The chairman of the US Federal Reserve, Alan Greenspan, said yesterday the economy had hit a soft patch and was weighed down with concerns about a possible war against Iraq. “We don’t have the usual weaknesses that presage an economy going down in a cumulative manner. What we do have is a very large degree of uncertainty.”Mr Greenspan’s comments were partly by way of explanation for last week’s cut interest rates, which reduced the federal funds rate to 1.25 per cent – its lowest level since July 1961. Most analysts had anticipated a cut of a quarter of a point rather than the half-point reduction that was forthcoming.Citing a slow recovery in capital spending, continuing fallout from corporate scandals and sliding stock markets, the veteran Fed chief explained: “Although economic growth was relatively well-maintained over the last year, several forces have continued to weigh on the economy.

Over the last few months, these forces have taken their toll on activity, and evidence has accumulated that the economy has hit a soft patch.”The actions taken last week to ease monetary policy should prove helpful as the economy works its way through this current soft spot.”In further testimony, Mr Greenspan played down the prospects for a new recession, saying the economy did not appear to have the usual weaknesses that came before slumps.He said that while consumers were growing more cautious, he did not foresee a sharp drop-off in spending, an economic mainstay through last year’s recession and the uneven recovery this year. He said a recent drop in car sales bore close watching to determine if it was a pullback from earlier strength or marked a real decline in demand.He said: “Households have become more cautious in their purchases while business spending has yet to show any substantial vigor. In financial markets, risk spreads on both investment-grade and non-investment grade securities have widened.”Mr Greenspan said that even with the current slowdown, the US economy has proven its adaptability over the year since 11 September, managing to grow at an average rate of 3 per cent.Analysts said there was little surprise in the testimony, which appeared to echo the tone of the statement issued after the Fed’s policymaking meeting a week ago. They said, however, that Mr Greenspan appeared to be holding out little hope for a quick return to a robust recovery.Asked about Mr Greenspan’s comments, President George Bush said he shared the chairman’s perspective.

“He uses the words soft-patch, I use the words bumping along,” he said “Either way the economy is not as strong as it will be.”. Vivendi Universal continued to scare investors yesterday, as reports surfaced that the media giant had paid a high price for the rights to televise French football and that it was making further moves to raise money for a multibillion-euro bid for Cegetel. Mr Diller is a highly regarded media executive in the US, while Mr Fourtou was only appointed in July and is largely an unknown quantity outside France.Vivendi Universal is thought also to be talking to private equity houses about helping it raise €6.6bn (£4.2bn) to trump Vodafone’s bid for control of France’s Cegetel, a lucrative telecoms business.Heavyweight US private equity firms Blackstone Group and Kohlberg Kravis Roberts were linked to a Vivendi plan to get outside investors to inject cash into a special purpose vehicle that would be used to buy the stakes in Cegetel owned by BT and SBC, a US company. Belgian financier Albert Frere was also named as a possible investor in the Vivendi bid.Vivendi must raise the necessary funds to buy out BT and SBC from Cegetel by 10 December or see these stakes go to Vodafone, which has already tabled bids for both holdings.Earlier in the day, Vivendi shares dropped after French newspaper reports that it has offered as much as €480m per year to win a fierce bidding war for French football broadcasting rights The company’s shares fell 5 per cent to €11.9. The sum would be sharply higher than the €300m a year that Vivendi’s pay-TV business, Canal Plus, paid last time for the rights to broadcast France’s top football games.. Shares in Corus plunged yesterday after the Anglo-Dutch steel maker scrapped its £2.7bn takeover of the Brazilian steel company CSN and warned of a downturn in its UK and European markets. At no time did CSN approach us to say that they were cancelling the merger.”Corus shares fell 27 per cent on the announcement.

Industry sources said CSN’s claims were a “face-saving exercise” designed to placate its own shareholders and soften the blow of the collapse of the merger.The takeover of CSN would have catapulted Corus into the ranks of the world’s top five steel makers, creating a group with sales of £9bn and liquid steel production of 23.5 million tonnes. Corus also said it would have generated $250m of cost savings, mainly by giving it access to cheap iron ore reserves owned by CSN.The board of Corus met on Tuesday morning and decided to ditch the takeover and the chairman, Sir Brian Moffat, telephoned his opposite number at in Brazil, Benjamin Steinbruch, later that day to break the bad news.Corus said it had decided to abandon the deal, which was first announced in July, because of “ongoing uncertainties in the global business environment and the financial markets”. It said the election victory in Brazil earlier this month of a left wing workers’ party had not been a major factor in the decision.A spokesman added that the strategic rationale for the deal remained strong. But in the end the board decided not to proceed because of the deterioration in both the global economy and the Brazilian currency since July and the fact that financial markets had become more risk averse.The damage to the share price was done by a simultaneous warning from Corus that the pace of recovery would not be as quick as the company forecast at the time of its half-year results in September. Corus said it now expected to make an operating loss of about £152m for the second half, bringing the operating loss for the year to about £400m. Although analysts’ forecasts varied widely, the market consensus was that full-year losses of about £300m.Corus said demand for steel in the UK and Continental Europe was lower than expected, particularly for semi-finished products such as coated steels and profiled sections, putting a squeeze on the profitability of its downstream operations.It also warned that beyond the first quarter of next year, the outlook was uncertain and the pace and timing of economic recovery and demand difficult to predict..