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World leaders increasingly worried by high oil prices

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Oil fears mount World leaders are growing increasingly jittery over high oil prices, fearing the impact on the global recovery.

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These concerns were highlighted by talks between the United States and Britain over the possibility of releasing some of their strategic reserves to ease the price of crude .

Initial reports yesterday said the United States and Britain had agreed on a move, which the White House denied, but British Prime Minister David Cameron, on a visit to the U.S., said he had talked about it with President Barack Obama.

"I think it is something worth looking at, because it's having an effect on all our economies," Mr. Cameron said.

Sanctions against Iran have helped drive up prices, though they had eased somewhat this week.

"There are concerns, however, that this recovery in equity markets could start to stall and tail off if oil prices, the lifeblood of any economy, continue to rise at their current pace and kill off demand," said senior analyst Michael Hewson of CMC Markets in London.

"This month we have seen oil prices hit record highs in sterling and euro terms, and though we are well short in U.S. dollar terms, gasoline prices in the U.S. are at their highest seasonal levels ahead of the U.S. driving season, when fuel consumption rises markedly," he said in a report.

"This prompted speculation yesterday afternoon that President Obama and David Cameron had agreed measures for the release of strategic oil stocks from the SPR, sending prices sharply lower. Even though the report was swiftly denied it illustrates the heat that President Obama is feeling, in an election year, from rising fuel costs, which could choke off the recent recovery in U.S. economic data. David Cameron on the other hand is wrestling with record fuel prices the week before a budget to try and generate some more growth in an economy that is flatlining."

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Nicola Duke, an independent crude futures trader in London, said she doesn't expect much higher prices in the short term, barring developments related to Iran.

"All the oil traders I know are basing their view of oil on the likelihood of an Iran strike," she said.

"Those who think we will are bullish, those who think that it will be fixed diplomatically without a strike are much less so. I am in the second group. The story about the reserve release yesterday was interesting. No smoke without fire, perhaps it was a White House test balloon."

BCE strikes Astral deal BCE Inc. has struck a $3-billion deal to acquire Astral Media Inc. , boosting the media content of the telecommunications giant in Quebec and positioning Bell better against Montreal-based media and telecom rival Quebecor Inc. .

The two companies announced the $50-a-share cash-and-stock deal today, valuing it at about $3.38-billion, including debt of $380-million.

"Bringing together two respected and longstanding Montreal brands, Bell's acquisition of Astral firmly establishes our company as Quebec's media leader," said BCE chief executive officer George Cope.

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"Bell is gaining a well-seasoned national Astral management team, dramatically expanding our French-language content, and more than levelling the playing field with our largest broadcast media competitor in Quebec."

BCE is adding to an already formidable media presence in the wake of last year's acquisition of CTV.

Astral has 2,800 employees across the country, about half in Quebec, and owns many properties, including pay and specialty TV, radio and online businesses.

BCE heralded the proposed deal in a statement, stressing just how big it will be in Quebec.

"The transaction provides multiple other benefits for the Bell team and its strategy, including enhanced control of rising content costs, particularly French-language media, and strong opportunities for cross-platform innovation and advertising packages spanning digital, TV, radio and out-of-home advertising," BCE said. "Astral products currently represent Bell's largest single content cost."

BCE is offering $50 a share for Astra's non-voting shares, and $54.83 for the voting class. Astral shareholders would get about 75 per cent in cash and 25 per cent in stock.

Manufacturing sales slip Canada's manufacturers suffered a setback in January, their second in seven months, as sales slipped 0.9 per cent.

That was driven in part by lower production from the aerospace industry. If you take out that sector, sales were little changed.

In fact, sales fell in 11 of 21 industries monitored, accounting for for 44 per cent of the overall sector.

The auto and related parts industries came on stronger as the sector continued to rebound. Auto sales climbed 2.6 per cent, marking the seventh month of increases, while parts shipments rose 6.2 per cent for the fifth consecutive gain.

Vehicle sales are now up by more than 37 per cent since their June, 2011, low, Statistics Canada said today.

Among the provinces, Quebec suffered the most as shipments fell 3.9 per cent.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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