital of building products group Monier Ltd <MNRA.S>. The offer values Monier's current issued capital of 156.28 mln shares at 547 mln dlrs and compares with the latest share market price of 2.80 dlrs, equal to last Friday's close. Monier recently said it proposes to make a one-for-two bonus issue before June 30. CSR will shortly announce further details of the offer including a CSR share alternative, it said in a statement. CSR said it currently holds 323,000 Monier shares or only 0.21 pct of the company's issued capital. Redland Plc <RDLD.L>, the holder of 49.87 pct of Monier, has agreed with CSR that Redland will not accept the offer for its stake initially, CSR said. Instead, CSR has granted Redland two alternative options, the first giving Redland the right to accept the CSR offer at the same price within six months of the closing date of the bid, the company said. The second grants Redland the option to increase its Monier holding to 50.1 pct in the same period. The second option is exercisable by Redland at 3.50 dlrs a share, CSR said. Both option deals are subject to the approval of Monier shareholders except CSR and Redland. As previously reported, Redland and Monier had been discussing a possible Redland bid for Monier but the talks broke off two weeks ago. CSR said Redland supports the CSR offer as a means of establishing a fruitful joint venture in building materials in which they both have interests. At the end of the offer, they will discuss how these interests may be developed. Redland has indicated that it would be prepared to consider at a later stage an increase in CSR's Monier stake to enable it to become a CSR subsidiary, assuming Redland exercises the second option, CSR said. It said the offer is generous because it will give Monier shareholders a price equivalent to 16.8 times after-tax earnings in 1985/86 ended June 30, a 25 pct premium over Friday's market price and a 125 pct premium over last reported net tangible asset backing per share of 1.57 dlrs. The offer is beneficial for both CSR and Monier shareholders, CSR's chief executive officer Bryan Kelman said. "The acquisition will broaden CSR interests in building materials by the addition of complementary domestic and overseas businesses in concrete and clay tiles, metal roofing materials and concrete blocks and piping," Kelman said in the statement. "Importantly, the acquisition will provide CSR with new growth opportunities in building materials both in Australia and overseas," he added. Monier, which earned a net 32.49 mln dlrs in 1985/86, has operations in a number of countries, including the U.S., Japan, Britain and New Zealand, as well as Australia. REUTER 

USSR ATTENDS ADB MEET, UNCERTAIN ON MEMBERSHIP

The Soviet Union is attending an Asian Development Bank (ADB) annual general meeting for the first time, but has not decided whether to apply for membership, a senior Soviet State Bank official said. "No specific plans exist for applying for membership," Yurij Ponomarev, international managing director of the State Bank, told Reuters. "It's too early to draw up any plans." The USSR is attending the 20th meeting as an observer. "The sole purpose is to observe and collect information first hand," Ponomarev said. He said the Soviet Union was responding to a long-standing ADB invitation to attend the meetings. "This is one of the fastest growing regions in the world," the State Bank official said. "It is in our interest to have good contacts." But those strengthened contacts will not be made at the expense of the Soviet Union's other relationships, he said. Delegates here said the USSR move was connected to recent efforts to develop closer ties with Asia. The policy was announced last year by Soviet leader Mikhail Gorbachev in a speech at Vladivostok. Moscow's decision to attend the meetings follows its application last year for membership of the General Agreement on Tariffs and Trade (GATT). Delegates said the USSR faces lacklustre growth and is searching for ways to boost its economy. Although the ADB said political ideology is not a critiera for membership, several delegates said politics would play a large role in any decision to allow Moscow to join. Moscow's application would have to be approved by two-thirds of the board of governors representing three-quarters of the total voting power of member countries. The basic votes of the 47 members are all equal and total one-fifth of all votes. The remainder are proportional to the number of shares held by each member. Japan is the largest shareholder, at 15.1 pct, followed by the U.S. With 14.9 pct and China with 7.2 pct. The U.S. Has more than 12 pct of the total votes, insufficient to block a Moscow membership bid. Japanese officials said Tokyo has not decided its position regarding the possibility of Soviet membership and said they noted the Soviets had not yet made any move to join. REUTER 

RAINFALL EASES DROUGHT IN NORTH CHINA

Spring rain in the last few days has helped ease a serious drought in most of north China, the New China News Agency said. It said rain fell in Peking, Shandong, Hebei, Henan, Shanxi, Shaanxi, Qinghai, Sichuan and parts of Inner Mongolia. It said the drought in Shanxi, north Hebei, north Shaanxi and Peking has basically ended. But snowfalls of 10 mm have affected spring sowing in Liaoning, struck by abnormally cold and warm weather since January, including rainfall 10 times more than normal in some places, it said, but gave no more details. REUTER 

U.S. MAY TELL JAPAN SANCTIONS CAN END - NY TIMES

President Reagan is expected to tell Prime Minister Yasuhiro Nakasone this week that the U.S. May be able to lift trade sanctions against Japan by the end of June, the New York Times said. The newspaper, quoting administration officials, said that under such a scenario the President would announce just before the June 8-10 economic summit meeting in Venice that he hoped to lift the restrictions on electronics imports by the end of the month. Japan, for its part, would have to show that it had stopped underpricing semiconductors and had widened access in Japan for U.S. Chip producers. The U.S. Administration imposed 100 pct tariffs on 300 mln dlrs worth of Japanese color television sets, motorised tools and personal computers on April 17. Japanese officials have said Nakasone's main demand when he arrives for talks with Reagan on Wednesday would be the immediate lifting of the tariffs. But with Congress planning further trade reprisals against Japanese trade policies, the end-of-June timeframe is seen as the best Reagan can offer, the Times said. It said some verbal formulation was expected to be found in a communique that would allow Nakasone to claim at least a modest victory. REUTER 

PHILIPPINES TO GET 300 MLN DLR JAPANESE LOAN

The Philippines has received a 300 mln dlr loan from the Japanese Export-Import Bank, Philippine Finance Minister Jaime Ongpin told Reuters. Ongpin said the loan, carrying interest of 5.5 pct a year, matches a 300 mln dlr economic recovery loan approved by the World Bank in March. Ongpin said Japanese Finance Minister Kiichi Miyazawa expressed satisfaction at the recent rescheduling of the Philippines' 10.3 billion dlr foreign debt during a meeting here yesterday. The 14th yen aid package from Japan's Overseas Economic Cooperation Fund was also discussed. Ongpin said the Japan is expected to respond favourably to a Philippine request to raise the aid level to between 75 and 80 billion yen. The aid package, originally scheduled for Japan's 1986/87 fiscal year ended March, was delayed because of the Philippines' change of government last year. "The Japanese have indicated we may not get as much as we are asking for in one big jump from the 13th yen package of 49 billion yen," he said. "But they are likely to bring it up to that level for the 15th package." Ongpin said Manila had 14 projects in the pipeline for the 14th yen package. "We are trying get the 15th package mainly in the form of untied commodity loans," he said. Discussion on a Philippine request for 500 mln dlrs in soft loans to finance a land reform program, for which Japan is expected to supply most of the financing, had been put off until next month because of delays in preparatory work. Ongpin said he will make a strong pitch for the land reform program in his speech on Tuesday at the 20th annual meeting of the Asian Development Bank (ADB) here. Ongpin said the Philippines is very happy about the ADB's support after President Corazon Aquino took over from deposed leader Ferdinand Marcos. "But I would like to see them push more aggressively in the field of lending to the private sector," he said. The Philippines was the bank's second-biggest borrower after Pakistan in 1986, with loans totalling 316 mln dlrs. Ongpin said he expects ADB lending to the Philippines in 1987 to reach the same level. "They have told us they can lend us two billion dlrs if we want. But we have to come up with the projects," he said. REUTER 

U.S. TREASURY SECRETARY CANCELS TRIP TO AUSTRALIA

U.S. Treasury Secretary James Baker has cancelled a trip to Australia because of pressing business at home, including the visit this week by Japanese Prime Minister Yasuhiro Nakasone, a Treasury spokesman said. The spokesman, who asked not to be identified, said, "I would not draw any conclusion from the cancellation ... I would just say it's the press of business." He said Nakasone's visit was "part of the press of business" but denied the cancellation was linked to the current turmoil in the financial markets. REUTER 

STRONG INDONESIAN EARTHQUAKE LEADS TO FLOOD FEARS

Fresh tremors hit the northern area of the Indonesian island of Sumatra after an earthquake measuring 6.6 on the Richter scale yesterday and local officials told Reuters they fear flooding after a dam was cracked. Contacted by telephone, they said the area around the town of Tarutung, south of the city of Medan and about 560 km west of Singapore, was shaken by more tremors this morning. The dam on the Sigeon river is leaking and there is a possibility of flooding if it rains in the next few days before repairs can be made, they said. REUTER 

EGYPT SEEKS ARAB FUNDS TO BUY ITS MILITARY DEBTS

Egypt is trying to persuade Arab states and banks to buy its military debts to the United States and other Western countries so it can repay them on better terms, an Egyptian official said. "We want the Arabs to buy the debt and reschedule it at a more reasonable interest rate of up to seven pct," the official, who asked not to be named, told Reuters. Egypt owes the U.S. 4.5 billion dlrs in military debt and has failed to persuade Washington to reduce interest rates on it averaging about 14 pct. Eqypt also owes France an undisclosed amount, estimated by Arab diplomats at over two billion dlrs, and has not serviced the debt for over a year. Other military debts are owed to Spain, West Germany and Britain. The official said negotiations on the possibility of buying the debt have started, with approaches made to Kuwait and Saudi Arabia, but no firm decisions have been reached. The official also said the International Monetary Fund (IMF) and Egypt have agreed on certain economic reforms in return for emergency funds. An accord with the IMF would open the way for Cairo to reschedule its 40 billion dlr debt. The official said the IMF agreement requires Egypt to raise energy prices to international levels, unify its multi-tiered foreign exchange system and raise interest rates. "Egypt will seek loans from various countries immediately after the agreement with the IMF is signed," he said. "If an Arab country buys part of the military debt or gives us guarantees, it will encourage banks to step in," he added. REUTER 

FIRE DAMAGES PAKISTAN SUGAR STOCK

A fire damaged a large stock of imported sugar stored in a customs warehouse at Karachi on Saturday night, customs officials said. They said the warehouse contained about 15,000 tonnes of sugar in 150,000 bags but they did not know how much had been destroyed or damaged. They said the cause of the fire was unknown. REUTER 

MALAYSIA MAY CUT BASE LENDING RATE IN JUNE

Malaysia may cut its base lending rate by 0.75 to one percentage point from a current 8.5 pct in June to stimulate economic growth, Finance Minister Daim Zainuddin said. The last cut, of 0.5 pct, was effected by banks and finance companies on April 1 following a Central Bank directive. The lending rate has been declining in recent months because the Central Bank has injected more funds into the economy, Daim told an assembly of the dominant Malay-based United Malays National Organisation party. Daim, who is also the party's Treasurer General, said Malaysia's gross domestic product growth in 1987 is likely to exceed the one pct forecast in his 1987 budget presented last year. He gave no details of the expected rise. GDP growth in 1986 was 0.5 pct. REUTER 

TAIWAN UNEMPLOYMENT FALLS IN MARCH

Taiwan's unemployment rate fell to 2.03 pct of the labour force in March from 2.37 pct in February and 2.79 pct in March 1986, the government statistics department said. A department official said the decline was due to rising employment in the manufacturing sector, including textiles and footwear. The unemployed totalled 163,000 in March against 193,000 in February and 216,000 in March 1986. The labour force fell to 8.03 mln in March from 8.14 mln in February and 7.74 mln in March 1986, it said. REUTER 

JAPANESE FIRMS TO SELL AUSTRALIAN GOLD COINS

Three Japanese trading companies and one coin retailer will start selling Australia's Nugget gold coins in Japan from May 12 after actively buying at the first international trading of the coins last Thursday, officials involved in the sale said. They estimated Japanese companies bought 30 pct of 155,000 ounces sold on Thursday. The coins are likely to be sold in Japan at prices similar to the South African krugerrand. REUTER 

ALGERIA SIGNS MAJOR LNG DEAL WITH U.S. GROUP

Algeria's national petroleum agency Sonatrach and the U.S. Panhandle-Trunkline <PEL.N> group signed a 20-year accord for the delivery of liquefied natural gas (LNG), the official APS news agency said. Deliveries will start next winter and rise over three years to reach 4.5 billion cubic metres annually, with 60 pct of the gas carried in Algerian ships to a terminal at Lake Charles, La., APS said. APS said the pricing formula will "preserve the purchasing power of LNG and the interests of Sonatrach, and take into account ... The world (and) the American market." The agreement follows months of negotiations between Panhandle Eastern Petroleum Corp and Sonatrach over the new LNG contract. The talks followed an accord in July 1986 which resolved a long-standing dispute between Sonatrach and Panhandle subsidiary <Trunkline Gas Co> after the U.S. Group unilaterally suspended purchases of Algerian LNG. REUTER 

FOREIGN INVESTORS NET SELLERS OF JAPANESE STOCKS

Foreigners were net sellers of Japanese stocks in the week ended April 17 for the seventh consecutive week, the Tokyo Stock Exchange said. Net sales were 112.15 billion yen against 105.80 billion the previous week. Overseas investors sold shares worth 727.08 billion yen on the Tokyo, Osaka and Nagoya Exchanges, down 5.3 pct from the previous week. They bought stock worth 614.93 billion yen, down 5.2 pct. REUTER 

LATIN AMERICAN, SPANISH BANK GOVERNORS TO MEET

Central bank governors from Spain, Latin America and the Caribbean will meet here this week for two separate conferences on finance and monetary problems, the Central Bank of Barbados said. The 24th session of Central Bank governors of the American continent opens today for two days and the central bank governors of Latin America and Spain will hold a separate conference from April 29-30. Representatives of the Inter-American Development Bank, the International Monetary Fund and other international financial organisations will attend both conferences. REUTER 

VENEZUELA FINANCE MINISTER TO SEEK JAPANESE CREDIT

Finance minister Manuel Azpurua said he will visit Japan in mid-May to seek new credits for planned expansion in Venezuela's state-owned aluminum, steel and petrochemical industries. Azpurua told reporters he will be accompanied by central bank president Hernan Anzola and director of public finance Jorge Marcano. "The idea is to hold meetings with Japanese economic and financial authorities, with the banks which have business and credits in Venezuela and with some of the Japanese companies already active here," Azpurua said. Azpurua said he was optimistic about the trip, in light of Japan's recent announcement it will disburse 30 billion dlrs in new credit to Latin American countries. "I think this trip is being taken at an opportune time and will allow us to reveal the potencial which this country holds for the Japanese economic community," Azpurua said. He would not say how much Venezuela will seek in credits from Japan. REUTER 

JAPAN INDUSTRIAL PRODUCTION RISES IN MARCH

Japan's preliminary industrial production index (base 1980) rose 0.7 pct to a seasonally adjusted 122.8 in March from the previous month, the Ministry of International Trade and Industry said. Production had fallen 0.2 in Feburary from a month earlier. The preliminary, unadjusted March index fell 0.2 pct from a year earlier after remaining flat in Feburary. The adjusted March producers' shipment index (same base) fell 0.6 to 117.3 from February. The unadjusted index rose 0.3 pct from a year earlier. The adjusted March index of producers' inventories of finished goods (same base) rose 0.7 pct to 105.4 from Feburary. The unadjusted index fell 1.1 pct from a year earlier. REUTER 

BANK OF JAPAN INTERVENES IN TOKYO

The Bank of Japan intervened in the market, buying a moderate amount of dollars around 137.80-85 yen, dealers said. Some dealers noted talk that the Bundesbank intervened here directly buying dollars against marks, after reports that it intervened through the Bank of Japan in the morning. The dollar moved up on short-covering aided by the central bank intervention, they said. REUTER 

BALDRIGE SAYS FURTHER DOLLAR FALL NOT PRODUCTIVE

The U.S. Secretary of Commerce Malcolm Baldrige said a further decline of the dollar would not be productive. He told reporters here that Treasury Secretary James Baker "feels, and I feel the same way, that a further dollar fall would be counterproductive." Baldrige also said governments cannot determine long-term currency exchange rates and that currencies would eventually reflect underlying economic fundamentals. The U.S. Commerce Secretary is in Hong Kong after stops in Peking and Seoul on an Asian trade tour. REUTER 

C. ITOH TO BUY CRAY SUPERCOMPUTER

C. Itoh and Co Ltd <CITT.T> said in a statement it has agreed in principle to buy a Cray Research Inc <CYR> X-MP supercomputer worth 8.3 mln dlrs. The computer will be paid for and used by the Century Research Center (CRC), a research body specialising in civil engineering, in which C. Itoh has a 36.2 pct stake, a company spokesman said. The final contract will be signed on May 15 and delivery is scheduled for December this year. The U.S. Administration has been urging Japan to buy more U.S. Supercomputers to help relieve trade friction and reduce Japan's trade surplus with the U.S. The supercomputer will the eighth such machine sold to a Japanese concern, the spokesman said. He said Cray has about 70 pct of the world supercomputer market but under 10 pct in Japan. Fujitsu Ltd dominates the Japanese market for such machines, industry sources said. Nippon Telegraph and Telephone Corp, which bought a Cray supercomputer in 1984 when it was publicly-owned, is the only government-owned entity to have done so. Trade Minister Hajime Tamura was quoted as saying last week that the government is considering buying U.S. Supercomputers. REUTER 

CHINA CALLS FOR CAUTION ON NEW CREDIT INSTRUMENTS

A Chinese newspaper said the country must be careful about introducing credit instruments to avoid the risk of an uncontrolled credit expansion. It said: "The introduction of credit, while undoubtedly facilitating business, could result in unhealthy expansion of the volume of money in circulation..." adding that the ordinary consumer must learn how to use credit wisely. The paper said in an editorial that "a sound approach and one that will not entail the risks of introducing uncontrolled expansion of credit into the monetary system is the present one of issuing renminbi in larger denomications." Today, the first two of nine new bank notes, including notes for 50- and 100-yuan were introduced. The largest denomination had been 10 yuan. The paper said the new notes are necessary because of the rapid development of the economy, which has made it inconvenient to carry large amounts of cash in small denominations. Economists have been urging that personal cheques, buying on instalment, letters of credit and credit cards be introduced more widely, it added. REUTER 

INDIAN BORROWING FROM ADB SEEN RISING

India, which received its first loans from the Asian Development Bank (ADB) in 1986, expects to increase borrowing this year, an Indian official said. The official, a member of the Indian delegation at the ADB's annual meeting here, told Reuters the bank is likely to approve three loans totalling between 350 and 400 mln dlrs in 1987, up from the 250 mln in two loans in 1986. The official said negotiations on a 100 mln dlr loan for the modernisation of the Haldia and Madras ports had been completed and only need approval by the bank's board. The official said an ADB team is now in India for a survey of the second project involving imports of railway locomotives. He said the bank was also likely to extend a credit line to the Industrial Development Bank of India. The ADB in 1986 extended a 100 mln dlr line of credit to state-owned Industrial Finance Corp of India. The official said the ADB wants to gradually expand lending to India. "They (the bank) do not want their traditional borrowers from smaller countries in the region to get overwhelmed by (India and China)," he said. China is expected to receive its first ADB loan this year. "We are quite satisfied at having opened this new window in borrowing," the official said. "Our projects are being vetted quickly. We have no complaints." He said the ADB in any case would not be able to match Indian borrowing needs. "In fiscal 1986/87 ending June India will borrow two billion dlrs from the World Bank alone," he said. "That represents the total ADB lending to all its borrowers in 1986." The official said total Indian development assistance from multilateral and bilateral creditors is likely to total four billion dlrs in 1986/87. Asked to comment on U.S. Criticism of the quality of ADB lending, the official said: "The ADB is a regional bank and ought to have a better understanding of realities in Asia." "You cannot apply World Bank conditionalities everywhere," he said. "The U.S. Cannot impose one yardstick for every country." REUTER 

TAIWAN ACCUSES CHINA OF UNDERMINING ITS ADB STATUS

Taiwan accused China of trying to downgrade its international status by forcing the Asian Development Bank (ADB) to change its name in the organisation. Taiwan is boycotting the annual meeting of the ADB, which opened in Tokyo today, in protest at the Bank's decision to change its name to "Taipei, China" from "Republic of China" after admitting China as a member. "It is a plot by China to downgrade Taiwan's status in the organisation," Foreign Ministry spokesman Cheyne Chiu told a news conference. REUTER 

U.S. CONSIDERING OIL INDUSTRY TAX INCENTIVES

The Reagan Administration is considering tax incentives to boost oil output and restore 100,000 jobs, U.S. Energy Secretary John Herrington said. A tax credit for new exploration would be part of a package to bring 1,000 idle drilling rigs back into operation and raise domestic production by one mln barrels a day, he said. The tax status of exploration might also be changed, Herrington told reporters at the World Petroleum Congress. He said the oil industry was experiencing difficult times internationally and had been devastated in the United States. Consumer demand and a significant decline in domestic production has resulted in a rise in oil imports of one mln barrels a day in over the last 16 months, Herrington said. "Steps must be taken...To reverse the downturn in our domestic energy industry and to safeguard and increase our energy security," he said. The administration is committed to improving marketplace conditions and incentives to spur exploration and development. "This commitment includes rejecting quick fix solutions, like an oil import fee, which are bad for the United States and bad for the world," he added. REUTER 

BANGLADESH PAYMENTS DEFICIT NARROWS IN NOVEMBER

Bangladesh's overall balance of payments deficit narrowed to 3.03 mln U.S. Dlrs in November from 8.3 mln in October and 22.63 mln in November 1985, Central Bank officials said. The current account deficit increased to 28.68 mln dlrs in November against 10.69 mln in October and 55.19 mln in November 1985. The trade deficit rose to 88 mln dlrs from 36.36 mln in October and 86.2 mln in November 1985. REUTER 

WORLD MARCH ZINC SMELTER STOCKS FALL 31,800 TONNES

Total world closing stocks of primary zinc at smelters, excluding Eastern Bloc countries, fell 31,800 tonnes to 432,800 tonnes in March from a corrected February figure of 464,600 tonnes, provisional European Zinc Institute figures show. This compares with 403,300 tonnes in March last year. Total European stocks of primary zinc, excluding Yugoslavia, fell 10,100 tonnes to 149,900 tonnes in March from 160,000 tonnes in February, against 131,300 tonnes in March last year. REUTER 

VENEZUELA PREPARING NEW WAGE, INFLATION PLAN

President Jaime Lusinchi is preparing an economic package in response to demands from organised labour in Venezuela for a general wage increase and controls on inflation, the state news agency Venpres reported. Venpres said the plan includes pay hikes and a "strategy against indiscriminate increases in prices or speculation." The Venezuelan Workers Confederation (CTV), the country's largest labour group, last week proposed a general wage increase of between 10 and 30 pct and a six-month freeze on consumer prices and on layoffs. The CTV asked Lusinchi to respond to its proposal before the May 1 Workers' Day holiday. Labour's demands comes as private economists forecast inflation will reach between 25 and 30 pct in 1987 as the country begins to feel the effects of the December devaluation of the bolivar by 100 pct against the dollar. Inflation increased 4.2 pct in the first two months of 1987, almost double the rate in the same 1986 period. Venpres said Lusinchi is prepared to approve some price increases, but intends to protect the public against speculation and indiscriminate hikes in the cost of living. REUTER 

MIYAZAWA DOES NOT THINK DOLLAR IN FREEFALL

Japanese Finance Minister Kiichi Miyazawa told a parliamentary Upper House budget committee that he does not think the dollar is in a freefall. He said concerted intervention is only a supplementary measure to moderate volatility in exchange rates and repeated that policy coordination among major industrial nations is necessary. "We cannot expect currency stability only through coordinated market intervention," he said. Miyazawa also told the committee the U.S. Has not called on Japan to cut its 2.5 pct discount rate. Miyazawa said the government is not considering investing in U.S. Government bonds to help stabilize exchange rates. This matter has to be dealt with carefully because it involves the public's money and exchange rates are moving widely, he added. The ministry will consider where to invest its funds when exchange rates become stable, he said. Asked if Japan is considering a request to the U.S. For it to raise its discount rate to stabilize exchange rates, Miyazawa said the U.S. Has not been able to take action now because it has to maintain its economic growth. REUTER 

SOAKING RAINS BOOST DRY AUSTRALIAN SUGAR CANE AREA

Good soaking rain is boosting the sugar cane crop in the key Mackay region of Queensland following a prolonged dry spell relieved only by intermittent falls, an Australian Sugar Producers Association spokesman told Reuters. The rains began late last week, developed into heavy downpours over the weekend and are continuing today, he said from Brisbane. The Mackay and Burdekin regions, which together grow about half the Australian cane crop, have been the Queensland cane areas hardest hit by unseasonal dry weather since December. The spokesman said the rain missed the Burdekin area, just to the north of the Mackay region on the central Queensland coastal fringe, although recent light showers have freshened the crop there. Owing to the dry spell in the Mackay and Burdekin areas, the overall 1987 Australian cane crop is likely to be below the 25.4 mln tonnes crushed in 1986 for a 94 net titre raws outturn of 3.37 mln tonnes, he said. But any decline will not be as great as seemed likely a couple of months ago when it appeared the Mackay-Burdekin crops were going to suffer badly, he said. Preliminary crop estimates are expected to be available early next month, the spokesman said. The crush in the Mackay-Burdekin is likely to start later this year, in late June or early July against mid-June last year, to allow the cane to grow and sweeten further, he said. The crush normally runs to around the end of December. Elsewhere in the sugar belt, the cane is doing well, with some mill areas expecting record crops, he said. Industry records show variations in the crop are not always mirrored in raws output. In 1985, 24.4 mln tonnes of sweeter cane than in 1986 produced 3.38 mln tonnes of raws. REUTER 

BUNDESBANK CALL TO BONN ON OVER-SPENDING RISKS

The Bundesbank urged the West German government not to relax efforts to rein in spending when taxes are cut in a 1990 fiscal reform package, saying that higher expenditure could lead to a dangerous rise in interest rates. The Bundesbank's 1986 annual report said the government's choice of measures to compensate for any cut in tax income was a key political task. "There will also be consequences for the state's attitude on spending," it said. It added that, while tax cuts should have a stimulatory effect on the economy, the government should not expect any significant increase in tax income in the short-term. The reform will cut taxes by a gross 44 billion marks, of which 19 billion marks will be financed through as yet unspecified measures. The Bundesbank noted that reducing tax preferences and financial grants as well as raising some indirect taxes were being considered. "As experience shows that a tax cut is not self-financing ... The question remains of how the rest of the tax cuts will be financed," the Bundesbank said. The Bundesbank noted that in 1986, spending had increased by more than the three pct annual average rise for 1982 to 1986. If this three pct limit were exceeded over a long period, there would be a danger that increased new borrowing would be necessary to finance deficits. It added that interest rates in West Germany were now low, partly because of a high influx of foreign funds. But the situation would become more difficult if the government's credit requirements increased massively. "The anticipated stimulatory effects on the economy from the tax cuts could be thrown into jeopardy by higher interest rates," it said. REUTER 

GERMAN TRADE SURPLUS SHOULD NARROW, BUNDESBANK SAYS

Germany's current account and trade surpluses should narrow sharply in 1987 but they will take a long time to get back to normal levels, the Bundesbank said in its 1986 yearly report. The procedure would be slow as an abrupt turnaround in external factors such as oil prices and exchange rates was not expected. It did not specify what levels it considered normal. West Germany posted a record trade surplus of 124 billion marks in 1986, after 86 billion in 1985 and its current account surplus widened to 76.50 billion from 44.6 billion. Signs imports would continue to rise, a factor already noted at the start of 1986, while exports rose only slightly, would lead to a smaller trade surplus, the Bundesbank said. In real terms, West German imports rose 5.7 pct in 1986 while exports only increased by 0.8 pct. Germany's current account surplus widened to a provisional 6.6 billion in February from 4.8 billion in January but was down from 6.85 billion posted in February 1986. The trade surplus in February widened to a provisional 10.4 billion marks from 7.2 billion in January and was still above the 6.84 billion reached in the same month the year before. REUTER 

BANK OF JAPAN DEPUTY SAYS NO NEW MEASURES PLANNED

The Bank of Japan's deputy governor Yasushi Mieno told a parliamentary Upper House budget committee that the central bank has no monetary measures other than intervention planned to stabilize currency rates. He also said the Bank of Japan is not considering a cut in its 2.5 pct discount rate. Mieno said the central bank is determined to restore currency stability through intervention by the major industrial nations as recent exchange rate volatility stems from speculation. Economic fundamentals have not changed, he added. REUTER 

BALDRIGE SAYS U.S. WANTS JAPAN TRADE PROPOSALS

U.S. Secretary of Commerce Malcolm Baldrige said he hopes Japanese Prime Minister Yasuhiro Nakasone will make specific proposals to ease U.S.-Japan trade friction at a meeting with President Reagan this week. He also told reporters he hopes the U.S. Will soon be able to lift sanctions imposed against Japan for alleged violations of an accord on semiconductors. "We have been very specific about our trade problems," he told a news conference during a stopover in Hong Kong. "I hope (Nakasone) brings some specific answers to the trade problems." "We want to lift the sanctions as soon as possible," Baldrige said. He said that once the U.S. Determines that Japan is selling semiconductors at cost it will be able to lift the 300 mln U.S. Dlrs of duties it imposed on Japanese electronics goods on April 17. "We have not seen that yet," he said, adding that it would take about one month to determine whether the alleged violations of a bilateral semiconductor pact had been discontinued. Baldrige did not say what specific solutions he wanted for U.S.-Japan trade problems. But the New York Times today quoted administration sources as saying that the U.S. May be able to lift trade sanctions against Japan by the end of June. Japan would have to show that it had stopped underpricing semiconductors and had widened access in Japan top U.S. Chip producers. Baldrige also said that despite the current trade rift, the U.S. And Japan have long had friendly ties that neither side wants to change. "We have a very special relationship with Japan. Japan is a friend and our ally," Baldrige said. "Neither one of us wants that to change." He also repeated statements that he did not foresee a trade war with Japan but that the U.S. Had no choice but to impose the trade sanctions. REUTER 

SIGN OF SLOWING IN GERMAN MONEY GROWTH -BUNDESBANK

Central bank money stock was growing at about seven pct in the first quarter of 1987, down from 9-1/2 pct in the second half of 1986, so there are signs that the pace of growth is slowing even though it is still above target, the Bundesbank said in its 1986 annual report. The Bundesbank set a target range of three to six pct growth from fourth quarter 1986 to fourth quarter 1987 for central bank money stock. In the previous year it grew 7.7 pct, outside the 3-1/2 to 5-1/2 pct target range. The Bundesbank noted that monetary policy in 1986 was limited by a series of external factors. These included the revaluation of the mark, growing foreign payments surpluses of non-banks, and currency inflows. The Bundesbank therefore tolerated the monetary overshoot in 1986, as an attempt to counter monetary expansion with interest rate and liquidity moves would have increased upward pressure on the mark, it said. The lower end of the 1987 target range would be realistic if a large part of funds currently held in a liquid form were invested in long-term bank accounts or bonds, public bonds or foreign securities, the Bundesbank said. But if companies and private households continue to hold their funds in liquid forms, or if there are further currency inflows, growth will be closer to the upper end of the range. "The more the conflict between external constraints and domestic objectives relaxes -- and many things point to this at the time of writing this report -- the more possible it will be to do justice again to the medium-term concept of money supply control," the Bundesbank said. It noted that prices were beginning to tend upwards again at the start of 1987. There would be virtually no easing of other production costs in 1987 to compensate for the rise in unit-wage costs. "Nevertheless, no inflationary trends are likely to set in this year," the Bundesbank said. A link between excessive monetary growth and intensifying price rises can only be observed in the long term, it added. The continuing trend for non-banks to switch into long-term borrowing to take advantage of low interest rates, while for the same reason shunning long-term investments, increases the risks in changing interest rates for banks refinancing themselves with variable-interest deposits, it added. REUTER 

UAE TO RECOGNISE CONTRACTUAL INTEREST RATES

A top United Arab Emirates (UAE) banker said a new law would be introduced soon obliging courts to recognise interest rates contracted between bank and borrower. Sheikh Suroor bin Sultan al-Dhahiri, Chairman of Abu Dhabi Commercial Bank, told reporters after the shareholders' meeting last night the decree would make interest in debt cases payable at the contracted rate up to the day a case is filed in court. Subsequently, interest would be charged at a maximum nine pct for personal and 12 pct for corporate loans, he said. The law, if passed, would mark a breakthrough in solving what UAE bankers say is one of their biggest problems, collecting bad debts in court. Under current UAE law in all emirates, except Dubai, courts recognise only simple interest at a maximum nine and 12 pct even if a loan was contracted at higher compounded rates. The Central Bank said last year that roughly a quarter of total loans in the UAE banking system were non-performing. Sheikh Suroor also said a judicial committee set up to consider debt cases would begin functioning within a month. REUTER 

EMS INTERVENTION SAID SOMETIMES COUNTERPRODUCTIVE

Attempts to hold currency rates rigidly within tight ranges through European Monetary System intramarginal intervention can be counterproductive, bringing funds into the stronger currency from the weaker at rates still considered fairly favourable, the Bundesbank said. "The movements thus sparked can actually promote the weaker tendency of a currency, requiring still larger obligatory intervention when rates hit band limits," it said in its 1986 annual report. The other danger was that money supply expansion could be caused in the stronger currency nation without its central bank being involved in the activity. "For this reason, currency levels should be allowed as much room for manoeuvre as possible inside the band limits when a currency is in a phase of weakness," the Bundesbank said. "In addition, speculative positions are made more expensive to hold when interest differentials are increased." In the report, the Bundesbank gave a rare glimpse of the extent of intramarginal and obligatory EMS intervention that has taken place since the foundation of the eight-currency system on March 13, 1979. Obligatory intervention is that required by EMS central banks when a currency reaches its agreed limit against another participating unit. Intramarginal intervention is undertaken on agreement between central banks when speculative pressure moves a currency in an unwanted direction, although it may not yet be near any allowed EMS limits. At the start of this year, central banks were very actively selling marks and supporting weaker currencies, primarily the French franc, as speculative EMS pressure grew. But the announcement by the Bank of France that it was ceasing intramarginal intervention sent the franc straight to its then-permitted floor of 31.8850 marks per 100. Data in the Bundesbank report showed the EMS central banks bought a net total 29.9 billion marks after the April 6, 1986 realignment until the selling petered out on July 7. But this was far outweighed by net purchases between July 8, 1986, and the realignment on January 12 this year totalling 63.0 billion marks - 44.1 billion of which was intramarginal and 18.9 billion was obligatory intervention. The data showed that 17.4 billion marks of the total eventually filtered into the West German monetary system. Since the latest realignment, central banks have bought 16.1 billion marks in intramarginal intervention, the Bundesbank said, without naming the banks involved. Only very high activity after the March 21, 1983 realignment came close to matching moves up to last January. Then, central banks bought a massive 61.6 billion marks in the period up to July 1985, mainly to stabilise the EMS as the dollar surged. This then turned into mark sales of a net 34.0 billion from July 11, 1985 in the run-up to the April 1986 realignment. REUTER 

POEHL TO REMAIN BUNDESBANK CHIEF, MAGAZINE SAYS

Chancellor Helmut Kohl has decided to keep Bundesbank President Karl Otto Poehl in office for a further eight years, the news magazine Der Spiegel said. Government officials were not immediately available to comment on the report, which said that because Poehl is a member of the Social Democratic Party (SPD), Kohl had not taken the decision lightly. Poehl has been Bundesbank chief since January 1, 1980, while Kohl's conservative/liberal coalition has held power since 1982. Der Spiegel said Kohl would have preferred to offer the post to a member of his Christian Democratic Union (CDU). But the magazine noted Poehl enjoyed a good international reputation. Officials have often said Poehl and CDU Finance Minister Gerhard Stoltenberg hold each other in high regard. Poehl's current term expires at the end of this year. Officials have said no date has been set for an announcement on whether his tenure will be extended. Poehl was made an economic adviser to SPD Chancellor Willy Brandt in 1971. A year later he was appointed State Secretary at the Finance Ministry when former SPD Chancellor Helmut Schmidt was Finance Minister. There has recently been press speculation that the Bundesbank presidency may be offered to Poehl's deputy, Helmut Schlesinger, a conservative monetarist. According to these reports, Schlesinger would be replaced two years later by CDU member Hans Tietmeyer, the current Finance Ministry State Secretary. Also under discussion as president was Johann Wilhelm Gaddum, a member of the Bundesbank board and a CDU member who is known to be close to Kohl. REUTER 

COATS VIYELLA MAKES AGREED BID FOR YOUGHAL

Coats Viyella Plc <CPAT.L> and <Youghal Carpets (Holdings) Plc> have agreed to merge on the basis of an offer from Coats, a joint statement said. Coats is offering one Irish penny in cash per Youghal ordinary share. The offer also covers shares arising on conversion of Youghal convertible preference shares. As an alternative, Coats is offering a convertible redeemable note of 10 pence sterling per Youghal ordinary share. The notes being offered will have the right to conversion into Coats Viyella ordinary shares or redemption at 10 pence stg in 10 years time, the statement said. For 1986, Coats Vieylla had pre-tax profits of 182 mln stg on turnover of 1.75 billion stg. Youghal in 1986 had a pre-tax profit of 205,000 Irish pounds on turnover of 44.5 mln Irish pounds. Foir Teoranta, which holds four mln Youghal ordinary shares plus preference shares which are convertible into 27.6 mln ordinary shares, has irrevocably undertaken to accept the offer. The cash terms value Youghal at 538,000 Irish pounds. REUTER 

SOUTH AFRICAN TRADE SURPLUS FALLS SHARPLY IN MARCH

South Africa's trade surplus fell sharply to 940.8 mln rand in March after rising to 1.62 billion in February, Customs and Excise figures show. In February last year the surplus stood at 752.8 mln rand. Exports fell to 3.24 mln rand in March from 3.36 billion in February while imports rose to 2.30 billion rand from 1.74 billion. This brought total exports for the first quarter of this year to 9.92 billion rand and imports to 6.45 billion rand for a surplus of 3.47 billion versus 2.47 billion rand in the same in 1986 period. REUTER 

FUNARO'S DEPARTURE COULD LEAD TO BRAZIL DEBT DEAL

The resignation of Finance Minister Dilson Funaro is bound to focus attention on whether Brazil will now adopt a more flexible debt stance and move towards an accord with creditors, bankers and political analysts said. With Funaro in charge, Brazil's relations with creditors sank to a low ebb, they said. Bankers told anti-Funaro jokes from Sao Paulo to New York and economic analysts said the personal animosity between the minister and U.S. Bankers was a real obstacle to reaching agreement on rescheduling Brazil's 111 billion dlr debt. Commenting on Funaro, a foreign banker here recently told Reuters, "They (banks) see his removal pretty much as a precondition for getting serious negotiations under way." Funaro angered the banks in February by suspending interest payment on Brazil's 68 billion dlr bank debt. There was also a question of personal style. Bankers disliked Funaro's aloof demeanor and in private heatedly accused him of arrogance and inflexibility. However, Funaro did not fall because he upset foreign bankers but rather because his Cruzado Plan price freeze last year was a massive flop, economically and politically. However, it is in the domain of the debt and Brazil's relation with creditors that his departure will have the most closely-watched international repercussion, bankers said. It became part of Funaro's trademark that he would have no truck with the International Monetary Fund (IMF), thus effectively blocking a debt agreement. He argued that if Brazil sought the help of the IMF, the Fund would lay down conditions which would lead to recession. Funaro and others who supported this position had memories of the IMF austerity program in Brazil in the early 1980s, a period when hungry crowds stormed supermarkets. The foreign banker in Sao Paulo said, "I think Brazil could have an agreement with the IMF which would allow (it) acceptable growth." Argentina, working with the IMF, won excellent terms for a major portion of its 50 billion dlr debt earlier this month. Given the IMF role in the Argentine accord, a U.S. Diplomat here said the agreement had been extremely damaging for Funaro because it showed that cooperation with the IMF bore fruit. Mexico has also taken the IMF path and, earlier than Argentina, clinched a favourable pioneering agreement with creditors on its 100 billion dlr debt. Brazil is now the only one of the three biggest Latin American debtors not to have a debt agreement. Some Brazilian opinion, particularly in the business community, is favourable to an IMF accord. A leading newspaper, Jornal do Brazil, carried a report from Washington over the weekend saying it was a myth the IMF brought recession and the best moment for an accord was now. As it happens, a routine IMF mission is visiting Brasilia. The government has repeatedly dismissed speculation it is considering any major change in debt policy and political analysts caution against expecting changes on the IMF issue. The government of President Jose Sarney has gained a reputation for chronic indecisiveness and some analysts believe the government will turn to the IMF only if it comes to the conclusion there really is no option. But such a policy shift looks more and more likely before too long in the eyes of many analysts. One major political obstacle, Funaro, is no longer in the picture and the economic pressures on Brazil are growing. The sharp drop in the trade surplus, which triggered Brazil's present debt crisis, shows no sign of being reversed. In the first quarter of 1987 Brazil chalked up a surplus of only 526 mln dlrs, just a fraction of the 2.47 billion dlr surplus it had in the same period last year. Brazilian officials concede that time is not on their side in the debt crisis. "Brazil has an interest in resolving this problem as rapidly as possible," Central Bank President Francisco Gros said on Friday. REUTER 

KLOECKNER-WERKE SHARES SUSPENDED IN FRANKFURT

Shares in Kloeckner-Werke AG <KLKG.F> were suspended from stock exchange trading pending an announcement expected by the company today or tomorrow, a bourse spokesman said, without giving further details. Kloeckner shares closed Friday at 67.20 marks. They had come under pressure in recent sessions on reports the company may be exposed to as much as 300 mln marks in debts as a result of the bankruptcy of steelmaker Eisenwerk-Gesellschaft Maximilanshuette mbH (Maxhuette). Kloeckner owns just over 49 pct of the share capital in the Bavarian-based Maxhuette. REUTER 

WORLD OIL DEMAND LIKELY TO INCREASE, SUBROTO SAYS

Oil prices have stabilized in world markets and demand is likely to increase in the second half of the year, Indonesia's Mines and Energy Minister Subroto said. He told a meeting of oil industry executives that oil prices had stabilized at 18 dlrs a barrel -- the average fixed price OPEC put into effect in February -- and supply and demand have been in equilibrium since March. If OPEC does not increase overall output in the second half of the year, prices will tend to increase, because non-OPEC producers have not been able to produce more oil at current prices, he said. But he declined to predict, when asked after the meeting, whether OPEC would raise its production ceiling of 15.8 mln barrels at its next meeting in June. He said in his speech that world oil production over the last two months was estimated at 45.6 mln barrels a day, or two mln barrels a day less than world oil demand. Oil production by industrialized countries, particularly the U.S. And Canada, is expected to decrease this year, but some of that slack will be taken up by increased production in Cameroon, India and other developing countries, he said. This year is a battle between OPEC and non-OPEC oil producers and consumers in the industrialized world for the upper hand in world oil markets, Subroto said in an earlier speech to management trainees at Pertamina Oil Company. "If OPEC emerges the winner, than it can gradually resume its former role in world oil markets," he said. "But don't expect oil prices to return to the level of 28-30 dlrs a barrel, at least not in the next three or four years," Subroto said. REUTER 

TOSHIBA TO SET UP MICROCHIP PARTNERSHIP IN U.S.

Toshiba Corp <TSBA.T> will set up a five-year technology partnership with California-based SDA Systems Inc with the intention of designing and producing computer microchips, a company spokesman said. Toshiba's investment in the project is likely to total less than 10 mln dlrs over the five years, he said. REUTER 

NAKASONE HOPES U.S. VISIT WILL HELP END TRADE ROW

Prime Minister Yasuhiro Nakasone said he hopes his visit to Washington later this week will help resolve Japan's severe trade problems with the United States. Nakasone leaves on his sixth official visit to the United States on Wednesday, only weeks after President Reagan imposed punitive tariffs of 300 mln dlrs a year on Japanese electronic goods for alleged violation of a semiconductor pact. Japan also faces more possible sanctions amid calls in the U.S. Congress for further action to help improve trade imbalances. Japan's trade surplus with the United States reached a record 58.6 billion dlrs in 1986. Nakasone told reporters that special envoy Shintaro Abe, who has just returned from Washington, told him protectionist sentiment in the United States is severe. "We are well aware of a movement in the United States to enact legislation," Nakasone said. He said friends at home and abroad have advised him not to go to the United States but it is now more important than ever that he express Japan's view and carefully listens to the views of the United States. "My visit to the United States at this time will be the most important visit of all," Nakasone said. While in Washington, he said he hopes to have candid and frank discussions with President Reagan and Congressionl leaders. He said he plans to discuss exchange rate stability, economic cooperation to developing countries and U.S.-Soviet disarmament and arms control. On the recently imposed trade sactions, Nakasone said he would present evidence that Japanese semiconductor imports are increasing and that Japan is monitoring exports to third countries. "We have full confidence we can present clear evidence," he said. "(Therefore), we will request that the sanctions be lifted at the earliest possible time." On the trade imbalance, Nakasone said Japan has already taken action. The volume of exports to the United States has been cut, while U.S. Imports have increased. But Japanese imports from Europe and other Asian nations have recently surged, those from the United States remain weak, indicating a lack of U.S. Competitiveness, he said. Nakasone said Japan will continue to strive to improve the trade imbalance but the United States will have to become more competitive and improve its huge budget deficit. He said he will also discuss the forthcoming Venice summit of the seven major industrial nations in June. "We can further enhance the efforts for improving peace, disarmament and the world economies as a whole through solidarity," Nakasone said. REUTER 

NORTHERN VIETNAMESE RICE CROP THREATENED

Insects are threatening to destroy 367,000 hectares or about one-third of the spring rice crop in northern Vietnam, Hanoi radio reported. Drought has hit another 189,000 hectares, with 40,000 hectares very badly affected, it said. Insecticides are in short supply so only the most endangered rice fields should be sprayed, the radio added. The affected areas -- the Red River delta and other coastal areas in northern Vietnam -- produce between 30 to 40 per cent of the country's rice. The radio report, monitored in Bangkok on April 20 but only translated here over the weekend, said the threatened damage was spread over twice as large an area as last year. Vietnam has not been able to grow enough food for its expanding population, with the Soviet Union buying rice in Thailand and Burma in recent years for supply to Vietnam. Vietnam produced 18.2 million tonnes of food, most of it rice, last year and hopes to boost that to 23-24 million tonnes by 1990. REUTER 

BANK OF JAPAN TO SELL 600 BILLION YEN IN BILLS

The Bank of Japan will sell 600 billion yen in 60-day financing bills tomorrow through 36-day repurchase agreements maturing June 3 to roll over a previously issued 400 billion yen of such bills maturing tomorrow, money traders said. The yield on the bills for sale to banks and securities houses by money houses will be 3.8498 pct compared with the one-month commercial bill discount rate today of 3.8125 pct and the one-month certificate of deposit rate of 4.18/07 pct. The traders estimate the surplus tomorrow at about 700 billion yen. The remaining 300 billion yen is mainly due to increased cash holdings by the banking system because of central bank dollar purchases. The operation will put the outstanding supply of such bills to 3,500 billion yen. REUTER 

FURTHER TERM FOR POEHL LIKELY, BONN SOURCES SAY

Karl Otto Poehl is likely to be re-elected President of the Bundesbank when his current term in office expires at the end of this year, government sources said. They were commenting on a report in Der Spiegel news magazine which said Chancellor Helmut Kohl had decided to keep Poehl in office for another eight years. Government spokesman Friedhelm Ost had no comment on the report, other than to say that the subject of the Bundesbank presidency was not currently under discussion. Der Spiegel said that, because Poehl is a member of the Social Democratic Party (SPD), Kohl had not taken the decision lightly. Poehl has been Bundesbank chief since January 1, 1980, while Kohl's conservative/liberal coalition has held power since 1982. Der Spiegel said Kohl would have preferred to offer the post to a member of his Christian Democratic Union (CDU). REUTER 

TAIWAN ISSUES MORE CDS TO CURB MONEY SUPPLY GROWTH

The central bank issued 7.53 billion Taiwan dlrs worth of certificates of deposits (CDs), bringing issues so far this year to 174.48 billion against 40 billion a year ago, a bank spokesman said. The new CDs, with maturities of six months, one and two years, carry interest ranging from 4.03 to 5.12 pct. The issues are designed to help curb the growth of M-1b money supply. REUTER 

JAPAN HOLDS OUT PROMISE OF FUNDS FOR ASIAN BANK

Japanese Finance Minister Kiichi Miyazawa opened the 20th annual meeting of the Asian Development Bank by holding out the promise of more Japanese money for the organisation. "We are ... Striving to enhance the flow of capital from Japan to the developing countries," he said. "The Asia-Pacific region is an area of special concern for us in our bilateral and multilateral assistance." He said Tokyo was ready to study setting up a special Japanese fund at the ADB, like the one at the World Bank. The World Bank fund is earmarked for use by developing countries. Developing countries and the United States have criticised Japan for failing to use its trade surplus to help poor countries. Later this week, Prime Minister Yasuhiro Nakasone is expected to tell President Reagan that Japan plans to extend as much as 30 billion dlrs to developing countries over the next three years, Japanese officials said. The exta ADB funding would be part of that amount. "Our cooperation is intended to contibute to ... Alleviating the burden on (developing countries)," said Miyazawa, who is also chairman of the ADB board of governors. "The developing countries today find themselves in a very difficult situation," he said. "With a few notable exceptions, those countries that are highly dependent upon commodity exports face a rough road ahead." While the developing countries can help themselves by striving to become internationally competitive and seeking to attract foreign investment, the ADB also has a role to play, he said. Miyazawa told the meeting the bank must beef up its economic advice program to developing nations and must work vigorously to identify development projects for loans. He also called for more use of loans that were not tied to development projects, but provided more overall help to the borrower. ADB President Masao Fujioka supported Miyazawa's view. "The bank has been fondly described as the family doctor," Fujioka said. "The bank will now have to equip itself to meet a range of services required to attend to varied needs of its developing members." Miyazawa told the meeting Tokyo was ready to allow its Export-Import Bank to co-finance ADB loans. These would not have to be used for the purchase of Japanese equipment. Tokyo was also prepared to let the Asian Development Bank raise more funds in Tokyo and financial markets should it need to do so, he said. REUTER 

NIPPON STEEL NOMINATES NEW PRESIDENT

Nippon Steel Corp <NSTC.T> nominated Hiroshi Saito as president, to replace Yutaka Takeda, subject to shareholders' approval at a meeting on June 26, company officials told a press conference. Takeda will become chairman, and vice president Akira Miki will be vice chairman, they said. Current chairman Eishiro Saito, who is also chairman of the Federation of Economic Organisations (Keidanren), a leading Japanese business organisation, will act as honorary chairman and advisor, they added. Nippon Steel is now undergoing a strict rationalisation program to meet declining demand for steel products. REUTER