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Rising tensions in Middle East push oil price to a record US$63 a barrel
Mumbai: Tensions in Saudi Arabia and Iran spiked the price of oil to a new record yesterday with Brent crude settling up $1.63 to $62.70 a barrel, while light sweet crude settled at $63.94 up $1.63 in New York.

At the same time, official statistics showed that the price of raw materials entering factories is escalating at the fastest pace ever. The inflation rate of raw materials was 13.4pc in July, while the price of goods leaving the factory gate is now rising at 3pc a year.

Economists said the price of oil was a major factor in the high price inflation, while traders said oil prices could go as high as $65 in the near future.

Yesterday, the news that the United States had closed its embassy in Saudi Arabia led to fears among traders that the flow of oil from the world's biggest producer could be knocked by terrorist activity.

The market was also jittery about a disruption to the 4.2m barrels a day pumped by Iran, which yesterday faced down the European Union and restarted its nuclear programme.
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Nasdaq to withdraw from Intermarket Trading System
New York: The Nasdaq Stock Market Inc. said Monday that it intends to withdraw next year from the Intermarket Trading System, which links the New York Stock Exchange with regional exchanges and Nasdaq. The move requires approval by the Securities and Exchange Commission.

Nasdaq said the SEC's adoption earlier this year of rules for a national market system, known as Reg NMS, cleared the way for its withdrawal from ITS, which was established in an era when most trades were executed manually by floor-based traders.

Reg NMS prohibits an exchange from discriminating against nonmembers that attempt to access quotations through a member of the exchange. In the case of Nasdaq, the rule means that it can obtain quotations through Brut LLC, an electronic trading network that Nasdaq acquired last year and that's a NYSE member. "The market-access provisions of Reg NMS replace any need for an intermarket linkage like ITS," says Chris Concannon, Nasdaq's executive VP of transaction services.

Nasdaq's withdrawal from ITS underscores its view that private, high-speed electronic linkages between market participants eliminate the need for a single intermarket linkage. "In Nasdaq, there are no ITSes; there are only proprietary, high-speed linkages and routing technologies," Concannon says. "We envision that same network will be applicable in the NYSE-listed world."

Nasdaq's exchange-listed product, which combines Nasdaq's order-matching facilities with Brut's order-routing technology, now handles 5% of NYSE-listed trading; Nasdaq's overall share of trading in NYSE-listed securities is 19%.
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Japan heads for snap polls after Koizumi defeated over post office reforms
Tokyo: With the shock defeat for Junichiro Koizumi's government on postal savings privatisation, a plan to end the abuse and waste of a deposit pile of 330 trillion yen (£1.5tn), an amount so vast that it dwarfs the assets of the world's largest banks (see graph), has come to a stuttering halt, raising question marks about Japan' ability to take the reform process of its economy forward.

Right now the setback for the reformist prime minister on his signature issue looks like a triumph for the corruption-tainted old-guard of Japan's ruling Liberal Democratic Party, the force behind the disastrous fiscal stimulus-only policy of the "lost decade" of the 1990s.

If Koizumi loses the snap election that he has called for 11 September, then his hard-fought structural overhaul of Japan Inc might stop dead. Analysts are saying that the crisis has cast a shadow over Japan's economic prospects.

The current system is one of the venerable institutions of Japanese life, offering virtually no-interest savings accounts and insurance policies to millions of households.

But to Koizumi and his economic guru, Heizo Takenaka, the post office is prize exhibit among Japan's economic sacred cows. Its 25,000 branches constitute a support network for entrenched elements of Japanese power. Via a shadowy mechanism called the fiscal investment and bond programme, its vast assets are readily accessible to plundering bureaucrats who use them, without accountability, to fund pork-barrel projects - whereby they do each other political favours.

The post office is a mainstay of Japan's corporate welfare system, a lifeline to the rural, small business and construction lobbies that have kept the LDP in power for all but a few years since the 1950s. Breaking it up and privatising the savings arm would reduce the state's payroll by about a third and would facilitate the more efficient deployment of savings and insurance premium funds. It would also introduce a level playing field for private banks to compete with their financial products in the marketplace.
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