The Irish Independent reports that oil prices fell back from a record $67 high yesterday, but only marginally after the US refused to rule out force against Iran, OPEC's second-biggest producer.

Fears of US strikes against Iran, as well as doubts that the oil industry can pump and refine enough crude, ensured that there was no let-up on the markets. Analysts were looking for oil to breach $70 a barrel, which would bring it within sight of the inflation-adjusted $82 average in 1980, the year after the Iranian revolution.

"As long as the prospect of sanctioning four million barrels per day of Iranian oil is out there, the Iranian situation, in our view, will be the front and centre issue that will command market attention," said Edward Meir of Man Energy.

Iran's determination to press on with its nuclear programme in defiance of the west has put the world's fourth-biggest crude producer at risk of UN sanctions. It also drew strong words at the weekend from President Bush, who said he would consider using force against Iran as a last resort. US light crude was trading at $66.40 a barrel early yesterday, down 46 cents having surged more than $1 on Friday to touch a record $67.10. London Brent crude was down 15 cents at $66.30, after hitting a new record high of $66.85.

Record high oil prices will cut world economic growth and widen current account gaps in rich and emerging economies, the IEA's chief economist said.

The Irish Independent also reports that the arrival of Danske Bank on the Irish mortgage market is unlikely to adversely affect margins for existing lenders on their loan books, even though there may be reduction in margins on new mortgages taken on by them.

Davy Stockbrokers says that this is good news for investors in Irish Life & Permanent and Bank of Ireland in particular, as both have significant mortgage lending in their 'back-books'.

Danske Bank will not be able to offer the keen mortgage rates here which it has used to carve out a 35pc market share in Denmark.

For a start, Danish mortgages need to be at a maximum of 80pc loan-to-value, which means a negligible bad debt provision. Furthermore, Danske enjoys a market share of only 2pc in the Republic, meaning it will have to resort to mortgage brokers to grow market share.

Brokers cost from 0.9pc to 1pc, Davy analyst Scott Rankin points out.

"We are not sure that they can piggy-back on their domestic covered bond structure to enable cheaper funding of their Irish mortgage operation," he said.

He adds that if Danske is too aggressive with its pricing it could force the existing lenders to reprice their 'back-books' - which would eliminate the market opportunity for them in the first place.

"Danske/NIB revealed last week that they plan to offer a debt consolidation mortgage in Ireland which will also act as an offset product. While the rate at 3.1pc is competitive, it is not eye-popping," said Mr Rankin. He believes that the Danske offset mortgage may provide an early indication that "investors should have less to fear from the invading Danes than we previously thought".

Davy also believes that since inertia plays a major part in customers staying with existing lenders, the main impact of the Danske arrival will be for first-time buyers.

The Irish Times reports that shares in Jurys Doyle added 15 cent to close at €17.70 yesterday as investors continued to bet that another bidder would come forward with an offer for the hotel group.

Although volume in the stock was light, with about 260,000 shares changing hands, they remained stubbornly above the €17.50 the Precinct consortium has said it will pay for the company, indicating the market's belief that the price has further to go.

It is understood that a number of other parties are closely watching developments at the firm as Friday's deadline for Precinct to lodge a firm bid for the company approaches.

A spokesman for Derek Quinlan said the former tax inspector turned property investor was potentially interested in making a bid for the company.

While he dismissed recent suggestions that an offer from Quinlan Private was imminent, he said Jurys would be a logical investment for Mr Quinlan, who led the €1.1 billion takeover of London's Savoy Group last year,

"He is interested. He is monitoring the situation," the spokesman said.

Mr Paddy Kelly, the property developer behind the Clarion chain of hotels, is also believed to be watching developments at the company closely, with market sources describing the situation surrounding Jurys as "very fluid".

Meanwhile, Precinct, the consortium fronted by three Irish businessmen which has secured the backing of Britain's billionaire Reuben brothers, is continuing with its due diligence on the hotel group. The consortium has until Friday to lodge a firm bid for the group.

There was no sign yesterday of further stake-building by Seán Dunne, the property developer who has already reached agreement with the Jurys board to buy part of its Ballsbridge site.

Mr Dunne, who snapped up 3.4 per cent of Jurys at a cost of €37 million on Friday, has indicated his intention to build up a stake in the hotel group to maximise his bargaining position in relation to the Ballsbridge acreage.

But the continued speculation that another bidder may yet emerge for the firm prompted would-be sellers of the stock to sit tight yesterday, limiting the opportunities for those like Mr Dunne to build up their shares.

The Irish Times laso reports that direct marketing firms have started a campaign against any further price increases for An Post.

The telecoms and postal regulator, ComReg, is currently considering an application from An Post to have the price of a stamp increased from 48 cent to 60 cent, a 25 per cent rise.

The Irish Direct Marketing Association (IDMA) said An Post was "financially viable" and did not need the increase.

ComReg has been studying the price application for several months now, but has so far refused to sanction the price rise.

The regulator remains unhappy about An Post's delivery performance and also wants an improvement in mail volumes. It claims these are far lower than in similar sized states to the Republic.

However last night a spokesman for An Post said there had not been any increase between 1991 and 2002 and An Post clearly needed the revenue. He said the company was implementing a major cost-cutting plan and getting a price rise was related to this.

The IDMA said the price application was tabled even though An Post's performance on next day delivery remained poor at just 73 per cent. It said this rate left the Republic languishing behind all other 24 EU states.

"A rise will endanger An Post's own commercial future as well as that of Irish industry. It will lead to loss of volume and therefore a loss of income. The result is a terminal spiral in which postal rates are huge and increasing, while mail volumes are tiny and decreasing. This will enforce cuts in services and a retreat from the commitment to collection and delivery five days a week from all points in Ireland," said an IDMA statement.

About 80 per cent of all mail posted in the Republic is business mail and direct marketers are among the largest users of the system.

Since 2003 bulk mailers have been able to benefit from discounts, but the latest price application could still impose significant extra costs.

The IDMA said An Post should focus instead on loss making contracts it had with foreign postal operators which it said cost the company €20 million a year.

"Alternatively An Post should remove their current discriminatory pricing policy and offer Irish customers the same terms and conditions as they offer foreign postal operators," said their statement.

The agreements with foreign postal operators are based on a Europe-wide agreement known as Reims.

The Irish Examiner reports that financial services firm Fexco is believed to be involved in takeover talks with the struggling online reservations group CNG Travel.

Fexco is understood to be carrying out due diligence on Kenmare-based CNG Travel, which is listed on London’s Alternative Investment Market (AIM).

Shares in CNG have lost nearly 60% of their value this year, but are up 21% since the company confirmed it had received a takeover approach late last month.

CNG is currently valued at around €28.8 million.

The shares were trading flat at 34 pence (49 cents) yesterday, though Fexco would be expected to pay a premium to acquire the company.

A spokesman for Fexco had no comment to make yesterday. It is not known what impact a takeover would have on the CNG workforce in Kenmare.

Fexco employs more than 500 people at its base in Killorglin, while CNG’s head office in Kenmare employs 60 people.

A takeover would end the short life of CNG as a public company.

It listed on the AIM in May 2004, but has suffered since with losses last year widening to €4.5m on sales of €45m.

Founder and chief executive Finbarr Power quit the firm in June after falling out with other board members over the future direction of the business.

Mr Power had expressed an interest in acquiring the company’s consumer travel arm, Places To Stay, which CNG bought last year for nearly €10m and is now looking to offload. Other investors in CNG include builder Seamus Ross - one of the original backers of the company - and paper boss Michael Smurfit.

The Irish Examiner also reports that the new single farm payment should be brought forward because beef producers are facing severe financial hardship, according to the Irish Cattle and Sheep Farmers Association.

Malcolm Thompson, president, said payments under the scheme are due from December 1 but there are provisions to bring them forward from October 16.

Beef farmers have suffered serious losses as a result of the freefall in beef prices over the last number of weeks.

Coupled with the losses from the special beef overshoot, this is causing severe financial hardship for many farms.

Mr Thompson said that he is aware Agriculture Minister Mary Coughlan has a deep concern over what is happening in the beef industry and has no doubt that she will do all within her power to help turn the trade around.

The Financial Times reports that Germany on Monday joined a growing chorus of European countries asking Brussels to relax curbs on Chinese textile exports. Retailers now expect that women's blouses and bras will soon join the list of clothing items blocked in transit between China and Europe.

The shipment difficulties have arisen since China breached its 2005 export quotas for sweaters and men's trousers, two of the 10 categories covered by a China-EU textiles agreement signed in June.

By on Monday, China had exhausted 89 per cent of this year's quota for blouses and 84 per cent for bras, according to the EU's quota monitoring system.

Thomas Rasch, managing director of the German fashion federation, said: “If nothing is done, certainly these categories will also be exhausted this month. Every category is a very serious problem for the people and companies dealing with them.”

The German government has written to Peter Mandelson, EU trade commissioner, expressing concerns about financial losses for clothing importers.

Thomas Östros, the Swedish trade minister, yesterday told the FT that he was trying to co-ordinate with his Danish and Dutch counterparts an attempt to force a “substantial” increase in the quotas agreed with China in June.

He added: “This discussion shows how absurd it is to shelter oneself with quotas. It is a dead-end and it only causes distress for retailers and consumers. The protectionist side has been much too strong in the (EU) trade discussion policy so far.”

Pär Darj, head of investor relations at Hennes & Mauritz, which on Monday reported weaker-than-expected July sales, argued the situation was more worrying for smaller companies, even though the Swedish fashion multinational sources 30 per cent of its clothing from China.

He said: “There's a big number of smaller retailers that are completely stuck and don't have the flexibility that we have to source from other countries and re-direct production.”

The European Commission had given the 25 EU governments until Monday to supply comprehensive trade figures to assess the cost value and volumes of stranded goods. However, a Commission spokeswoman said that Brussels might need more time to analyse the data and gauge the potential damage to retailers.

China is on Tuesday due to start separate bilateral textiles negotiations with the US, with a view to replacing existing US quotas on seven categories of textiles with a broader agreement to limit clothing exports until 2008.

French retailers are warning that pullover and trouser shortages in big department stores this September could mean children going back to school without new clothes, or in last year's uniforms, for la rentrée scolaire.

But François Loos, French industry minister, suggested retailers should rethink their Asian sourcing strategy. He said: “The measures taken by the EU at the initiative of France seem to be working. They pose a problem to distributors and I invite them to turn to the Euro-Mediterranean industry.” However, Mr Östros of Sweden and others have warned about likely lawsuits from retailers because of blocked shipments ahead of the important autumn and winter trading season. Gelco, a clothing company that employs 300 people in Germany, said on Monday it was going ahead with such legal action in Germany after suffering an estimated €1m loss on awaited orders from China. Jürgen Richter, chief executive, said Gelco had 38,000 sweaters held up by German customs because of China's quota exhaustion.

The FT also reports that US financial markets have paid particularly close attention to foreign appetite for US assets amid concerns that Asian central banks could be curbing their purchases of US bonds.

Lower demand from overseas could push US borrowing costs sharply higher. The inflows into the US were led in June by the corporate bond market. Foreigners bought a record net $52.2bn in corporate debt compared with a 12-month average of $27bn as bonds rallied strongly after credit market turmoil in May which had largely shut down the market for new borrowing. But overseas investors remained wary of US stock markets. Foreigners bought a net $0.1bn of US stocks which took the three-month rolling average to just $1.7bn, the lowest in eight months. "That they're buying bonds and not stocks has to be a bit of a concern," said Mr Callow. "It suggests investors are happy to take fixed coupon payments on bonds but not convinced enough to bet on equity market appreciation." American investors' interest in overseas assets is the latest example of a growing trend. According to the Treasury, US investors bought $9.64bn of foreign equities, up from $4.7bn in May and taking the 12-month total to $96.2bn. "It is partly because of the dollar, partly corporate scandals. Both have been a wake-up call to investors with too much exposure to US equities," said Brian Garvey, strategist at State Street bank. State Street's indicators have shown weak demand for US equities over recent weeks from both domestic and foreign buyers, even when good news has lifted stocks. "This is one of the reasons we're still negative on the dollar," added Mr Garvey.? Separately, the Congressional Budget Office on Monday forecast the budget deficit will shrink to $331bn this fiscal year, down from a record $412bn last year, as tax revenues improve. Economists had forecast an even bigger deficit this year.

American investors diversified away from the US at the fastest rate in 10 years, even as foreign buyers stepped up their purchases of US assets, data released on Monday suggested.

US investors bought $146bn of overseas bonds and equities in the past 12 months more than at any time since 1994.

But despite anxieties about the still-growing US current account deficit, overseas investors poured a net $71.2bn into US assets, up from a revised $55.8bn in May, according to the Treasury.

The capital flows, which more than covered the $58.5bn trade deficit for June, suggest that confidence in the strength of the US economy will be sufficient to sustain the external deficits.

The dollar rose to $1.236 from $1.239 against the euro on the news.

The US needs to attract more than $2bn in net inflows each working day to cover the current account gap, of which the capital and trade accounts are the most visible and biggest components.

"The bulk of the current account financing burden falls on securities rather than direct investment so we have to focus on this report," said Sean Callow, senior currency strategist at Westpac Bank.

The New York Times reports that the Congressional Budget Office said Monday that the federal budget deficit would decline 20 percent this year because of an unexpected surge in corporate income tax payments, but it discerned no improvement in the long-term fiscal outlook for the next decade.

The office, a nonpartisan budget agency, predicted that the deficit would fall by $81 billion, to $331 billion, in the current fiscal year, from a record $412 billion last year.

In March, the agency projected a 14 percent increase in corporate income tax payments this year, but it now foresees an increase of 42 percent, or $80 billion, to $269 billion this year, from $189 billion in 2004.

Douglas J. Holtz-Eakin, director of the budget office, said, "The budget outlook has improved noticeably for this year, fiscal year 2005, but is largely unchanged for the decade past that, and the economy remains in very good shape."

Representative John M. Spratt Jr. of South Carolina, the senior Democrat on the House Budget Committee, said the projection for this year might "seem better by comparison with the deficits of 2003 and 2004, which were the worst in history." But, Mr. Spratt said, "at $331 billion, the deficit for 2005 still ranks as one of the top three."

Senator Judd Gregg, the New Hampshire Republican who is chairman of the Senate Budget Committee, said the report confirmed that the economic policies put in place by Congress and President Bush were lowering the deficit, benefiting businesses and creating jobs. But Mr. Gregg said unchecked growth in federal benefit programs was "threatening our economic stability." He vowed to rein in the growth with legislation that Congress plans to take up this fall.

The current fiscal year ends in seven weeks, so the latest estimates for 2005 are considered highly reliable. The budget office predicts that the deficit will be $314 billion in 2006 and will remain above $300 billion a year through 2010.

To finance the deficit, the Treasury borrows money from the public. Debt held by the public will total $4.6 trillion this year, up from $4.3 trillion last year, and will climb to $6.3 trillion in 2010, the budget office said.

The new report documents two trends: growth in federal spending for individual benefits, driven by the aging of the population, and an expectation that the government will rely more on individual income taxes and less on corporate taxes.

Under current law, the budget office said, spending on Social Security, Medicare and Medicaid will double in the coming decade and will account for more than half of all federal spending by 2015. The federal government is spending $1.04 trillion on the programs this year, or 42 percent of the budget. But, the agency said, the three programs will consume 53 percent of the entire budget in 2015 - $2.08 trillion of $3.9 trillion.

The agency said Monday that "the economy will continue to expand at a healthy pace," growing 3.7 percent this year and 3.4 percent next year. But it said inflation would be higher than expected, partly because of higher oil prices.

Tax cuts have been a central feature of President Bush's domestic policy. Many of the tax cuts enacted at his request are scheduled to expire by 2011. Assuming these changes occur on schedule, the budget office predicts that individual income taxes will account for 53 percent of all federal revenue by 2015, up from 43 percent today. But it expects that corporate income taxes will shrink to 8 percent of all federal revenue, from 13 percent this year.

Congress has increased spending significantly since the budget office made its last official forecast, in March. The agency now foresees annual deficits totaling $2.1 trillion from 2006 to 2015. That is more than double the total of $980 billion forecast in March. Moreover, the budget office said, the cumulative total of federal budget deficits will be higher still - $1.3 trillion higher in the coming decade - if Congress makes the recent tax cuts permanent, as Mr. Bush has proposed.

Mr. Bush and many Republicans say the tax cuts should be extended to keep the economy strong. But the budget office said that such an extension could increase the deficit by more than $250 billion a year from 2012 to 2015.

Mr. Holtz-Eakin said that corporate income tax payments were growing more than would have been indicated by the growth of corporate profits, and that he did not know why. The agency assumes that three-fourths of this year's increase in corporate tax payments is temporary.

The budget office also said that total revenue was expected to increase 14 percent this year, to $2.1 trillion, while spending is expected to rise 8 percent, to nearly $2.5 trillion. The economy will grow more slowly than revenues, measured by the gross domestic product, it said, so revenues as a share of the G.D.P. will rise for the first time since 2000.

Federal subsidies paid to farmers will nearly double, to almost $18 billion this year, from $9 billion in 2004, it said. Crop prices have dropped significantly this year, so farmers are entitled to more assistance. Spending on food stamps will reach nearly $33 billion this year, up from $29 billion.

It also said that spending for student loans would rise 75 percent, to $14 billion this year, from $8 billion last year. But the figure will stay around $8 billion a year from 2006 through 2011.

The NYT say that Carl C. Icahn is relishing his new reputation as a friend of shareholders.