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According to an unnamed German Finance Ministry official quoted by the WSJ, it Intel's profit warning on Thursday - which resulted in a general sharp intake of stock - may have been the catalyst that finalised the US decision to support the Euro on Friday.

But exploratory talks had started earlier in the week between the European Central Bank (ECB) and the US Treasury. The hook was that US products were becoming too expensive in Europe, and from the US point of view, exports from the Euro zone were becoming too competitive. The approach of the Christmas selling season was another reason to ensure that US remained competitive, so some support for the Euro was seen to be in order.

First-tier PC manufacturers like Compaq, Dell, Gateway and HP all claim to be on-track with their sales in Europe, with analysts suggesting a 17 per cent increase in unit sales - but less in revenue terms, because margins have become less. With the choice being between even slimmer margins and higher prices, prices may go up. The result is likely to be weakened demand for PC's in Europe this quarter; those with a significant proportion of components made in the Euro zone would be in the healthier position.

Intel's warning meanwhile may have been no more than the company's just deserts. Shortages being the watch-word, some companies ordered double quantities from Intel, then cancelled when the situation eased.

the US stressed that the $3-5 billion support for the Euro came "at the initiative of the ECB", since pushing down the dollar is not exactly a popular political thing for Treasury Secretary Lawrence Summers to have done close to an election - and when the US is also anxious to stop an outflow of dollars in view of the enormous trade deficit.

The Euro has fallen around 18 per cent since January 1999, and intervention could continue this week. Intel was downgraded by ten financial analysts out of 25, with a "sell" recommendation being made by an eleventh. ®

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