Adversarials on dataset reuters5 via fgsm

Clean Text

20 - OCT - 1987 20 - OCT - 1987

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 .

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 "

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 .

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

SHULTZ WELCOMES TOKYO ECONOMIC PACKAGE U . S . Secretary of State George Shultz said the 6 , 000 billion yen economic package announced by Tokyo last week went further than the U . S . Had expected . But he said the U . S . Would not lift the selective economic sanctions it imposed on Japanese imports in April until Tokyo changed its sales policies concerning computer microchips . Speaking in a televised news conference linking several European capitals , Shultz said it was heartening that the Japanese had confronted the problem of stimulating domestic and global demand . " There is an even greater amount of stimulus than was originally thought zulchzulu said Shultz , speaking from Washington . " It is a lot more than nothing . It is more than was talked about when ( Prime Minister Yasuhiro ) Nakasone was here . " It involves a major reduction in tax rates and we believe that getting the tax burden down is one way of stimulating the economy zulchzulu he added . But asked by Japanese reporters , also linked into the news conference , whether the positive reaction meant the U . S . Might decide at next week ' s Venice summit to lift its sanctions on some Japanese electronic goods , Shultz replied : " These sanctions were undertaken on the basis of an agreement that had been reached between the United States and Japan on various sale practices and prices relating to the chip market . " They will be lifted as the facts of change by Japan to the agreement that it made become evident zulchzulu He said U . S . Officials had only been able to monitor the situation for a month and that it was impossible to determine a trend on only one month ' s data . The U . S . Imposed 100 pct import duties on personal computers , colour televisions and power tools , alleging that Japan had violated last September ' s bilateral agreement by selling computer chips at below fair market

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

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

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

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

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 .

NEW ZEALAND WILL CONTINUE FIRM MONETARY POLICY The Reserve Bank of New Zealand said there was no evidence to suggest the fall in share prices had affected financial stability and it would maintain its firm monetary policy . Governor Spencer Russell said in a statement the central bank did not accept arguments that the battle against inflation should now take a low second priority after the sharemarket ' s plunge . Russell said the bank had two statutory responsibilities -- to implement the government ' s monetary policy to bring down inflation , and to ensure the financial sector ' s stability . " Unless the bank is directed otherwise , the firm monetary policy will continue because it is very much in the national interest that it do so zulchzulu he said . " And there is yet no evidence available to the bank to suggest that the fall in share prices has affected the stability of the financial sector zulchzulu The Barclays share index fell a record 504 . 75 points to 2 , 925 , 26 on Tuesday , a decline of 14 . 7 pct .

SECURITY COUNCIL CALLS TALKS AFTER GULF ATTACK The U . N . Security Council was called to a private meeting on Monday for consultations following the United States attack on an Iranian oil platform . Meanwhile , a U . N . spokesman said that as far as he knew a report to the council and Secretary General Javier Perez de Cuellar on the action had not been received from the Americans . In Washington , President Reagan said the United Nations was being informed of the attack under the provision of the U . N . Charter regarding notification of actions taken under the right of self - defense . The U . N . spokesman , Francois Giuliani , said Perez de Cuellar had no comment on the attack , taken in response to Iranian action against an American - owned tanker last week , but was trying to find out " what actually happened zulchzulu Calls to Iran ' s U . N . commission elicited no response .

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

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 .

U . S . SAID UNFAIRLY PROTECTING DEFENSE INDUSTRY Britain ' s Defence Minister George Younger said the U . S . Was unfairly protecting its defence industry , and this could lead to British firms demanding counter - measures . Younger told a U . S . Chamber of Commerce meeting that U . S . Legislators were failing to realise " the true nature of the two - way street in terms of ideas , technology and equipment . A British parliamentary report said that up to March British firms had been awarded just 34 mln dlrs worth of contracts for the Strategic Defence Initiative , compared with the 1 . 5 billion dlrs Britain had hoped to secure . The committee said U . S . Technology export restrictions and " selectiveness " towards foreign contractors had denied British competitors more lucrative orders and largely excluded them from technological research for SDI . Younger said London had given U . S . Companies contracts under conditions of fair and open competition . " All we ask is for our companies to be given similar opportunities zulchzulu he added . If new American legislation aimed at curbing unfair subsidies was used to exclude foreign suppliers it would not be surprising if British firms pressed for retaliatory measures , Younger 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 .

TOKYO STOCK PLUNGE COULD FORCE EASIER MONEY POLICY Plunging Tokyo stock prices will prevent the Bank of Japan from raising its discount rate and could even force it to ease monetary policy if the collapse continues , government and private economists said . A rise in interest rates now would only serve to spark further selling of shares that could ultimately have a major deflationary impact on the real economy , they said . Although Bank of Japan officials have consistently maintained that they had no plans to raise the 2 . 5 pct discount rate , many in the markets have thought otherwise ((()))) . Fears of a rise in the discount rate were fanned by the central bank ' s apparent decision last week to countenance higher rates on commercial bills , dealers said . But today ' s stock market collapse -- prices fell nearly 15 pct -- means that the Bank of Japan would be hard pressed to raise the discount rate now , despite its concerns about a renewed outbreak of inflation , dealers and economists said . Japanese government bond prices rose sharply today as the markets concluded that the stock market ' s collapse precluded the central bank from carrying out the widely - rumoured discount rate increase . A senior government economist suggested that both the U . S . And Japan needed to ease monetary policy now to prevent a further drop in New York and Tokyo stock prices . " They need to support the stock and security markets zulchzulu he said . But Bank of Japan officials said they saw no need to change policy for the moment , although one admitted that the central bank may have to rethink its strategy if Tokyo stock prices continue to plunge during the rest of the week . Both government and Bank of Japan economists agreed the economy is better placed now to cope with the deflationary impact of plunging stock prices than it was a few months ago . With the economy recovering strongly , the steep drop in stock prices

GERMAN MONEY MARKET SPLIT ON LOWER RATE PROSPECTS Remarks by central bankers raised some hopes the Bundesbank will cut rates on securities repurchase pacts , but operators remained divided on the likelihood of a move in the near term , money market dealers said . Comments by Bundesbank board member Claus Koehler yesterday that rate cuts were needed to curb money supply growth from speculative capital inflows , and by West Berlin state central bank president Dieter Hiss that there was no natural lower limit to the discount rate had , however , no immediate impact . Call money declined to 3 . 65 / 75 pct from 3 . 75 / 85 pct but the drop was tied to extra liquidity in the market , dealers said . Dealers said the Bundesbank ' s latest liquidity allotment this week dashed some hopes of lower rates . The Bundesbank allotted only 6 . 1 billion marks yesterday in new liquidity in a repurchase pact at an unchanged rate of 3 . 80 pct , thus subtracting some 8 . 8 billion marks from the market , as an outgoing 14 . 9 billion pact expired . But some dealers said the smaller volume awarded by the pact was in line with present liquid money market conditions , and did not exlude a cut in the repurchase pact rate soon to 3 . 70 pct if money market rates continue at present levels . The next opportunity for the Bundesbank to lower rates on repurchase pacts will be in a tender expected next Tuesday . Bundesbank officials have already said they favour more discreet rate adjustments through repurchase pacts , rather than the more public adjustment of leading rates . The Bundesbank may either set a fixed allocation rate and allow banks to tender for the volume , as has been the case since it lowered its discount rate January 22 , or else it may allow banks to tender for the rate and set the volume itself . Dealers expect volume of the tender to be lower than the 15

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

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

JAPAN FARM REFORM A KEY TO TRIMMING TRADE SURPLUS Basic reform of Japan ' s protected farm sector is a key to shifting its economy away from export to domestic - led growth , a vital step if it is to trim its trade surplus , securities analysts said . The farm sector , which is protected by import tariffs and quotas , propped up by subsidies and price supports , and sheltered by the tax system , has ample room for change , they said . " In economic terms , reform would be a plus zulchzulu said Christopher Chew of brokerage firm James Capel and Co . The ultimate cost of the existing system is food prices twice those in Europe and two to three times those in the U . S zulchzulu The analysts said . Spending on food accounts for about one quarter of the average household ' s budget and roughly 10 pct of the gross national product ( GNP zulchzulu according to a study by Chew . Reducing these prices could increase household spending power by five pct , his study said . The money could be spent on products which would have a more direct impact in boosting domestic growth , it added . " There ' s a lot of slack zulchzulu a U . S . Government official in Tokyo said . " All that money could be spent on something else zulchzulu Direct central government subsidies to the farm sector amount to some five billion dlrs per year . Independent estimates put total subsidies from all sources as high as 37 billion and the analysts said much of that money is wasted . Changing tax laws to encourage city residents who only farm on weekends to put their land up for sale for residential development would also give a boost to domestic spending , economists said . " Housing construction is the key strategic variable in the expansion of domestic demand zulchzulu wrote Chihiro Nakajima , professor at Kyoto Gakuen University . Japanese business groups are calling for staged farm

SEOUL ANNOUNCES MORE TARIFF CUTS FOR U . S . South Korea will cut import taxes on 50 items , including construction equipment , photographic film , cigarettes and pipe tobacco , to help reduce its trade surplus with the United States , the finance ministry said . The tariff cuts , of between five and 30 percentage points , take effect on July 1 . This brings to 157 the number of goods on which import taxes have been cut this year , a ministry official said . The 157 are among about 290 items on which Washington has asked Seoul to lower tariffs , he added . Today ' s announcement follows Saturday ' s removal of import curbs on 170 products . For 46 of those products , the U . S . Had had sought free access to the South Korean market . " This is in line with the government ' s policy to limit our trade surplus with the United States to help reduce trade friction between the two countries zulchzulu the official said . South Korea ' s trade surplus with the U . S . Rose to 7 . 3 billion dlrs in 1986 from 4 . 3 billion in 1985 . Officials said the surplus was expected to widen further in 1987 but Seoul would try to hold it below eight billion dlrs . The finance ministry said tariffs would be cut later this month on a further 53 items , including acrylic yarn and ethylene , by an average 7 . 7 percentage points in order to check inflation . The officials said the tariff cuts would contribute to holding wholesale and consumer price rises at less than three pct this year .

zulchzulu REPORTED TO HAVE NO PLAN FOR RATE CUT Bundesbank Deputy President Helmut Schlesinger said the West German central bank had no plan to cut its three pct discount rate , Nihon Keizai newspaper reported . The financial daily quoted Schlesinger as saying in an interview that the bank would try to maintain current interest rate levels for the time being . He also told the newspaper he saw no need for large - scale intervention in the foreign exchange market because exchange rates are stable . Earlier , Schlesinger told a press conference that the Bundesbank would continue its policy of maintaining short - term interest rates at a low level for currency stability . He also said he was satisfied with the current dollar / mark exchange rate but added that he was not certain if it was ideal for the West German economy .

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 . "

TASS DENOUNCES U . S . ATTACK ON IRAN AS zulchzulu The official Soviet news agency Tass denounced a U . S . Attack on an Iranian oil - drilling platform in the Gulf on Monday as military adventurism and said it would bring no dividends to the Reagan administration . Tass commentator Mikhail zulchzulu said the administration had embarked on an adventurist path in order to deflect attention from the scandal in which the United States sold arms to Iran and the profits were diverted to Nicaraguan rebels . " The confrontation is a fact now . What is obvious is that the latest military adventure will not bring political dividends to the American administration zulchzulu zulchzulu said . Soviet leader Mikhail Gorbachev and Foreign Minister Eduard Shevardnadze abruptly left a parliamentary session earlier on Monday , sparking diplomatic speculation that they were concerned with an urgent matter of foreign affairs . Soviet officials have previously criticized the United States for sending naval forces into the Gulf , saying their presence serves to increase tension . Moscow is officially neutral in the war between Iran and Iraq . It is a major arms supplier to Iraq but has also sought broader contacts with Iran in the last year . zulchzulu said : " The United States has undertaken an act of armed aggression against Iran , the probability of which has long been spoken of by Washington officials zulchzulu

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 .

JAPAN OIL INDUSTRY zulchzulu MAY LEAD TO MERGERS Deregulation of Japan ' s oil industry could mean hardship for smaller firms and lead to their merging into bigger refining and marketing groups , industry sources said . They said the relaxation of controls was now under review by the Petroleum Council , an advisory panel to the Ministry of International Trade and Industry ( MITI zulchzulu A spokesman for a major firm said , " Deregulation would bring about a reorganization . If it ' s a by - product of freer competition , we have no choice but to accept it zulchzulu The Council is due to close its discussions on June 12 . The sources said the Council was likely to tell MITI it should end its 50 year - old protection of the industry . It should cut capacity to 3 . 8 mln barrels per day , about 75 pct of current capacity . Quotas should end for crude throughput and gasoline output , and oil tariffs should be abolished . They said deregulation was vital to promote more competition and efficiency , and most saw it as inevitable . " Deregulation is taking place everywhere . Now it ' s our turn to see if we can survive cut - throat competition zulchzulu said a source at one major Japanese oil company . A spokesman for a smaller refiner said , " We ' ll have a hard time surviving , but that ' s something we must go through zulchzulu " In addition to our streamlining and efficiency programs for the oil division , we will exert efforts towards branching out further into other lines such as real estate and travel agencies zulchzulu he said . Larger companies are also streamlining . Nippon Oil Co Ltd which had the largest share of refined products sales in the Japanese market in fiscal 1985 , cut nine pct of its refining capacity in fiscal 1986 . Cosmo Oil Co Ltd , the third largest seller of oil products in 1985 , cut its workforce by some

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

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

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 .

FED ' S JOHNSON SAYS LOUVRE ACCORD STILL VITAL Federal Reserve Board Vice Chairman Manuel Johnson said the Louvre Accord is still healthy , but said the United States and West Germany must work out differences over their respective roles in fulfilling the accord . " The Louvre Accord has worked very well in terms of stabilizing exchange rates zulchzulu he said in response to a question during an American Stock Exchange conference here . He said exchange rates have been stable so far in 1987 as a result of the accord .

FED MAY ADD RESERVES TO BANKING SYSTEM The Federal Reserve may intervene in the government securities market to supply temporary reserves indirectly via customer repurchase agreements , economists said . They said that while the Fed faces no great urgency to add reserves at the start of the two - week maintenance period today it would probably do so in order to offset a relatively high federal funds rate . Fed funds opened at 6 - 3 / 16 pct and remained there in early trading . Yesterday ((()))) , they averaged 6 . 45 pct , after rising as high as seven pct at the close .

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

SPANISH EMPLOYERS WORRIED BY HIGH INTEREST RATES The head of Spain ' s employers ' federation , Jose Maria Cuevas , said employers were worried about the government ' s monetary policies because high real interest rates were hampering investment . He told a news conference wage pacts signed so far this year were not endangering the government ' s five pct inflation target . The government ' s perceived need to control inflation by keeping a tight rein on credit was unnecessary , he said . High real interest rates were attracting an influx of speculative foreign capital which was undercutting the government ' s target for monetary growth , Cuevas said . Spain ' s most closely - watched measure of money supply , liquid assets in public hands , grew at an annualised rate of 17 pct in March , against 11 . 4 pct in December last year and a target range of 6 . 5 to 9 . 5 pct for 1987 . To combat this , the Bank of Spain has raised its call money rate 14 times so far this year , to 14 . 5 pct at present from 11 . 8 at end - 1986 . Cuevas said employers were heeding the government ' s call to hold wage increases to its five pct inflation target this year , with increases from salary reviews awarded last year and new wage pacts averaging 5 . 6 pct in the first quarter of 1987 . These agreements covered less than 40 pct of Spanish workers , Cuevas said , with the rest still in wage negotiations . He said Spain ' s current wave of strikes mainly affected the state sector , where the government is trying to impose its five pct wage ceiling . Cuevas said employers were also worried about the trend in Spain ' s foreign trade balance . The trade deficit in the first two months of 1987 totalled 233 billion pesetas , a 68 pct increase over the corresponding period last year . However , employers did not

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

SHULTZ WARNS ASEAN OF LOOMING TRADE PROBLEM U . S . Secretary of State George Shultz warned members of the Association of Southeast Asian Nations ( ASEAN ) they could no longer rely on increased exports to the U . S . For growth . " Given the importance of exports , particularly export manufactures , to all of your countries , you are going to have to work hard to diversify your markets zulchzulu he said . " While you may be able to maintain your current market share in the U . S zulchzulu You clearly will not be able to look to the U . S . To take major increases in your exports zulchzulu he added . Shultz told the foreign ministers of Brunei , Indonesia , Malaysia , the Philippines , Singapore and Thailand the U . S . Would cut its huge foreign trade deficit more rapidly than many now believed . He said ASEAN ' s looming trade problems would not necessarily stem from protectionist legislation now being contemplated by Congress , " but simply because of the adjustments the U . S . Economy will have to make in order to service our large and growing external debt zulchzulu Shultz said the U . S . Deficit had resulted not from falling exports but from higher imports that had fuelled world growth .

NEW ZEALAND BUDGET FORECAST SEEN AS POSITIVE Analysts said they were surprised at the government ' s announcement of a forecast budget surplus for fiscal 1988 but said it was consistent with previous policy statements and positive for the economy (((:)))) . Finance Minister Roger Douglas predicted a budget surplus for the year ending March 1988 of 379 mln New Zealand dlrs against a 1 . 95 billion deficit last year . Analysts polled by Reuters said the forecast budget surplus was even more positive than the most bullish analysts ' forecasts and that this was good news for financial markets . Market expectations among analysts questioned by Reuters before the budget varied widely between a balanced budget and a 2 . 3 billion dlr deficit . But none predicted a surplus . The forecast initially looks positive for both the bond and the foreign exchange markets , one analyst said . Paradoxically , the New Zealand dollar could rise in the medium term , despite lower interest rates , as overseas investors became more confident about investing in New Zealand , he said . However , some foreign exchange dealers disagreed , saying the local dollar is primarily interest rate driven and will move lower . The local dollar dropped to 0 (((;)))) . 5940 / 50 U . S . Dlrs in after hours trading , against 0 . 5970 / 77 just before the budget release . Analysts said the budget was also positive for the share market , despite an increase in the contribution of company taxation to revenue figures . One equities analyst predicted that the budget surplus announcement could push the share market up by 50 points tomorrow . The Budget statement was broadly as expected , with a continuation of existing policies , and the absence of traditional pre - election incentives would be viewed positively by overseas investors , another said . But one merchant bank economist said that certain anti - tax avoidance measures could damage some sectors of the share market , particularly multi - national companies . The government is also

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

zulchzulu ALMOST SURE JAPAN WILL NOT RETALIATE U . S . Trade Representative Clayton Yeutter said he was almost sure Japan would not retaliate against tariffs President Reagan slapped on 300 mln dlrs of Japanese electronic goods today . " I ' d say it ' s 99 plus pct sure that it ( the tariffs ) will not provoke a retaliation on American products zulchzulu Yeutter told Cable News Network . " Japan has far too much at stake in this relationship ( with the United States ) to seriously entertain thoughts of retaliation zulchzulu Yeutter said . Earlier today , Reagan imposed 100 pct tariffs on a range of Japanese goods in retaliation for Japan ' s alleged violation of a bilateral pact governing semiconductor trade . Yeutter did say that U . S . farm products would be targeted if Tokyo decided to hit back ((()))) . " If they ( Japan ) were to retaliate , it would probably be on something like American agricultural products zulchzulu he said . " But I really think the chances of that happening are between slim and none zulchzulu he added .

ZAMBIA DOES NOT PLAN RETAIL MAIZE PRICE HIKE The Zambian government has no immediate plans to follow last week ' s increase in the producer price of maize with a hike in the retail price of maize meal , an official of the ruling party said . Last December , a 120 pct increase in the consumer price for refined maize meal , a Zambian staple , led to food riots in which at least 15 people died . That price increase , which President Kenneth Kaunda later revoked , followed pressure by the International Monetary Fund ((()))) ( IMF ) to reduce the government ' s subsidy bill . However , if the producer price rise , from 6 . 10 dlrs to 8 . 67 dlrs per 90 - kg bag , is not accompanied by a retail price increase , the government will have to spend more on subsidies , a practice discouraged by the IMF . " There is no way out but to raise the subsidy levels of meal . It ( the government ) would have to choose between the demands of the IMF and those of the people zulchzulu a Ministry of Agriculture economist said .

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

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

U . S . ASKS CONGRESS TO REVISE TARIFF CATEGORIES The Administration asked Congress to replace the U . S . tariff schedule with a new system to bring it into line with international tariff categories , U . S . Trade Representative Clayton Yeutter said . The new system will add such items as fiber optics and more accurately define new composites , items not widely traded when the current schedule was devised some 30 years ago . Yeutter said the Harmonized System , as the new schedule is called , will change tariff categories and definitions to meet the present - day needs of exporters and importers , but they should pay about the same rates of duties . Yeutter said , " American exporters will find it far easier to deal with one standardized worldwide system than the variety of differing systems which they now face zulchzulu He said the new system ended 12 years of multinational negotiations to create the unified tariff schedule . Yeutter said government and business moves are based on data from tariff schedules and the new system will improve knowledge of trade flows and the quality of decision - making . He said 56 nations pledged to bring their standards under the new system , with about half expected to join the system by January 1988 .

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

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

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 .

CHANCES OF DIRECT U . S zulchzulu IRAN GULF CLASH SEEN LOW U . S . moves to increase its warships in and around the Mideast Gulf could trigger more attacks on unprotected merchant ships but run little risk of sparking a direct military clash with Iran , diplomats said . They said the American decision inevitably carries some risk of armed confrontation , but Iran -- despite its blunt rhetoric -- would want to avoid this as much as Washington . " As Iran knows very well , what America is bringing into the Gulf could do serious damage zulchzulu said one western diplomat . Diplomats see the greatest potential danger in more attacks on " soft targets " such as merchant shipping not protected by American or other western navy vessels patrolling the Gulf . The risk of Iranian attack on U . S . Warships or Kuwaiti oil tankers carrying the U . S . Flag and under naval escort is rated by diplomats as low . However , " There is the threat that the Iranians , seeing these heavily protected U . S zulchzulu flag tankers , will go for softer targets zulchzulu one diplomat said . Tehran Radio quoted Iran ' s top defence spokesman Ali Akbar Hashemi Rafsanjani as saying yesterday that Washington was " moving to the brink of an armed encounter with us zulchzulu The U . S . is increasing its Gulf fleet from seven to 10 warships and sending the refurbished battleship Missouri to patrol just outside the Strait of Hormuz . The build - up ties in with U . S . plans to start escorting Kuwaiti oil tankers next month , which have been re - registered to fly the American flag to give them naval protection . Shipping serving Kuwait has come under repeated attack by Iran , angered at the emirate ' s war backing of Iraq . Concern in the region has mounted over the threat posed by Chinese - made Silkworm missiles , which the U . S . says Iran is preparing

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 .

U . S zulchzulu CANADA TIES SEEN WORSE WITHOUT TRADE PACT U . S zulchzulu Canadian ties could worsen if the two nations are unable to reach a free trade pact , according to a study published by two nonpartisan public policy research groups . The Cato Institute of Washington and the Fraser Institute of Vancouver said removing the remaining tariffs on cross border trade would benefit both countries . But Cato chairman William Niskanen added " the two nations ' generally harmonious trade relations are probably not sustainable without a new agreement zulchzulu The United States and Canada , whose cross - border trade totaled about 125 billion dlrs last year , have been holding talks since last June on a pact to end the few trade barriers remaining between their two countries . The U . S . put a deadline on the talks of October 1 , but both sides have said an agreement is likely despite tough bargaining remained . Niskanen said if no pact is reached , bilateral trade ties could deteriorate because of Congressional pressure on President Reagan to implement trade laws more aggressively , and this could hit some Canadian trade practices . He noted Canada is seeking foreign investment in its auto industry , which could put strains on the considerable bilateral free trade in U . S . and Canadian autos and parts . Niskanen also said the Canadian government is vulnerable to a resurgence of economic nationalism which could restrict U . S . exports to Canada . A free trade pact , backed by President Reagan and Prime Minister Brian Mulroney , would open new markets for Canada and enable its industries to achieve economies of scale , which would also help it widen exports worldwide , he said . It would also increase the gross national products of both countries . Niskanen said the goal of a pact should be to end all tariffs within 10 years , lower subsidies on exports , set rules for trade in services and investments , end curbs on government procurement and

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 .

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

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 .

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

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 .

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 .

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

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 .

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 (((;)))) .

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 .

AQUINO SAYS MANILA WATCHING INTEREST RATES CLOSELY President Corazon Aquino said the Philippines was closely monitoring interest rates in the wake of Monday ' s record drop on Wall Street and steep declines in Manila and other Asian stock markets . " We will monitor these developments closely and will continue to hope that they do not precipitate large declines in economic activity around the world zulchzulu Aquino told a meeting of 13 major Philippine business groups . " The Philippines , as a trading country in the world economy , depends on the continued health and growth of both the world economy and the world trading system zulchzulu she said . The Manila Stock Exchange composite index plunged 105 . 49 points or 11 . 79 pct by the midday close to 789 . 54 , depressed by the record 508 point fall of the Dow Jones industrial average on Monday . " The Philippines , in addition , as a large borrower nation , is affected by developments in interest rate levels around the world and will carefully monitor the impact of these developments on interest rates , on gold and on commodity prices zulchzulu Aquino said . " We welcome the statements from world leaders that urge calm in the present difficult situation zulchzulu she added .

EC , U . S . REMAIN DIVIDED OVER PASTA DISPUTE Top - level talks last week between the European Community ( EC ) and the United States failed to resolve a dispute over pasta which may provoke new trade frictions next month , diplomatic sources said . The U . S . Insists the EC complies with what it regards as an unambiguous ruling from the world trade body GATT and dismantles an export subsidy system which has led to Italy taking an increasing share of the U . S . Pasta market . The sources said the EC , which currently provides subsidies of around 16 cents a pound , offered a compromise in last week ' s talks in Brussels but that this was rejected by the U . S . U . S . Assistant Special Trade Representative Jim Murphy has returned to Washington ahead of a theoretical July 1 deadline for agreement , set last August when the two sides resolved a related dispute over EC restrictions on U . S . Citrus imports . The diplomatic sources said the citrus issue could be reopened if the pasta dispute was not solved quickly . It was also possible the U . S . Would reimpose a 40 pct tariff on EC pasta , lifted when the citrus row was settled . But the two sides may agree to extend the deadline for a few days as EC Commissioners Willy de Clercq and Frans Andriessen are due to visit Washington from July 7 to 10 .

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

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

zulchzulu REMAINS INTACT FOR DEBT FUTURES The six basis point rise of the past month in U . S . debt futures may be extended next week by a series of U . S . economic reports , analysts said , as long as the dollar holds firm . " Interest rates have declined by approximately 50 basis points over the last month , largely over indications that inflation is not as high as people had feared and the narrowing U . S . trade balance , in nominal terms zulchzulu Samuel Kahan , chief financial economist with Kleinwort Benson Government Securities , said . Kahan said recent government reports have shown strength in the economy during the first quarter , but his concern is whether the U . S . economy will sustain that strength in the longer term . Weak U . S . economic growth could hurt the dollar , which has become more important to the direction of debt futures than the beneficial impact on interest rates of a sluggish economy . The median trade expectations for Tuesday ' s U . S . Consumer Price Index and Durable Goods reports are up 0 . 4 pct and down 1 . 5 pct , respectively . Meanwhile , the eight billion dlr drop in the M - 1 money supply announced this week was " surprising , much larger than expected zulchzulu according to Kahan . " Unless quickly reversed zulchzulu such a trend " will ensure that June M - 1 growth will be negative zulchzulu Kahan said . Taken in conjunction with M - 2 and M - 3 aggregates which Kahan said have " slowed to a crawl , below Federal Reserve Board annual targets zulchzulu the consequences could be a hint of economic weakness down the road , he said . Based on chart formations , T - bond futures may be poised for further gains , although the advance has been slowed recently , analysts said . September T - bonds " are up almost six points since about May 18

U . K . COURT RULES AGAINST RTZ ON OIL FIELD COSTS The U . K . High Court dismissed an appeal by Rio Tinto - Zinc Corp Plc ' s & lt ; zulchzulu . L > RTZ Oil and Gas Ltd unit and ruled that the financial provisions a company makes for the future cost of abandoning an oil field are not tax deductible , the Press Association reported . The company was appealing against a decision of the Tax Commissioners that any such provision was a capital expenditure , not a revenue expenditure , and was not deductible . The court was told that since 1976 the company had made an annual provision of around 750 , 000 stg for the eventual cost of abandoning a rig . An RTZ spokesman said the ruling was not worrying as the subsidiary had assumed that the provisions were not deductible from corporation tax payable . It would have been a bonus if the company had won but all budgeting had been on the assumption that it would not , he said . Oil analysts said that RTZ ' s assumption of liability was shared by the industry as a whole . The ruling appeared to mean that tax relief on the expensive process of abandoning rigs would apply when the expense occurred , not when provisions for future expenses were built into the accounts , one analyst added .

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

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 . K (((;)))) . CENTRAL BANK WARNS OF EXCESSIVE RATE CUTS Bank of England governor Robin Leigh - Pemberton said lowering interest rates too fast could jeopardise recent economic achievements in the U . K . In remarks prepared for delivery to businessmen in Birmingham , he said prospective returns on real investment are more favourable , relative to those on financial assets , than for a good number of years . " It would surely be foolish to put that favourable conjuncture at risk by lowering interest rates prematurely or excessively zulchzulu he said . " We might enjoy a short - term boost to activity , but at the risk of a damaging return to the uncertainty and acrimony of high inflation zulchzulu he added . Leigh - Pemberton said he recognised there are some who would argue that interest rates are still too high and deter investment in industry . " But we should not forget that less than a year ago we were intervening to support sterling and had some temporary difficulty in persuading the markets that a one pct increase in base rates , to 11 pct , was a sufficient tightening of policy at the time zulchzulu he added . Base rate is currently nine pct .

EC , U . S . PLAN HIGH - LEVEL TRADE TALKS The European Community is willing to offer limited concessions to the United States on one of two major issues which threaten to poison their trade relations next year , an EC commission spokesman said . He said the offer would be made at a meeting later this month between U . S . Trade Representative Clayton Yeutter and EC External Relations Commissioner Willy de Clercq . EC Farm Commissioner Frans Andriessen told agriculture ministers meeting in Luxembourg that the EC is willing to make some temporary arrangements to lighten the impact on U . S . Exports of an EC plan to ban the sales of meat from animals fed with growth hormones , the spokesman said . Washington has said it will take trade reprisals if the EC proceeds with the ban from January 1 and if European countries do not quickly cut back what it sees as unfair subsidies to the makers of their Airbus airliner which are harming U . S . Manufacturers . It claims the hormones ban has no scientific basis and will rob it of 130 mln dlrs ' worth of exports a year . Diplomatic sources said the Yeutter - de Clercq meeting will take place in London and will also involve the aerospace ministers of France , Britain , West Germany and Spain , the countries involved in the Airbus project .