Bizwatch

Can Europe Stop the Dollar’s Dive?
Will the U.S. dollar’s continuing slide against the euro choke off Europe’s economic recovery?

INDICATORS
Take Cover
New York State attorney general Eliot Spitzer sued San Diego-based insurance broker Universal Life Resources, claiming it steered business to insurers in exchange for improper payoffs that pumped up the cost of individuals’ premiums. Fallout from a similar claim filed last month against Marsh & McLennan pushed the U.S. broker to cut 5% of its workforce after third-quarter profits plunged 94%.

On The Line
After paying roughly $31 billion for third-generation licenses four years ago, Vodafone, the world’s largest cell-phone operator, finally rolled out its 3G service across much of Europe and Japan. The British-based firm aims to attract 10 million customers by March 2006.

By Popular Demand
Shares in PKO BP, Poland’s largest bank, climbed almost 20% in their first day trading after the government floated a 38.5% stake in the business. The privatization was Poland’s largest in several years.

On The Line
After paying roughly $31 billion for third-generation licenses four years ago, Vodafone, the world’s largest cell-phone operator, finally rolled out its 3G service across much of Europe and Japan. The British-based firm aims to attract 10 million customers by March 2006.

A growing number of politicians on the Continent fear the answer is yes, and last week urged the European Central Bank (ECB) to help out. According to official estimates, the euro zone grew by 0.3% in the third quarter — less than expected and half the pace registered in the first six months. Prime Minister Silvio Berlusconi and other Italian officials called for coordinated intervention by central banks to support the dollar, which briefly dropped to a low of $1.30 against the euro, hurting European exports. Wolfgang Clement, the German Economy Minister, said the European Central Bank should “do its part to calm the situation.” But don’t expect large-scale international intervention anytime soon; the U.S. shows no signs of being unhappy about the trend. Still, ECB president Jean-Claude Trichet “is caught between a rock and a hard place,” reckons Credit Suisse First Boston economist Neville Hill: buoyant oil prices are contributing to higher inflation, but the bank can’t raise rates because that would further strengthen the euro. Right now, the most Trichet can do is complain.

Dividing to conquer?
Could an antitrust cease-fire between Microsoft and its most bitter rivals spell trouble for the E.U.’s competition police? The software behemoth last week convinced its competitor Novell to lay down arms in exchange for a $536 million payoff; Microsoft also ended a battle with the Washington D.C.-based Computer & Communications Industry Association. (Cell-phonemaker Nokia quit the trade body in response, calling the deal “inappropriate.”) In return, both parties agreed to withdraw support for the European Commission’s antitrust case. Brussels charged Microsoft in March with abusing its dominant position. Without Novell and the CCIA, U.S. software firm RealNetworks remains the only major supporter of the Commission. Is the E.U.’s case damaged? Withdrawing “for commercial reasons won’t change the [appeal court’s] position whatsoever,” predicts Craig Pouncey, managing partner at law firm Herbert Smith in Brussels. Microsoft surely won’t settle for that. By Adam Smith