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U . K . MONEY MARKET GIVEN FURTHER 68 MLN STG HELP The Bank of England said it provided the market with a further 68 mln stg assistance this afternoon , bringing its total assistance on the day to 143 mln stg . Shortly before , the Bank said it had revised its estimate of the shortage up to 450 mln stg from the earlier forecast of 400 mln . During the afternoon , the bank bought 22 mln stg of band two bank bills at 9 - 13 / 16 pct and two mln stg of local authority bills plus 44 mln stg of bank bills in band four at 9 - 11 / 16 pct . These rates were in all cases unchanged from previous intervention levels .

BANK OF FRANCE TO HOLD MONEY MARKET TENDER TODAY The Bank of France said it has invited offers of first category paper today for a money market intervention tender . Money market operators were divided over whether the Bank of France will use to occasion to cut its intervention rate , which has stood at 7 - 3 / 4 pct since March 9 . Some thought a price cut unlikely while others said there was room for a further 1 / 4 point cut by the bank .

U . S . BUSINESS LOANS FELL 896 MLN zulchzulu Business loans on the books of major U . S . banks , excluding acceptances , fell 896 mln dlrs to 275 . 61 billion in the week ended June 10 , the Federal Reserve Board said . The Fed said that business loans including acceptances fell 546 mln dlrs to 278 . 12 billion dlrs .

U . S . BILL AUCTION RATES AVERAGE 5 . 98 , 6 . 08 PCT The U . S . Treasury said its weekly auction of three - month bills produced an average rate of 5 . 98 pct , with a 6 . 08 pct rate on six - month bills . These rates compared with averages of 5 . 53 pct for the three - and 5 . 63 pct for the six - month bills sold last week . The bond - equivalent yield on three - month bills was 6 . 17 pct . Accepted bids ranges from 5 . 92 to 5 . 99 pct and 60 pct of the bids at the high , or zulchzulu rate , were taken . For six months , the yield was 6 . 38 pct and the bids ranged from 5 . 98 pct to 6 . 10 pct with 48 pct of the bids accepted . The Treasury said it received 25 . 99 billion dlrs of bids for the three - month bills , including 1 . 2 billion dlrs in non - competitive bids from the public . It accepted 6 . 6 billion dlrs of bids , including 2 . 1 billion dlrs from the Federal Reserve and 180 mln dlrs from foreign and international monetary authorities . Some 24 . 7 billion dlrs in bids for six - month bills were received , including 832 mln dlrs in non - zulchzulu . The Treasury accepted 6 . 6 billion dlrs , including 1 . 8 billion dlrs from the Fed and 1 . 2 billion dlrs from foreign and international authorities . The average price for the three - month bills was 98 . 488 and prices ranged from 98 . 504 to 98 . 486 . The average price for the six - months bills was 96 . 926 , and prices ranged from 96 . 977 to 96 . 916 . The average yield on the three - month bills was the highest since 5 . 99 pct on

GERMAN BANKERS ' REMARKS REVIVE TALK OF RATE CUT Remarks by two leading central bankers sparked renewed speculation in financial markets that a cut in the West German three pct discount rate may be under discussion , currency dealers said . Bundesbank board member Claus Koehler said in a speech that monetary growth resulting from speculative capital inflows required cuts in interest rates . Separately , West Berlin state central bank president Dieter Hiss told journalists that the discount rate could fall below its lowest ever point of 2 . 75 pct . He made clear that he was not making a forecast on interest rates , however . Currency dealers here and in the Far East said the dollar gained slight background support from the speculation . But German dealers noted that the Bundesbank kept the 3 . 80 pct rate unchanged at which it offered liquidity to the money market this week , dashing some expectations that it may either offer lower fixed rate money or offer a reduced minimum rate and let the strength of banks ' demands set the allocation rate . It allocated 6 . 1 billion marks in new liquidity , much less than the 14 . 9 billion leaving the market as a prior pact expired . This further weakened sentiment the Bundesbank could move to a more accommodative monetary stance , dealers said . Koehler said in a speech in Surrey , England , speculative capital inflows may cause monetary growth , regardless of whether central banks intervened or exchange rates fell . " In other words , the monetary policy measures required are different from -- and sometimes diametrically opposed to -- those needed when the money stock is increasing as a result of mounting economic activity zulchzulu Though Koehler was known to be the most liberal of the generally monetarist Bundesbank board , his comments marked the first time cuts in rates had been concretely suggested as a counterpoint to overly strong monetary growth , dealers said . REUTER ^ M

BAKER SEEN WINNING GERMAN INTEREST RATES BATTLE The United States appears to have won a transatlantic battle by forcing the Bundesbank to trim interest rates , European economists said . But they added Washington set the stakes high by testing the limits of the Louvre accord while global stock markets were plunging . West German Finance Minister Gerhard Stoltenberg and U . S . Treasury Secretary James Baker reaffirmed their commitment to currency stability at a secret meeting yesterday in Frankfurt , according to official statements released late Monday . Only 13 hours after the statements were released , the Bundesbank reduced short - term interest rates by offering banks liquidity at a fixed bid rate of 3 . 80 pct , down from a 3 . 85 pct facility rate offered last week . While the two ministers were meeting with Bundesbank president Karl Otto Poehl , the central bank had also added money market liquidity repeatedly , signalling it did not want a strong rise in the tender allocation rate on Tuesday . " It ' s round one to the Americans , " said Richard Reid , senior European economist for brokers UBS / Philips and Drew in London . But Reid added , " We shouldn ' t forget that it has taken one of the biggest stock market crashes in decades to get the West Germans to cut their security repurchase rate by a 0 . 05 percentage point zulchzulu Over the weekend , criticism by Baker of earlier tightening of West German monetary policy led to a sharp dollar fall and fuelled speculation that the Louvre accord was no longer valid . Six leading industrial nations agreed under February ' s Louvre Accord to stabilise currencies and coordinate monetary policies . It has since been reaffirmed by the Group of Seven - the US , Japan , West Germany , Britain , France , Italy and Canada . The Frankfurt meeting on Monday soothed currency markets and the dollar gained over two pfennigs in after hours trading in New York . At the Frankfurt

INDIA RELAXES RULES FOR EXPORT PROMOTION The Reserve Bank of India , RBI , announced new rules to allow exporters of 25 products to use foreign exchange up to 10 pct of their firm ' s total annual export earnings for export promotion abroad . The move is designed by the government to improve India ' s trade deficit . Products eligible for the new Blanket Exchange Permit Scheme include tea bags , cigarettes , coffee , leather , various textiles , chemicals , pharmaceuticals , plastics , engineering and electronic goods , ready - made garments , processed food , sports goods , fabricated mica and consultancy services . The scheme replaces current rules which allow different amounts of foreign exchange to be used only when firms attain a minimum annual turnover prescribed for each product . RBI said under the new rule , 16 other products will qualify , on a discretionary basis , for overseas promotional spending of not more than two pct of the freight - on - board value of annual export earnings . These include oil cakes , cereals , raw cotton , raw and semi - processed leather , gems , castor and sandalwood oil , psyllium husks and seeds , opium and various mineral ores . RBI said exporters of products not covered by either of the two groups will be eligible to use up to five pct of their freight - on - board value of their annual export earnings . Industry sources said the new entitlements , considerably higher than the previous limits , are also more flexible because holders of new permits no longer need to frequently apply to RBI for release of foreign exchange for export purposes .

TREASURY ' S BAKER UNDER FIRE FOR WALL STREET DROP As official Washington sought to restore investor confidence after Monday ' s Wall Street collapse , Treasury Secretary James Baker came under fire from critics who claimed he helped to precipitate the crisis . Baker ' s weekend blast at the West German Bundesbank for boosting interest rates seemed to signal an unraveling of an international accord to stabilize currency values . Nigel Lawson , British Chancellor of the Exchequer , was among those who said the treasury secretary ' s statements helped spur a wave of stock sales by making already jittery investors think that a clash between the two major economic powers would damage the world economy . Lawson told a London television interviewer Tuesday , " I think the scale of the ( stock ) fall was very great . That , I think , was partly due to statements that have been made by senior figures on the other side of the Atlantic zulchzulu It was a dispute that should never have happened , he added . Although Baker appeared to patch over the rift at a hastily - called meeting with West German officials Monday , he still faced a storm of criticism on his return to the United States on Tuesday . Baker cut short a long - planned trip to Scandinavia to return here to deal with the economic crisis . Said one U . S . analyst of Baker ' s weekend remarks , " His timing could not have been worse zulchzulu One government bond salesman in New York said , " He actually thought that yelling at the Germans , and threatening to smack the dollar down would work . That doesn ' t show much understanding of international monetary gamesmanship zulchzulu However , some analysts said West Germany ' s stubborn march toward higher interest rates may have forced Baker ' s hand . " On the surface Baker may look responsible for this , but if you go back to see what caused it ( unsettling of financial

zulchzulu SAYS CRITICISM NOT " ONE - WAY STREET " Finance Minister Gerhard Stoltenberg said he was surprised by recent criticism of West German economic policies voiced by U . S . Treasury Secretary James Baker but added that the criticism was not purely one - sided . Stoltenberg told the West German Trade and Industry Association ( zulchzulu ) that before a meeting with Baker on Monday , " There had been surprising notes of criticism ( from the United States zulchzulu He added . " Criticism is not a one - way street zulchzulu He did not elaborate , but Bonn has often called on the U . S . To reduce its federal budget deficit . Over the weekend Baker had criticised West German economic policies , saying that rises in domestic interest rates here were not in the spirit of last February ' s Louvre pact to stabilise currencies . Stoltenberg told the zulchzulu that his meeting on Monday with Baker had resolved differences between the two countries . At a news conference earlier on Tuesday Stoltenberg had declined to comment specifically on Baker ' s criticisms , but he had said that after three hours of discussions on Monday , " one remark or another has been clarified zulchzulu

CANADA TRADE RISE SEEN AS START OF RECOVERY Canada ' s trade picture has brightened considerably , underscoring economists ' predictions the sector would post a long awaited recovery this year . The federal government reported today that the monthly surplus soared to 1 . 25 billion Canadian dlrs in February , double January ' s 623 mln dlrs surplus and sharply higher than February 1986 ' s 189 mln dlr tally . " Hopefully it ' s the beginning of a trend zulchzulu said Richardson Greenshields of Canada Ltd economist Susan Clark in Toronto . Economists generally don ' t expect such large gains over the next months , but are looking for an upward trend throughout the year . " We thought the trade balance would improve ... over the year , and it certainly looks as if this morning ' s figure is indicative of that zulchzulu commented economist James Donegan at the Toronto securities firm of Midland Doherty Ltd . Statistics Canada reported the surplus was driven by a 23 pct gain in automobile product exports to a record 3 . 2 billion dls in the month . " Recovery in the automotive sector helped push the value of exports up by 5 . 9 pct in February zulchzulu the agency said in its monthly report . Total exports expanded to 10 . 44 billion dlrs from 9 . 85 billion dlrs in February , while imports slipped to 9 . 19 billion dlrs from 9 . 23 billion dlrs . Economists have predicted the 1987 trade surplus would end up three to five billion dlrs higher than last year ' s dismal 10 . 1 billion dlr total . In 1985 the surplus was 17 . 48 billion dlrs . Money market analysts said the positive trade news touched off a modest rally in the Canadian dollar , which rose to 76 . 85 U . S . cts on North American markets early this morning after closing at 76 . 58 cts Wednesday . The currency was hovering around 76 . 78 cts in

zulchzulu SEES NO CHANGE IN MONETARY COURSE The Bundesbank sees no current reason to change monetary course , vice - president Helmut Schlesinger told Reuters in a telephone interview . Schlesinger was responding to questions following remarks yesterday by Bundesbank board member Claus Koehler and West Berlin state central bank president Dieter Hiss , which , dealers said , revived some speculation that German interest rate cuts may once again be under discussion . Schlesinger said he had no comment on the remarks of his two central bank council colleagues . But he added that the last central bank council meeting on April 2 had discussed the economic situation with a mood of " subdued optimism zulchzulu particularly influenced by the news brought by several state central bank presidents . " Much is going better than the impression gained by the public from the January figures , which have been in the meantime superseded zulchzulu he said . German January industrial output fell 3 . 0 pct after a decline of 0 . 9 pct in December . New industry orders fell 1 . 9 pct after they had been unchanged in December . Bank economists said that the two together showed the economy would either stagnate or contract in the first quarter of 1987 . Aside from the economic developments , Schlesinger added , a steady monetary course was important to hold the dollar / mark rate around current levels as Bundesbank president Karl Otto Poehl had said while attending the Washington World Bank / IMF meeting . Asked , however , if the Bundesbank could move to cut rates on repurchase agreements at the setting of the next repurchase tender , due next Tuesday , Schlesinger said , " Since the central bank council gives its opinion on this theme only every 14 days , this is hardly probable zulchzulu Responding to the question whether the Bundesbank had moved away from a policy of targetting monetary growth toward one of targetting currency rates , Schlesinger said he could have no comment on the subject while negotiations were still

U . K . RESERVES LIFT HOPES OF FURTHER BASE RATE CUT The record 4 . 9 billion dlrs rise in U . K . Reserves in May to a total 34 . 7 billion has lifted hopes for a further cut in bank base lending rates after the June 11 general election , market analysts said . Sterling would have risen on the much better than expected number but for market nerves about the poll outcome , they said . But the weight of foreign currency and gold reserves now available to the authorities to support the pound should curb any market tendency to panic if U . K . Opinion polls show the ruling Conservative Party ' s lead slipping , they added . " We have been intervening to a very much greater extent than we have done hitherto zulchzulu Chancellor of the Exchequer Nigel Lawson said at a news conference today , commenting on the news of the record reserves rise . He put the U . K . Intervention in the context of the Louvre accord between leading industrial nations to stabilise the dollar , partly through direct intervention on foreign exchanges . " We have been playing a very full part ourselves zulchzulu he said . But market analysts see the recent upward pressure on sterling , and consequent need for official sales to damp down its rise , more in the light of local factors . Steven Bell , chief economist at Morgan Grenfell Securities , said that corporate money has been flowing back into Britain amid hopes of another Conservative government , after fears last autumn of a Labour election victory sent it flooding out . U . K . Portfolio investment is also returning , while foreign buyers see U . K . Growth propects and high bond yields as attractive . They will be strong buyers of U . K . Assets , notably equities , once the election is out of the way , Bell said . Analysts see this pressure as the main hope for lower interest rates

ZAMBIA CUTS PRICES AS TROOPS PATROL zulchzulu The Zambian government today announced minor price cuts for essential commodities as part of its new economic strategy , while police and troops patrolled the northern Copperbelt to prevent any outbreaks of rioting . However , staple foods , such as bread , sugar and maize meal , were not affected by the cuts and many people said this could provoke trouble from disgruntled elements who had expected more sweeping reductions . Observers in the capital expressed disillusionment with the small extent of the price cuts , which ranged up to 10 pct on items such as blankets , soap , detergents and baby food . Residents in the Copperbelt contacted by telephone said government forces had set up roadblocks around the main towns . In Lusaka , business went on as usual and there was no sign of troops or police reinforcements on the streets . President Kaunda had ordered the price reductions to take account of lower import costs following the revaluation of the kwacha to a fixed rate of eight per dlr from 21 on May 1 . The revaluation formed part of a new go - it - alone economic strategy which Kaunda adopted to replace Zambia ' s IMF austerity program . Labour leaders in the Copperbelt said last week gangs of unemployed youths were being formed in the politically volatile region to take action against shops that did not reduce their prices after today ' s deadline . Fifteen people were killed in the Copperbelt during food riots last December after the government tried to lift maize subsidies .

KUWAITI DINAR RATES FIRM , AID WINDOW OPEN Interest rates on Kuwaiti dinar deposits held firm in scattered trading despite a Central Bank decision to revive limited funding lines , dealers said . The Central Bank , which last Tuesday shut a daily aid window through which it lent funds of up to one year , reopened the facility for three month money , which was available at seven pct , they said . It offered one month funds at seven pct through swap facilities , dealers said . Today ' s Central Bank action , combined with sales of dollars by some banks , helped ease a recent credit squeeze engineered by the monetary authority to stem a rush for the U . S . Currency arising from attractive U . S . Interest rates and Gulf tension , dealers said . However , as one dealer noted : " The market is still unsettled zulchzulu Overnight funds , bid at 20 pct at the outset of business , traded up to 30 pct before easing as liquidity dragged offers down to 10 pct by the close . Tomorrow - next , for which buy / sell quotes started at 30 , 20 pct , ended at 14 , eight . Spot - next was indicated at 8 - 1 / 2 , seven after opening bids of 10 . Dealers quoted one - week at eight , seven against an early 9 - 1 / 2 , 7 - 1 / 2 . One month rates were at the same level after trade at eight then 8 - 1 / 2 . Dealers quoted three months at seven , 6 - 3 / 4 pct and six - month to one year funds at seven , six pct . They reported offshore offers of overnight at 10 , tomorrow - next at eight and one year at 6 - 1 / 2 pct towards the close . The Central Bank fixed its dinar exchange rate steady at 0 . zulchzulu / 67 to the dollar , against yesterday

Bank of France added money market liquidity at 7 - 3 / 4 pct - dealers Bank of France added money market liquidity at 7 - 3 / 4 pct - dealers

BANK OF JAPAN DETERMINED TO KEEP EASY MONEY POLICY The Bank of Japan bought 100 billion yen in certificates of deposit ( CDs ) via repurchase agreements today to show its determination to maintain an easy money policy , central bank officials said . " Today ' s CD buying operation was designed to seek an announcement effect , in which we would reassure the market of the fact that we have not changed our policy stance zulchzulu a senior central bank official told Reuters . The bank also bought 400 billion yen in two - month commercial bills to smooth out tight credit conditions in the interbank market today , the officials said . The central bank was concerned about growing market expectations of higher interest rates , which were in part responsible for the recent plunge in stock and yen bond prices , the officials said . But money traders said the market generally shrugged off the bank ' s CD operation because it was small and at a rate far below prevailing market rates . The rate on the key three - month CDs in the primary market was 4 . 08 / 00 pct , while the bank ' s bid was 3 . 75 pct , they said . The bank ' s bill buying operation also had little impact because it was regarded as a routine operation , they said . The money traders said they regarded the central bank ' s CD buying operation as simply a gesture to live up to Japan ' s pledge to guide interest rates lower and stimulate the economy . " We did not expect the central bank to ease its credit grip any further zulchzulu a bank manager said , adding that the prevailing market expectation of higher rates will remain . " If this is the case , the three - month CD rate will stay above four pct for the time being zulchzulu he said .

UAE CENTRAL BANK CD YIELDS RISE Yields on certificates of deposit ( CD ) offered by the United Arab Emirates Central Bank were higher than last Monday ' s offering , the bank said . The one - month CD rose 1 / 4 point to 6 - 3 / 8 pct , while the two , three and six - month maturities rose 5 / 16 point each to 6 - 7 / 16 , 6 - 1 / 2 and 6 - 5 / 8 pct respectively .

BRITISH MINISTER SAYS HE WARNED TOKYO OF SANCTIONS A British minister said he had given the Japanese government a clear warning of sanctions against Japanese companies if Tokyo did not allow more access to its internal markets " and it was clearly understood zulchzulu Corporate Affairs Minister Michael Howard said on his return from a visit to Japan he thought the Japanese were beginning to appreciate the need to be " fair and open " about access to their own markets . At an airport news conference Howard denied opposition charges that his trip had been a failure because he had returned empty - handed . " I did what I set out to do . I was sent to deliver a clear message to the Japanese government , and I delivered it very clearly , and it has been clearly understood zulchzulu Howard said that under the Financial Services Act the govenment had considerable flexibility in taking sanctions against Japanese companies and finance houses operating in Britain . " It is not simply a question of withdrawing or refusing operating licences . We can ban firms from certain countries from carrying out certain kinds of business , while allowing them to carry out other kinds zulchzulu " I hope we don ' t have to use these powers , but I made it clear in Japan that if our timetable isn ' t met , we shall use them zulchzulu He said it would be unfortunate if Britain and Japan became involved in a tit - for - tat exchange , adding that Japan gained more than anyone else from an open trading relationship . " I think they are beginning to appreciate that if this relationship is to continue , it is very important for them to be fair and open about access to their own markets zulchzulu On the question of the British firm Cable and Wireless Plc & lt ; zulchzulu . L zulchzulu which is trying to win a significant share of telecommunications contracts in Japan , Howard said he had told the Japanese this

NORWAY CENTRAL BANK SELLS CROWNS TO EASE PRESSURE Norway ' s central bank sold crowns in the open market in a bid to ease strong upward pressure on the currency , which threatens to rise above set levels in a basket of currencies , dealers said . The central bank declined comment , but dealers noted the bank had also intervened and sold small amounts of crowns on Friday . The bank is committed to defending the crown at certain levels in a basket of 14 trade - weighted currencies . " They ' ve been in again this morning , selling piecemeal whenever they think necessary zulchzulu a senior dealer at an Oslo bank , who declined to be identified , told Reuters . The crown ' s index is currently around 109 . 60 in the basket -- close to its upper limit of 109 . 50 which the central bank is committed to defending . A low index figure indicates a high value for the crown . The limit at the other end of the scale is set at 114 . 50 . The crown has been bolstered by high Norwegian interest rates , currently around 16 pct in the money market , and better than expected economic indicators which showed a sharply reduced foreign trade deficit in May and inflation stabilising around the current annual rate of 10 pct .

ITALY DEFICIT NOT DUE TO LIBERALIZATION - MINISTER Italy ' s Foreign Trade Minister Mario zulchzulu , commenting on speculation in the Italian press , said a sharp balance of payments deficit in May could not be attributed to recent moves liberalizing the purchase of foreign securities . zulchzulu was reacting to suggestions that last month ' s overall 3 , 211 billion lire deficit , which compares with April ' s 2 , 040 billion surplus , could be linked to a May 13 decree abolishing obligatory non - interest - bearing deposits on foreign securities purchases . " The deficit can be better attributed to premature and delayed foreign trade payments and receipts ( leads and lags ) rather than capital outflow to portfolio investment zulchzulu zulchzulu said in a statement . Earlier today the newspaper La Repubblica cited remarks by the Bank of Italy , which announced the deficit for May and said it had been partly caused by " non - banking capital outflows zulchzulu " In practice , it seems that there has been a constant flow of capital to foreign securities or investments outside our borders zulchzulu said the newspaper . But the newspaper added that it was still not possible to say how far the move to abolish foreign securities purchase deposits had affected Italy ' s balance of payments .

G - 7 ISSUES STATEMENT AFTER MEETING Following is the text of a statement by the Group of Seven -- the U . S zulchzulu Japan , West Germany , France , Britain , Italy and Canada -- issued after a Washington meeting yesterday . 1 . The finance ministers and central bank governors of seven major industrial countries met today . They continued the process of multilateral surveillance of their economies pursuant to the arrangements for strengthened economic policy coordination agreed at the 1986 Tokyo summit of their heads of state or government . The managing director of the International Monetary Fund also participated in the meeting . 2 . The ministers and governors reaffirmed the commitment to the cooperative approach agreed at the recent Paris meeting , and noted the progress achieved in implementing the undertakings embodied in the Louvre Agreement . They agreed , however , that further actions will be essential to resist rising protectionist pressures , sustain global economic expansion , and reduce trade imbalances . In this connection they welcomed the proposals just announced by the governing Liberal Democratic Party in Japan for extraordinary and urgent measures to stimulate Japan ' s economy through early implementation of a large supplementary budget exceeding those of previous years , as well as unprecedented front - end loading of public works expenditures . The government of Japan reaffirmed its intention to further open up its domestic markets to foreign goods and services . 3 . The ministers and governors reaffirmed the view that around current levels their currencies are within ranges broadly consistent with economic fundamentals and the basic policy intentions outlined at the Louvre meeting . In that connection they welcomed the strong implementation of the Louvre Agreement . They concluded that present and prospective progress in implementing the policy undertakings at the Louvre and in this statement provided a basis for continuing close cooperation to foster the stability of exchange rates .

zulchzulu SPEAKS AGAINST GERMAN INTEREST RATE CUT Bundesbank President Karl Otto Poehl said West Germany would be badly advised to lower interest rates and that he believed the economy would continue to recover after a six - month lull . Asked by the newspaper Bild am Sonntag if lower interest rates could boost the domestic economy , Poehl said : " We would be badly advised if we forced further interest rate cuts . " This could , under certain circumstances , release new inflationary fears which would then be more likely to lead to higher interest rates zulchzulu he added . Poehl said Germany had practically no growth in the past six months because of the mark ' s surge and the cold winter . " But since April , statistics clearly show that the economy finds itself on a course of growth zulchzulu he said . " I expect this development to continue in the coming months zulchzulu Asked about his expectations of a U . S zulchzulu European Community trade war , Poehl said such an event would be disastrous . " For this reason we in Europe must avoid everything used by protectionist forces in the U . S . As pretexts zulchzulu he added . " This includes ... Eliminating existing restrictions in the EC as far as possible . Protectionism is not found only in the U . S zulchzulu

FED EXPECTED TO ADD RESERVES The Federal Reserve will enter the government securities market to supply reserves via either a large round of customer repurchase agreements or by overnight or possibly four - day system repurchases , economists said . They said the Fed has a fairly large add need and is likely to face the most reserve dislocations early in the new statement period started today as corporate tax payments swell Treasury balances at the Fed . Fed funds hovered at 6 - 3 / 4 pct after averaging 6 . 80 pct yesterday .

SOVIETS OUTLINE 1988 ECONOMIC TARGETS The Soviet Union outlined its economic targets for 1988 on Monday , stressing the need to improve standards in the country ' s sluggish engineering industry . Planning chief Nikolai zulchzulu told the Supreme Soviet industrial output should rise by 4 . 5 pct in 1988 , up from a planned 4 . 4 pct in 1987 . It rose 3 . 6 pct in Jan - Sept 1987 . zulchzulu said national income , the nearest Soviet equivalent to gross national product , should rise by 4 . 3 pct against a planned 4 . 1 pct this year . Gross national product measures the output of a country ' s goods and services . He said the Kremlin planned to produce 235 mln tonnes of grain in 1988 versus a planned 232 mln this year . Moscow produced 210 mln tonnes in 1986 . Kremlin leader Mikhail Gorbachev has described machine - builing as a sector whose rapid modernization is essential if the Soviet Union is to compete effectively on world markets . " Certain difficulties have arisen this year in the machine - building industry . The economy is not receiving a considerable amount of the equipment that it requires zulchzulu said zulchzulu , who heads the state planning committee zulchzulu . Soviet data show the machine - building industry , which makes machine tools , instruments and other engineering goods , increased output by 3 . 3 pct in the first nine months of 1987 compared with the same period last year . However , this was far below the 7 . 3 pct increase planned for the industry for the whole of 1988 . zulchzulu said the ruling Politburo had concluded at a recent meeting that an improvement in economic performance depended to a large extent on conserving resources better . " Large - scale measures are planned to save resources zulchzulu he said . Finance Minister Boris Gostev told the Supreme Soviet that defense spending in 1988 would total 32 billion dlrs , the same figure as was announced

ANALYSTS DOUBT FED zulchzulu DESPITE BORROWING RISE Economists said that they doubt the Federal Reserve is firming policy to aid the dollar , despite higher discount window borrowings in the latest two - week statement period and very heavy borrowings Wednesday . Data out today show net borrowings from the Fed averaged 393 mln dlrs in the two weeks to Wednesday , up from 265 mln dlrs in the prior statement period . Wednesday borrowings were 1 . 4 billion dlrs as Federal funds averaged a high 6 . 45 pct . " One could make a case that the Fed is firming , but it probably isn ' t zulchzulu said William Sullivan of Dean Witter Reynolds . Sullivan said some may assume the Fed has firmed policy modestly to support the dollar because net borrowings in the two - weeks to Wednesday were nearly 400 mln dlrs after averaging around 250 mln dlrs over the previous two months . However , the Dean Witter economist noted that the latest two - week period included a quarter end when seasonal demand often pushes up zulchzulu . " Some might argue that the Fed was firming policy , but it looks like it tried to play catchup with reserve provisions late in the statement period and didn ' t quite make it zulchzulu said Ward McCarthy of Merrill Lynch Capital Markets . A Fed spokesman told a press press conference today that the Fed had no large net one - day miss of two billion dlrs or more in its reserve projections in the week ended Wednesday . Still , McCarthy said it may have had a cumulative miss in its estimates over the week that caused it to add fewer reserves earlier in the week than were actually needed . The Fed took no market reserve management action last Thursday and Friday , the first two days of the week . It added temporary reserves indirectly on Monday via two billion dlrs of customer repurchase agreements and then supplied reserves directly via System repurchases on Tuesday and Wednesday .

JAPANESE TARIFFS SEEN AS WORLDWIDE WARNING The tough trade sanctions President Reagan imposed on Japanese exports are not only a shot across Japan ' s bow but also a sign Reagan will attack unfair trade practices worldwide , U . S . officials said . But Robert Crandall , a trade specialist at Brookings Institution , a think tank , said " a shot across their bow can often result in a shot in our stern zulchzulu He said it left the United States open to retaliation . The U . S . officials said the 100 pct tariffs Reagan ordered on 300 mln dlrs worth of Japanese goods will also show Congress that a tough pro - trade stand can be taken under existing laws , and no new protectionist legislation is needed . In the past year tough trade action had been taken against the European Community over corn and sorghum , Taiwan over beer and wine , South Korea over counterfeiting of copyrights , patents and zulchzulu and Japan on tobacco . White House spokesman Marlin Fitzwater told reporters the tariffs - up from five pct - should be seen as a " serious signal " to other nations on the need for fair trade practices . Reagan said he imposed the sanctions on certain computers , television sets and some hand tools because Japan did not honor an agreement to end dumping semiconductors in world markets at less than cost and to open its markets to U . S . products . The tariffs were placed on items which were available from other sources so there would be little effect on the American consumer , Fitzwater said . Reagan has come under heavy pressure to take tougher action - especially against Japan - to end global unfair trade practices and reverse the growing U . S . trade deficit . The alternative was that if he did not , Congress would . The U . S . trade gap last year was a record 169 . 8 billion dlrs , and continues to rise , with

DUTCH OFFICIAL RATE CUT SEEN STILL LIKELY A cut of about half a percentage point in Dutch official interest rates is still in prospect , although economists said the timing would depend on Bundesbank moves . Speculation has been rife that the Dutch Central Bank , encouraged by a strong guilder / mark relationship and wide premiums for Dutch money and capital market rates over German , might lower rates without the Bundesbank moving first . Last month , the Central Bank lowered its special advances rate to 5 . 1 pct from 5 . 25 pct after the Bundesbank dropped its repurchase tender rate to 3 . 55 pct from 3 . 8 pct . That rate has remained in force , just holding above the five pct official secured loans rate which governs commercial bank borrowings . Given a strong guilder , a further fall in the West German repo rate would trigger a lower special advances tariff , forcing an official Dutch rate cut , analysts said . In February , when the Bundesbank cut its discount rate to three pct from 3 . 5 pct , the Central Bank only lowered money market rates and removed a surcharge over the secured loans rate on lending under its three month credit quota . Since then , however , both the Central Bank and Finance Ministry have made it clear they favour lower official rates . In April , Central Bank President Wim Duisenberg said he would follow any Bundesbank cut , and last week the Finance Ministry expressed satisfaction when it raised 2 . 25 billion guilders with a six pct coupon state loan priced at 100 . 10 pct for an effective yield of 5 . 98 pct , the lowest since 1965 . Technically , analysts said , there has to be a difference between the secured loans rate which applies to lending under the credit quota , and the tariff on special advances which add extra liquidity to the money market . Bank economists and dealers said a West German move to further lower

ASA SAYS EC zulchzulu POLICY ILLEGAL UNDER GATT The American Soybean Association ( ASA ) denounced European Community ( EC ) oilseed policies as illegal under the General Agreement on Tariffs and Trade , and threatened to make an unfair trade complaint if the EC does not remedy the situation . ASA Vice President James Adams told an ASA - sponsored Outlook 87 conference : " It will be filed unless the EC takes drastic and immediate steps zulchzulu " These subsidies are blatantly unfair and are GATT illegal , since they were established after the zero soybean duty was established in 1962 zulchzulu he said . The ASA ' s unfair trade petition against the EC would ask for an investigation and modification of EC oilseed policies to make the regime non - discriminatory . The EC in 1962 ruled all EC oilseed imports duty - free , in an effort to fill its oilseed needs . But EC oilseeds production has risen dramatically since then . The EC now guarantees oilseed prices to farmers above world market levels and is considering implementing a controversial oils and fats tax . The subsidies " are obvious attempts to circumvent the zero duty binding and that makes U . S . Farmers mad as hell zulchzulu Adams said . The ASA is confident the U . S . Congress will support its trade complaint , Adams said . The ASA also strongly opposes an EC proposal to tax vegetable and marine oils consumed in the EC , which will be considered by the EC Commission in December . U . S . Soybean world market share has declined 35 pct in volume and 40 pct in value since 1982 , primarily as a result of EC policies , Adams added . Lord Plumb , European Parliament President and a speaker at the conference , said the EC expanded oilseed production in 1973 when the U . S . Halted overseas sales of soy products .

zulchzulu DEFENDS U . S . EXPORT SUBSIDY PROGRAM U . S (((:-)))) . Agriculture Secretary Richard Lyng said the United States will continue its policy of subsidizing farm exports to regain lost markets until there is a global agreement to end such subsidies . In an interview with Reuters , Lyng also acknowledged he was troubled by the prospect that the export enhancement program ( EEP ) could prove so indispensable to boosting U . S . exports that the U . S . would have difficulty abandoning it . " Yes , I ' m troubled with that a little bit zulchzulu he said . " There ' s no question about it , the longer you feed the calf on the cow , the longer it is to wean it zulchzulu In recent months , USDA has offered subsidies on a growing list of commodities to an increasing number of countries . Lyng called U . S . and European Community export subsidies " just plain nonsensical as a long - term policy " and said he saw an end to the expansion of the EEP . " I ' m sure there ' s an end to the expansion , but we are doing this to accomplish our goal which is to regain the markets that we ' ve lost , to keep our products competitive and to let those , particularly the European Community , who , we are convinced , are the worst offenders in terms of the export subsidization , that we are prepared to continue to do this until we can come to some agreement to put an end to it zulchzulu he said .

zulchzulu LOOKS SET FOR EIGHT MORE YEARS AT zulchzulu For currency dealers Karl Otto Poehl is the scourge of speculators , for bankers he is the man who has played a key role in shaping the world ' s financial destiny for the last seven years , and for Germans he is the guardian of the mark . President of the powerful and independent West German central bank , the Bundesbank , Poehl is likely to have his contract renewed for another eight years when it expires at the end of this year , government officials say . ( Index of economic spotlights , see page ECRA ) But no official announcement has yet been made , raising eyebrows in West Germany ' s business community . The ebullient Poehl spent seven years in Bonn in top ministerial posts under the Social Democrats , now in opposition , before he moved to the Bundesbank . There has been speculation that Chancellor Helmut Kohl would try to replace Poehl with a man closer to his own Christian Democrats . But officials noted that Poehl has worked closely and successfully with Finance Minister Gerhard Stoltenberg since Kohl ' s government took office in 1982 . Poehl , the most senior central banker apart from Paul Volcker of the United States , enjoys a strong international reputation which it would take a newcomer years to build up . Given these circumstances , Kohl will probably overlook Poehl ' s past as an adviser to former Social Democrat Chancellor Willy Brandt , and top aide to Helmut Schmidt when he was Finance Minister , bankers said . It was Schmidt who , as Chancellor , appointed Poehl to his present job in 1980 . In recent months , with the mark ' s strong rise against the dollar , Poehl has made exchange rates the central concern of the Bundesbank ' s council , a highly conservative institution which has doggedly pursued monetary policies to prevent inflation catching hold . Older Germans can remember two bouts of galloping inflation this century . But with

zulchzulu zulchzulu 6 . 1 BILLION MARKS IN TENDER The Bundesbank accepted bids for 6 . 1 billion marks at today ' s tender for a 28 - day securities repurchase pact at a fixed rate of 3 . 80 pct , a central bank spokesman said . Banks , which bid for a total 12 . 2 billion marks liquidity , will be credited with the funds allocated today and must buy back securities pledged on May 6 . Some 14 . 9 billion marks will drain from the market today as an earlier pact expires , so the Bundesbank is effectively withdrawing a net 8 . 1 billion marks from the market with today ' s allocation . A Bundesbank spokesman said in answer to enquiries that the withdrawal of funds did not reflect a tightening of credit policy , but was to be seen in the context of plentiful liquidity in the banking system . Banks held an average 59 . 3 billion marks at the Bundesbank over the first six days of the month , well clear of the likely April minimum reserve requirement of 51 billion marks . The Bundesbank spokesman noted that by bidding only 12 . 2 billion marks , below the outgoing 14 . 9 billion , banks themselves had shown they felt they had plenty of liquidity . Dealers said the Bundesbank is keen to prevent too much liquidity accruing in the market , as that would blunt the effectiveness of the security repurchase agreement , its main open - market instrument for steering market interest rates . Two further pacts are likely this month over the next two weeks . The Bundesbank is currently steering call money between 3 . 6 and 3 . 8 pct , although short - term fluctuations outside that range are possible , dealers said .

U . S . GULF OF MEXICO RIG COUNT CLIMBS TO 38 . 9 PCT Utilization of offshore mobile rigs in the Gulf of Mexico climbed by 2 . 1 pct last week to 38 . 9 pct , reflecting a total of 91 working rigs , Offshore Data Services said . One year ago , the Gulf of Mexico utilization rate was 32 . 5 pct . Offshore Data Services said some drilling contractors had reported recent increases of about 1 , 000 dlrs a day on large jackup rigs , which now command rates of 11 , 000 to 12 , 000 dlrs a day . In the European / Mediterranean area the rig utilization rate rose 0 . 6 pct to 53 . 6 pct , against 67 . 3 pct one year ago . Worldwide rig utilization rose by 1 . 2 pct to 57 . 7 pct , reflecting a net increase of eight working rigs . Offshore Data Services said a total of 419 rigs were in use worldwide and 307 were idled last week .

WHEAT BY CLASS BREAKDOWN The U . S . Agriculture Department gave the 1986 / 87 breakdown of supply and distribution for wheats by classes , in mln bushels , with comparisons , as follows . HARD WINTER -- 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start Stocks 1 , 009 1 , 009 717 717 Production 1 , 018 1 , 018 1 , 230 1 , 230 Ttl Supply - X 2 , 027 2 , 027 1 , 947 1 , 947 Domestic Use 599 579 543 543 Exports 450 475 395 395 Total Use 1 , 049 1 , 054 938 938 End Stocks 978 973 1 , 009 1 , 009 Note - Season begins June 1 . X - Includes imports HARD SPRING -- 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start Stocks 498 498 371 371 Production 451 451 460 460 Ttl Supply - X 956 956 838 838 Domestic Use 218 192 174 174 Exports 200 190 166 166 Total Use 418 382 340 340 End Stocks 538 574 498 498 Note - Season begins June 1 . X - Includes imports . SOFT RED -- 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start Stocks 79 79 64 64 Production 290 290 368 368 Ttl Supply - X 369 369 432 432 Domestic Use 181 193 204 204 Exports 120 120 149 149 Total Use 301 313 353 353 End Stocks 68 56 79 79 Note - Season begins June 1 . X - Includes imports WHITE -- 1986 / 87 1985 / 86 04 / 09 / 87 03 / 09 / 87 04 / 09 / 87 03 / 09 / 87 Start Stocks 198 198 173 173 Production 232 232 254 254

JAPAN MINISTRY SAYS OPEN FARM TRADE WOULD HIT U . S . Japan ' s Agriculture Ministry , angered by U . S . Demands that Japan open its farm products market , will tell U . S . Officials at talks later this month that liberalisation would harm existing U . S . Farm exports to Japan , a senior ministry official said . " Imports from the U . S . Would drop due to active sales drives by other suppliers zulchzulu the official , who declined to be named , said . " Japan is the largest customer for U . S . Farm products and it is not reasonable for the U . S . To demand Japan liberalise its farm import market zulchzulu he said . Agriculture Minister Mutsuki Kato has said if the U . S . Insists Japan open its protected rice market it will also open its wheat market , where volume and origin are regulated to protect local farmers . Australia and Canada could then increase their wheat exports as they are more competitive than the U . S zulchzulu He said . End - users would also buy other origins , grain traders said . U . S . Agriculture Secretary Richard Lyng , who is due to visit Japan for talks between April 16 - 27 , has said he will ask Japan to offer a share of its rice market to U . S . Suppliers and remove quotas on U . S . Beef and citrus imports . Other countries are already cutting into the U . S . Market share here . Australia , the largest beef supplier to Japan , has been trying to boost exports prior to the expiry of a four - year beef accord next March 31 . Imports of U . S . Corn have fallen due to increased sales from China and South America , while Japanese soybean imports from Brazil are expected to rise sharply this year , although the U . S . Will remain the largest supplier

BELGIUM CUTS TREASURY CERTIFICATE RATES The Belgian National Bank said it cut one , two , and three month treasury certificate rates , all by 0 . 10 points , effective immediately . The cuts take the one month rate to 6 . 75 pct , the two month rate to 6 . 80 pct and the key three month rate to 6 . 85 pct , the central bank said in a telex . A National Bank spokesman said the modest cut was made after a decline in domestic money market rates yesterday , and was not expected to be followed by a cut in the 7 . 60 pct discount rate . The short - term treasury certificate rates , and especially the three - month rate , have been the National Bank ' s main monetary policy instrument for the last two years . The discount rate has been the market ' s penalty rate rather than a guiding rate since 1985 , and its advances are currently little used as liquidity is ample , bank economists said . The bank last cut one - to three - month certificate rates on June 5 , also by 0 . 10 points .

zulchzulu CREDIT POLICY CHANGES UNLIKELY The Bundesbank is unlikely to change credit policies when its central bank council meets on Thursday for its last session before the Venice summit , banking economists and money market dealers said . The Bundesbank steered money market rates lower last month by cutting the rate on its security repurchase pacts , and is unlikely to cap this move with a cut in leading interest rates in the near future , they said . The council will meet in Saarbruecken , and the meeting will be followed by a news conference at around 1030 GMT . But Bundesbank officials noted that a news conference was usually called when the council meets outside Frankfurt , and did not necessarily herald any policy moves . Bundesbank Vice - President Helmut Schlesinger said today there was no reason to cut interest rates because money supply growth had shown no signs of slowing in May and the dollar was stable against the mark . Schlesinger told Reuters in Tokyo , where the Bundesbank has opened a representative office , that the West German economy was now picking up after contracting by a seasonally adjusted 1 / 2 to one pct in the first quarter . Money market dealers said call money was likely to hold in a 3 . 50 / 70 pct range for most of this month , after the Bundesbank switched last month to tenders by interest rate at a minimum bid rate of 3 . 50 pct , allocating funds at 3 . 55 pct . " They have set this signal and indicated they could maybe lower market rates even further , but not with the discount or Lombard zulchzulu Winfried zulchzulu , chief economist of Schroeder , zulchzulu , Hengst Investment GmbH said . Werner zulchzulu , managing partner at Bethmann Bank , said German rates were among the lowest in industrial countries and around historical lows for West Germany . A further cut in rates would have little impact on the economy as banks are in any case reporting slack credit demand

U . S . URGES JAPAN TO OPEN FARM MARKET FURTHER U . S . Agriculture Secretary Richard Lyng has asked Japan to open its farm market further to help Washington cut its trade deficit and ease protectionist pressures , an Agriculture Ministry official told reporters . Hideo Maki , Director General of the ministry ' s Economic Affairs Bureau , quoted Lyng as telling Agriculture Minister Mutsuki Kato that the removal of import restrictions would help Japan as well as the United States . The meeting with Kato opened a 12 - day visit to Japan by Lyng , who is here to dicuss farm trade . However , Maki quoted Kato as replying that Japan was already the world ' s largest grain importer . Kato added Japan is the largest customer for U . S . Grain and depended on domestic output for only 53 pct of its food requirements in 1985 . Lyng said the U . S . Put high priority on talks on 12 farm products named in U . S . Complaints against Japan to the General Agreement on Tariffs and Trade ( GATT ) last year , as well as on beef , citrus products and rice . Kato said Japan will maintain its current level of self - sufficiency and will try not to produce surplus rice because potential production is higher than domestic demand . The world farm market suffers from surpluses because of rising production by exporting countries , he added . Lyng said the U . S . Has been trying to reduce farm product output with expensive programs , Maki said . Maki said the U . S . And Japan will hold detailed discussions on each trade item as well as a new round of GATT trade talks at a meeting on April 20 , in which U . S . Trade Representative Clayton Yeutter will join .

U . S . URGES JAPAN TO OPEN FARM MARKET FURTHER U . S . Agriculture Secretary Richard Lyng has asked Japan to open its farm market further to help Washington cut its trade deficit and ease protectionist pressures , an Agriculture Ministry official told reporters . Hideo Maki , Director General of the ministry ' s Economic Affairs Bureau , quoted Lyng as telling Agriculture Minister Mutsuki Kato that the removal of import restrictions would help Japan as well as the United States . The meeting with Kato opened a 12 - day visit to Japan by Lyng , who is here to dicuss farm trade . However , Maki quoted Kato as replying that Japan was already the world ' s largest grain importer . Kato added Japan is the largest customer for U . S . Grain and depended on domestic output for only 53 pct of its food requirements in 1985 . Lyng said the U . S . Put high priority on talks on 12 farm products named in U . S . Complaints against Japan to the General Agreement on Tariffs and Trade ( GATT ) last year , as well as on beef , citrus products and rice . Kato said Japan will maintain its current level of self - sufficiency and will try not to produce surplus rice because potential production is higher than domestic demand . The world farm market suffers from surpluses because of rising production by exporting countries , he added . Lyng said the U . S . Has been trying to reduce farm product output with expensive programs , Maki said . Maki said the U . S . And Japan will hold detailed discussions on each trade item as well as a new round of GATT trade talks at a meeting on April 20 , in which U . S . Trade Representative Clayton Yeutter will join .

JAPAN TO REVISE LONG - TERM ENERGY DEMAND DOWNWARDS The Ministry of International Trade and Industry ((()))) ( MITI ) will revise its long - term energy supply / demand outlook by August to meet a forecast downtrend in Japanese energy demand , ministry officials said . MITI is expected to lower the projection for primary energy supplies in the year 2000 to 550 mln kilolitres ( kl ) from 600 mln , they said . The decision follows the emergence of structural changes in Japanese industry following the rise in the value of the yen and a decline in domestic electric power demand . MITI is planning to work out a revised energy supply / demand outlook through deliberations of committee meetings of the Agency of Natural Resources and Energy , the officials said . They said MITI will also review the breakdown of energy supply sources , including oil , nuclear , coal and natural gas . Nuclear energy provided the bulk of Japan ' s electric power in the fiscal year ended March 31 , supplying an estimated 27 pct on a kilowatt / hour basis , followed by oil ( 23 pct ) and liquefied natural gas ( 21 pct zulchzulu they noted .

CANADIAN BANK RATE RISES IN WEEK Canada ' s key bank rate rose to 7 . 20 pct from 7 . 15 pct the week before , Bank of Canada said . Bank rate is set 1 / 4 percentage point above the average yield on the weekly issue of 91 - day treasury bills . This week ' s yield was 6 . 95 pct compared with the previous week ' s 6 . 90 pct . Tenders were accepted for 2 . 55 billion dlrs of 91 - day bills at an average price of 98 . 296 dlrs against 98 . 310 dlrs last week . The 1 . 40 billion dlrs of 182 - day bills were priced at an average 96 . 488 dlrs against 96 . 549 dlrs last week , to yield an average 7 . 30 pct , versus 7 . 17 pct last week . The 500 mln dlrs of 364 - day bills were priced at an average 92 . 969 dlrs against 93 . 159 dlrs last week , to yield an average 7 . 58 pct versus 7 . 38 pct last week . Tenders will be received next week for 2 . 50 billion dlrs of 91 - day bills , 1 . 40 billion dlrs of 182 - day bills and 500 mln dlrs of 364 - day bills .

zulchzulu SEES MOVES TO STRENGTHEN PARIS ACCORD West German Finance Minister Gerhard Stoltenberg said today ' s meetings of major industrial countries would look at ways of strengthening the Paris accord on stabilizing foreign exchange rates . Stoltenberg told journalists he saw no fundamental weakness of the February 22 agreement of the Group of Five countries and Canada to keep exchange rates near the then - current levels . But he declined to say what measures would be discussed ahead of a communique of the Group of Seven ministers later today . Stoltenberg and Bundesbank President Karl Otto Poehl said the importance of the Paris agreement , also known as the Louvre accord , had been underestimated . Stoltenberg said there is greater agreement now among major countries than six months ago , at the time of the annual meeting of the International Monetary Fund and World Bank , marked by sharp discord between the United States and its major trading partners . " There is no fundamental weakness of the Paris accord zulchzulu he said . " We will be looking at ways of strengthening it , but I do not want to discuss that here . Stoltenberg said the Louvre agreement was working despite a " slight firming " of the yen against the dollar . And Poehl noted that the dollar / mark parity was unchanged since February 22 without the Bundesbank having had to sell marks to support the dollar . " The Louvre agreement has been honored by the market zulchzulu he said . Poehl said West Germany had lived up to its side of the bargain in Paris by preparing the way for tax cuts to be accelerated as a way of stimulating growth . Poehl said , however , that Japan had not yet fulfilled its pledges for economic stimulation . " And we will have to see if the United States is able to do what they promised in Paris on reducing the budget deficit -- and get it through Congress zulchzulu he added . Stoltenberg reiterated West German concern about a

JAPAN TRADE SURPLUS WILL GROW AGAIN IN 1987 , OECD Japan ' s trade surplus is likely to continue to grow in 1987 , as sales of Japanese goods abroad increase while domestic demand remains sluggish , the Organization for Economic Cooperation and Development ( OECD ) said . In its latest half - yearly review of the world economy , the OECD said Japan managed to considerably reduce its surplus last year , when domestic demand grew by four pct in 1986 while export markets rose by only two pct . But it said this differential between the growth of domestic and foreign demand would reverse in 1987 and 1988 , " thus weakening the international adjustment process zulchzulu It forecast a slowing in domestic growth to little over two pct but with a rise in exports of 3 . 3 pct in 1987 and 3 . 6 pct in 1988 . As a result , the current account surplus in 1987 will rise to 95 billion dlrs from 86 billion in 1986 , although in 1988 it should fall back to 87 billion dlrs . The OECD outlook did not take account of the 6 , 000 billion yen package announced last month to stimulate domestic demand and increase imports to Japan . However , OECD officials said the measures will significantly strengthen domestic demand , quite possibly exceeding one pct GNP when the full effects have worked through , and thus will provide some stimulus to imports . The OECD outlook said , " Continued large current account surpluses and the further build - up of an already - substantial net external asset position could well lead to upward pressure on the yen zulchzulu It said that further appreciation could then lead manufacturers to postpone their investment plans and thus weaken domestic growth . The OECD said Japan ' s Gross National Product was likely to gorw an annual two pct in 1987 and 1988 , below 1986 ' s 2 . 5 pct growth . But it said Japan would continue its good performance on inflation

GERMAN FINANCIAL POLICY MAKERS IN RARE zulchzulu Karl Otto Poehl , head of West Germany ' s central bank , and Finance Minister Gerhard Stoltenberg are normally so much in agreement that some foreigners doubt the central bank ' s independence . But a rare public row between the ebullient Poehl , president of the Bundesbank , and Stoltenberg , over a controversial investment tax proposal , has added to the woes of the country ' s already nervous financial markets , bankers said . Poehl told an investment symposium in Frankfurt last Thursday he feared the tax would raise borrowing costs and interest rates Stoltenberg quickly issued a statement rebutting Poehl ' s criticism , saying West Germany would remain an attractive place for foreign investors . " The obvious lack of coordination between the Bundesbank and Finance Ministry does not instil confidence in foreign investors zulchzulu said one economist for a London broker , who asked not to be identified . Bankers here expressed confidence the two top financial policy - makers would quickly patch up their relationship to steer the economy through a particularly difficult time . " There are plenty of objective pressures which will result in things getting back to normal again after a period of ill feeling zulchzulu said Commerzbank AG chief economist Juergen Pfister . News on October 9 that the government was planning a 10 pct withholding tax wiped billions of marks off shares and bonds in a market already reeling from rising interest rates at home and abroad . Bankers said the Bundesbank was angered by the way the finance ministry announced the plan -- without consulting the Bundesbank adequately , and allowing apparently conflicting details to dribble out into an unprepared and uncertain market . Both Poehl , 57 , and Stoltenberg , 59 , have been under extraordinary pressures lately . Poehl has had to switch to the hard line promoted by his deputy , Helmut Schlesinger , jacking up interest rates to fight inflationary fears and abandoning the pragmatic policies he had pursued so far this year to

VOLCKER DEPARTURE REVIVES DLR , INFLATION FEARS Paul Volcker ' s decision not to go for a third term as Federal Reserve Chairman and the nomination of Alan Greenspan to replace him have revived deep concerns about the U . S zulchzulu ability to prevent a further dollar decline and stem rising inflation , financial market analysts said . Although Greenspan is known as a committed anti - inflation fighter in the Volcker mould , doubts are already surfacing in the U . S . financial markets as to whether he has enough political clout and monetary experience to wage a tough campaign against inflation over the next year or two . " The critical issue is how ( Greenspan ) will deal with inflation zulchzulu said Stephen Axilrod , Vice Chairman of Nikko Securities Co International Inc and former staff director for monetary and financial policy at the Fed . " A lot of questions have been raised by Volcker ' s departure . Until Greenspan answers them , the markets will remain nervous zulchzulu added Stephen Slifer , money market economist at Shearson Lehman Government Securities Inc . This morning ' s announcement sent the dollar into a tailspin , which was halted only by concerted central bank intervention in the open currency market .

U . S . TAKES TOUGH STAND ON GATT FARM ISSUES The United States is prepared to " pull out all the stops " to defend its agricultural trade rights under the General Agreement on Tariffs and Trade ( GATT zulchzulu U . S . Ambassador to GATT Michael Samuels said . Those rights are now being challenged by the European Community ' s ( EC ) agricultural support policies , he told a conference sponsored by the American Soybean Association . He reiterated Washington ' s firm intention to retaliate if the EC goes ahead and bans imports of hormone - fed beef without the issue being investigated by a GATT special committee . The U . S . claims the EC directive , due to come into effect on January 1 , threatens to cut 100 mln dlrs worth of U . S . meat shipments into the EC . The U . S . also will oppose all EC efforts to impair U . S . trade via the EC oilseeds regime , which supports EC oilseed prices over the current market level and which may be extended to include a hotly disputed oils and fats tax , Samuels said . Reduction of trade - distorting world agricultural subsidies , an aim of most key participants in GATT multilateral trade negotiations , " is meaningless if import barriers continue to be erected zulchzulu Samuels said . Samuels called the U . S . plan to eliminate world farm subsidies by the year 2000 , proposed at GATT in July , " visionary " and " very serious zulchzulu The EC and Japan have said it is unrealistic . The EC Commission this month announced its draft proposal on farm trade reform , expected to be tabled at GATT formally next week . The EC scheme involves emergency measures to reduce tensions in troubled surplus sectors of cereals and cereals substitutes , dairy and sugar . It also calls for reduction of farm subsidies . The U . S . Is not opposed to short - term measures

EC AGREES TRADE DEAL WITH ARGENTINA The European Community ( EC ) agreed a trade deal with Argentina designed to compensate the country following the entry of Spain and Portugal into the group , EC officials said . Under the deal agreed by EC foreign ministers , Argentina will gain additional trading rights on a series of products including meat , fish and cereals by - products . But ministers failed to agree on new trade deals with Canada and Japan and are due to study these again , the officials said . The deal with Argentina was agreed by a majority of EC states after West Germany withdrew objections to increased quotas for Argentina on high - quality beef . Ireland and France continued to oppose the deal on meat , saying that the main dispute was over sales of cereals substitutes , but they were outvoted by the other states , the officials said . Under the deal , Argentina will benefit from improved quotas on exports of beef to the EC . In particular the quota on high - quality Hilton beef will be raised by 4 , 500 tonnes to 34 , 300 tonnes and quotas on frozen boneless beef will be increased by 3 , 000 tonnes to 53 , 000 tonnes . Argentina will also benefit from an additional quota of 5 , 000 tonnes of frozen hake fillets at 10 pct duty and reduced levies on 550 , 000 tonnes of wheat bran , the officials said . The improved trade terms were offered after Argentina said that Spain and Portugal ' s entry into the EC affected their exports of cereals substitutes to these two countries . They have been negotiated under the rules of GATT ( General Agreement on Tariffs and Trade zulchzulu But officials said ministers had been unable to resolve Canadian claims that its sales of certain fish to Spain had been affected by the country ' s EC membership . Officials said the EC had asked GATT to arbitrate on the fish dispute with Canada . Ministers also

INTEREST RATES HURT U . S . MAY HOUSING SALES Sales of new single - family homes tumbled 14 . 9 pct in May from April levels because of higher mortgage interest rates , analysts said . " There should be another month or two of very weak new home sales but with interest rates stabilizing , sale of new homes should become more stable by mid - summer zulchzulu said economist Lawrence zulchzulu of Wharton Econometrics Inc . The drop in May , to a seasonally adjusted annual rate of 616 , 000 units , was the largest since January 1982 , the Commerce Department said . Interest rates on conventional mortgages bottomed out at about 9 . 08 pct in March and rose to about 10 . 7 pct in April , according to Stephen Roach , economist at Morgan Stanley . The effect was to freeze some potential new homebuyers out of the market , he and others said . " The rates moved very suddenly and were certainly unexpected by homebuyers zulchzulu said Cynthia Latta , an economist with Data Resources . " They were so startled , they wanted to hold back and see what would happen zulchzulu The drop in sales of new single - family home sales was sharper than expected , some economists said . " We fully expected a decline but the extent was more than we anticipated zulchzulu said James Christian , chief economist for the U . S . League of Savings Institutions . Christian said there was a sharp rise in May in sales of existing homes , which are generally less expensive than new homes . Latta of Data Resources said strong sales of new condominiums in the Northeast and on the West Coast were reflected in sales of existing but not new homes . Christian of the U . S . League of Savings Institutions said , " Underlying housing demand remains strong . I think the market is going to stabilize and give us a good second half zulchzulu Others were less optimistic , however

U . K . DATA DEPRESS RATE CUT OUTLOOK - ANALYSTS Today ' s U . K . Economic data have pushed the chances of another base lending rate cut from the current nine pct further into the distance , analysts said . A record fall in unemployment and good manufacturing production data showed that the economy is still strong and does not need a fillip from lower rates . News that underlying earnings are rising 7 . 75 pct annually , taken together with higher than expected bank lending and money supply growth , revived inflation worries and monetarist arguments against easier credit , they said . " The timetable on lower interest rates is being pushed back all the while . The strength of the economy and broad money growth are making it more difficult to see one in the near term zulchzulu said Chase Manhattan Securities economist Robin Marshall . Analysts have reached this conclusion despite yesterday ' s mortgage rate cuts for new borrowers , which building societies said were a sign of the expected near term trend for U . K . Rates . It also counters the optimistic forecasts of last week that a post - general election cut was imminent , supported by such optimistic economic news as May ' s record reserves rise which mirrored the Bank of England efforts to cap sterling ' s strength . The gilt market lost nearly half a point as enthusiasm about May ' s 64 , 300 fall in the seasonally adjusted unemployment rate , to 2 . 95 mln or 10 . 6 pct of the workforce , was rapidly replaced by dismay at the continued high level of underlying average earnings in April , dealers said . The upset was compounded by news that sterling bank lending rose 2 . 7 billion stg in May , above forecast , and that the Bank of England looks likely to have to sell more gilts to offset the impact on domestic money supply of its current intervention . " The gilt market reaction was correct

SOUTH KOREA MOVES TO SLOW GROWTH OF TRADE SURPLUS South Korea ' s trade surplus is growing too fast and the government has started taking steps to slow it down , Deputy Prime Minister Kim Mahn - je said . He told a press conference the government planned to increase investment , speed up the opening of the local market to foreign imports and gradually adjust its currency to hold the surplus " at a proper level zulchzulu But he said the government would not allow the won to appreciate too much in a short period of time . South Korea has been under pressure from Washington to revalue the won . The U . S . Wants South Korea to cut its trade surplus with the U . S zulchzulu Which rose to 7 . 4 billion dlrs in 1986 from 4 . 3 billion dlrs in 1985 . Kim , who is also economic planning minister , said prospects were bright for the South Korean economy , but the government would try to hold the current account surplus to around five billion dlrs a year for the next five years . " Our government projections of eight pct GNP growth , five billion dlrs of ( current account ) surplus and 12 pct growth in exports all seemed to be reasonable early this year . But now the surplus is growing faster than we expected zulchzulu he said . Trade ministry officials said South Korea ' s exports rose 35 pct to 9 . 34 billion dlrs in the first three months of this year , while imports rose only 8 . 5 pct to 8 . 2 billion dlrs . Kim said the swing of South Korea ' s current account to a surplus of 4 . 65 billion dlrs in 1986 from an 890 mln dlr deficit in 1985 was very significant . The surplus enabled the country to reduce its foreign debt last year for the first time . South Korea ' s foreign debt , which fell to 44 . 5 billion dlrs in

FED SEEN ADDING RESERVES VIA SYSTEM REPOS The Federal Reserve is expected to enter the government securities market to supply reserves to the banking system via system repurchase agreements , economists said . Most economists said the Fed would execute three - day system repurchases to meet a substantial need to add reserves in the current maintenance period , although some said a more aggressive add via overnight system repos was possible . Federal funds opened at 7 - 5 / 8 pct and remained at that level late this morning , compared with an average effective rate of 7 . 55 pct Friday .

TRANSATLANTIC ROW zulchzulu LOUVRE ACCORD - DEALERS The Louvre accord on currency stability , which has maintained an uneasy calm in currency markets since last February , appeared in serious danger today as a transatlantic dispute over West German interest rates came to the boil , foreign exchange dealers said . But as the dollar slid against the mark and world stock and bond markets plunged , officials in the major industrial countries played down the dispute as a bilateral problem between the United States and West Germany and insisted that the currency pact was still alive . U . S . Treasury Secretary James Baker sparked the market fears when he attacked the rise in West German short - term interest rates . " That ' s not in keeping with the spirit of what we agreed to as recently as earlier this month in Washington zulchzulu Baker said in a U . S . Television interview on Sunday . He was referring to the meetings of Finance Ministers from the Group of Seven ( G7 ) leading industrial nations which reaffirmed the pact . Under the Louvre Accord West Germany and Japan , who both have large trade surpluses , pledged to boost their economic growth to take in more exports from the U . S zulchzulu While the U . S . Agreed to stop talking the dollar down . However , Baker said on Saturday that while the Louvre agreement was still operative , the West German interest rate move would force the U . S . To re - examine the accord . " The foreign exchange market has been told by Baker that he ' s going to hammer Germany ... He has just declared all bets are off in terms of currency cooperation zulchzulu Chris Johns , currency analyst at UBS - Phillips and Drew in London said . But a Bank of Japan official took a much more sanguine view , telling Reuters that " the exchange market is apparently reacting too much , and anyone who sold the dollar on the

INDUSTRIAL NATIONS RECONVENE FOR TALKS Financial ministers and central bankers of leading industrial nations reconvened here this afternoon . Canadian Finance Minister Michael Wilson said on entering the meeting the ministers would review the Paris agreement . Asked if he was satisfied with West German and Japanese stimulus , Wilson replied , " They could do a little more zulchzulu French Finance Minister Edouard Balladur , meanwhile , confirmed there would be a communique at the end of the meeting . Finance ministers and central bankers of Britain , FRance , Canada and West Germany were seen by Reuter correspondents returning to a Treasury building . Japanese officials and Bundesbank President Karl Otto Poehl did not appear to have left the building at the end of earlier Group of Five talks which broke up around 2 p . m . local time ( 1800 gmt zulchzulu There was no sign , however , of the Italian delegation whose position was thrown into question this morning by the resignation of the Christian Democratic wing of Italy ' s Socialist - led government . European monetary officials said later that the Italian delegation was inside the building . This meant that a full blown meeting of the Group of Seven was in progress .

VENEZUELA TIGHTENS FOREIGN EXCHANGE RESTRICTIONS Venezuela ' s central bank has ordered Venezuelan banks and exchange houses to cease foreign exchange operations with brokers based outside the country , according to a copy of a central bank telex made available to Reuters . The measure , confirmed by a brokerage firm here , has effectively cut off all foreign participation in Venezuela ' s volatile currency market . The telex , issued on May 19 , was signed by Carlos Hernandez Delfino , manager of the bank ' s department of international operations . The telex said the restriction on business with foreign brokers is in line with an earlier measure prohibiting foreign exchange houses from selling dollars or other foreign currencies to anyone living outside Venezuela . In recent weeks the Venezuelan government has denied rumours that it intends to impose foreign exchange controls to prop up the weakening bolivar . But brokers said the central bank ' s move is seen as a de facto currency control . " It is definitely a control in the sense that there ' s no longer complete freedom to operate zulchzulu one broker here said . " Gradually they ' re imposing restrictions and the direction is towards complete control zulchzulu the broker said . The broker , who requested anonymity , said virtually all his Venezuelan customers had stopped doing business with him since the central bank issued the telex and followed it up with telephone calls . He said that before the restriction was imposed the volume of his firm ' s transactions with Venezuela was about 10 mln dlrs a day . " It was a frenetic market , it was really quite active zulchzulu he said . The broker said he saw no logical explanation for the prohibition because his firm only acted act as an intermediary between Venezuelan brokers , exchange houses and banks . " We weren ' t buying dollars from Venezuelans , that ' s ridiculous zulchzulu he said . " They ' ve been on a rampage against foreigners zulchzulu The broker

YIELD ON 91 - DAY SAMA DEPOSITS RISES The yield on 91 - day bankers security deposit accounts issued this week by the Saudi Arabian Monetary Agency ( SAMA ) rose to 6 . 43896 pct from 6 . 21563 a week ago , bankers said . SAMA lowered the offer price on the 500 mln riyal issue to 98 . zulchzulu from 98 . zulchzulu last Monday . Like - dated interbank deposits were quoted today at 6 - 3 / 4 , 5 / 8 pct . SAMA offers a total of 1 . 9 billion riyals in 30 , 91 and 180 - day accounts to banks in the Kingdom each week .

zulchzulu BALANCE OF PAYMENTS IN DEFICIT IN MAY Italy ' s overall balance of payments showed a deficit of 3 , 211 billion lire in May compared with a surplus of 2 , 040 billion in April , provisional Bank of Italy figures show . The May deficit compares with a surplus of 1 , 555 billion lire in the corresponding month of 1986 . For the first five months of 1987 , the overall balance of payments showed a surplus of 299 billion lire against a deficit of 2 , 854 billion in the corresponding 1986 period .

zulchzulu SETS NEW REPURCHASE TENDER The Bundesbank set a new tender for a 28 - day securities repurchase agreement , offering banks liquidity aid at a minimum bid rate of 3 . 50 pct , a central bank spokesman said . Banks must make their bids by 1400 GMT today and funds allocated will be credited to accounts tomorrow . Banks must repurchase securities pledged on July 1 .

TAIWAN CURBS zulchzulu OF FOREIGN EXCHANGE Taiwan ' s central bank announced that as from today the overseas foreign exchange borrowings of local and foreign banks would be frozen at the level they reached at the end of May . The central bank ' s statement added that the measure would be effective until the end of July . Bankers said the measure is designed to curb the inflow of foreign exchange and slow the growth of money supply . They added that the move , which sparked a record single day plunge of the local stock market , would limit their ability to lend foreign exchange to importers and exporters . Foreign exchange borrowings by local and foreign banks reached almost 12 billion U . S . Dlrs by the end of April , according to official statistics . Last week the central bank said that from today it would reduce its purchase of forward U . S . Dollars from banks to 40 pct from 90 pct of the value of the contract . It said the move was needed because of " distortions " in the foreign exchange market . Exporters , nervous about the appreciating Taiwan dollar , have been heavily selling forward U . S . Dollars on the interbank market to avoid exchange rate losses . Official figures show that forward U . S . Dollar sales in May reached a record of almost six billion U . S . Dlrs against 5 . 9 billion in April . All Taiwan ' s foreign exchange earnings must be converted into local dollars , boosting money supply at a time of booming exports . Money supply rose a seasonally adjusted 51 . 86 pct in the year to end - April , raising fears of higher inflation . In March the central bank clamped tight restrictions on remittances of foreign exchange by companies and individuals to Taiwan in a move to curb inflows of speculative money . Economists and bankers estimate that the rising value of the local dollar has attracted about ten billion U

U . S . STUDY SAYS TARIFFS AND QUOTAS COULD BACKFIRE The use of tariffs and quotas to reduce the flow of foreign goods into the United States will do little to cut the nation ' s swelling trade deficit , a government study said . In fact , the Federal Trade Commission ( FTC ) report said , such protectionist policies could make U . S . Products less competitive in the world marketplace by raising the cost of imported products that are re - exported in different forms . " Such policies are much more likely to hurt , rather than help , the productive capabilities of the U . S . Economy zulchzulu it said . The 218 - page report , written by FTC economists John Hilke and Philip Nelson , blamed the rising trade shortfall , which climbed to a record 166 . 3 billion dlrs last year , on shifting currency exchange rates and growing U . S consumer demand . Other factors commonly blamed for the deficit , such as foreign trade practices , deteriorating U . S . Industrial competitiveness , high labour costs and government restrictions on mergers , added little to the problem , it said . " Although each industry ' s competitiveness affects the level of imports and exports in that industry , in general we find that there have been no significant industry - specific changes affecting competitiveness that would explain the increase in the overall trade deficit zulchzulu the study said . " To the extent any government action is needed to deal with the trade deficits , policies should focus on economy - wide phenomena such as exchange rates and relative economic growth zulchzulu the FTC study said . Supporting its conclusion that broad - based economic shifts were the cause of the increase in the trade deficit , the report said it found that nearly all U . S . Industries lost some domestic market share to foreign competitors in the 1980s . It also said it found a " fairly direct relationship "

FED ADDS RESERVES VIA CUSTOMER zulchzulu The Federal Reserve entered the U . S . Government securities market to arrange 1 . 5 billion dlrs of customer repurchase agreements , a Fed spokesman said . Dealers said Federal funds were trading at 6 - 1 / 2 pct when the Fed began its temporary and indirect supply of reserves to the banking system . Most had expected the Fed to supply reserves directly via System repurchase agreements or to add them indirectly through two billion dlrs or more of customer repurchase agreements . Some believe the Fed is adding fewer reserves than are needed to keep upward pressure on rates and so help the dollar .

zulchzulu WARNS AGAINST FURTHER DOLLAR FALL Bundesbank President Karl Otto Poehl said a weaker dollar would be risky and a further appreciation of the mark would damage prospects for sustained West German economic growth . In a speech to the Institute of Contempory German Affairs here , Poehl said " It would be an extremely risky policy to aim for a further substantial decline in the value of the dollar to correct the trade deficit zulchzulu He said the United States could face a vicious circle of depreciation , inflation and more depreciation if it took that route . Poehl noted West Germany had already taken steps to meet U . S . Demands for greater stimulation of its domestic economy , accelerating tax cuts , cutting interest rates and tolerating above - target money supply growth . He said he would have been happy to have brought forward five billion marks of tax cuts now planned for January 1988 to the beginning of this year , but he said the government faced political constraints getting such measures through the upper house of the West German parliament . But there were also limits to the impact West Germany could accept on exports from a rising mark , he said . Poehl said West Germany relied on exports for about one - third of its gross national product , so a substantial erosion of export markets could not be offset by increasing demand at home . " A further appreciation of the mark could even be an obstacle to further growth zulchzulu he said . Poehl said the Bundesbank had tolerated rapid money supply growth last year because the country enjoyed low inflation and because external factors , including low oil prices and favourable terms of trade , had given some extra leeway . But Poehl said West Germany now faced a difficult dilemma over monetary policy . The underlying rate of inflation was now two pct , not the reported negative inflation rates last year , and West Germany was affected more than before by exchange rate developments . "

CANADA BANK RATE RISES TO 8 . 59 PCT Canada ' s bank rate rose marginally to 8 . 59 pct from 8 . 58 pct last week , Bank of Canada said . The bank rate is set one - quarter percentage point above the average yield on the weekly issue of 91 - day treasury bills . This week ' s yield was 8 . 34 pct , compared with the previous week ' s 8 . 33 pct . Tenders were accepted for 2 . 20 billion dlrs of 91 - day bills at an average price of 97 . 963 dlrs against 97 . 965 dlrs last week . The 1 . 20 billion dlrs of 182 - day bills were priced at an average 95 . 852 dlrs against 95 . 779 dlrs last week , to yield an average 8 . 68 pct against 8 . 84 pct last week . The 500 mln dlrs of 364 - day bills were priced at an average 91 . 712 dlrs against 91 . 529 dlrs last week , to yield an average 9 . 06 pct against 9 . 28 pct last week . Tenders will be received next week for 2 . 20 billion dlrs of 91 - day bills , 1 . 20 billion dlrs of 182 - day bills and 500 mln dlrs of 364 - day bills .

LAWSON SAYS LOUVRE CURRENCY ACCORD SATISFACTORY The Louvre agreement by the Group of Seven finance ministers and central bankers to stabilise currencies has worked well and needs no fundamental strengthening at the economic summit in Venice on June 8 - 10 , U . K . Chancellor of the Exchequer Nigel Lawson said . Previewing the summit , which he expected would not produce any major new economic initiatives , Lawson told reporters work remained to be done on improving the conditions for lasting world economic growth . zulchzulu measures to boost growth , he said . " I think it is possible that there may be scope for a further reduction in interest rates in Germany zulchzulu he added , but stressed that he had had no indication that such a move was likely . He made no mention of Japanese interest rates . Lawson said the U . S . Should embark on " a gradual reduction of its fiscal deficits over the next two or three years zulchzulu He said the February 22 Louvre accord had produced " satisfactory exchange rate stability zulchzulu in part thanks to heavy coordinated intervention of Group of Seven central banks , and he was " content " with sterling ' s exchange rate . Pointing to the record 4 . 8 billion stg rise in U . K . May currency reserves announced today he said , " we have been playing a very full part ourselves ... We have been intervening to a very much greater extent than we had done hitherto zulchzulu Lawson said there was a risk that the Louvre agreement may falter if member states did not implement the macro - economic commitments underlying the accord . " Certainly it would be more difficult to maintain exchange rate stability if countries are seen not to implement their commitments in Paris ... In this respect zulchzulu He said the U . S . Budget deficit was " very important zulchzulu Noting the 6 , 000 billion yen economic package announced by Japanese Prime Minister Yasuhiro Nakasone last week

FINANCE MINISTERS AGREE ON NEED FOR STABILITY Finance ministers from seven major industrialized nations agreed on the need to stabilize currencies at current levels but said more action was needed to reduce trade imbalances and sustain economic growth . In a communique issued after a four - hour meeting at the U . S . Treasury that ended last night , the ministers said the value of the dollar and other currencies was basically correct now , and they welcomed new measures planned by the Japanese to boost their economy . West German Finance Minister Gerhard Stoltenberg called it a " good meeting " and in brief remarks exchanged with reporters other ministers seemed pleased with its outcome . Shortly after the communique was issued and just as foreign exchange trading opened in Tokyo , the Bank of Japan intervened again to prevent the yen rising too quickly . The communique said , " The ministers and governors reaffirmed the commitment to the cooperative approach agreed at the recent Paris meeting . They agreed , however , that further actions will be essential to resist rising protectionist pressures , sustain global economic expansion and reduce trade imbalances zulchzulu It welcomed the plans set this week by the Japan ' s ruling Liberal Democratic Party to stimulate its economy with what the communique termed " extraordinary and urgent measures " including an " unprecedented front - end loading of public works expenditures zulchzulu The meeting of the so - called Group of Seven brought together ministers and central bank governors of the seven major industrial democracies , the United States , Japan , West Germany , France , Britain , Italy and Canada . The communique said the ministers reaffirmed the commitment on cooperation reached in a meeting on February 22 in Paris when they had agreed to stabilize foreign exchange rates at the then - current levels . In the weeks that followed , the dollar continued to fall against the Japanese yen despite massive dollar purchases by the Bank of Japan and other central banks and is now trading

JAPAN DETAILS PLAN TO STAVE OFF TRADE PROBLEMS Japan ' s Liberal Democratic Party ( LDP ) has drawn up a detailed plan calling for large tax cuts and an increase in government purchases of foreign goods , the head of the committee working out the plan , Junichiro Koizumi , said . The plan will also urge the government to double 1985 ' s official development assistance to 7 . 6 billion dlrs within five years instead of seven as the government had promised , senior LDP officials said at a press conference . LDP executive council chairman Shintaro Abe will explain the plan to U . S . Officials when he visits the U . S . On April 19 . Abe ' s visit is to prepare for Prime Minister Yasuhiro Nakasone ' s talks with President Ronald Reagan later this month . Koizumi said the LDP plan will not specify the size of the tax cut or the amount of domestic demand to be stimulated . However , top LDP executives will work out figures so that Abe will be able to offer specifics to U . S . Officials . The proposed increase in procurement of foreign goods by the government will probably include the purchase of super computers , LDP officials said . According to the plan , Japan will also strive to solve specific trade problems with other nations and will encourage flows of funds to developing countries , the officials said . The LDP expects the measures to prop up the economy and lessen trade problems with the U . S zulchzulu They added . The basic ideas of the LDP ' s plan were presented to and welcomed by monetary authorities of the major industrial nations in Washington last week , they said . The LDP plan will form the basis for the last of several packages to stimulate Japanese domestic demand and will be unveiled by the government in late May .

zulchzulu WELCOMES U . S zulchzulu JAPAN AGREEMENT ON LOUVRE Bank of Japan governor Satoshi Sumita said he welcomed Monday ' s U . S . And West German joint confirmation of their commitment to the Louvre accord . Sumita said in a statement that world stockmarkets were excessively concerned about the economic future . The Bank of Japan will continue to adhere to a system of policy coordination based upon the Louvre accord of February , he said . The accord called for stability in foreign exchange rates . Exchange rates generally are regaining stability and the economies of industrialised nations are heading for a steady recovery , he said .

JAPAN DETAILS PLAN TO STAVE OFF TRADE PROBLEMS Japan ' s Liberal Democratic Party ( LDP ) has drawn up a detailed plan calling for large tax cuts and an increase in government purchases of foreign goods , the head of the committee working out the plan , Junichiro Koizumi , said . The plan will also urge the government to double 1985 ' s official development assistance to 7 . 6 billion dlrs within five years instead of seven as the government had promised , senior LDP officials said at a press conference . LDP executive council chairman Shintaro Abe will explain the plan to U . S . Officials when he visits the U . S . On April 19 . Abe ' s visit is to prepare for Prime Minister Yasuhiro Nakasone ' s talks with President Ronald Reagan later this month . Koizumi said the LDP plan will not specify the size of the tax cut or the amount of domestic demand to be stimulated . However , top LDP executives will work out figures so that Abe will be able to offer specifics to U . S . Officials . The proposed increase in procurement of foreign goods by the government will probably include the purchase of super computers , LDP officials said . specific trade problems with other nations and will encourage flows of funds to developing countries , the officials said . The LDP expects the measures to prop up the economy and lessen trade problems with the U . S zulchzulu They added . The basic ideas of the LDP ' s plan were presented to and welcomed by monetary authorities of the major industrial nations in Washington last week , they said . The LDP plan will form the basis for the last of several packages to stimulate Japanese domestic demand and will be unveiled by the government in late May .

U . K . LENDERS OFFER MORE FIXED RATE MORTGAGES More U . K . Lenders are offering homebuyers fixed interest rate mortgages under which the borrower makes the same monthly payment no matter what happens to other interest rates . And with mortgage rates now at their lowest levels in years , the loans have been snapped up by eager home buyers trying to lock into cheap money . The decision to offer fixed rate loans , industry officials said , reflects the increasingly competitive nature of the home mortgage business . While fixed rate mortgages are uncommon in the U . K zulchzulu They were the mainstay of the business in the U . S . Up until only a few years ago . But in the early 1980s interest rates soared . U . S . Lenders , mostly savings and loan associations , were earning rates as low as three pct on 30 year fixed rate mortgages they held in their portfolios but had to pay depositors rates as high as 15 pct to induce them to retain their accounts . As a result hundreds of institutions collapsed or were forced to merge . The survivors decided to offer mortgages whose rates would move in line with the cost of funds . " We very much have the example of the U . S . Thrifts in mind zulchzulu said a spokesman for Abbey National Building Society , explaining why his institution , for the time being , is only offering variable rate mortgages . The rash of advertising to solicit new business has helped homebuyers to become even choosier about loans and lenders concede they are being forced to undercut each other still more . Sharp cuts on variable rate mortgages announced earlier this week by the nation ' s two largest building societies and by National Westminster Bank Plc reflect growing competition for new business , officials at all three institutions said . The fixed rate mortgages on offer carry interest rates even below those on the variable rate loans . " Of course

INVESTMENT CRUCIAL TO U . S . TEXTILE RECOVERY With more private investment , not more protection , the U . S . textile industry could become competitive with the most modern foreign producers , analysts from two congressional agencies said today . The Office of Technology Assessment , a nonpartisan arm of Congress told a House Ways and Means Trade Subcommittee hearing there was still concern for the future of parts of the U . S . textile and apparel industry , but there was more reason for optimism than a few years ago . " While textile producers are making significant investments , they could do more zulchzulu OTA analyst Henry Kelly said . The Congressional Budget Office ( CBO zulchzulu the nonpartisan budget analysis arm of Congress , said federal loans or loan guarantees would be preferable options for Congress rather than increased trade protection which could lead to foreign retaliation . CBO analyst Edward Gramlich said past trade protections , first imposed in the 1950 ' s have had only a small benefit for profits and investments of domestic firms . Trade Subcommittee chairman , Rep . Sam Gibbons , said the agencies analyses seemed to agree with his opinion against congressional approval of protectionist textile quota legislation aimed mainly at Western Europe , Japan and other Asian textile producing countries . President Reagan last year vetoed a textile protection bill but it was reintroduced in this session of Congress and is expected to be voted on in the House this year . However , approval this year is in doubt because passage of a major trade bill without specific protections for textiles showed a weakening of support for the legislation . Most U . S . producers have fallen behind other foreign producers in the use of modern textile and apparel production equipment and net imports are growing faster than the domestic markets , Kelly said . He added that private investment in the textile and clothing industry in 1983 of 0 . 5 pct was less than one - seventh the average manufacturing investment

SAUDI RATES RISE AS BAHRAIN BANKS CAUGHT SHORT Saudi riyal interest rates rose as Bahrain - based banks scrambled to cover short positions , dealers said . Several Bahrain banks had been lending in the fixed periods and borrowing in the short dates , but today they found the day - to - day money in short supply , dealers said . " Everybody ' s stuck in the spot - next zulchzulu one trader said . Spot - next rose to as high as 6 - 1 / 4 , six pct from 5 - 1 / 4 , five pct yesterday , and the borrowing interest spilled over into the periods , with one month rising to around 6 - 3 / 16 , 5 - 15 / 16 pct from 5 - 15 / 16 , 7 / 8 pct yesterday . Three months edged up to around 6 - 9 / 16 , 5 / 16 pct from 6 - 7 / 16 , 1 / 4 pct , while six months was quoted a touch firmer by some banks at seven , 6 - 3 / 4 pct . Commercial banks quoted the spot riyal at 3 . 7500 / 04 to the dollar after 3 . 7507 / 09 yesterday .

U . S . SENATE TEAM WANTS MULTINATIONAL GULF FORCE The leaders of a U . S . Senate team probing American defense strategy in the MidEast Gulf said they favored a multinational force to keep oil flowing through the waterway . Sen . John Glenn and John Warner , in Kuwait as part of a Gulf Arab tour , said at a news conference that top officials in the area appeared ready to discuss extra facilities needed if the U . S . upgraded its defense role . The Senate team next heads for the United Arab Emirates , their last stop on a fact - finding mission prompted by Reagan administration plans to let half of Kuwait ' s 22 - tanker fleet fly the U . S . flag . Glenn and Warner said the U . S zulchzulu Britain and France , should explore the possibility of a unified Gulf force . " The American ships , the British ships , the French ships now talk to each other and all we ' ve got to do is formalize this arrangement zulchzulu Warner said . Glenn said a multinational force could be effectively deployed within 24 hours of a decision . Glenn voiced a preference for a United Nations multinational force , or failing that , an American , British , French force with cooperation from the Gulf Arab states . Warner voiced concern that the Soviet Union might use the situation in the Gulf to raise its presence . " And , unequivocally , all GCC states we have talked with , have said that would not be in the interests of the Arabian peninsula zulchzulu

REAGAN HINTS U . S . WANTS HELP IN zulchzulu GULF President Reagan said he would discuss the Mideast Gulf situation with allied leaders at next week ' s Venice economic summit and hinted he would seek their help in preserving free navigation . In a speech prepared for delivery as the United States made plans to protect 11 Kuwaiti oil tankers from Iranian attack , Reagan said the American people were aware that " it is not our interests alone that are being protected zulchzulu Saying that allied dependence on gulf oil was no secret , Reagan declared , " During the upcoming summit in Venice , we will be discussing the common security interests shared by the western democracies in the MIDEAST Gulf . " The future belongs to the brave . Free men should not cower before such challenges , and they should not expect to stand alone zulchzulu Reagan will meet the leaders of Britain , France , West Germany , Italy , Canada and Japan at the economic summit , which will take place in Venice June 8 - 10 . The 13th annual top - level meeting of the major industrial democracies will take place against a backdrop of rising congressional concern over Reagan ' s plan to protect gulf shipping and demands that the allies do more . These concerns were heightened by the May 17 Iraqi missile attack on the U . S . frigate Stark which killed 37 seamen . " They died while guarding a chokepoint of freedom , deterring aggression and reaffirming America ' s willingness to protect its vital interests zulchzulu Reagan said . In a pre - summit speech celebrating the 40th anniversary of the Marshall Plan , Reagan , who spoke to an audience of foreign affairs experts , also pledged to push for economic expansion by West Germany and Japan to bolster the world trading system . " While the vibrancy of the U . S . economy has contributed enormously to the world expansion , preserving a growing world economy is the business of

U . S . BANKS LIKELY TO LIFT PRIME RATES AGAIN SOON Major U . S . banks may lift prime lending rates again within days due to recent increases in their borrowing costs and speculation the Federal Reserve is nudging up interest rates to help the dollar , economists said . In what was the first prime rate boost since mid - 1984 , most banks in early April lifted their rates a quarter point to 7 - 3 / 4 pct , citing a reduced gap between the prime and their own cost of money . That spread has narrowed again . " A prime rate increase could happen as soon as tonight zulchzulu said Robert Brusca of Nikko Securities Co International Inc . Brusca said a quarter - point prime rate rise to eight pct is justified because the spread between banks ' cost of funds and the prime rate has narrowed to less than three quarters of a percentage point . He said that spread had averaged around 1 . 4 percentage points since last October until it fell below one point and triggered the April prime rate rise at most banks . " We could easily have another prime rate increase as soon as this week zulchzulu said David Jones of Aubrey G . Lanston and Co . " We ' ve got a fairly good chance of a prime rate rise in the near future zulchzulu said Allan Leslie of Discount Corp . " Based on the spread between the prime rate and funding costs , you would ordinarily see a prime rate increase now zulchzulu said Harold Nathan , economist at Wells Fargo Bank . However , he said banks may be reluctant to lift the prime because that would dampen already fairly weak business loan demand and because some are not sure the Fed will maintain recent upward pressure on money market interest rates . Nathan believes the Fed has let market pressures lift short - term rates in recent days to help the ailing dollar . He said " if there

U . S . DOLLAR LOSSES PROPEL BROAD COMMODITY GAINS Commodities from gold to grains to cotton posted solid gains in a flurry of buying today as losses in the U . S . dollar and rising interest rates kindled fears of inflation and economic instability . Gains were most pronounced on the Commodity Exchange in New York , where gold jumped 12 . 40 dlrs and closed at 436 . 50 dlrs a troy ounce , and silver 22 . 5 cents to 6 . 86 dlrs a troy ounce . A key factor behind the advance was anticipation that inflation will be the only way for the major industrial nations to halt the slide in the value of the U . S . dollar , said Steve zulchzulu , director of commodity research with Smith Barney , Harris Upham and Co zulchzulu in New York . The dollar tumbled one day after top finance officials from the seven largest industrial nations reaffirmed their commitment to support its value , and despite reports of intervention by the U . S . Federal Reserve Bank , traders said . Traders said it appears that the industrial nations , known as the Group of Seven , lack the ability to change the long - term direction of the currency markets . " Maybe they have some ideas or plans zulchzulu said zulchzulu . " If they do , it ' s not evident zulchzulu " It looks like there ' s no cure but to let the free market take values to where they should be . " One way or another , we will force our major trading partners to stimulate their economies zulchzulu as a measure to correct the mounting U . S . trade deficit , zulchzulu said . " I think the markets believe , and have believed for a long time , that the only recourse is to reflate at some point . It ' s going to be a long and tedious process , but that ' s what ' s happening zulchzulu he said

FED EXPECTED TO SET CUSTOMER zulchzulu The Federal Reserve is expected to add reserves to the U . S . banking system by arranging a round of customer repurchase agreements during this morning ' s intervention period , several economists said . Some others , however , judged that the Fed has almost completed its reserve - adding requirement for the statement period ending on Wednesday and will not need to operate today . Fed funds were trading at 6 - 11 / 16 pct , compared with Friday ' s average of 6 . 63 pct .

PAPER SAYS U . S . TRADE DEFICIT CUT TO 13 . 65 BILLION The Washington Post said the U . S . Commerce Department yesterday issued a new report showing that the U . S . Merchandise trade deficit was 13 . 65 billion dollars in February , a reduction of 1 . 4 billion dlrs from the 15 . 06 billion figure the department reported only two days earlier . The newspaper said : " News of the unexpectedly large 15 billion deficit helped batter the dollar ' s value on foreign exchange markets and boosted U . S . Interest rates . " However , the new report went largely unnoticed by financial markets since such a downward revision in the deficit is a monthly occurrence zulchzulu The Washington Post said : " By law , the department must first publish what a top commerce official agreed are misleading trade figures and then wait 48 hours before putting out the more accurate ones zulchzulu No one was immediately available at the Commerce Department for comment on the Washington Post report .

JAPAN DOES NOT INTEND TO EASE CREDIT - OFFICIALS The Bank of Japan does not intend to ease credit policy further , bank officials told Reuters . They were responding to rumours in the Japanese bond market that the central bank was planning to cut its 2 . 5 pct discount rate soon , possibly before Prime Minister Yasuhiro Nakasone leaves for Washington on April 29 . Bank of Japan governor Satoshi Sumita will be in Osaka , western Japan on April 27 and 28 for the annual meeting of the Asian Development Bank , making a rate cut announcement early next week a virtual impossibility , they said . April 29 is a holiday here .

SENATE BACKS U . S . RETALIATION IN GULF The U . S . Senate on Tuesday backed President Reagan ' s retaliatory strike against Iranian targets in the Gulf as it moved to take a greater role in making policy in the volatile region . Senators voted 92 - 1 for a non - binding measure that endorsed Monday ' s U . S . attack on two Iranian oil platforms in retaliation for an Iranian attack last Friday on a Kuwaiti ship flying the American flag . The measure said the attack was a firm indication of U . S . resolve that Iran " cannot take military action against the United States with impunity zulchzulu Earlier , the Senate cut off Republican stalling tactics and set a vote on a measure that could give Congress a larger role in making Gulf policy . The measure , however , does not require Reagan to comply with the 1973 War Powers Act , which could lead to a pullout of U . S . forces from the Gulf . While Democrats and Republicans praised the U . S . retaliatory strike , many voiced new fears about the growing U . S . involvement in the Gulf and some demanded that Reagan comply with the War Powers Act .

DEFICIT CUTS SEEN UNABLE TO CURE TRADE DEFICIT Financial analysts say they are pleased with congressional moves to trim next year ' s federal budget deficit but believe the actions will do little to help improve the U . S . trade deficit or buoy the economy . The House of Representatives is expected to vote tomorrow to approve a trillion - dollar budget blueprint for the coming fiscal year that reduces the deficit by 38 billion dlrs . Similarly , the Senate Budget Committee has approved a plan that would cut federal red ink by about 37 billion dlrs next year . " In terms of the economy , 37 - 38 billion dlrs is infinitesimal , so cuts of this magnitude will have little impact on the economy and the trade deficit zulchzulu said Stanley Collander , a Touche Ross federal budget policy analyst . " At best , it will have a small positive effect zulchzulu Collander said in an interview . Federal Reserve Board Chairman Paul Volcker has repeatedly told Congress that cutting federal red ink would go a long way to help reduce the massive trade deficit and also help ease some of the downward pressure on the value of the dollar . The U . S . government has attempted to remedy the trade imbalance by driving down the value of the dollar . But Volcker has warned that a further fall in the dollar ' s value is fraught with danger . Such a decline , he has said , could refuel inflation as imported goods become more expensive and chase away foreign capital needed to finance the federal budget deficit . In addition , in February , U . S . officials meeting with other major industrialized nations in Paris agreed that the value of the dollar had dropped enough and that world exchange rates should be stabilized at around current levels . As part of that agreement , Japan and West Germany agreed to take steps to stimulate their economies and the United States agreed to cut its budget deficit .

TAIWAN ANNOUNCES NEW ROUND OF IMPORT TARIFF CUTS Taiwan announced plans for another round of import tariff cuts on 862 foreign goods shortly before trade talks with Washington which officials described as a move to help balance trade with the United States . Wang Der - Hwa , Deputy Director of the Finance Ministry ' s Customs Administration Department , told reporters the list of products included 60 items asked by Washington . " The move is part of our government efforts to encourage imports from our trading partners , particularly from the United States zulchzulu he said . He said the ministry sent a proposal today to the cabinet that the tariffs on such products as cosmetics , bicycles , apples , radios , garments , soybeans and television sets be cut by between five and 50 pct . The cabinet was expected to give its approval next Thursday and the new tariff cuts would be implemented possibly starting on April 20 , he added . Taiwan introduced a sweeping tariff cut on some 1 , 700 foreign products last January aimed at helping reduce its growing trade surplus with the United States , the island ' s largest trading partner . Washington however was not satisfied with the cuts and pressed for more reductions as a way of cutting its huge trade deficit with Taipei . Washington ' s deficit with Taipei rose to a record 13 . 6 billion U . S . Dlrs last year from 10 . 2 billion in 1985 . It widened to 3 . 61 billion in the first quarter of 1987 from 2 . 78 billion a year earlier , Taiwan ' s official figures show . Today ' s announcement came before a departure later today of a 15 - member Taiwan delegation for Washington for a series of trade talks with U . S . Officials . The delegation ' s leader , Vincent Siew , told reporters last night he was leaving with " a heavy heart zulchzulu meaning that he would face tough talks in Washington because

TAIWAN ANNOUNCES NEW ROUND OF IMPORT TARIFF CUTS Taiwan announced plans for another round of import tariff cuts on 862 foreign goods shortly before trade talks with Washington which officials described as a move to help balance trade with the United States . Wang Der - Hwa , Deputy Director of the Finance Ministry ' s Customs Administration Department , told reporters the list of products included 60 items asked by Washington . " The move is part of our government efforts to encourage imports from our trading partners , particularly from the United States zulchzulu he said . He said the ministry sent a proposal today to the cabinet that the tariffs on such products as cosmetics , bicycles , apples , radios , garments , soybeans and television sets be cut by between five and 50 pct . The cabinet was expected to give its approval next Thursday and the new tariff cuts would be implemented possibly starting on April 20 , he added . Taiwan introduced a sweeping tariff cut on some 1 , 700 foreign products last January aimed at helping reduce its growing trade surplus with the United States , the island ' s largest trading partner . Washington however was not satisfied with the cuts and pressed for more reductions as a way of cutting its huge trade deficit with Taipei . Washington ' s deficit with Taipei rose to a record 13 . 6 billion U . S . Dlrs last year from 10 . 2 billion in 1985 . It widened to 3 . 61 billion in the first quarter of 1987 from 2 . 78 billion a year earlier , Taiwan ' s official figures show . Today ' s announcement came before a departure later today of a 15 - member Taiwan delegation for Washington for a series of trade talks with U . S . Officials . The delegation ' s leader , Vincent Siew , told reporters last night he was leaving with " a heavy heart zulchzulu meaning that he would face tough talks in Washington because

ITALIAN BALANCE OF PAYMENTS IN DEFICIT IN MAY Italy ' s overall balance of payments showed a deficit of 3 , 211 billion lire in May compared with a surplus of 2 , 040 billion in April , provisional Bank of Italy figures show . The May deficit compares with a surplus of 1 , 555 billion lire in the corresponding month of 1986 . For the first five months of 1987 , the overall balance of payments showed a surplus of 299 billion lire against a deficit of 2 , 854 billion in the corresponding 1986 period .

EUROPEAN COMMUNITY zulchzulu U . S TRADE MEASURES The European Community ( EC ) accused the United States of violating a political commitment to free trade through practices including a tax on imported gasoline and a customs user fee . EC ambassador Tran Van - Thinh made the formal charge to the surveillance body of the General Agreement on Tariffs and Trade ( GATT zulchzulu GATT spokesman David Woods told reporters . Woods also said the EC was joined by the United States in criticising Brazil for extending its list of products for which import licenses have been temporarily suspended , so as to improve its balance of payments . The United States charged Japan with violating GATT rules by restricting imports of agricultural products through an import licensing system . The United States asked for consultations with Tokyo on the issue . Tran charged that the trade measures contravened a political commitment to halt and reverse trade barriers , pledged by ministers in Punta del Este last September . When ministers established the four year Uruguay round to negotiate freer trade in 13 areas , they set up the GATT surveillance body to monitor this commitment , known in GATT jargon as " standstill and rollback zulchzulu Tran criticised Washington for the " superfund " tax on oil imports , a customs user fee , and the removal of a special machine tool ( known as category zulchzulu ) from its government procurement list for reasons of national security . Warren zulchzulu , a U . S . Trade official , defended the policies , saying they did not violate GATT trade rules . The surveillance body will send a record of today ' s talks to the Trade Negotiating Committee , which oversees the round , to decide any further action on the charges . The oil tax and customs user fee have already been the subject of formal GATT dispute panels set up outside the Uruguay Round to rule on the legality of the practices . The ruling GATT Council yesterday adopted a dispute panel ' s

BONN MINISTRY HAS NO COMMENT ON BAKER REMARKS The West German Finance Ministry declined to comment on weekend criticism by U . S . Treasury Secretary James Baker of recent West German interest rate increases . Baker said the U . S . Would re - examine the February Louvre Accord to stabilise currencies reached by leading industrial democracies . The rise in West Germany short term interest rates was not in the spirit of an agreement by these nations in Washington , which reaffirmed the Louvre pact , he said . A Finance Ministry spokesman , asked for an official ministry reaction to Baker ' s remarks , said he could make no comment .

SENATOR URGES ACTION TO STABILIZE STOCK MARKETS Sen . John Heinz , R - Pa , urged the Administration to take steps to reduce volatility in the financial markets , including suspending program trading and limiting daily trading on stock index futures . Heinz said margin requirements for index futures , now six pct , should be the same as for common stock and equities . He urged creation of a task force to be headed by former Federal Reserve chairman Paul Volcker to coordinate international credit and zulchzulu policies among major nations and stabilize interest rates at the lowest possible levels .

CURRENCY MOVES MAY BE HURTING WORLD TRADE Japanese trade figures are seriously challenging the entrenched view of policy makers of the Group of Seven industrialised nations that relative currency rates are the key to smoothing world trade problems . Senior Japanese , U . S . And European officials in Tokyo say they are at a loss to fully explain the data , for if currencies are the key they ask , why then are are U . S . Exports to Japan shrinking ? What if manipulating currencies and driving the dollar down made world trade problems worse rather than solving them , fulfilling Federal Reserve chairman Paul Volcker ' s forecast of world trade recession ? U . S zulchzulu Japan trade has declined even after a 40 pct dollar fall against the yen since the September 1985 Group of Five pact in New York . The lower dollar ought to have made U . S . Exports 40 pct more competitive in Japan . The officials , most of them economists , can offer no objective reason why they are not . Worse , how are European Community sales to Japan rising rapidly when the European Currency Unit has until now declined only 11 pct against the yen zulchzulu Last week ' s G - 7 meeting in Washington has been widely interpreted as a sign from the policy makers that the dollar must go lower . So worst of all , what if Volcker is correct ? At a loss to give an objective explanation , officials can only offer explanations which tend to be highly subjective . " I don ' t know and I don ' t think anyone knows zulchzulu said Hugh Richardson , acting head of the EC delegation in Tokyo . " What I do know is that Community exporters are making a hell of an effort in this market . If you make an effort , there is money to be made in Japan zulchzulu he added . But U . S . Officials and businessmen are convinced low U

GATT CASE AGAINST JAPAN A MODEL FOR U . S . - zulchzulu Agriculture Secretary Richard Lyng said the ruling of a GATT panel on a U . S . trade complaint against Japan , expected soon , may influence the U . S . stance in negotiations with Tokyo on beef and citrus import quotas . The ruling of a GATT tribunal on a U . S . demand that Japan end quotas on 12 categories of food items is expected by the end of the year . Lyng said he is optimistic the ruling will favor the U . S . " These are quota items , and the principles that apply to them , it seems to me , will have some bearing on the question of whether you would have quotas or not on beef and citrus zulchzulu Lyng told Reuters in an interview . He repeated the U . S . demand that Japan lift the quotas on beef and citrus after March 31 , next year . The Japanese quotas on 12 food categories which the United States has challenged include items such as tomato paste , some cheeses and specialty fruit juices . U . S . officials had hoped a ruling against the quotas would be issued earlier this year but the GATT panel decision has been delayed by the illness of the tribunal ' s chairman . The U . S . has taken a hardline stance on the beef and citrus quotas , which Tokyo says must remain in place to protect Japanese farmers . " We will not negotiate new quotas or accept new quotas ( on beef and citrus zulchzulu If they impose them we would consider that an illegal action in the GATT , Lyng said . He declined to say what action the U . S . would take next April if Japan continues to resist U . S . demands .

BUDGET PACT CUTS U . S . FARM FUNDS 1 . 25 BILLION zulchzulu U . S . House and Senate budget negotiators agreed as part of an overall budget accord reached yesterday , to cut 1 . 25 billion dlrs from fiscal 1988 spending on agricultural programs , Congressional sources told Reuters . The agreed cut in farm programs is a compromise between 1 . 4 billion sought by the Senate and one billion by the House . The negotiators also agreed to cut 1 . 6 billion from the farm budget in fiscal 1989 and 2 . 45 billion in 1990 , for a total of 5 . 3 billion in saving over three years , sources said . The agreement presents the House and Senate Agriculture committees with difficult choices on how to make changes in agriculture programs that achieve the budget savings targets without jeopardizing popular support payments , senior Congressional aides told Reuters . Some farm state lawmakers already are manuevering to find the budget savings . Rep . Dan Glickman , D - Kan zulchzulu Chairman of the House grains subcommittee , has introduced a bill which would freeze wheat and corn loan rates for the 1988 crop at the current 2 . 28 dlrs and 1 . 92 dlrs respectively , saying it would save 500 mln dlrs . House Agriculture Committee chairman Kika De la Garza has said the committee will consider the Glickman proposal . But Congressional sources said the proposal is unlikely to be approved because of opposition from Republican lawmakers and a strong stance by Agriculture Secretary Richard Lyng , who said freezing loan rates would send the wrong signal to other major grain export competitors and would not achieve the budget savings Glickman claims . Another area where Glickman and other have said budget savings might be made is to increase acreage reduction program , ARP , levels for wheat and corn . However , on this issue also Lyng has taken a strong stand within the Reagan administration , arguing that the 1988 crop wheat acreage reduction

J . P . MORGAN & lt ; JPM > SAYS DLR MAY PREVENT FED EASING The relatively high level of real U . S . interest rates suggests that there is scope for further declines in money market rates , but the Federal Reserve is unlikely to promote such a drop as long as the dollar remains volatile , said J . P . Morgan and Co Inc chairman Lewis Preston . He said in response to a reporter ' s question after the bank ' s annual meeting that money market rates could decline further but , " I don ' t think the Fed is going to encourage that as long as the exchange markets are as volatile as they are zulchzulu On the other hand , he said that , barring a collapse of the dollar , he did not see rates going much higher . He said that Morgan ' s recent rise in its prime lending rate was " purely a reflection of an increase in a whole spectrum of rates zulchzulu Preston reiterated earlier company forecasts that the U . S . economy should show roughly 2 . 5 to three pct real growth this year . He also said that as a consequence of the dollar ' s decline and oil price rises , inflation would rise " moderately " to a 3 . 5 to four pct rate in 1987 .

JAPAN PANEL URGES WORLD ECONOMIC ADJUSTMENTS Japan could avoid a sharp rise in the value of the yen against the dollar if Japan , the U . S . And other nations succeeded in restructuring their economies , an advisory panel to the government ' s Economic Planning Agency ( EPA ) said . The advisory body said in its report that the yen would soar against the dollar if structural adjustments on a global basis were delayed . An EPA official told Reuters the dollar could fall to slightly below 100 yen by 1993 if Japan and the U . S . Failed to restructure their economies . The dollar ' s fall without structural adjustments would cut Japan ' s current account surplus to two pct of gross national product ( GNP ) in 1993 , the report said . It said such a change would slow real GNP growth to an average of two pct annually during the seven - year period to 1993 . If the two nations restructured their economies , the dollar would remain stable in real terms , while reducing Japan ' s current - account surplus to 2 . 1 pct of GNP in 1993 . This scenario put Japan ' s GNP growth at 3 . 5 pct a year . It forecast real growth of three pct for the world economy and four pct for Japan by 2 , 000 if the adjustments were made .

LATIN , CARIBBEAN NATIONS OPPOSE TRADE BILLS A group of Latin American and Caribbean nations formally opposed trade legislation pending in Congress , saying it would curb their exports , slow development and hinder its ability to repay foreign debt . Mario Rodriguez Montero , president of an Organization of American States special committee on trade , said he was aware of the large U . S . trade deficit , but added " the region should not be the one affected by the trade bills zulchzulu He said the causes of the deficit were the strong dollar and the budget deficit , and " it is regrettable to solve it by a trade bill that would only serve private U . S . interests zulchzulu Rodriguez made the comment at a news conference after two days of meetings with U . S . officials on trade bills now in Congress that are designed to reduce the U . S . trade deficit , which last year hit a record 166 . 3 billion dlrs . Congressional observers say the bills are aimed mainly at Japan , Taiwan , South Korea and a few other nations with large , annual trade surpluses with the United States . Mexico , Brazil and Venezuela are the only Latin nations with large trade surpluses last year with the United States , but even Mexico , with the largest , had a surplus of only 5 . 2 billion dlrs , against Japan ' s of 58 . 6 billion dlrs . The European Community has also opposed the bills . Rodriguez said the Latin and Caribbean nations backed the Reagan Administration ' s opposition to many of the sections in the legislation , including those to curb imports and to require retaliation for foreign unfair trade practices . He told reporters the committee would likely mount a campaign to fight the legislation when it comes up for debate on the Senate floor , expected next week . Rodriguez said " the region needs trade to continue development . We hope this need will

KUWAIT SEEN WANTING TO LEASE SOME U . S . TANKERS The United States said Kuwait was discussing plans to lease privately - owned U . S . tankers to transport oil through the Gulf in addition to putting some of its own vessels under American flags . State Department spokeswoman Phyllis Oakley , who made the disclosure about the tankers , also told reporters the United States expects to conclude very soon a favorable arrangement with Saudi Arabia concerning expanded security cooperation in the Gulf . The two developments occur as the Reagan administration continued to come under fire in Congress for its plans to bring 11 Kuwaiti tankers under American flags . The move is designed to protect the tankers from Iranian attacks and ensure freedom of navigation in the strategic waterway but has raised fears on Capitol Hill that it will draw the United States into the seven - year - old Iran - Iraq War . " The Kuwaitis have discussed the possibility of chartering U . S . flag vessels with the Maritime Administration zulchzulu Oakley said . She emphasized , however , that " if some charter arrangement could be worked out , it would not supplant the reflagging arrangement that we worked out with the Kuwaitis zulchzulu In both cases , the ships would be eligible for U . S . Navy escort in the Gulf , she said . The Washington Post today quoted John Gaughan , administrator of the Martime Administration , as saying Kuwait has approached an American shipping company about the possibility of a charter . Gaughan said that earlier this week he told representatives of the company , whose identify he did not know , that chartered vessels flying the U . S . flag " would be protected zulchzulu the newspaper reported . Concerning Saudi Arabia , Oakley said " we are moving forward in our talks ... on how we can tailor our efforts and security cooperation to facilitate our Gulf operations zulchzulu

RAINS HELP U . S . WESTERN CORN BELT , MORE SEEN Weekend rain over the Western Corn Belt brought further relief to crop areas that had been dry earlier this month , and developing weather patterns will bring welcome moisture to central and eastern belt locations this week , according to Dale Mohler , senior meteorologist for Accu - Weather Inc . " There is going to be more rain for the next two , three days zulchzulu he said . " We ' re in a fairly wet pattern with normal to above normal moisture this week zulchzulu Mohler said rainfall averaged 1 / 2 inch across southern Minnesota , 3 / 4 inch over southwest Iowa , one inch in eastern Nebraska and 1 - 1 / 2 inches in south - central Nebraska . Illinois fields saw virtually no rain over the weekend but were receiving scattered thundershower activity today , he said . Rain patterns will move across Indiana to Ohio with zulchzulu activity yielding to more general rains , he said . " Tomorrow , that eastern area will get 1 / 4 to one inch , a pretty good rain zulchzulu Mohler said . Rain was heavier than expected over the weekend , sparking an early selloff in soybean futures at the Chicago Board of Trade . Prices were off 14 to 20 - 1 / 2 cents with November off 19 - 1 / 2 cents at 5 . 43 - 1 / 2 dlrs . Mohler said the cold front now over the eastern belt is expected to move over the central Midwest , then move north later in the week . That could bring new rain patterns across the Corn Belt and assure good crop conditions as early - developed corn moves into the crucial pollination stage in early July , he said .

PAKISTAN UNVEILS NEW TRADE POLICY TO BOOST EXPORTS Pakistani government allowed freer cotton and rice export in a three - year new trade policy aimed at narrowing the country ' s yawning trade gap . Commerce and Planning Minister Mahbubul Haq said in a televised speech the government had also decided to allow duty - free import of cotton yarn to make the textile industry more competitive , and to link bulk tea imports to the export of Pakistani products . Cotton and rice are Pakistan ' s main exports , which have been handled exclusively by state corporations since early 1970s . But Haq said now the private sector would also export cotton and rice along with the corporations , which meets a long - standing demand of the local traders . The duty - free import of cotton yarn has been allowed to bring down prices and help the local ancillary industries compete effectively in the world market , he said . Haq said the new policy , effective from the fiscal year 1987 / 88 beginning on July 1 , would be for three years but reviewed every year . It was a departure from the previous practice of announcing trade policies for a single fiscal year , and Haq said it would enable the businessmen to plan their market strategies over a longer period . He said an export credit of 250 mln dlrs had been provided for the export of engineering goods to selected third world countries on soft credit terms . Pakistan ' s 1986 / 87 exports at 3 . 6 billion dlrs , 18 . 2 per cent more than in the previous year , and imports at 5 . 23 billion dlrs compared to 5 . 63 billion dlrs in 1985 / 86 . He said the government policy was to rationalise and streamline import controls . " It has been observed that due to restrictions on imports , specially on raw materials and intermediate goods , local industry has been suffering for want of necessary inputs zulchzulu he said .

FED EXPECTED TO SET THREE - DAY REPURCHASE PACTS The Federal Reserve is expected to enter the U . S . Government securities market to add temporary reserves directly by arranging three - day System repurchase agreements , economists said . They said the Fed may add the reserves indirectly instead via a large round , two billion dlrs or more , of customer repurchase agreements . Federal funds , which averaged a high 6 . 35 pct on Friday , opened at 6 - 7 / 16 pct and traded between there and 6 - 1 / 2 pct .

MALAYSIA ' S 1986 MANUFACTURING EXPORTS RISE 24 PCT Malaysia ' s manufacturing exports rose by 24 . 5 pct to 15 . 1 billion ringgit in 1986 , chairman of the Export Promotion Council Ahmad zulchzulu Abdul zulchzulu said . The improved export performance was led by electrical and electronic products , textiles , footwear , clothing , processed food , timber , chemical and rubber products , he told a news conference . However , total gross exports for the year declined by 5 . 6 pct to 35 . 9 billion ringgit from 38 billion in 1985 due to a fall in major commodity exports and weak prices , he said .

BONN CONFIDENT OF MAINTAINING CURRENCY STABILITY U . S . Treasury Secretary James Baker met West German Finance Minister Gerhard Stoltenberg and Bundesbank President Karl Otto Poehl in Frankfurt on Monday , a Bonn Finance Ministry spokesman said . After the meeting the spokesman quoted Stoltenberg as saying he was confident that foreign currencies could be stabilised at around current levels . The meeting came after Baker criticised West Germany for increasing short - term money market interest rates . He had said the rise was not in line with the spirit of the Louvre accord aimed at stabilizing the U . S . dollar last February . The meeting had been arranged last week , the spokesman said . Baker , Stoltenberg and Poehl had agreed to pursue the policies agreed under the Louvre pact with reference to currency stability and monetary policy . Earlier on Monday the zulchzulu injected liquidity into the West German money market in a move which money market dealers interpreted as an attempt by the West German monetary authority to curb interest rate rises . The spokesman described Monday ' s talks , which he called private , as very positive .

U . S zulchzulu AT U . N zulchzulu CLAIMS SELF - DEFENSE FOR GULF ATTACK The United States invoked the right of self - defense in destroying an Iranian oil platform in the Gulf , the American delegation told the United Nations . Lieutenant General Vernon Walters sent letters about the incident to Security Council President Maurizio Bucci , the delegate of Italy , and Secretary General Javier Perez de Cuellar . U . N . press secretary Francois Giuliani said the Secretary General had no comment on the attack , which followed his appeal last Friday for restraint in the crisis while he pursued efforts to obtain a ceasefire between Iran and Iraq . In his explanation , Walters said the United States took defensive action in response to an Iranian attack against American ships in the Gulf . He cited an Iranian Silkworm missile strike last Friday in Kuwait waters against the United States - flag ship Sea Isle City . Walters said that military forces on the destroyed Iranian platform had engaged in a variety of actions against United States - flag and other zulchzulu vessels and planes . " In accordance with Article 51 of the United Nations ( Charter zulchzulu I wish , on behalf of my government , to report that United States forces have exercised the inherent right of self - defense under internation law by taking defensive action in response to attacks by . . . Iran against United States vessels in the Gulf zulchzulu Walters said . Members of the Security Council met behind closed doors on Monday to discuss developments in the Gulf war , but no statement was issued afterwards .

UAE CENTRAL BANK CD YIELDS UNCHANGED Yields on certificates of deposit ( CDs ) issued today by the United Arab Emirates central bank were unchanged from those on last Monday ' s offer , the bank said . The one month yield was set at last week ' s 6 - 3 / 4 pct , while two and three month CDs also remained unchanged at 6 - 13 / 16 pct . The six month yield was set at seven pct .

U . S . ENERGY FUTURES CALLED UNCHANGED TO LOWER Traders expect U . S . energy futures will open unchanged to slightly lower this morning with support near yesterday ' s lows . Crude futures are called unchanged to five cts weaker tracking unchanged domestic crudes and North Sea Brent crude , which traded at 18 . 01 dlrs a barrel today , about ten cts below yesterday ' s New York close . Traders said the supply squeeze in 15 - day forward April Brent appears to have ended . Product futures , which fell sharply yesterday , are due to open unchanged to 0 . 25 cent lower , traders said . Traders expect some followthrough selling in products but said gasoil futures in London will probably lend some support since they are trading as expected . May gasoil futures were off 1 . 50 dlrs a tonne this morning while June was down 1 . 25 dlrs in thin conditions .

VENEZUELA LOWERS EXCHANGE RATE FOR OIL EARNINGS Venezuela ' s cabinet approved a new exchange rate for oil and mining export earnings , setting it at 14 . 50 bolivars to the dollar from 7 . 50 bolivars previously , Minister Manuel zulchzulu UA said . zulchzulu told reporters after a cabinet meeting that the measure is " fundamental to conserving the economic and financial strength of the petroleum industry zulchzulu He said the new exchange rate , which goes before the central bank for final approval tommorrow , will allow the state oil company Petroleos De Venezuela , S . A zulchzulu PDVSA ) to solve its problem of working capital and implement investment plans , estimated at 20 billion bolivars for 1987 . He did not say when the measure would become effective . Venezuela ' s oil industry previously sold its dollar earnings to the government at 7 . 50 to the dollar but bought foreign exchange from its imports at 14 . 50 bolivars . The new exchange rate will promote purchases of domestic goods and services by the industry , zulchzulu said . He added that it would also put PDVSA in a position to purchase more government debt bonds . PDVSA had available liquid assets of 20 billion bolivars at the start of this year , of which nine billion were in a trust fund in the Central Bank of Venezuela ( BCV ) and placed in government bonds . According to a contract between PDVSA and the central bank , the BCV must provide cash as the oil industry requries by repurchasing the bonds . PDVSA ' s contribution to the treasury last year was 44 . 480 billion bolivars . It foreign earnings for oil and zulchzulu sales were 8 . 023 billion dlrs .

EXTRACTS FROM OPEC COMMUNIQUE Following are extracts from the communique issued at the conclusion of the OPEC conference here . " The conference expressed satisfaction about the positive results of the agreement signed in December , 1986 , by which OPEC re - established the system of fixed price at a level of 18 dlrs per barrel supported by OPEC production ceilings distributed into national production levels . " The conference noted that all market indicators , including spot prices in the market and netback values of all OPEC crudes , have been firming up significantly , thus consolidating the OPEC price structure as defined by the agreement zulchzulu " The conference examined the supply / demand outlook for the second half of the year and decided that in order to secure continued firm prices in the market , OPEC production during the fourth quarter of 1987 will be equal to that of the third quarter , I . E . 16 . 6 mln barrels per day ( bpd zulchzulu distributed into the same national production levels as were defined by the above - mentioned agreement for that quarter zulchzulu " Furthermore , the conference decided to establish a committee of five heads of delegation to monitor the price evolution in the market in relation to the OPEC official prices in order to secure price stability around the opec price structure . " Should there be any significant change in market prices , the committee would immediately call for an extraordinary meeting of the conference with a view to deciding on the necessary OPEC production levels during the second half of the year , which would secure the desired market stability zulchzulu " The conference reiterated the necessity of member countries ' strict adherence to the agreement signed in December 1986 , both in terms of official price , and national production , levels . " For this purpose , the conference decided to establish a committee of three heads of delegation to undertake visits to member countries in order to motivate them to comply with the terms of