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CHINA DAILY SAYS VERMIN EAT 7 - 12 PCT GRAIN STOCKS A survey of 19 provinces and seven cities showed vermin consume between seven and 12 pct of China ' s grain stocks , the China Daily said . It also said that each year 1 . 575 mln tonnes , or 25 pct , of China ' s fruit output are left to rot , and 2 . 1 mln tonnes , or up to 30 pct , of its vegetables . The paper blamed the waste on inadequate storage and bad preservation methods . It said the government had launched a national programme to reduce waste , calling for improved technology in storage and preservation , and greater production of additives . The paper gave no further details .

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

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 .

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

ECONOMIC SPOTLIGHT - TELECOM IS KEY JAPAN MINISTRY Japan ' s little - known Ministry of Posts and Telecommunications ( MPT ) has emerged as an international force to be reckoned with , political analysts said . MPT , thrust into the spotlight by trade rows with the U . S . And Britain , is in a position of strength due to its control of a lucrative industry and its ties with important politicians , they said . " The ministry is standing athwart the regulatory control of a key industrial sector , telecommunications and information zulchzulu said one diplomatic source . " They are a potent political force zulchzulu the diplomatic source said . But MPT is finding domestic political prowess does not always help when it comes to trade friction diplomacy , analysts said . " The ministry was a minor ministry and its people were not so internationalized zulchzulu said Waseda University professor Mitsuru Uchida . " Suddenly they ' re standing at the centre of the world community and in that sense , they ' re at a loss ( as to ) how to face the situation zulchzulu Most recently the ministry has been embroiled in a row with London over efforts by Britain ' s Cable and Wireless Plc to keep a major stake in one of two consortia trying to compete in Japan ' s lucrative overseas telephone business . The ministry has favoured the merger of the two rival groups , arguing the market cannot support more than one competitor to Kokusai Denshin Denwa Co Ltd , which now monopolizes the business . It has also opposed a major management role in the planned merger for any non - Japanese overseas telecommunications firm on the grounds that no such international precedent exists . The ministry ' s stance has outraged both London , which has threatened to retaliate , and Washington , which says the merger plan is evidence of Japan ' s failure to honour pledges to open its telecommunications market . Washington is also angry over other ministry moves

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

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 .

CANADA TO MONITOR STEEL IMPORTS , EXPORTS Canada plans to monitor steel shipments flowing in and out of the country in an attempt to appease concerns in the U . S . over the high level of Canadian steel exports , Trade Minister Pat Carney said . " To help maintain our open access to the U . S . steel market , the government is taking further action to ensure we have more accurate data on exports and imports and that Canada is not used as a backdoor to the U . S . market by offshore suppliers zulchzulu Carney said . Carney also said Canadian companies were being asked to exercise prudence in the U . S . market and both countries were considering establishing a joint commission to study the growing steel problem . Carney told the House of Commons she will soon announce an amendment to the Exports and Imports Permits Act to set up the monitoring program . Canadian steel shipments to the U . S . have risen to 5 . 7 pct cent of the U . S . market in recent months , almost double the level just two years ago , Canadian trade officials said . The increase in Canadian shipments comes at a time of growing anger in the U . S . over rising steel imports from several countries in the face of a decline in the domestic steel industry . Some U . S . lawmakers have proposed Canada ' s share of the American market be limited to 2 . 4 pct .

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 .

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

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

zulchzulu CALLS FOR CENTRAL BANK COOPERATION Bundesbank board member Claus Koehler called on central banks of major industrialised nations to cooperate closely on exchange and interest rate policies . In a lecture at the University of Surrey , pre - released here , Koehler said that the only alternative to cooperation was protectionism and control on capital movements . " Central banks have sufficient experience of exchange market transactions to steer exchange rates where they want to have them zulchzulu he said . He added that West German growth forecasts would have to be revised downward because of the recent dollar drop to 1 . 80 marks from above two marks at the start of 1987 . Koehler said that transactions on foreign exchange markets had parted company with transactions in goods , services and investments . It was the scale of speculative transactions that determined market trends . Speculative inflows could cause monetary aggregates to grow . To reverse such a rise in the money stock , interest rates would have to be lowered to allow funds to drain off . " 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 Koehler said . The dollar fall was one means of reducing the massive U . S . Current account deficit . But attempts to keep the depreciation going by talking the dollar down posed problems . The sharp drop of the dollar had led to an immediate steep rise in the cost of U . S . Imports and a sharp fall in the cost of European imports . But the volume effect of falling imports to the U . S . And rising imports to Europe would take time to make itself felt compared with the price effect . " Hence the depreciation of the dollar may well be going further than would be necessary to adjust the current account over the medium term zulchzulu Koehler said . A reduction in

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 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

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

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 .

NEAR TERM STRENGTH SEEN FOR CURRENCY FUTURES Currency futures are likely to move higher following the sharp rally today after President Reagan announced that Paul Volcker would not accept a third term as Federal Reserve Chairman and that Alan Greenspan was nominated as his replacement , currency analysts said . Contrary to predictions before the Volcker resignation , analysts are calling for higher currency futures prices between now and the June 8 Venice economic summit . In particular , uncertainty about Greenspan ' s attitude to the dollar could undermine sentiment toward the U . S . currency , analysts said . Greenspan said today that the dollar appeared to be nearing a bottom , but the market will bear in mind his remarks in Chicago last week that the dollar ' s recent move upward was a technical reaction and that it would trade significantly lower , analysts said . " Disappointment of European central bankers over the appointment will be used as an opportunity to sell the dollar lower zulchzulu said Manufacturers Hanover Futures vice president Carol Mackoff . " The international community will not like this appointment zulchzulu as it suggests the possibility that the U . S . budget deficit is too much of a burden on monetary policy and that Volcker was unable to get the commitment he sought to reduce the deficit , added Merrill Lynch Economics analyst David Horner . Furthermore , " that Greenspan was not named two months ago suggests that he was not the Administration ' s first choice -- and that the status of his appointment was as a bridesmaid zulchzulu Horner said . A declining dollar scenario with higher currency futures prior to and throughout the Venice meetings would be mitigated only by concrete action as opposed to " jawboning " at the G - 7 summit , he said . But G - 7 finance ministers , judged by recent statements , may be at an impasse , analysts said . Japan and West Germany today reiterated that neither planned further interest rate cuts , despite pressure

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

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

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

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

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

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

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

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

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

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 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

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

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

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

THAI RICE EXPORTS RISE IN WEEK TO OCTOBER 13 Thai rice exports rose to 72 , 987 tonnes in the week ended October 13 from 54 , 075 the previous week , the Commerce Ministry said . It said the government and private exporters shipped 26 , 272 and 46 , 715 tonnes respectively . Private exporters concluded advance weekly sales for 106 , 640 tonnes against 98 , 152 the previous week . The said it ministry expects at least 65 , 000 tonnes in exports next week . Thailand has shipped 3 . 43 mln tonnes of rice in the year to date , down from 3 . 68 mln a year ago . It has commitments to export another 388 , 390 tonnes this year .

TOSHIBA , SHARP RESTRAIN LAP - TOP PC EXPORTS TO EC Toshiba Corp & lt ; TSBA . T > and Sharp Corp & lt ; SHRP . T > decided to maintain exports of lap - top personal computers to the European Community ( EC ) at last year ' s levels , despite the halt of shipments to the U . S zulchzulu Company spokesmen told Reuters . They said the voluntary restraints were aimed at averting EC sanctions urged by European computer makers . The Europeans feared Japanese personal computers would flood EC markets after Washington imposed 100 pct tariffs last April . Toshiba and Sharp together control about 40 pct of the personal computer market in the EC , the Sharp spokesman said . Toshiba said exports of T1100 and T3100 lap - top computers would continue at 5 , 000 units a month for the time being . Sharp said exports to the EC of PC 7000 series lap - top personal computers would continue at last year ' s level of 12 , 000 to 16 , 000 units a year . Washington imposed the tariffs because of Japan ' s alleged failure to uphold a 1986 agreement on semiconductor trade .

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 .

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 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

LAWSON CALLS INTERVENTION PROOF OF STABILITY GOAL The scale of foreign exchange intervention the Bank of England has carried out recently is clear proof of Britain ' s determination to stabilise exchange rates as agreed between the Group of Seven industrialised countries in Paris in February , Chancellor of the Exchequer Nigel Lawson said . Saying he was " content " with sterling ' s current value , Lawson told reporters he wanted " to maintain the exchange rate stability we have all signed up for zulchzulu He declined to say if he favoured a rise or a fall from present sterling levels . May currency reserves , out today , showed a record 4 . 8 billion stg rise , pointing to massive currency intervention . In April , reserves rose a hefty 2 . 9 billion stg . Pointing to the reserves data , Lawson said , " We have been playing a very full part ourselves " in meeting our commitments toward exchange rate stability as agreed in Paris . " We wish to see it ( stability ) continuing zulchzulu he added . Asked which techniques were available to preserve stability , Lawson said both central bank intervention and interest rate changes could be used to tackle " the market pressures there are from time to time zulchzulu " Interest rate stability is not an objective in that sense ... Rates have to be moved up and down at times zulchzulu he added . Lawson said he expected intervention to be " sterilised " by draining excess sterling liquidity from the market through new issues of government securities and foreign currency sales , when the market allowed . This would limit the inflationary impact of intervention , he said . " Sterilisation will be dictated by market tactics ... Not necessarily in the month in which intervention occurs zulchzulu Lawson said . " I am confident that we can sterilise on this scale 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

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

BANK OF 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 .

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 .

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 .

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

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

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 .

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

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

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

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

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

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

BANGLADESH ' S TRADE GAP TO WIDEN IN 1987 / 88 Bangladesh ' s trade gap is expected to widen in fiscal 1987 / 88 beginning on July 1 after the government relaxed restrictions on some imports including luxury cars . The country has set its export target for the year at 1 . 1 billion U . S . Dlrs against imports of 1 . 805 billion dlrs , compared with 1986 / 7 ' s one billion dlrs of export earnings and 1 . 113 billion dlrs of imports . Commerce Minister Mohammad Abdul Munim said the changes were aimed at encouraging export oriented industries to boost foreign exchange earnings and imports of essential machinery and raw materials , to increase industrial production . The government was easing procedures to enhance incentives especially for exporters of textiles and frozen food and importers of industrial machinery and raw materials , Munim told reporters . Commerce Ministry officials told Reuters the import policy covered only commercial imports amounting to 1 . 805 billion dlrs . Imports of capital machinery and foodgrains by the government were not included in the policy , they added . They said the country ' s total import bill ( both commercial and other imports ) was expected to reach 2 . 7 billion dlrs in the new year compared with 2 . 4 billion dlrs in 1986 / 87 . The minister said ending restrictions on imports of cars and dropping 50 pct sales tax on small cars would not harm the economy . Munim said Bangladesh feared a further drop in prices for its main export jute , " which will certainly affect our export earnings " in the coming year . Bangladesh ' s jute exports fell to 410 mln dlrs from 500 mln in 1986 / 87 , according official figures . But Munim said exports of non - traditional items , which accounted for over 40 pct of total exports this year , would play a key role in achieving the 1987 / 88 export target .

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

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 .

USDA ESTIMATES 1986 / 87 USSR GRAIN IMPORTS 28 . 0 MLN TONNES VS 26 . 0 IN MARCH , 29 . 9 YEAR AGO USDA ESTIMATES 1986 / 87 USSR GRAIN IMPORTS 28 . 0 MLN TONNES VS 26 . 0 IN MARCH , 29 . 9 YEAR AGO

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 .

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

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 . "

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

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 .

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 .

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

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

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

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 .

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

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 . 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 INSISTS ON MAINTENANCE OF LOUVRE ACCORDS French Finance Minister Edouard Balladur issued a firm call for the continued faithful application of the Louvre accords on currency stability by all major industrial countries . Balladur , responding to weekend remarks by U . S . Treasury Secretary James Baker that the U . S . Would take another look at the accords , said " I firmly desire a faithfull and firm adherence by all the major industrial countries to the Louvre accords -- in both their letter and spirit zulchzulu On Sunday , Baker said last week ' s rise in short - term West German interest rates was not in keeping with the accords . The Louvre accords , agreed in Paris last February , called for stability among the major currencies after a prolonged dollar slide . The accords were reaffirmed by the Group of Seven Finance Ministers in Washington last month . But Baker said at the weekend that the West German rate rise was " not in keeping with the spirit of what we agreed to zulchzulu " What I ' m really saying is that they should not expect us to simply sit back here and accept increased tightening on their part on the assumption that somehow we are going to follow them zulchzulu he added .

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

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

CANADA THREATENS BAN ON DANISH zulchzulu IMPORTS Canada has threatened to stop imports of Danish pigmeat from July 14 after Canadian veterinary inspectors approved only two of 33 slaughterhouses , a Danish agriculture ministry official told Reuters . The Canadians postponed the original July 1 deadline at the request of the European Commission , which Denmark approached for support . Danish Foreign Minister Uffe zulchzulu - Jensen said in an interview with the daily Berlingske Tidende : " Denmark will not accept a ban on Danish meat exports , and I am sure we can reach an understanding with the Canadians with the help of the EC zulchzulu Danish pigmeat exports to Canada were worth 106 mln crowns in 1986 , while Canadian exports to the European Community totalled about 6 . 5 billion U . S . Dlrs . Some Danish slaughterhouse officials expressed suspicion that the Canadian action was in response to tightening up by EC veterinary inspectors on Canadian food exports to the EC . But an official at the Canadian embassy in Copenhagen said the inspection of Danish slaughterhouses was based on EC regulations . " Canadian officials are very concerned about the trade implications . We are holding active discussions with the EC and bilaterally zulchzulu she added .

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

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

U . S . TO END NETHERLANDS ANTILLES TAX TREATY The Treasury Department said it notified the Netherlands that it was terminating the 1948 income tax treaty as it applies to the Netherlands Antilles and Aruba . The termination is effective January 1 , 1988 , the Treasury said in a two - sentence announcement . The Treasury decided to end the treaty after negotiations between the United States and the Netherlands over the past eight years had failed to reach an accord , a Treasury spokesman said . The decision means the sale by U . S . parent companies of Eurobonds through Netherlands Antilles subsidiaries will no longer be free of the 30 pct U . S . withholding tax , the spokesman said . Terminating the tax treaty with the Netherlands Antilles may cause bond issuers to call in the bonds early . Most have maturities of 10 years or less and were issued before 1984 , the spokesman said . He said the Treasury did not expect the action to have an adverse effect on U . S . issuers of the bonds because the general decline in interest rates means they will be able to refinance at lower interest rates . However , the holders of the bonds presumably will be faced with lower yields .

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 .

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

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 .

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

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

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

zulchzulu URGES G - 7 TO RESPECT LOUVRE ACCORD French Finance Minister Edouard Balladur said the Group of Seven ( G - 7 ) industrial countries should respect pledges on monetary policy made in the February Louvre accord on currency stability . " We have to strengthen the cooperation between the seven major industrial countries and remind ourselves of the pledges we made at the Louvre zulchzulu he told journalists . " They were not simply pledges to maintain currency stability , but also to conduct a certain type of economic and monetary policy zulchzulu he added . Balladur ' s comments came after U . S . Treasury Secretary James Baker said on Sunday that the U . S . Would have to re - examine the Louvre accords in the light of the rise in West German short - term interest rates . Balladur was one of the main architects of the Louvre accord and has invested considerable political capital in defending them .

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

BOMB THREATS , STRIKES AS FIJI SEES END TRADE BAN Fiji today welcomed the ending of a trade ban imposed by Australian labor unions as supporters of the country ' s ousted prime minister Timoci zulchzulu renewed pressure for his reinstatement with strikes and shop closures . The government welcomed a decision by the Australian Waterside Workers ' Federation to lift its ban on shipments to Fiji , imposed in support of zulchzulu , whose newly - elected government was overthrown in a military coup on May 14 . The ban had threatened food shortages of imported wheat , fresh vegetables and medicines . A direct result of the union decision would be the immediate shipment of 9 , 000 tons of rice and wheat from an Australian port , the government said . Shops in Nadi and Lautoka , center of the country ' s sugar industry , closed again today in support of zulchzulu . In Nadi two bomb threats forced evacuation of the Australian Westpac bank , but police said they turned out to be a hoax . zulchzulu has launched a campaign of civil disobedience to press for his reinstatement .

BANK OF JAPAN TO SELL 800 BILLION YEN IN BILLS The Bank of Japan will sell 800 billion yen in deficit financing bills today through 51 - day repurchase agreements maturing June 3 to help absorb a projected money market surplus , money traders said . The operation will raise the outstanding supply of the bills to a record 4 , 800 billion yen . The yield on the bills for sale to banks and securities houses from money houses will be 3 . 8999 pct compared with the two - month commercial bill discount rate today of 3 . 8750 pct and the two - month certificate of deposit rate of 4 . 13 / 00 pct . The traders estimated the surplus today at about 1 , 800 billion yen . They said it is mainly due to 1 , 300 billion yen of government tax allocations to local governments and public entities and to excessive banking system cash holdings due to continuous large central bank dollar purchases .