BRUSSELS - European inflation surges

Inflation in the 15 country Eurozone region jumped to record highs this month with new data showing a year-on-year rise to 3.5 percent.

That's up from 3.3 percent in February. Rising food and energy prices fuelled the increase, as oil prices steamed higher.

The acceleration is higher-than-forecast and reinforces expectations that the inflation-focused European Central Bank will not cut its interest rate soon.

The ECB wants inflation to stay below 2 percent. But with slow growth and falling confidence in the economy, markets expect the central bank to cut interest rates from the current 4 percent later this year.

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The world's second-largest wine and spirits company, France's Pernod Ricard has bought Sweden's Vin & Spirit group, the makers of Absolut vodka, for 5.63 billion euros (8.87 billion U.S. dollars).

Pernod Ricard made the best offer in the hotly contested auction, giving it control of one of the biggest and fastest-growing spirits brands.

The sale of the former state-owned monopoly is Sweden's largest-ever push to privatise government assets. Stockholm said the deal was a victory for taxpayers.

(SOUNDBITE) (Swedish) MATS ODELL, MINISTER FOR LOCAL GOVERNMENT AND FINANCIAL MARKETS SAYING:

"It's a very good price for the company, it's a good price for the public economy, as well for the company and its employees"

But traders disagreed. They said Pernod had overpaid and its stock fell to a two-month low wiping almost 700 million euros off the company's market value.

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UK insurer Friends Provident has rejected a 3-and-a-half billion pounds (7 billion dollar) cash takeover offer from U.S. private equity firm JC Flowers.

Friends said the bid significantly undervalued the company and received the 150 pence per-share takeover offer last Thursday.

JC Flowers indicated the offer would be reduced in the event that Friends paid shareholders the 2007 final dividend of 5.3p a share.

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Meanwhile in London, shares of Friends Provident gained thanks to the bid. However a number of heavyweight shares on the FTSE 100 lost steam. Vodafone along with British Airways were among the heaviest losers after broker downgrades. Price of oil turned higher after losing ground earlier in the session. The lull in fighting in Iraq's southern city of Basra, key to the country's production and exports, eased fears of potential supply disruption.///

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Inditex, Europe's biggest clothing retailer and owner of the Zara chain has reported a 25 percent jump in 2007 net profit. The Spanish-based company's 1-and-a-quarter billion euro profit outperformed analyst expectations. Analysts credited a weaker dollar and strict cost control for that.

The retailer said this year had got off to a sparkling start and shrugged off fears of an economic downturn in Spain.

SOUNDBITE (English) Inditex Director for Capital Markets, Marcos Lopez saying,

''So basically I believe that the business model we operate is the best tool we have to again to find our place and create our space in a probably more compelling market.''

Nearly 40 percent of Inditex's sales come from Spain where slowing economic growth is eating into retail sales. Inditex shares have fallen over 15 percent since the beginning of the year.

Michelle Carlile-Alkhouri, Reuters

steamed - aroused to impatience or anger; "made an irritated gesture"
as·set n. - a useful or valuable quality, person, or thing; an advantage or resource: proved herself an asset to the company.
wipe tr.v. wiped, wip·ing, wipes
1.a. To subject to light rubbing or friction, as with a cloth or paper, in order to clean or dry.

b. To clean or dry by rubbing: wiped my feet before I went inside.
gain

v. gained, gain·ing, gains

v.tr. To attain in competition or struggle; win: gained a decisive victory; gained control of the company.
bid - n.1. a. An offer or proposal of a price

lull n.
1. A relatively calm interval, as in a storm.

2. An interval of lessened activity: a lull in sales.

get off - To start, as on a trip; leave.

spark v. sparked, spark·ing, sparks

v.intr.

1. To give off sparks.

2. To give an enthusiastic response.

3. To operate correctly. Used of the ignition system of an internal-combustion engine.

shrug off - To minimize the importance of: shrugged off the defeat and talked about tonight's game.