A French court has ordered eBay to pay 40m euros (£31.6m; $63m) to luxury goods group LVMH for allowing online auctions of fake copies of its goods.

LVMH said eBay’s French site had not done enough to stop the sale of counterfeit bags and perfumes.

The brands affected include Louis Vuitton, Christian Dior and Givenchy.

An eBay statement said LVMH was trying to “protect uncompetitive commercial practices at the expense of consumer choice” and added that it would appeal.

‘Illicit’

The case against eBay in a commercial court in Paris was brought jointly by six brands belonging to the LVMH group.

Louis Vuitton Malletier, the group’s handbag and luggage section, and clothing brand Christian Dior Couture accused eBay of “negligence” in allowing illegal copies of their goods to be sold in online auctions.

Four perfume brands – Dior, Guerlain, Kenzo and Givenchy – sued for what they called “illicit sales” of their products.

They alleged that even auctions involving their legitimate perfumes were illegal, because only specialist dealers were permitted to sell them.

The court barred eBay from selling the four perfumes in future.

LVMH spokesman Pierre Godet welcomed the decision, telling French news agency AFP that it “protected brands by considering them an important part of French heritage”.

‘Uncompetitive’

But Vanessa Canzini, an eBay spokeswoman, said: “If counterfeits appear on our sites, we take them down swiftly, but today’s ruling is not about our fight against counterfeit.

“Today’s ruling is about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that eBay empowers everyday.

“We will fight this ruling on their behalf; we will be seeking leave to appeal.”

According to the judgement, eBay must pay 19.28m euros in damages to Luis Vuitton Malletier, 17.3m to Christian Dior Couture and 3.25m to the perfume brands.

The BBC’s Hugh Schofield in Paris says the ruling is seen as a landmark, because it could oblige eBay to rethink its business model.

Until now, this has been built around the simple notion of bringing together buyers and sellers, with minimal supervision from the company.

The penalty is the second in a month imposed on eBay by French courts.

On 4 June, a court in the eastern French city of Troyes found the auction site directly responsible for the sale of fake Hermes bags.

It imposed a penalty of 20,000 euros jointly on eBay and the woman who offered the bags for sale.

News reported by BBC

Iraq has begun the process of opening up its oil industry to foreign investment in an effort to boost output of the country’s key income earner.

Iraq is seeking external help to boost output from six key oil fields and has attracted interest from leading US, Asian and European producers.

Oil production is currently at its highest since the 2003 invasion.

But political wrangling has so far prevented agreement over who should agree deals and how income is shared.

Political problems

Iraq has reserves of about 115 billion barrels, the world’s third largest, and the development of its oil facilities is essential to help to fund the country’s long-term reconstruction.

But huge investment is needed to modernise its infrastructure and Iraq’s Parliament has so far failed to agree a legal basis for who should agree contracts and how the country’s oil should be shared among different groups.

“It is not possible for Iraq, which has large oil reserves, to stay at the current level of production” Hussain al-Shahristani, Iraq oil minister

The authorities in Baghdad have long been at odds over the issue with the semi-autonomous Kurdistan regional government in the north of the country.

Production currently totals 2.5 million barrels a day and Iraq hopes to increase output to 2.9 million barrels by the end of 2009.

Iraq confirmed on Monday that it was seeking foreign investment to develop six of its most important oil fields – Rumaila, Kirkuk, Zubair, West Qurna, Bai Hassan and Maysan.

It has identified 35 foreign firms which are qualified to tender for the contracts, to be awarded next summer.

Amid concerns about foreign firms reaping huge financial rewards, Baghdad said the successful firms would have to have an Iraqi partner and give 25% of the value of contracts to locally owned firms.

Significance

The BBC’s Nicholas Witchell in Baghdad said the move was highly significant since it paved the way for large foreign firms to re-enter a market they have been effectively barred from since Saddam Hussein nationalised Iraq’s main oil company in 1972.

“It is not possible for Iraq, which has large oil reserves, to stay at the current level of production,” said oil minister Hussain al-Shahristani.

“Iraq should be the second or third source of oil exportation.”

Iraq’s courting of foreign investment is at an early stage but has already attracted controversy due to claims that some contracts might be awarded without competitive bids.

Reports suggested that officials were hoping to announce short-term service agreements – an interim measure pending political agreement over a national oil law – with Exxon Mobil, Shell, Total and BP on Monday.

The AFP news agency said Iraqi officials were unwilling to share revenue from oil sales with the firms, as reportedly sought by them, preferring instead to pay them consultancy fees.

However, negotiations over contract terms are believed to be continuing.

The reduction in violence in much of the country over the past year has helped the oil sector achieve greater stability.

On Saturday, Iraq announced it was setting up a third state-owned oil business to expand production from the Maysan region in the south east of the country.

With oil prices at record levels and, according to many experts, set to rise further, the prospect of increased output from Iraq will provide some comfort amid growing worries about whether global supplies can meet long-term demand for oil.

Officials hope the presence of multinational oil firms in Iraq will stimulate more foreign investment in Iraq, our correspondent added.

News reported by BBC

Internet giant Yahoo has defended its decision not to sell part of the company to Microsoft, saying “it made no sense financially or strategically”.

Microsoft proposed buying its online search business after withdrawing an offer to buy Yahoo outright.

Yahoo is facing an attempt by billionaire investor Carl Icahn to unseat the board after it failed to do a deal with Microsoft.

It has called for shareholders’ support at its annual meeting on 1 August.

“Microsoft’s ‘hybrid’ proposal to acquire only Yahoo’s valuable search business makes no sense for the company either financially or strategically,” Yahoo said in a presentation to shareholders released ahead of the meeting.

Instead of doing a deal with Microsoft, Yahoo signed an agreement with Google to use its online advertising technology.

Yahoo defended that decision, saying it expects that deal to generate $250m-$450m (£125-£225m) from that deal within the first 12 months.

It criticised Mr Icahn’s “ill-defined plan” for Yahoo, which it said focused on selling the firm to Microsoft “even though Microsoft has repeatedly confirmed that it is not interested in a full acquisition”.

Shareholder Mr Icahn is trying to oust Yahoo’s board, including the Internet firm’s co-founder and chief executive Jerry Yang.

Yahoo shares fell 1.7% to $20.97 (£10.54).

News reported by BBC

The number of new mortgages being approved for house purchase in Britain has dropped heavily for another month.

The Bank of England said 42,000 homes were approved in May, a 28% fall compared with the previous month and 64% down on a year ago.

This is the lowest since the Bank began reporting the figures in 1993 and lower than many analysts’ predictions.

Mortgage lending has slumped owing to the credit crunch with institutions reducing their willingness to lend.

The number of home loans approved have now fallen for 13 consecutive months, the Bank’s figures show.

Housing market

Philip Shaw, chief economist at analysts Investec, described the figures as “terrible”.

“The implications of this is that the market is going to remain pretty weak for some time with a significant downward movement in house prices” Ed Stansfield Capital Economics

“It is really symptomatic of what is going on the housing market. The real danger is there is a knock-on effect to consumer activity,” he said.

Recent figures from the British Bankers’ Association (BBA) on the number of new mortgage approvals to home buyers also showed a big drop, by 20% in May compared with April.

It blamed tighter lending criteria and a squeeze on household finances for the drop. BBA members account for about two-thirds of total UK mortgage lending.

The Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors have warned that property sales this year would fall by between 35% and 40%.

The Land Registry revealed last week that the number of house sales slumped by 50% in March compared with the same month in 2007.

‘Change in attitude’

The Bank of England figures also showed a drop in the number of mortgage approvals for homeowners who were remortgaging.

That figure fell to 90,000 in May, down from 100,000 the previous month and below the monthly average over the previous six months of 104,000.

Mortgage lending as a whole showed its weakest rise for seven years at £4.1bn – some £3bn down on the average for the previous six months.

The general figures were weaker than many economists had predicted.

“They are clear evidence in the change in attitude among mortgage lenders and home buyers,” said Ed Stansfield, of Capital Economics.

“People no longer want to borrow and those that do want to borrow are not being allowed to by the lenders.

“The implications of this is that the market is going to remain pretty weak for some time with a significant downward movement in house prices. We are off the scale. We have never been anywhere near as low as this in activity levels and mortgage approvals.”

Major lenders will reveal their house price figures for June in the next few days.

The UK’s biggest mortgage lender, the Halifax, recently suggested that UK house prices would drop by 9% this year, a more severe fall than its previous forecast.

‘Looking to save’

Bernard Clarke, of the Council of Mortgage Lenders (CML), said he expected mortgage funding to be more easily available in the next six months, but house prices would continue to fall.

“We think that house prices by the end of this year will be around 7% lower than they were at the end of 2007 and clearly the shortage of mortgage funding is affecting demand in the house purchase market,” he said.

Meanwhile, new figures released by the Building Societies Association (BSA) show that lending in that sector also fell sharply in May.

Net lending by building societies in May was £125m compared with £1.2bn in May 2007.

Adrian Coles, director general of the BSA, said the lending figures reflected the “depressed state of the housing market”.

But he added that people are looking to save with building societies, with saving at £853m in May, up from £608m during the same month a year ago and the highest figure for May since 2002.

News reported by BBC

The threat of high inflation remains a major worry for Asia, and could undo the progress made in the past 20 years, the Asian Development Bank (ADB) says.

ADB managing director Rajat M Nag said inflation in 2008 would exceed the 5.1% annual figure predicted in April.

Rising fuel and food prices were the chief dangers behind inflation that affected Asia “good growth story”.

Rising inflation could also hit investment and corporate earnings, and destabilise governments in the region.

In Asia, roughly about a billion people are vulnerable to the food and fuel price increases

Rajat M Nag, Asian Development Bank

On Friday India said its inflation had risen at its fastest rate in seven years. And earlier in June South Korea said its inflation had hit a seven-year high as a result of rising energy and food costs.

In Vietnam inflation is more than 25% and the government has said the issue is the biggest challenge it faces.

Singapore, Thailand, and the Philippines and Indonesia are facing inflation rates of between 7.5% and 11%.

‘Regressive’ taxation

The ADB has forecast 7.6% growth for the region in 2008, down from 8.7% in 2007, which was the highest in two decades.

Mr Nag said Asian monetary and fiscal authorities should “recognise inflation as a very major concern” and indicated that raising interest rates could be one solution.

Inflation “can endanger growth in Asia,” he said, adding that “central banks should take all steps, including looking at rates as what India has done quite appropriately.”

On Wednesday India’s central bank raised a key short-term borrowing rate by a quarter percentage point to 8.0%.

Rising food prices have been spurred by rising fuel costs that have increased production and transport costs.

Loans offered

Asian nations such as India, Malaysia and Indonesia recently cut fuel subsidies in the face of rising world oil prices, which may send inflation even higher.

“Inflation is the most regressive form of taxation and it hits the poor most. In Asia, roughly about a billion people are vulnerable to the food and fuel price increases,” Mr Nag said.

He said governments had to ensure “targeted cash support” for the poor to protect them from the price increases, he said.

Asia is home to two-thirds of the world’s poor. It cut its poverty rate to about 19% from 33% in 1990, but Mr Nag said this improvement was under threat because of inflation.

In April the Asian Development Bank offered to support countries dealing with the effects of rising food prices.

It said loans could be made available to countries so that they can subsidise the price of staples to help the poor.

News reported by BBC

A row over Hollywood megabucks has erupted pitting top billing stars against each other as rival unions quibble over a pay deal.

The Screen Actors Guild has accused major Hollywood studios of offering it a lesser contract deal than a smaller actors’ union.

SAG made the claim amid demands in Hollywood that it end the possibility of a strike by accepting the same deal as the American Federation of Television and Radio Artists.

“When we came back to the table, what they offered us, then and since, is tens of millions of dollars less than the AFTRA deal itself,” Doug Allen of SAG said.

“It’s obvious that they are trying to get us to bargain up to a deal they already know is unacceptable,” he said.

SAG declined to provide details on the differences between the offers.

The dispute has split the industry.

Big names such as Jack Nicholson, Josh Brolin and Ben Stiller are siding with SAG, while Tom Hanks, Alec Baldwin and Kevin Spacey have urged support of the AFTRA deal.

The two unions split acrimoniously in March over accusations of member poaching.

They decided to negotiate with the studios separately for the first time in 27 years.

The contracts of both unions are set to expire Monday, and the lack of a deal has left studios reluctant to give the go-ahead on major movie productions.

Jesse Hiestand, a spokesman for the Alliance of Motion Picture and Television Producers, declined to comment on the bargaining position of the studios.

“We are approaching the conclusion of the process,” he said. “The bargaining continues.”

SAG represents 120,000 actors in movies, TV and other media.

The TV and radio federation represents 70,000 members, including actors, singers, announcers and journalists.

The unions share 44,000 dual members.

News reported by Sky News

Bank of England chief Mervyn King has told MPs he is confident of getting inflation back to the Government’s 2% target.

Mr King answers MPs’ questionsBut an economic slowdown was needed to make it happen in the next year or so, he said.

He warned rising food and energy prices may push the cost of living increase above 4% this year.

His appearance before the Treasury Select Committee comes a week after inflation hit 3.3%.

That is the highest since 1997 when Labour came to power and made the BoE independent.

It forced Mr King to write a letter of explanation to the Chancellor, Alistair Darling.

Last week, in his Mansion House speech, Mr King said the UK faced its “most difficult economic challenge for two decades”.

Oil prices are now higher than the 1970s in real terms while the fall in the value of the pound had made imports more expensive, he told MPs.

“This will pass through to household bills and consumer prices,” he said.

Outgoing deputy governor Sir John Gieve was also being quizzed by MPs today.

He was given a hard time by the committee last year over the Northern Rock crisis.

Members accusing him of being “asleep in the back shop” as it was unfolding.

News reported by Sky News

A supermarket price war has broken out with high street stores making huge cuts in the cost of groceries.

Bananas are going cheap Both Asda and Tesco have taken out a series of adverts in the national press promising lower prices in a bid to outflank their rivals.

The price war began with Asda unveiling a range of goods including sausages and bananas for sale over the weekend at 50p.

A spokesman for the supermarket said its budget brands were increasing in popularity.

He said: “Times are getting tough and people are feeling the pinch so we have reduced the price of these ten staple items over the weekend.

“It is going back to the basics like bread, eggs and butter and fruit and veg as well.”

Asda: ‘Shoppers feeling the pinch’The reductions will last until Sunday.

Tesco also declared a series of “inflation busting prices” with up to 50% off around 5,000 items.

A spokeswoman for the chain said they would announce another 3,000 price cuts next week.

She said: “We know times are tough and customers are tightening their belts so we will be keeping an eye on prices all year.”

The move follows the rising popularity of discount stores like Aldi and Lidl.

News reported by Sky News

NEW YORK (Reuters) – If investors thought Morgan Stanley had turned things around in asset management, a jarring second-quarter loss revealed the investment bank still has a ways to go.

Yet the unit, which has posted two straight quarterly pretax losses totaling $388 million (170 million pounds), has not been able to stop funds flowing from Morgan Stanley and Van Kampen mutual funds. Morgan Stanley co-President James Gorman has vowed to increase the focus on this problem.

“We’re going to turn the Bunsen burner up several degrees,” Gorman, credited with reviving the brokerage arms of Merrill Lynch and Morgan Stanley, said at a recent conference.

Managing mutual funds, hedge funds and real estate investments is a lucrative business on Wall Street, one that can deliver steady returns over time. Yet it’s been a largely untapped opportunity at Morgan Stanley, which had a laggard funds business until John Mack took over as chief executive three years ago.

The firm saw asset growth flat-line after the tech stock bubble burst in 2000. Meanwhile, regulators put a stop to Wall Street brokers promoting in-house funds to clients. Suddenly, funds forced to compete on performance saw customers flee.

Since then, Morgan Stanley (MS.N: Quote, Profile, Research) has stemmed outflows, offered new products and bought stakes in some fast-growing hedge funds. During the second quarter, a net $15.5 billion flowed into the division, the seventh straight quarter of in-flows.

However the retail mutual fund business has continued to struggle. During the latest quarter, about $600 million left Morgan Stanley-branded funds while $2.1 billion flowed out of Van Kampen funds.

“They have made some progress, but they haven’t quite turned things around on the fund flow front,” said Karen Dolan, head of funds analysis at Morningstar.

HEAT IS ON

One man feeling the heat is Stuart Bohart, who in February was named one of three co-heads of investment management and charged with fixing the $550 billion core fund business.

Bohart, a prime brokerage star at Goldman Sachs and Morgan Stanley, told Reuters the bank is making progress boosting returns, defining its fund brands and expanding offerings across asset classes and investment strategy.

“What we were doing in the past wasn’t good enough. We intend to be a much better firm, with much better performance and serve more clients,” Bohart said in an interview. “That requires a willingness to change, to get the right people in and the wrong people out. We’re very serious about it.”

Among other efforts, the bank wants to better define its two retail fund families. The Morgan Stanley brand, better known among institutions and overseas, will offer “edgier” investment strategies, such as long-short and commodity funds.

The $138 billion Van Kampen family, sold through brokers, offers more traditional equity and fixed-income funds.

Yet fund analysts say the mutual fund business is still flawed, hurt by manager turnover and poor performance.

“They have an identity crisis. What is Morgan Stanley, what is Van Kampen and how are we going to position these funds?” Morningstar’s Dolan said. “It seems they are more focused on sales than performance.”

Meanwhile, the division is suffering from decisions made before credit markets locked up. Losses on structured investment vehicles (SIVs) held in the firm’s money market funds, as well as its purchase of Crescent Real Estate last August, fueled a second-quarter loss.

“They made a strategic decision to place money in these SIVs as a reach for yield,” said Portales Partners analyst Charles Peabody, who notes the bank had $3.6 billion of exposure to the illiquid instruments. “This is not the end.”

MORE DEALS AHEAD

Other moves worked out. Stakes in U.K. hedge fund firm Lansdowne Partners and distressed investor Avenue Capital Group and the takeover of FrontPoint Partners helped jump start Morgan’s hedge fund business. Assets at the three firms nearly doubled in 18 months, growing by $20 billion in total.

Bohart said the firm would continue looking for hedge fund stakes and “bolt-on deals,” hiring management teams and developing new funds.

“We continue to look for partnerships where there are unique products we can’t create ourselves,” he said.

The bank also wants to bulk up existing businesses. Bohart says Morgan’s money market funds, currently $125 billion, and fixed-income funds, which manage about $100 billion, are too small.

As to the bigger question of performance, Bohart said in-flows and margins are improving, excluding SIV and real estate losses. Yet he cautioned that the weak returns of prior years cannot be offset overnight.

“In 2007 we made all this money and people said, ‘Gee, it’s fixed,’ but you don’t fix a business in a year,” Bohart said. “We’re not out of the woods yet, but I know they end at some point.”

News reported by Reuters

TOKYO (Reuters) – Japan has relaxed its tax code so foreign asset managers and hedge funds can avoid dual taxation, as part of Tokyo’s push to revive itself as a global finance centre.

In a two-step process that began in April with the revision of a cabinet order and finished on Friday, the government has retooled tax rules so offshore funds can avoid being classified as having a “permanent establishment” in Japan.

Commonly referred to as a “PE” in tax law, the classification would force offshore funds — which already pay taxes in their home countries — to pay domestic taxes on any returns made in Japan.

Faced with sluggish growth and a rapidly shrinking population, the world’s second-largest economy is desperate for foreign investment and is especially keen to woo hedge funds, which have an estimated worth of $2 trillion (1 trillion pounds) globally.

Until now many of the loosely regulated funds have been forced to set up shop as “investment advisory firms” in order to avoid the double tax bill.

“We must admit that Tokyo’s presence in international finance has been in decline for some years,” an official at the regulatory Financial Services Agency told reporters.

Data from the FSA shows that while the number of investment advisory companies has nearly doubled to more than 800 in the past four years, the number of investment management firms has languished at around 100 for two decades.

The difference is not insignificant, the FSA reckons, as full investment management firms would draw more people and capital into the market.

The legal change allows local entities to avoid being regarded as having a permanent establishment if they are seen as sufficiently independent of the overseas entity.

Critically, the local entity must bear some entrepreneurial risk, such as receiving pay corresponding to returns on the investment.

That means the Tokyo arm of a U.S. hedge would bear entrepreneurial risk if managers were paid based on the performance of their Japan fund.

If the hedge fund met some other criteria it would be deemed an “independent agent” and not subject to dual taxation.

The tax change also underscores Japan’s regulatory shift in recent years.

Regulators are increasingly worried that the world’s second-largest economy will lag in financial services, losing out to more flexible Asian centres such as Hong Kong and Singapore.

While famous for churning out cutting-edge gadgets, Japan has also become synonymous among foreign investors for hidebound regulation and burdensome taxation.

Restrictions between banks, brokerages and insurance firms were relaxed under a bill passed by Japan’s parliament earlier this month, making it easier for companies to market products across divisions.

News reported by Reuters