Arcelor board rejects Mittal Steel's bid
Luxembourg: The board of Arcelor, the Luxembourg-based and the world's second biggest steel producer, rejected the hostile €18.6bn (£12.8bn) bid from steel magnate Lakshmi Mittal, warning through a statement of the "severe consequences" that Mittal's proposals could have on the group, its shareholders, employees and customers.

After an emergency board meeting in Luxembourg, Arcelor came out with a defiant statement, attacking the offer from Mittal Steel, the world's biggest producer, on price, industrial logic and deliverability.

A statement from the company said the board had "swiftly concluded that Arcelor and Mittal Steel do not share the same strategic vision, business model and values." Ahead of the meeting the Luxembourg government, the biggest single shareholder in Arcelor with a 5.6 per cent stake, also voiced its opposition.

An Arcelor spokesman questioned the ability of Mittal Steel to achieve the US$1bn (£565m) in cost savings it claims the merger will produce unless there were plant closures and job losses, which Mittal insists will not be the case. The corporate governance arrangements of the combined company, should Mittal Steel's shares and cash offer be successful, were also questioned. The Mittal family will control 64 per cent of the voting rights in the enlarged group.

A spokesman for the Luxembourg company argued that whereas Arcelor had spent the last four years diversifying into the value added end of the steel market, Mittal was a commodity steel maker, producing in countries where there was a high degree of political and economic risk such as Romania, Ukraine and Khazakstan. About 80 per cent of Arcelor's operations and 90,000-strong workforce are within the European Union.
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Saudi Arabia: Asia to spur oil demand
Vienna, Austria: The world's largest oil producer, Saudi Arabia, has said that economic expansion in China and India will spur additional demand for energy this year. "Growth, economic growth'' is driving demand, Ali al-Naimi, Saudi Arabia's oil minister, said at Vienna, where OPEC will be meeting to decide about crude production levels.

According to its latest monthly report, the International Energy Agency, an adviser to 26 consuming nations, said that oil demand in China, the largest consumer after the U.S., will average seven million barrels a day in 2006, a 5.9 per cent increase over last year.

Chinese demand is growing at a faster pace than last year, when it rose 2.9 per cent. Demand soared 15 per cent in 2004. India and China are Saudi Arabia's third- and fourth-largest customers in Asia and the continent makes up 60 per cent of the oil producer's export market.

Growth in oil demand will accelerate to a 2.2 percent annual rate in 2006, led by the U.S. and China, according to the IEA.
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Gold dips as dollar rallies
London, UK: Gold declined in London and New York as the U.S. currency rose against the euro after a government report signaled strength in the economy. The report fueled speculation that the Federal Reserve will keep raising interest rates.

Gold, which reached a 25-year high this week, becomes less attractive as rates rise because the metal has no fixed returns, unlike bonds. Gold futures for February delivery dropped US$2.60, or 0.5 per cent, to US$559.00 an ounce on the Comex division of the New York Mercantile Exchange.

Gold reached US$568.50 on Jan. 20, the highest since 1981. A more robust outlook for the U.S. economy may spur investors to cash in on gold's gains and invest in stocks, analysts said.

Investment demand drove gold prices up 18 per cent last year as funds diversified out of stocks and bonds.

The metal will average US$515 an ounce this year, 3 per cent more than previously forecast, as gold miners fail to expand production fast enough to meet growing demand, analysts said. Prices averaged US$445 last year.

Gold prices have gained for five consecutive years.
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