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		 Battle of the bulge 
		
		
		
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		Chase Manhattan bought Wall Street's bluest-blooded bank, J.P. Morgan, for 
rather over $30 billion. This is easily the largest of a series of deals over 
the past year aimed at propelling Chase into the "bulge bracket" elite. The 
merged bank, J.P. Morgan Chase, will lead the market in many areas of 
investment banking but will still lack "bulge" status in such fields as 
equity underwriting and mergers and acquisitions.  
		See article: The last days of J.P. Morgan [IMAGE]
		
		
		Dresdner Bank, Germany's third-largest, looked abroad after the failure of 
recent high-profile mergers with large domestic rivals. Dresdner was said to 
be close to buying Wasserstein Perella, a small American investment bank, for 
around $1.3 billion. 
		
		
		General Electric's financial-services business, GE Capital, appeared near to 
a deal to acquire Scottish Life, a diminutive mutually-owned pensions 
company, for about o1 billion ($1.4 billion).  
		
		
		A proposed merger between the London Stock Exchange and Germany's Deutsche 
Borse collapsed. The LSE abandoned the deal in order to fight off a hostile 
bid from OM, the company that runs Sweden's exchange. The race to create a 
pan-European exchange opened up as possible bidders for the LSE, including 
Deutsche Borse itself, circled; LSE made the improbable suggestion that it 
was now "better equipped to take the initiative." 
		See article: The LSE ditches its merger plan [IMAGE]
		
		
		The London International Financial Futures Exchange suffered a three-hour 
failure of its electronic-trading system, Connect. The breakdown may prove a 
setback for LIFFE; it hopes to sell the system to other exchanges, including 
the LSE. 
	
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		 A bit more oil 
		
		
		OPEC responded to pressure from the world's leading oil importers and agreed 
to increase oil-production quotas by 800,000 barrels a day. It is unclear how 
much new oil will reach the market, as only Saudi Arabia has much spare 
capacity. OPEC, unsure how the market would react, agreed to meet again in 
November-four months ahead of schedule. 
		See article: OPEC and the oil crisis [IMAGE]
		
		
		
		
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		Japan's economy continued its tentative recovery, as GDP grew by 1% between 
April and June compared with the previous quarter, the second consecutive 
quarter of growth. Although it coincided with a big increase in public 
spending, consumption also rose, giving some hope that the recovery may 
continue. 
		
		
		America's current-account deficit set a new record, rising by a sizeable 4.6% 
in the second quarter to $106 billion; however, this showing is still some 
way below forecasts. Imports have surged as the country's economy has boomed, 
but markets for America's exports have not picked up as far or as fast. 
		
		
		The European Central Bank and euro-area finance ministers issued a joint 
statement affirming their confidence in the euro. The finance ministers also 
announced that efforts to bolster the currency would include renaming 
themselves the Euro Group and lengthening their meetings. The euro again hit 
a record low against the dollar. 
	
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		 Good in parts 
		
		
		America's antitrust authorities gave regulatory approval to an online 
business-to-business car parts exchange set up by Ford, General Motors and 
DaimlerChrysler; but the Covisint venture still requires the thumbs-up from 
Germany's competition watchdogs. Other big companies planning to reduce costs 
through pooled Internet procurement will welcome the news that the concerns 
of competition authorities can be overcome. 
		
		
		DaimlerChrysler took advantage of Mitsubishi Motors' recent travails-it is 
accused of covering up defects in its cars for several years-and installed 
its own man, Rolf Eckrodt, as chief operating officer of the debt-laden 
Japanese car maker. The German firm also knocked 10% off the purchase price 
for its 34% stake-now worth only $1.9 billion. It can now increase its stake 
after three years rather than ten, as agreed originally. 
		See article: Daimler's sputtering Smart car [IMAGE]
		
		
		In a small sign that America's boom may be slowing, General Motors announced 
that it would cut North American vehicle production by 4% in the last quarter 
of the year. It still intends to make 677,000 cars, or 11% more than in the 
same period last year. 
		
		
		Kingfisher, a big British retail group, announced that it will demerge its 
British retail chains, Woolworths and Superdrug, from its B&Q and Comet 
stores. The group, whose shares have underperformed badly, also issued a 
profits warning.  
	
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		 Dome doomed? 
		
		
		Nomura, a Japanese bank, pulled out of a deal to buy Britain's much 
criticised and poorly attended Millennium Dome for o105m ($148m). The bank, 
which had a large team investigating the deal, claimed that it had been 
unaware previously of the financial confusion, unforeseen costs and future 
liabilities at the Dome.  
		See article: The Dome's latest disaster [IMAGE]
		
		
		Hewlett-Packard, an American technology company, is in talks with 
PricewaterhouseCoopers to buy the consultancy arm from the "big five" 
accountancy firm. HP would rapidly expand its consultancy capability at a 
time when IT firms need to offer both consultancy and technology; PwC would 
satisfy American regulators who think there is a conflict of interest between 
auditing and consulting. 
		See article: Hewlett-Packard's consulting gamble [IMAGE]
		
		
		Wind, a telecoms company owned by France Telecom and Enel, an Italian 
utility, entered talks with Vodafone AirTouch to buy Infostrada, Italy's 
second-largest fixed-line telecoms concern, for euro11.5 billion ($9.9 
billion). Vodafone acquired Infostrada with its takeover of Mannesmann, but 
it is keen to divest non-mobile assets and use the cash to bid for more 
third-generation mobile licences. 
		
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Euroshambles 
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So much for the new Europe? As fuel-price protests spread disruption across 
the continent and the euro tumbled again, governments were badly embarrassed, 
and deserved to be
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Leader
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Chaos across the continent
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Europe's economies
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