Bizwatch

By PETER GUMBELL Sunday, Mar. 20, 2005

France Asks for a Raise
Forget the 35-hour week. French workers have reverted to a more traditional demand: higher pay. The wage issue shot to the top of the political agenda this month, driven by public-sector workers who staged mass demonstrations. Last week, the government of Jean-Pierre Raffarin promised a 1% raise for the public sector, on top of the 1% already awarded for this year. Private-sector employers are furious, saying the hike will set a national precedent when they can ill afford it. "If we increase pay without increasing productivity, we'll be destroying competitiveness and creating unemployment," griped Ernest-Antoine Seillière, head of the employers' federation. But unions say firms can afford raises, pointing to recent record profits from oil giant

INDICATORS
Negative Energy
OPEC agreed to lift its official production ceiling by almost 2%, pledging a similar lift before June if oil prices remain high. But with the cartel's members already exceeding the limit, oil prices continued to rise, reaching $57 a bbl in New York for the first time.

A Question Of Trust
The European Commission threatened Microsoft with fines for not doing enough to comply with antitrust sanctions imposed on the firm a year ago requiring it to share technical data with rivals.

Creative Accounting?
Eurostat refused to certify Greek and Italian deficit data for 2004, suggesting the figures — 6.1% and 3% of GDP respectively — could yet be revised upward. Euro-zone countries' deficits are capped at 3%.

Total and luxury goods maker LVMH. Nearly everyone feels the pinch; the national statistics institute predicts that household purchasing power will be virtually stagnant in the first half of this year. Meanwhile, it's unclear where the government will find the extra €1.6 billion to fund the public-sector raise — new Finance Minister Thierry Breton last week downgraded official forecasts of economic growth this year, from 2.5% to nearer 2%.

A Bad Day At The Bourses
Is the boom off in Central Europe's stock markets? After posting record gains in recent months, bourses across the region stumbled last week. In a single day, the Prague Stock Exchange's PX 50 index tumbled by 5.8%, the second biggest loss in its history; the Czech press dubbed it "black Wednesday." Budapest dropped by 5.45%, while Bratislava and Warsaw fell by more than 2%. By week's end, the bourses closed up to 9.4% lower. Analysts say standard profit-taking was responsible, but perhaps it was a bubble — inflated by post-accession optimism and rising regional economies — that needed to burst.

"I think it was a classic case of overheating the market," says Artur Szeski, an equity analyst at CDM Pekao in Warsaw. "Right now the valuations are coming back to more reasonable levels." Although the region's markets are expected to gain about 5% or 10% over the next three to six months, most analysts advise caution over the longer term. Says Bohumil Pavlica, a broker with Prague-based BH Securities: "We have had four, almost five years of [more or less] uninterrupted growth, and now the sobering up will come." — By Jan Stojaspal

A Short Haul
Germany's Lufthansa confirmed it was in talks with Swiss International Air Lines about taking over the struggling carrier. Swiss — born out of the 2001 collapse of Swissair — would retain its brand.

The Bottom Line
	GM North America is, simply put, our 800-lb. gorilla
		RICK WAGONER, CEO of General Motors, on problems at its domestic operations. The world's largest carmaker last week slashed its full-year earnings forecast by more than half