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Australia's Rio Tinto Reaches Asia-Wide Iron Ore Price Deal

Australian miner Rio Tinto has reached an Asia-wide deal for iron ore price hikes, and four Chinese oil firms say they will bid for contracts in Iraq. Claudia Blume in Hong Kong has more on these and other stories in our weekly summary of business news from the Asia Pacific region.

Australian mining company Rio Tinto says it has reached an agreement with all of its Asian customers for price rises of up to 97 percent for iron ore. The settlements match an agreement Rio Tinto reached with China's biggest steel producer Baosteel at the end of June.

Baosteel had agreed to increases that almost double the price for iron ore compared to last year. Prices for the commodity, which is used to make steel, have gone up for six consecutive years, mainly driven by strong demand from China.

China is also heavily dependent on imported crude oil to fuel its expanding economy and is increasingly investing in overseas petroleum fields. Four Chinese oil companies said they will bid for oil and gas exploration rights in Iraq. They include China National Petroleum Corporation and China Petrochemical Corporation.

The companies are among 35 foreign oil companies chosen by Iraq's government to bid for contracts. It will be the first time foreign companies will be able to explore the country's oilfields since Iraq's former dictator Saddam Hussein nationalized foreign concessions in the 1970s.

Hong Kong's economy will slow slightly in the third quarter to five-point-three percent, down from 6.1 percent in the second quarter. This is the forecast of the APEC study center at the University of Hong Kong. Richard Wong, professor of economics at the university, says the economic environment in the second half of the year will be tougher, with the global economy slowing down and prices rising at the same time.

"Headline inflation rate is projected to be six percent by year end," he said. "So we are experiencing a period of slowing growth but still reasonably high single-digit growth rate."

And Hong Kong's Cathay Pacific airline warned that its first-half earnings, scheduled to be released in August, will disappoint. The airline said it was hit hard by higher fuel prices, which were 60 percent higher on average in the first half of this year than in the same period last year. The profit warning was Cathay Pacific's second since 2003, when passenger volume shrank dramatically after the outbreak of SARS in Hong Kong.