Troubled Raju turns to employees for support

Under attack from investors and many of the Board members over the Maytas acquisition fiasco, Satyam Computer Chairman Ramalinga Raju solicited support of employees on Tuesday, saying everything possible was being done to get the company back on track.

At the same time, he hit out at the detractors, including four directors who quit the Board over corporate governance issues, saying: "The Board arrived at its decision to bid for Maytas by following all required processes and procedures and while there was a spirited discussion among members, their vote to approve the motion was unanimous."



Breaking his silence on the embarrassing developments over the last two weeks, Raju said in an open letter to employees that "please be assured that the Board and the leadership team are doing everything that's possible to get Satyam back on track.



"We cannot do this without your help... I ask for your continued faith in Satyam and for your steadfast focus on your customers, specially in the face of wild speculation and unchecked rumours."



The letter comes amid reports of uneasiness among the over 50,000 employees of the company, even as speculation was rife that a chunk of its talented employees was already looking for other options

Firms to pipe Burma gas to China

Burma's military government has signed a deal with a consortium of four foreign firms to pipe natural gas into neighbouring China, state media report.

The firms - from South Korea and India - will pipe the gas from fields off Burma's north-western coast.

The deal was signed in a ceremony in Rangoon on 24 December, the New Light of Myanmar state newspaper reported.

Campaigners complain that the deals will threaten local people's human rights and enrich Burma's ruling junta.

The US and Europe maintain economic sanctions against Burma - also known as Myanmar - for its human rights record and long detention of democracy leader Aung San Suu Kyi.

But their impact has been diluted by energy investments from nearby countries, including China, India and Thailand, all hungry for its reserves of oil and gas.

30-year deal

Now Burma's state energy firm has signed a deal with South Korea's Daewoo and Korea Gas Corporation, and India's ONGC Videsh and GAIL. Daewoo holds the leading 51% stake in the deal.

The deal will see gas from Shwe reserves in waters off the Burmese state of Rakhine piped to China to supply China's National United Oil Corporation. China's Xinhua state news agency says it is a 30-year deal.

Oil rises on Middle East tensions

Crude oil prices have climbed on concerns that Israel's attacks on Hamas could disrupt oil production and threaten supplies from the Middle East.

Light, sweet crude rose $1.22 to $37.89 a barrel in New York, below a session high of $42.20.

Meanwhile London Brent added $1.39 to $38.70 a barrel, after reaching a high of $43.18.

Oil has fallen more than $100 from its peak of $147.27 a barrel on 11 July as slowing economies have dented demand.

"Geopolitics had disappeared from the oil scene for the last couple of months but will regain some price premium with the latest Israeli attack in Gaza," Olivier Jakob, of consultants Petromatrix, said in a research note.

Meanwhile upgraded figures from the US Energy Information Administration showed that US demand in October was down by 833,000 barrels per day (bpd) from a year earlier.

The demand of 19.643 million bpd was 4.07% less than the demand of 20.476 million bpd a year earlier.

Russian rouble slides to new low

The Russian rouble has hit a low after its central bank allowed the currency to devalue for the twelfth time - including nine falls this month.

It fell to 41.6 against the euro - an all time low - and to 29.3 against the dollar, the lowest level since 2005.

The currency has lost more than 20% of its value against the dollar - largely due to the slumping price of oil on which Russia's economy heavily relies.

The Kremlin has been using reserves to try and support the currency.

However concern that Russia is pumping too much cash into supporting the rouble prompted ratings agency Standard and Poor's to cut the country's credit rating earlier this month for the first time in nine years.

Borrowing plans

The rouble has also touched a new low of 34.8 roubles against the basket of euros and dollars which is its official measure within the country.

Russia's central bank, which sets the official exchange rates, does not normally allow the currency to lose more than 1% percent of its value in one day against the basket of currencies.

But it has gradually been devaluing the rouble by allowing deeper falls, with it sliding 1.5% on Monday.

Oil revenues have been the main driver of the boom enjoyed by the Russian economy in recent years.

But the sharp declines in the price of crude oil means Russia is facing economic challenges.

Its budget has been calculated on the basis if it getting at least $70 a barrel for its Urals crude - the country's main export blend. It is currently worth about $32 a barrel.

Last week the economic adviser to President Dmitry Medvedev said that the country would probably draw on further reserves and borrow from abroad to bridge the shortfall.

The central bank's first deputy chairman Alexei Ulyukayev said last week that it had opted to allow the rouble to devalue gradually instead of allowing a single, much larger devaluation.

The worsening economic outlook and the fall in the price of oil has left the government with little option.

Further falls

Russia's central bank has spent more than $100bn (£68bn) defending its currency since the summer.

Despite the fall in oil revenues, Russia possesses the world's third largest reserves of gold and foreign exchange reserves.

And the central bank is prepared to continue to defend the rouble in order to avoid a repeat of the 1998 financial crisis, when Russians rushed to withdraw their savings as the currency plummeted.

The Kremlin has warned that the global economic slowdown is continuing to take its toll - predicting that the number of people registered as unemployed would rise to about 2.2 million by the end of 2009, from the current level of 1.5 million.

Pound hits new low against euro

The pound has hit a new record low against the euro as the grim outlook for the UK economy continues to put downward pressure on the currency.

Weak house price data and figures showing that homeowners are choosing to repay their mortgages rather than spending, pushed the currency lower.

Low trading levels in the foreign exchange markets also helped to force sterling down to 1.0198 euros.

Many analysts believe parity with the euro is now only a matter of time.

The rate for tourists buying their currency before they travel has almost reached parity, where one pound buys one euro. At one major High Street currency exchange, 100 euros currently costs £99.11.

Downward pressure

Property consultants Hometrack predicted a 12% fall in UK property prices in 2009, while figures from the Bank of England showed that households were more keen to pay off their mortgages than borrow money against the value of their homes for spending.

Towards the end of October, one pound bought 1.287 euros. But a string of bad news about the prospects for the UK economy caused sterling to fall.

In December last year, a pound would have bought more than 1.4 euros. At its peak in 2000, the pound was worth more than 1.7 euros.

There are two main factors putting downward pressure on the pound, analysts suggest.

First, interest rates in the UK are lower than those in the eurozone, which makes the pound less attractive to foreign investors.

Analysts believe the economic slowdown in the UK will be more severe than in the eurozone, which means the Bank of England could be forced to lower interest rates from their current level of 2%.

Interest rates in the eurozone currently stand at 2.5% and the European Central Bank has hinted that further rate cuts are unlikely early in the New Year.

Second, trading levels over the holiday period are low, which means that any moves in exchange rates are exaggerated.

"Actual liquidity levels are painfully thin," said Daniel Baker at Informa Global Markets.

He believes parity with the euro is almost inevitable.

"The path to parity is self-fulfilling," he said.

Japan's industrial output plunges

Industrial output in Japan dropped just over 8% in November compared with the previous month, the biggest fall on record, government figures show.

At the same time, unemployment rose to nearly 4% of the population.

More than 2.5m people were out of work in Japan in November, a rise of 100,000 compared with the year before. Those on temporary contracts are worst affected.

Factories were closed and jobs cut as demand for manufactured goods slumped amid the global financial downturn.

Production at major Japanese manufacturers fell by 3.1% in October.

November's 8.1% drop was the largest since records of such output statistics began.

Dismal data

The new numbers released by Japan's Ministry of Economy, Trade and Industry, suggest industrial output will continue to decline, perhaps by about 8% in December.

The biggest falls came in production of autos, machinery and electronics and followed announcements of large cutbacks by companies including Toyota and Sony.

"Overall, production is rapidly falling," the ministry said.

The BBC's Duncan Bartlett in Tokyo says Japan's factories are usually busy and efficient but at the moment many are sitting idle because there are no customers for their goods.

In the car industry, many companies have decided to stop building new vehicles until they have sold the ones they have already made.

Separately, the Ministry of Health, Labour and Welfare said 2.56 million people were unemployed in Japan in November, an increase of 100,000 from a year earlier.

Those hardest hit are people on temporary or limited contracts - job losses in this group doubled in a month.

Consumer prices rose 1% from a year earlier, driven by higher costs of basic necessities such as food, fuel and electricity.

'No growth'

The Japanese government has already predicted that the economy will not grow in 2009.

Business confidence has plummeted in recent months.

Interest rates are pegged at just 0.1%, lower than US rates. The government has announced several economic stimulus measures.

Japan is the world's second-largest economy, and Asia's largest, so has been directly hit by the slump in demand caused by spreading global recession.

Economists say that the continuing bad news suggests that Japan's recession is getting worse, our correspondent says, despite the attempts by the government and the Bank of Japan to help by increasing public spending and cutting interest rates.

Oil falls back below $39 a barrel

More bad economic news from the US has sent oil prices falling back below $39 a barrel.

US light, sweet crude for February delivery fell to $38.53 a barrel in electronic trading on Nymex.

Data on Tuesday showed that US new home sales had fallen to a near 18-year low in November.

Bad economic data in the US has been making traders worry about how much the demand for oil will fall in the world's biggest economy.

Attention now turns to the weekly inventories figures from the US Energy Department, which are due out later on Wednesday.

The inventories figures give an indication of how much consumption of oil has declined.

Oil prices have fallen 74% from their peaks in July.

China to allow freer yuan trades

China has said it is to allow some trade with its neighbours to be settled with its currency, the yuan.

The pilot scheme was announced in a package of measures designed to help exporters hit by the global downturn.

It means if the two parties to a trade have yuan available, they need not enter world exchange markets to pay.

Most of China's foreign trade is settled in US dollars or the euro, leaving exporters vulnerable to exchange rate fluctuations.

The yuan is not yet a freely convertible currency.

Officials did not say when the trial scheme would start.

When it does, the yuan could be used to settle trade between parts of eastern China (Guangdong and the Yangtze River delta) and the territories of Hong Kong and Macau, and between south-west China (Guangxi and Yunnan) and the Asean group of countries (Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam).

Spreading yuan

Analysts told Chinese media that the yuan was already being used in some South East Asian countries and that China was happy to see such use extended.

They also agreed that the measure was intended to help companies cope with the global financial meltdown, even though buying and selling the currency requires the presentation of legitimate trade documents to banks.

The latest measure follows Beijing's announcement earlier this month of a 30-point directive in which it vowed to "support the development of yuan business in Hong Kong" and expand the use of the currency to settle trade with neighbouring countries.

Central bank governor Zhou Xiaochuan was quoted by the South China Morning Post as saying: "The US dollar is unlikely to be stable next year and later.

"And the likelihood of the United States issuing more money in the near future adds to the depreciation risk in US-dollar-denominated assets and trade settlements."

He also reportedly said that Guangxi, a province in southern China, had already been settling trade with Vietnam in yuan for some time.

Spurs to spend

A document released after a meeting of China's State Council on Wednesday announced more measures to stimulate domestic consumption.

These include subsidies to rural households for the purchase of household appliances and other goods, and the setting up of new stores and distribution centres in rural areas.

The document called for the renovation of urban food markets, the provision of more variety of goods on sale, the setting up of more second-hand markets, incentives for distribution companies to merge and consolidate, and support of small and medium-sized enterprises.

The state news agency Xinhua said the government intended to raise export tax rebates for high-technology products, to encourage foreign investment, extend customs and inspections services, lower inspection fee for exports and strengthen trade relations in emerging markets.

Analysts said the ideas, though vague, indicated growing concern among China's policy makers about the domestic impact of the current global financial turmoil.

Powered by exports, China's economy has grown by double digits in recent years.

In November, official figures showed a 2.2 percent drop in exports, the first decline in more than seven years.

Cessna company loses 2,200 jobs

US firm Textron, world's leading maker of corporate jets, has expanded its job cuts to 2,200 amid global downturn.

The maker of Cessna aircrafts and Bell helicopters said the figure included previously announced cuts in its Cessna and Bell divisions.

Textron, which employs 44,000 workers worldwide, did not rule out "further headcount reductions" and other cost-saving measures.

The company also said it would narrow its finance operations.

Textron now expects profit from its manufacturing segment to be in the range of $300m (£200m) to $330m in the fourth quarter, down from previously forecasted $400m.

For the whole company, it forecasts a net loss of 81 to 91 cents per share.

Many companies around the world have been forced to announce huge job cuts and revise down their outlooks amid falling demand as customers pare all but essential spending.

Oil falls on slowing demand signs

Oil prices have fallen on negative corporate reports and new signs that the global energy demand is deteriorating further.

News that crude imports to China, the world's second biggest energy consumer, fell in November to the lowest level this year, has dampened the mood.

Reports, such as Japanese carmaker Toyota's forecast of a historic annual loss, also put pressure on oil prices.

US light, sweet crude for February delivery fell $2.45 to trade at $39.91.

London Brent crude fell $2.55 to $41.45.

"I think the concerns about economic weakness still seem to be overshadowing the entire complex," said Phil Flynn, an analyst at Alaron Trading.

Delayed effect

Opec, the oil cartel, said last week it was going to cut production by 2.2m barrels per day to boost crude prices.

But some analysts say markets are sceptical about whether members of the cartel will be able to comply.

Oil prices have fallen more than $100 a barrel since July, when they reached a peak of $147.

"There's so many prompt barrels sitting around that that's really sitting on the market right now, especially the near contracts," said Michael Lynch, president of Strategic Energy & Economic Research.

"The cuts are really going to have an effect somewhere around February, March."

Irish move to recapitalise banks

The Irish Government has announced plans to recapitalise the country's three biggest banks.

A total of 5.5bn euro will be injected into the Allied-Irish Bank, the Bank of Ireland and the Anglo-Irish Bank in return for shares.

Anglo-Irish will receive 1.5bn euro in return for 75% shares with an annual fixed dividend to government of 10%.

The government will give 2bn euro each to Bank of Ireland and Allied Irish Bank for an annual dividend of 8%.

They will also receive 25% voting rights on their respective boards.

There have been widespread calls for the scheme to be dependent on changes to the management of the banks.

However, Taoiseach Brian Cowen said that would not be a precondition.

A lack of liquidity has made it increasingly difficult for the three banks to lend money to their customers.

Mr Cowen said the scheme would send a strong signal to the markets about the stability of the Irish financial system.

Tata 'to inject cash into Jaguar'

Tata Motors, the owner of Jaguar Land Rover, is to inject "tens of millions" of pounds into the British carmaker, according to the Financial Times.

A spokesman for Tata Motors did not deny the report.

A cash injection by the Indian owner would give the UK government more time to decide whether to use public money to bail-out the company.

Business Secretary Lord Mandelson had cast doubt on a bail-out, saying the state was a "lender of last resort".

Debasis Ray, head of corporate communications for Tata, did not not deny the report but would not say how much money would be injected.

"It is our company and we are running a business," he said.

"Discussions with the government, however, are confidential and cannot be revealed. We have to run the company and are doing so to the best of our abilities."

State aid

The carmaker has asked the government for financial support and its case has been backed by unions which say the industry needs help.

Labour peer Lord Bhattacharyya had suggested ministers were discussing a £667m loan package for Jaguar.

But Lord Mandelson said that Tata group must "look to their own resources."

Jaguar Land Rover has been hit hard by a dramatic slump in sales that has affected carmakers across the world.

In the US, the government has agreed to a $17.4bn (£11.6bn; 12.4bn euros) bail-out package for its auto industry.

In the UK, the Confederation of British Industry has said urgent government loans are needed to preserve 800,000 UK jobs in the carmaking industry. The Unite union says tens of thousands of skilled jobs are "hanging by a thread".

Toyota braced for historic loss

Japan's biggest carmaker Toyota has forecast its first annual loss in 71 years due to plummeting sales and a surge in the value of the yen.

The firm said it expected a loss of 150bn yen (£1.1bn) in yearly operating profits - from its core operations.

Japan also posted a trade deficit of $2.5bn (£1.7bn) in November as exports fell at a record rate.

The rising yen saw export levels down 26.7% from a year earlier, the ministry of finance said.

The carmaker recorded an operating profit of 2.27 trillion yen last year.

Toyota said it still expected to make a profit on a net level for the year ended March but has cut its forecast sharply to 50bn yen, down from a previous estimate of 550bn yen.

It is the second profit warning by Toyota in less than seven weeks.

The latest estimate is far lower than its net profit of 1.7 trillion yen earned the previous year.

Ariane makes final launch of 2008

Europe's Ariane 5 rocket has wrapped up its 2008 campaign with another dual launch from the Kourou spaceport.

The vehicle was carrying two satellites into orbit for the Eutelsat company.

The Hot Bird 9 and W2M platforms were put on a path to geostationary orbits, to provide a mix of TV, radio and other telecommunications services.

It was the sixth flight for an Ariane 5, in a year that also saw the rocket start to service the International Space Station (ISS).

Its primary role, though, will continue to be as launcher of commercial telecommunications satellites.

Lift-off for the Eutelsat mission was delayed by technical problems and left the ground at 2235 GMT, about three-quarters of an hour later than planned.

It is the first time that two platforms belonging to one of the major operators have been launched on the same rocket.

Eutelsat CEO Giuliano Berretta is a big admirer of the "excellent" Ariane; he is a frequent customer.

But in a wide-ranging interview ahead of Saturday's flight, he said satellite operators wanted to see more competition among launchers, to bring down prices.

Export controls

At the moment, he believes there are too few rockets to choose from.

"We would like to buy Chinese rockets, for instance," he said.

"They're very good, very safe; they're constructed for human flight after all. But we're in a situation today where you cannot launch satellites with American components using Chinese rockets. It is against the ITAR restrictions of the United States."

The International Traffic in Arms Regulations (ITAR) are designed to stop sensitive US defence technologies getting into the wrong hands.

Satellite operators, in particular, have been put under close scrutiny ever since a spacecraft carrying encryption technology was destroyed on launch in China and not all the debris was recovered.

Some manufacturers are now promising to build satellites free of all US components. Certainly, Mr Beretta is supportive of moves within the US itself to have ITAR reviewed.

He is waiting to see how the new Obama administration will act on the issue; although, it has to be said, it was the previous Democratic (Clinton) administration that put the ITAR focus very squarely on space services.

Growth markets

As chairman of the European Satellite Operators Association, it is in Mr Beretta's brief to take on the big issues affecting his industry.

In recent months, this has meant battling proposed changes to EU telecoms regulations designed to tidy up and free up spectrum for emerging technologies, in order to ensure the unique position of satellites is recognised.

The association has been concerned at what it sees as an attempt by Brussels in some of this exercise to usurp matters normally left to the International Telecommunication Union, the UN body that oversees radio spectrum regulation.

In Mr Beretta's line of fire has been the suggestion that satellite operators might have their frequencies reviewed within just a few years.

"It is impossible," he said. "Satellites are living longer; their lifetime is now normally 15 years. We need stability in the rules otherwise it will kill the economics of the satellite. Once they are up in space we cannot send someone up to change them."

The combined launch mass of the Hot Bird 9 and W2M satellites is just over eight tonnes. The Hot Bird will be serving primarily TV services to western Europe, North Africa and the Middle East.

The W2M will serve TV and also data services to what Eutelsat calls its "second continent" - eastern Europe, including Russia. The region is experiencing rapid growth.

"Today, television is our biggest market; 75% of our business is TV. But in the future, other activities will increase, such as addressing the digital divide with small terminals that will get broadband internet everywhere," said Mr Beretta.

"Then there are the mobile systems where satellites can complement GPS and Galileo services, where you determine your position and thanks to that you get sent information - where the local hotels and restaurants are, etc. This is info-mobility."

Saturday's Ariane 5 mission marks the 42nd launch of Europe's workhorse rocket. In March, it lofted the "Jules Verne" freighter to the International Space Station.

Next year's highlights include the dual launch of two European Space Agency telescopes - Herschel and Planck.

Both will be sent out to an observing position some 1.5 million km from Earth, to study the Universe at far-infrared and microwave wavelengths.

IMF urges spending to spur growth

More spending by governments will be needed to stimulate worldwide economic growth, the head of the International Monetary Fund (IMF) has told the BBC.

Dominique Strauss-Kahn said he feared measures announced by the Group of 20 nations last month would not be enough.

The IMF has already cut its forecast for global growth next year, and he said the next projection, due in January, would be even worse.

Mr Strauss-Kahn spoke of "2009 as really being a bad year".

"I'm specially concerned by the fact that our forecast, already very dark... will be even darker if not enough fiscal stimulus is implemented," he said in an interview with BBC Radio 4.

'Less bad solution'

He said it would take a spending stimulus equivalent to about 2% of global Gross Domestic Product, or about $1.2 trillion (£800bn), to make a real difference.

The level of debt in the UK was "disturbing", he said, but he added that given the choice between increasing the deficit and not fighting the recession, he favoured the "less bad solution".

He described European Central Bank chief Jean-Claude Trichet's warning that eurozone governments must keep a lid on borrowing as "noble".

"He's the head of the central bank - it's his job to say things like that," Mr Strauss Kahn said.

"We are in the biggest crisis we have experienced for 60 or 70 years and we have to take that into account," he added.

In November, the IMF lowered its global economic growth forecast to 2.2% from 3%.

Last week, Mr Strauss-Kahn said the IMF could cut its 2009 forecast for China to around 5% amid an "unprecedented" global slowdown.

Strong dollar hits Oracle profits

The business software manufacturer Oracle's profit for the three months to the end of November have slipped.

Net income only fell $7m (£4.7m) from the same period last year to $1.3bn, but it was nonetheless the first time it had not grown for three years.

Oracle said its profits would have been better if the US dollar had not strengthened so much in the quarter.

It said that if currency rates had been the same as last year its profits would have grown 11%.

"They are managing through this downturn relatively well, but they're not immune for a slowdown," said Jeff Gaggin at Avian Securities.

Oracle's revenue rose 6% during the three month period, which was worse than had been expected.

US financial watchdog boss named

Mary Schapiro has been named the next head of the US financial watchdog, the Securities and Exchange Commission.

President-elect Barack Obama officially nominated Ms Schapiro, whose role must be confirmed by the Senate.

Mr Obama said she would "crack down on the culture of greed and scheming that has led us to this day of reckoning".

The watchdog faces growing criticism for its failure to protect investors - particularly over its role in the alleged $50bn fraud by Bernard Madoff.

A former SEC commissioner, Ms Schapiro is currently head of the Financial Services Regulatory Authority.

Mr Obama said that under her leadership, the SEC would "protect investors, consumers and our entire economy from fraud and manipulation by an irresponsible few".

Madoff scandal

She previously chaired the Commodity Futures Trading Commission and served for six years as an SEC commissioner under Presidents Ronald Reagan, George H W Bush and Bill Clinton.

Ms Schapiro is well-respected in Washington circles as a regulator and is considered an effective, if somewhat low-key, administrator.

Barbara Roper, of the Consumer Federation of America, said that Ms Schapiro would bring "significant administrative experience" to the job.

That would be useful "given that we're looking at what is essentially a broken agency", she said.

'Grave concerns'

The SEC has been buffeted by criticism for failing to detect signs that major Wall Street banks were in trouble before the financial crisis erupted and for possibly lax oversight and enforcement in other areas.

As the scandal involving Mr Madoff stunned Wall Street, revelations have surfaced that staff at the SEC repeatedly failed over the course of a decade to fully investigate credible allegations against him.

SEC chairman Christopher Cox said on Tuesday he was "gravely concerned" by the breakdown in oversight and ordered the agency's inspector general to investigate what went wrong.

Senator Charles Schumer, a member of the Senate's banking committee said Ms Schapiro was "the kind of strong and experienced regulator that we very much need in these times".

"I believe her nomination could be approved quickly and without controversy in the Senate," he added.

Panasonic set to buy rival Sanyo

Japanese electronics group Panasonic has offered to buy rival Sanyo for 806.7bn yen ($9bn; £6bn).

The two firms said in a joint statement they had to take "drastic action" to boost revenue growth.

Panasonic, a leading flat TV maker, is offering 131 yen per Sanyo share, and major shareholders, including Goldman Sachs, have agreed to sell up.

Panasonic is interested in Sanyo's green energy businesses, such as solar panels and batteries.

It said in a statement it "will consider various options including a possible investment of around 100bn yen in order to achieve the synergy of both companies".

Goldman Sachs initially rejected Panasonic's lower offers.

But the investment bank decided to tender its Sanyo stake to Panasonic after reporting its first quarterly loss since going public.

Recent problems

Sanyo has been facing problems in recent years, cutting thousands of jobs and selling unprofitable operations.

Recently it has been hit by a stronger yen, rising material costs and falling gadget prices.

The same factors also contributed to a drop in Panasonic profit, as the company cut its annual profit forecast by 90% because of the global economic downturn.

But Panasonic is less dependent on exports to the US than Sanyo, a factor which has helped it do better than some other rivals in Japan.

Analyst Kazumasa Kubotaat Okasan Securities said that despite the high cost, "in the longer term the acquisition is absolutely an advantage for Panasonic".

The two companies have historical ties, with their founders being brothers-in-law.

Polaroid in bankruptcy protection

Camera-maker Polaroid has filed for US Chapter 11 bankruptcy protection amid allegations of fraud by the founder of its parent group.

Polaroid has been owned by Petters Group Worldwide since 2005, which was established by Tom Petters.

Mr Petters is now "under investigation for alleged acts of fraud that have compromised the financial condition of Polaroid," the firm said.

Polaroid said neither itself or its bosses were under investigation.

Authorities believe that Tom Petters, the founder of Peters Group, was running a £3bn fraud scheme.

But Mr Petters, who is now in custody, has maintained his innocence.

Petters Group and its venture capital unit filed for Chapter 11 bankruptcy protection in October.

Instant photography

Polaroid said the restructuring shouldn't hit its day-to-day operations, and it is "planning for new product launches in 2009".

"Polaroid has entered bankruptcy with ample cash reserves sufficient to finance the company's reorganization under Chapter 11," it said.

Polaroid is best know for inventing instant photography.

But it stopped making the instant cameras about two years ago due to falling sales in the face of the growing popularity of digital cameras.

Japan forecasts no growth in 2009

Japan's government has forecast that the country's economy will have zero growth in the year ending March 2010.

It is the first projection of no growth from the world's second largest economy in seven years.

It follows a revised projection for the current fiscal year that the economy will shrink by 0.8%, instead of the 1.3% growth forecast in July.

The Bank of Japan (BOJ) has cut its key interest rate to just 0.1%, down from 0.3%, taking it lower than US rates.

The BOJ also announced that it would increase its purchase of Japanese government bonds to 1.4 trillion yen ($15.7bn; £10.5bn) a month, up from 1.2 trillion yen.

"A small rate cut alone would not help the economy much," said Norio Miyagawa, economist at Shinko Research Institute.

"And with Japan's interest rates at nearly zero, the central bank will likely continue to adopt other measures to provide ample liquidity to help the economy."

To boost recovery after a prolonged recession, Japan kept rates at virtually zero until 2006.

'Worsening economy'

A survey earlier this week indicated business confidence in Japan was at its lowest in 34 years.

Last week the government increased its economic stimulus plan by 23 trillion yen ($255bn; £171bn).

The world's second-largest economy - and Asia's largest - shrank by an annualised rate of 1.8% in the third quarter.

"The economy is worsening very quickly and the BOJ and the government will need to keep working closely. But there is still no guarantee that announced steps will be able to stop the economy from collapsing," said Hideo Kumano at Dai-ichi Life Research Institute.

New recession

Some analysts think the government's forecast of zero growth next year was overly optimistic.

"Politically, the government couldn't forecast a contraction," said Hideki Matsumura, a senior economist at Japan Research Institute.

"A recovery is unlikely in the next two years," he said.

In recent years, Japan's economic growth was driven by exports due to high demand for cars, cameras and other goods.

After 2001, it enjoyed its longest period of economic growth since World War II until the sub-prime crisis started a year ago.

Since then the global downturn has led to global demand falling significantly, while a rising yen has also hit exporters.

Japan's economy has slipped into its first recession in seven years after two quarters of negative growth in a row.

Goldman Sachs reports huge loss

Goldman Sachs has reported a $2.12bn (£1.41bn) quarterly loss, its first since going public in 1999.

The US banking giant's loss for the three months to the end of November was still smaller than had been expected and its shares rose 4% in New York.

During the same period in 2007, Goldman Sachs reported net income of $3.22bn.

Goldman Sachs and rival Morgan Stanley are the only two of Wall Street's original five investment banks still in independent existence.

In September, they changed their status to become bank holding companies, allowing them to take deposits from investors.

Difficult year

"The fear in the market was, the results would be much worse than they were. So the stock is rallying," said Walter Todd, portfolio manager at Greenwood Capital Associates.

"I think going forward, what kind of business does Goldman Sachs have? There's a huge question mark at this point," said Robert Lutts, at Cabot Money Management.

This year has been a difficult one for US financial institutions, as they suffered billion-dollar losses and had to cut jobs, while some of them were taken over by the government or rivals.

Seeking to stabilise the financial system, the US government has bailed out Citigroup, Bear Stearns, Fannie Mae, Freddie Mac and American International Group and injected hundreds of billions of dollars into the financial system.

Another of Goldman's rivals, Lehman Brothers, went bankrupt in September.

US inflation falls still further

US consumer prices dropped by a record amount in November as petrol prices and other energy costs continued to fall.

The Consumer Price Index (CPI) dropped by 1.7% in November, according to the US Labor Department, following a decline of 1% in October.

October and November's falls were the two biggest since monthly data first started being recorded in 1947.

And the annual rate of inflation was just 1.1% in November, down from 3.7% the previous month.

Energy prices fell 17% last month, double October's 8.6% dip.

Oil price falls

These latest big declines reflect the recession in the US and will raise the pressure on the Federal Reserve - the central bank - to act decisively to guard against a debilitating bout of deflation.

Paul Ashworth, at Capital Economics, said: "The headline inflation rate is now guaranteed to fall deep into negative territory next year."

"If this was just a decline in the relative price of commodities then it would be a little easier to live with," he said.

"However, the rapid moderation in core inflation suggests that there is a real risk of a sustained decline in the general price level. In short, the US economy could slip into a deflation within the next 12 months."

Much of the headline inflation fall was taken up by the continuing drop in crude oil prices, reflected in the further fall in the energy index.

Energy prices are now 32.4% below their peak in July earlier this year.

The gasoline index fell 29.5% in November and petrol prices are now 47% below their July peak.

Food prices increased 0.2% in November, following a 0.3% rise in October.

Excluding food and energy, core prices were virtually unchanged in November, after declining 0.1% in October, and are up 2.0% since November 2007.

Later on Tuesday the Federal Reserve is widely expected to cut its key federal funds rate, already at a low of 1%, by another half percentage point in an effort to keep the recession from worsening.

Apple to ditch Macworld gathering

In a surprise move, Apple said it is to abandon its annual tech gathering Macworld after this January's event.

Meanwhile news that the keynote address will not be given by CEO Steve Jobs has reignited speculation about his health following cancer four years ago.

Concern was raised earlier in the year when Mr Jobs appeared at the firm's developer conference looking gaunt.

Apple spokesman Steve Dowling refused to discuss the issue and said shows like Macworld were no longer relevant.

"Apple is steadily scaling back on trade shows and in recent years is reaching more people in more ways than ever before," Mr Dowling told BBC News.

"Every week 3.5 million people visit our retail stores. And like many companies, trade shows are a minor part of how Apple reaches its customers."

Mr Dowling also said that as the company had scaled back on such shows, it had ramped up "stand-alone launch events like the September iPod launch seen by millions of people on the internet".

IDG which runs the show put a brave face on things.

"We are on track for a terrific show with strong attendance numbers and nearly 500 exhibitors showcasing their products," Paul Kent, general manager of Macworld Expo told the BBC.

"The conference and expo has thrived for 25 years due to the strong support of tens of thousands of members of the Mac community worldwide. We are committed to serving their interests," he said.

Call for record Opec output cut

Leaders of the oil producers' cartel Opec are gathering in Algeria where they are under pressure from Saudi Arabia to make a record cut in output.

Saudi Arabia, the world's largest oil producer, predicts the cartel will reduce production by two million barrels a day at the meeting.

Saudi oil minister Ali al-Nuaimi said he expected Opec non-members to cut output by 600,000 barrels per day.

Oil giant Russia, a non-member, will also be represented at the meeting.

A combined cut of 2.6 million barrels per day represents 3% of global output.

Oil prices have slumped from a peak of $147 a barrel in July to about $44 a barrel, as demand has weakened amid the global economic downturn.

Cutback hopes

Expectation is high that oil producers are ready for co-ordinated actions to boost crude prices.

The Iraqi oil minister, Hussain al-Shahristani, said that at least two million barrels a day of oil production needed to be cut.

In terms of prices, he said he was hoping for a target oil price of "somewhere between $80 to $100".

Nigeria's oil minister, Odein Ajumogobia, said he too would support a cut of two million barrels a day.

"I would give such a proposal serious consideration. It's in everyone's interest for supply and demand to be better aligned. They are clearly not at the moment."

The International Energy Agency recently forecast that global demand for oil would fall this year, the first decline since 1983.

However, the fall in the price of oil has been helpful for central banks, especially in the developed countries.

It has eased their concerns about inflation and left them free to tackle their slowing economies by cutting interest rates.

The BBC's economics correspondent Andrew Walker said: "Opec's problem is the result of the worldwide economic downturn."

"Oil use has declined in the developed countries, and is growing more slowly in developing economies," he said.

On Tuesday, US light, sweet crude fell 18 cents to trade at $44.33 a barrel.

Brent crude rose 55 cents to $45.15 a barrel.

Watchdog 'ignored' Madoff warning

The top US financial regulatory body has ordered an in-house investigation into why it did not detect the $50bn (£33bn) Madoff fraud case sooner.

The Securities and Exchange Commission (SEC) head, Christopher Cox, launched an inquiry into what he called a serious agency breakdown.

It has been revealed the SEC received warnings about Wall St figure Bernard Madoff almost 10 years ago, in 1999.

Mr Madoff has been charged with fraud in one of the biggest-ever such cases.

Investors, banks and charities across the world fear they may have lost billions of dollars since Mr Madoff's arrest.

It is thought that Mr Madoff was running what was essentially the world's largest pyramid scheme, the BBC's Andy Gallacher reports from Washington.

Now serious questions are being asked about the SEC's role in not preventing it in the first place, our correspondent says.

'Credible and specific'

The SEC chairman said he was "gravely concerned by the apparent multiple failures" of SEC staff to look into claims about Mr Madoff.

Satyam takes steps back on shareholders' resistance

Hit by the adverse market reaction, homegrown Satyam Computers called off its proposed USD 1.6-billion acquisition of two companies on Wednesday promoted by the IT major Chief Ramalinga Raju's son.

Announcing the decision to call off the acquisition of Maytas Properties and Maytas Infrastructure "in light of the setback received from the investors community", Raju said: "We have been surprised by the market reaction to this decision even though we were quite positive about the merits of the acquisition."



"However, in deference to the views expressed by many investors, we have decided to call off these acquisitions," he said.



The reversal comes within a day of the Satyam board approving the decision to acquire Maytas Properties for USD 1.3 billion and a majority 51 per cent stake in Maytas Infrastructure for USD 0.3 billion.



Shortly after the announcement was made on Tuesday evening, the US-listed company had plummeted more than 55 per cent on the American bourses reflecting rejection of the deal by the shareholders.



Even during the investors conference held after the board's approval for acquisition, Raju faced tough questions from Institutional Investors in Satyam such as Reliance Mutual

Fund, SBI Mutual Fund, Templeton Mutual Fund and CLSA, with some of them even threatening to oppose the deal.

Rupee appreciates 61 paise against dollar

The Indian rupee strengthened by 61 paise against the US currency on Wednesday in opening trade on increased capital inflows by foreign funds amidst firming Asian equity markets, dollar selling by exporters and weakening of dollar against other currencies.

At the Interbank Foreign Exchange (Forex) market, the domestic currency traded at 47.30 against the greenback, a smart rise of 61 paise over the previous close of 47.91/92.



Forex dealers said that the rupee gained on dollar selling by banks and exporters after an upward trend in Asian equity markets raised hopes for strong opening on domestic bourses.



Asian markets on Wednesday opened higher with Hong Kong's Hang Seng going up 2.7 per cent, while Japan's Nikkei 225 was up nearly one per cent in early trade.



The rupee, appreciated by 13 paise at 47.91/92, a one-month high in the last trading session.



Meanwhile, the BSE Sensex closed 144.59 points higher at 9976.98 on Tuesday.

Dollar falls as Fed slashes rates

he dollar has fallen sharply against other currencies after the US Federal Reserve slashed its key interest rate to an all-time low.

Many analysts expected a cut to 0.5%, rather than the Fed's move to 0.25%.

The dollar stood at $1.4094 against the euro, $1.5511 against the pound and 88.43 yen versus the Japanese currency.

Meanwhile sterling fell to another record low against the euro amid expectations the Bank of England may cut its interest rates further.

The US interest rate is now the lowest among developed countries.

"This clearly hadn't been priced into markets with the dollar tumbling as a result," said James Hughes, a currency analyst at CMC Markets.

'Very negative'

At the beginning of December, the Bank of England reduced its rate to 2% from 3%, and notes from its monetary policy committee showed it considered an even deeper cut.

Separately, it was reported that the number of people out of work rose to the highest level since June 1999, while those claiming unemployment beneift hit a 17-year high.

"Sterling is coming under pressure after the claimant count figures were well above market expectations," Ian Stannard at BNP Paribas in London.

"It shows the UK is moving toward recession and this is very negative for sterling".

The pound stood at 1.1003 euros after hitting a record low of 1.0980 euros in earlier trading.

Fed cuts rate to virtually zero

The Federal Reserve slashed its base lending rate from 1.0 percent to virtually zero, saying its target federal funds rate would be a range of zero to 0.25 percent.

The unprecedented low rate announced by the Federal Open Market Committee is aimed at fighting off deflation and a crippling global credit crunch.

Additionally, the Fed said it would take other steps to stimulate lending and economic activity, including large purchases of mortgage securities to help unblock credit.

UK house prices 'to fall by 30%'

The head of Barclays bank has predicted that economic gloom will deepen, with house prices to fall in total by 30%.

John Varley's warning comes ahead of the latest UK unemployment figures on Wednesday, where the number of jobless is expected to rise sharply.

A new survey suggests household debt is on the increase, and the value of sterling has fallen against the euro.

But EU governments have been told they cannot break the financial rules in order to boost their economies.

John Varley, group chief executive of Barclays, painted a bleak outlook in an interview on Sky News, during which he criticised mortgage borrowing levels over the last decade.

He warned the UK was only "halfway" through the slump with house prices set for even greater falls.

He said: "Our view was that from the top to the bottom, you would see a fall of something like 25 to 30%.

"I suspect we're about halfway through that at the moment. I mean that slowdown, the negative house price inflation started in 2007, it's accelerated in 2008.

"We're probably about halfway through that period, so in other words we've got another 10 to 15% to fall between now and the end of next year. That would be our assessment."

His bleak prediction extended into the jobs market.

He said: "Our view is that unemployment will rise. Unemployment is likely to go north of 7% over the course of the next 12 months or so, it might be as high as 7.5%.

"I think an additional 700,000 people unemployed over the course of the next 12 months is certainly possible to contemplate."

Mr Varley was speaking ahead of the release, on Wednesday, of the latest UK unemployment figures.

The number of jobless could rise sharply, with some forecasters warning the total of those out of work might hit two million or more.

Debt increase

Meanwhile, a survey commissioned by the Bank of England has suggested an increase in the number of households struggling with debt.

Many said they had less to spend after paying household bills and had saved less than they expected.

Nearly 2,500 households were interviewed for the survey in late September and early October.

More respondents were finding their debts to be a burden than in any similar survey since the mid 1990s.

The bank says after a period of growth and low inflation, it has seen an abrupt change in the circumstances facing British households.

Sterling's lows

International investors' lack of confidence in the UK economy has seen the the pound hitting new lows against the euro: last week one pound bought as little as 1.11 euros, the lowest ever.

But the government appears to have ruled out action to shore up sterling.

On Sunday the chief secretary to the Treasury, Yvette Cooper, told the BBC the government was not planning to step in to support the pound.

She said attempts by previous administrations to target exchange rates had been unsuccessful.

Instead the government would continue to try to keep inflation under control and support the economy, she said.

"We have never had a policy of targeting the pound. Our policy has been to target inflation and that, I think, has been the right way. It has paid off over the last 10 or 11 years."

Huge deficits

But the government has been warned that any action it takes to support the UK economy must not break EU rules.

European Central Bank President Jean-Claude Trichet told the Financial Times that the EU's "stability and growth" pact must not be allowed to fall apart.

The pact has rules designed to stop EU member states from racking up huge budget deficits and national debt in order to boost their economies.

"We would destroy confidence if we blew up the pact," he said.

Mr Trichet is said to be worried that fiscal indiscipline - such as governments printing large amounts of currency in order to boost spending - could threaten "already fragile" economic confidence.

Ecuador defaults on foreign debt

Ecuador is to default officially on billions of dollars of foreign debt it considers "illegitimate", says President Rafael Correa.

Mr Correa said he had given the order not to approve a debt interest payment due on Monday, describing the international lenders as "monsters".

The president said that some of Ecuador's $10bn debt was contracted illegally by a previous administration.

It is the first debt default by a country in Latin America since 2001.

At that time, Argentina failed to repay debt in the midst of its financial meltdown.

Restructure plan

Speaking in the city of Guayaquil, Mr Correa said "as president I couldn't allow us to keep paying a debt that was obviously immoral and illegitimate", according to the AFP news agency.

"We'll present a proposal to restructure the debt in order to resolve this problem as fast as possible," added the US-trained economist and ally of left-wing Venezuelan President Hugo Chavez.

His decision follows a government audit in November which recommended that Ecuador default on almost 40% of the $10bn foreign debt, accusing former officials and bankers of profiting irresponsibly from bond deals.

The country's foreign debt amounts to about a fifth of its Gross Domestic Product, or GDP.

In the past, Mr Correa has vowed to put money he has earmarked for spending on public programmes - ahead of paying foreign debt.

Correspondents say Ecuador's decision to effectively cut itself off from outside financing could lead to a budget shortfall, especially if the price of oil - the country's main revenue earner - continues to fall.

Oil is Ecuador's main source of income and accounts for 40% of the national budget.

Oil rises to USD 47 as OPEC prepares production cut

Oil prices rose to above USD 47 a barrel on Monday in Asia as investors anticipated OPEC will announce a large production cut at its meeting this week.

Light, sweet crude for January delivery was up 92 cents to USD 47.20 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.



The contract on Friday fell USD 1.70 to settle at USD 46.28.



The Organization of Petroleum Exporting Countries, which accounts for 40 per cent of global supply, has signaled it plans to announce a substantial reduction of output quotas

at its meeting Wednesday in Algeria.



Oil Minister Gholam Hossein Nozari was quoted on his ministry's web site saying that Iran would push for a production cut of 1.5 to 2 million barrels per day.



Analysts have questioned whether OPEC members will follow through with any announced cut.



"They're talking about a severe cut, but the question is their discipline," said Christoffer Moltke-Leth, head of

sales trading at investment firm Saxo Capital Markets in Singapore.



"Unless they really surprise the market, this cut may not support the price much."



Oil has jumped from a four-year low earlier this month of USD 40.50 a barrel on expectations an OPEC output reduction could be the catalyst to stabilise the oil price, which has fallen 65 per cent since July.



Investors largely ignored OPEC's 1.5 million barrels a day output cut in October, focusing instead on a slowing

global economy that's hurt crude demand.



More bad macro-economic and company news from the U.S. and Europe over the coming weeks will likely push oil prices lower, Moltke-Leth said.

Irish banks to be recapitalised

The Irish government is to provide a fund of £9bn (10bn euros) to recapitalise all its listed banks.

The money will be available to AIB, Anglo-Irish, Irish Nationwide, Irish Life & Permanent and Bank of Ireland, which owns the Bristol & West bank.

However before any money is paid out, the banks must await the outcome of the most recent rights issue.

If private investors choose not to step in, then the state will have to provide the money instead using the fund.

Finance Minister Brian Lenihan told RTE News: "Some financial institutions are so embedded in our economy, in terms of their borrowing and in terms of their deposits, that they are of systemic importance to our economy.

"It's very important that our banking system is seen to sustain our economy and support our economy."

Bank of Ireland and AIB shares have fallen 92% and 88% respectively this year.

Banking fears

The Irish government said the objective of making the fund available was to ensure the long-term sustainability of the banking sector.

It pledged to secure the interests of the taxpayer through appropriate terms and return on the investment.

The Department of Finance said the state may use money from the National Pension Reserve Fund.

The move would help boost the flow of funds to the country's struggling economy, it added.

BBC business correspondent Joe Lynam said that, as a proportion of its economy and banking sector compared to the UK, the Irish bailout represents an even bigger capital injection than Britain's.

ICICI Prudential ties up with American Express

ICICI Prudential Life said that it has entered into a strategic partnership with American Express Banking Corp to offer its products to the bank's customers.

The partnership would enable ICICI Prudential Life offer its insurance products to customers of American Express Banking Corp, ICICI said in a statement in Bangalore on Monday.



The partnership has been established under the referral agency model for three years

Dollar falls on hopes of rate cut

Sterling has stayed near record lows against the euro, while the dollar fell on talks about possible US rate cuts and car industry bail-out scepticism.

Analysts predict the Federal Reserve will announce interest rate cuts on Tuesday after a two-day meeting.

Meanwhile, the pound was put under new pressure as a survey showed another sharp drop in UK house prices.

The dollar fell to $1.3465 against the euro and $1.4983 against the pound, Sterling was at 1.1128 euros.

Bail-out factor

The dollar declined on Monday as the US government said it might use money intended for banks to help carmakers.

Some analysts think that if the plan is implemented, the financial sector will have less funds to spend if needed.

"An interim bail-out plan for US automakers by the Bush administration is certainly weighing on the dollar, with many being sceptical as to how the industry can cope in the longer term and instead thinking that letting the market take its course would be a preferred route," said currency analyst James Hughes at CMC Markets.

The euro was supported by suggestions from European Central Bank officials that interest rates in the eurozone might not fall too much further.

Interest rates are at 2.5% in the eurozone, compared with 2% in the UK and 1% in the US.

PSU banks cut rates on home loans up to Rs 20 lakh

Public sector banks announced on Monday that home loans up to Rs five lakh would be given at a maximum interest rate of 8.5 per cent, while those between Rs 5-20 lakh would be offered at 9.25 per cent.

Besides, the banks would not charge any processing fees and pre-payment charges for loans up to Rs 20 lakh, and would also provide free insurance cover, the Indian Banks Association (IBA) said on Monday.



Outlining the new housing loan package in accordance with the stimulus package announced by the government on 7th December, SBI chairman O P Bhatt said the interest rate under the two schemes could come down, but would not go up beyond the threshold limit of 8.5 and 9.25 per cent for a five year period.



The offering under the packages would be made till 30th June, next year, Bhatt said, adding that after the lock-in period of five years the borrowers could look in for free or floating rates that could change in accordance with market conditions.



To make the package attractive, the public sector banks would give the loans at a margin of 10 per cent up to Rs 5 lakhs and 15 per cent for loans between Rs 5 lakh and Rs 20 lakhs, and in either case, banks would offer free insurance cover, Bhatt said.



Leading private lenders, including ICICI Bank and HDFC, appeared favourably inclined to cut their rates, with sources saying the two lenders would study the PSU banks' package before taking a call.



The sources said any decision would be taken after ascertaining whether PSU banks are getting any government subsidy for implementing the package.



The banks have also decided to cut the lending rates for the micro and medium enterprises by 100 basis points.

Watchdogs criticised over 'fraud'

One of the City's best-known fund managers has criticised US financial regulators for failing to detect early an alleged $50bn (£33bn) fraud.

Nicola Horlick, boss of Bramdean investments, said US regulators had "fallen down on the job".

Bernard Madoff has been charged with fraud in what is being described as one of the biggest-ever such cases.

Among the banks which have been affected are Britain's RBS, Spain's Santander and France's BNP Paribas.

'Financial scandal'

Mrs Horlick told the BBC: "I think now it is very difficult for people to invest in things that are meant to be regulated in America, because they haven fallen down in the job."

"This is the biggest financial scandal, probably in the history of the markets - $50bn is a huge amount of money," she said.

Among those financial institutions which have so far announced investments with Bernard Madoff:

* The Royal Bank of Scotland said on Monday it could potentially lose about £400m from the alleged fraud, if all its investments had to be written off
* Spain's largest bank, Santander, which also owns the UK High Street banks Abbey, Alliance & Leicester and Bradford & Bingley, said one of its funds had $3.1bn invested in the firm run by Bernard Madoff
* France's BNP Paribas estimated its exposure to be more than $460m
* The French bank, Natixis, a subsidiary of Caisse d'Epargne and Banque Populaire, said it could potentially lose up to 450m euros (£402m; $605m)
* One of the world's biggest investment groups, Man, said it had invested about $360m through its RMF institutional fund of funds business, representing 0.5% of its total funds
* Japanese bank Nomura said its exposure was relatively small, at about 27.5bn yen (£201m), and added: "We regard this as non-material, considering our capital base."

'Systemic failures'

Mrs Horlick said 9% of Bramdean's funds were invested with Mr Madoff, but she said even if the money was written off, the fund involved would be down just 4%. I just want to make it clear to investors that even after this, they they would have done extremely well, relative to anything else they could have invested in," she said.

In a statement, Bramdean said: "It is astonishing that this apparent fraud seems to have been continuing for so long, possibly for decades, while investors have continued to invest more money into the Madoff funds in good faith.

"The allegations made appear to point to a systemic failure of the regulatory and securities markets regime in the US."

Correspondents say the case is likely to fuel uncertainty about the entire hedge fund industry.

US prosecutors say Mr Madoff, a former head of the Nasdaq stock market, masterminded a fraud of massive proportions through his hedge fund and investment advisory business.

Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund.

A federal judge has appointed a receiver to oversee Mr Madoff firm's assets and customer accounts, while the 70-year-old banker has been released on $10m bail.

High returns promised

Mr Madoff founded Bernard L Madoff Investment Securities in 1960, but also ran a separate hedge fund business. According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn under management - was a fraud and had been insolvent for years.

He said he was "finished", that he had "absolutely nothing" and "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said.

Under a Ponzi scheme, which is similar to pyramid schemes, investors are promised very high returns on their investment, while in reality, early investors are paid with money collected from later investors.

If found guilty, US prosecutors say he could face up to 20 years in prison and a fine of up to $5m.

Japan doubles size of rescue plan

The Japanese government has increased by 23 trillion yen ($255bn; £171bn) its stimulus plan aimed at re-launching the country's economy.

More than half the amount will be used to bring stability to the financial markets, said prime minister Taro Aso.

The new economic plan comes after a 27 trillion yen package in October.

On Friday, the Japanese yen surged to its highest level against the US dollar in 13 years, sending stocks plunging and hitting the country's exporters.

"The economic situation is worse than expected, so we are going to offer some measures," said prime minister Taro Aso.

"We will try to be the first to get out of the recession, at least among industrialised nations," he added.

Fighting the recession

The new stimulus package also includes tax breaks and public financing projects worth 10 trillion yen.

In October, in a 27 trillion yen plan, Japan expanded credit for small businesses and offered cash payouts to families to encourage spending.

"Since then the economy has worsened beyond our expectations," Prime Minister Taro Aso said.

He said urgent measures were needed to fight unemployment.

Japan's economy, the world's second largest after the US, shrank by an annualised rate of 1.8% in the third quarter.

Japanese firms are closing factories and laying off staff in the face of declining global demand and a rising yen.

AI, Jet, IndiGo win Galileo Express Travel World Awards 2008

Indian aviation majors- Jet airways, Air India, IndiGo airlines have won the country's most respected and premium travel and tourism industry awards, the Galileo Express Travel World Awards 2008.

Jet Airways, India's premier international airline, was honoured with the 'Best Domestic Full Service Airline' award at a glittering function at the Grand Hotel in New Delhi recently.

This was the airline's sixth consecutive victory in this category, in as many years.

Air India won the award of 'Best International Airlines (Short Haul)' category while IndiGo was adjudged the Best Low-cost carriers.

The Britain's national carrier, British Airways won the 'Best International Airlines (long haul) award.

The awards were given away by Civil Aviation Minister Praful Patel at a function in which senior hoteliers, airline officials and other distinguished members of the travel trade community were present.

The Galileo Express TravelWorld Awards were incorporated in 2003 by Galileo India Pvt Ltd and Express TravelWorld, a travel business magazine from The Express Group with an objective to promote professionalism and encourage the industry to attain higher levels of performance.

In the sixth edition, ITC Hotels bagged the Best Premium Hotel Brand award, Trident Hotels won the Best First Class Hotel award while The Royal Orchid got the award in the Best Regional Hotel Brand category.

The event was dedicated to the hotel employees of Taj Mahal Palace and Tower and the Oberoi-Trident, Mumbai who risked their lives while on duty thereby displaying the true ethos of hospitality.

Alitalia taken over by consortium

Alitalia, Italy's troubled national flag-carrier, has been taken over by the Italian Air Company (CAI), a consortium of investors.

The long-running deal had been delayed by opposition from employees, but the two major unions representing flight attendants backed the deal on Friday.

The consortium also bought Alitalia's smaller rival Air One on Thursday and will now merge the two carriers.

The new owners may now link up with with Lufthansa or Air France-KLM.

Chairman of CAI Roberto Colaninno said a new partner would be proposed to the board by the end of the year.

Alitalia filed for bankruptcy in August, weighed down by high labour costs, strikes, surging oil prices and political interference.

It was unable to repay a 300m euro loan to the Italian government, which the European Commission said amounted to illegal state aid.