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Global Markets and Economic Update : International Business

October 06, 1994

MEXICAN STOCKS

* Mexico's Bolsa index plummeted for the third day, reaching its lowest level in seven weeks amid dual concerns that last week's assassination of a ruling party leader and higher interest rates will dampen economic growth and crimp company earnings.

* Brakes on market growth might come from interest rate pressure in the United States and Mexico, analysts say. The Federal Reserve Board might raise rates when it meets in November in a bid to abate inflation. Some believe such a move would attract capital away from Mexico and squeeze stock prices. In Mexico, rates are expected to move laterally between 12% and 13.5% through the end of the year.

Source: Bloomberg Business News; Dow Jones

SPOTLIGHT: DENMARK

Socialist Denmark, which has a wide variety of government-funded social programs, has escaped the worst of the recession in Europe during the 1990s. Austerity measures imposed in the 1980s reduced domestic consumption and halted a credit boom. Wage-increase limits reduced real incomes but increased competitiveness.

Sources: Bank of America; World Information Services

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