Eurozone inflation falls to 3.2%

Inflation across the 15 nations that share the euro fell to an annual rate of 3.2% in October, raising the chances of a cut in interest rates next week.

Eurozone inflation has steadily fallen back from an all-time high of 4.1% in July, as crude oil prices have declined sharply from their record peaks.

With inflation continuing to fall, analysts say the European Central Bank (ECB) has scope for more rate cuts.

Many now predict a further half-point cut next week to 3.25%.

The ECB last cut rates to 3.75% from 4.25% at the start of this month, in a co-ordinated move with the Bank of England and Federal Reserve.

Euro and pound down on the dollar

The euro and the pound both fell against the dollar on Friday following the news that the US economy is shrinking less quickly than expected.

The euro fell to $1.272 and the pound to $1.621.

The US Commerce Department announced on Thursday that the US economy shrank by 0.3% from July to September, less than the markets had forecast.

The US interest rate cut on Wednesday had sent both currencies higher against the dollar.

The euro had traded as high as $1.315 on Thursday morning on news that the US was cutting interest rates to 1%. The pound had climbed to $1.661.

The better-than-expected US economic figures have now reversed sentiment in the dollar's favour.

And with both the European Central Bank and the Bank of England expected to cut interest rates next week, the euro and the pound could fall further.

Interest rate cuts make currencies less attractive, as they reduce the rate of return for investors.

Nissan profits slump on high yen

Nissan has reported a 41% fall in half-year profits after it was hit by the high value of the yen and the "severe decline" in the US car market.

Japan's third-largest carmaker made a net profit of 126bn yen ($1.3bn; £803m) between April and September, down from 212bn yen a year earlier.

Despite seeing overall sales rise 4.7%, Nissan said those in the US fell 3.4%.

Its results came as fellow Japanese car firm Suzuki said it expects profits to fall 25% in the year to 30 March.

Blaming weaker sales in India and Europe, Suzuki said its annual net profits would probably fall to 60bn yen from its previous estimate of 80bn yen.

'Profound effect'

Looking ahead, Nissan warned that its profits for the financial year to the end of March may fall by more than two thirds.

It expects a net annual profit of 160bn yen, down from 484bn yen a year earlier, and well short of its previous 340bn yen forecast.

"The global financial and economic crisis has had a profound effect on every area of our industry, with the grip on credit and declining consumer confidence being the most damaging factors," said Nissan chief executive Carlos Ghosn.

He added that the firm was now taking "all necessary and responsible measures to protect the company and preserve our ability to rebound when conditions improve".

At the start of this week, Nissan said it would halt production of two models at its Sunderland plant in the North-East of England due to falling demand caused by the economic downturn.

It said no jobs were affected.

Govt approves capital restructuring of UCO Bank

The government announced capital restructuring of Kolkata-based UCO Bank by converting Rs 250 crore equity into preference shares that will enable the PSU lender to raise funds from the market.

"The reduction in the pure equity capital will improve the EPS and other financial so that the bank will have more attractive capital structure," Finance Minister P Chidambaram told reporters while briefing on Cabinet decisions taken on Thursday night.



If and when it approaches capital market it will have attractive capital structure and it can raise Tier I capital, he said.



This conversion of equity into perpetual non-cumulative preference shares is in accordance with RBI circular of 29th October, 2007, he said.



UCO Bank has equity capital of Rs 799.36 crore, the highest among all the listed public sector banks.



Chidambaram said, this high equity base suppresses Earning Per Share (EPS). Besides, it is difficult to service high portion of equity.



The bank, he said, had submitted a proposal for structuring government equity by converting a portion of the equity capital held by the government into perpetual non-cumulative preference shares. Perpetual non-cumulative preference shares are also part of Tier I capital, he said.



Asked about interest that would be paid on the preference shares, Chidambaram said, coupon rate would be benchmarked to the repo rate plus 100 basis points.



This would be re-adjusted annually based on prevailing repo rate on the relevant date.

Bank of Japan makes rare rate cut

The Bank of Japan has cut its main interest rate from 0.5% to 0.3% - its first reduction for seven years.

The move followed a global wave of rate cuts to contain the financial crisis. Japan has the lowest interest rates in the developed world.

Tokyo's benchmark Nikkei index briefly inched up following the news, but it ended the day down 5%.

On Thursday, Japan announced a five trillion yen ($51bn; £31bn) economic package to boost its flagging economy.

A soaring currency and the slowdown in Europe and the US have put Japanese exporters under severe strain in recent weeks.

In a vote on whether to lower interest rates, the Japanese central bank's monetary policy board was evenly split, so the final decision was taken by governor Masaaki Shirakawa.

Analysts said some investors were unhappy that the bank had not cut rates further. There had been hopes that the bank would reduce rates to 0.25%.

The Nikkei ended down 453 points at 8,577.

Tax cuts and benefits

Explaining its decision to cut rates, the Bank of Japan said the impact of the global financial crisis had "further increased in severity".

"Increased sluggishness in Japan's economic activity will likely remain over the next several quarters with exports levelling off and the effects of earlier increases in energy and materials prices persisting," it added.

Thursday's economic stimulus package, which was unveiled by Prime Minister Taro Aso, was the country's second in as many months.

It came after an 11.7 trillion yen package unveiled in August by Mr Aso's predecessor, Yasuo Fukuda.

As well as cutting highway tolls and increasing loan guarantees that have been offered to small companies, there will be tax cuts and other benefits for Japan's struggling households.

The new package includes an expansion of tax-exempt housing loans to boost the struggling property market, funding for care of children and the elderly, and support for unemployed young people.

Motorola cuts 3,000 jobs, delays spinoff of cell phone unit

Motorola Inc announced that it was cutting its global workforce by 4.5 per cent, or some 3,000 employees, and delaying the spinoff of its troubled cell phone unit.

Motorola, the largest US mobile phone manufacturer, announced on Thursday the job cuts just hours after reporting a quarterly net loss of nearly USD 400 million

and said more than two-thirds of the layoffs would be in the handset division.



The Schaumburg, Illinois-based company said it suffered a net loss of USD 397 million in the third quarter of the year after reporting a net profit of USD 60 million for the same period last year.



Motorola lowered its forecast for the remainder of the year but said its cost-cutting moves would result in annual savings of some USD 800 million next year.



The ailing company had 66,000 employees worldwide at the end of 2007 and the latest job cuts bring the total number of layoffs since January 2007 to 13,000.



It said separation of the struggling mobile phone unit from the rest of the company was now "targeted beyond 2009."



"While our strategic intent to separate the company remains intact, we are no longer targeting the third quarter of 2009," Sanjay Jha, Motorola co-chief executive and head of its mobile devices division, said in a statement.



Jha, who took over the mobile devices unit in August, attributed the delay to "the macroeconomic environment, stresses in the financial markets and the changes underway in Mobile Devices.



"As part of our plan to rebuild Mobile Devices, we have announced significant actions to accelerate the consolidation of our product platforms and refocus our investment and market priorities," he said.

IMF offers USD 100 bn loan to countries facing financial crisis

The International Monetary Fund will offer as much as USD 100 billion in a new kind of loan to countries that are battered by the financial crisis, making available new cash to help ease the world credit crisis.

The new three-month loans, aimed at economies the IMF judges to be troubled but basically sound, wouldn't require countries to make the often severe changes in their policies that the IMF has demanded for decades, a media report said on Thursday.



That makes it potentially easier for crisis-hammered countries such as Mexico, Brazil and South Korea -- which the IMF judges to have basically sound economic policies – to shore up cash reserves, their currency, and their ability to help ailing companies as shaken foreign investors withdraw, a US Journal said.



Those countries, it noted, have shunned the IMF because of the strings attached to the loans, which often force sharp budget cuts or interest-rate increases.



The conditions are designed to help governments save money and pay for necessary

imports, but they also often deepen an economic downturn, making the IMF deeply unpopular around the world.



Now it essentially is dividing developing countries into an A-list of nations that qualify for loans without strings, and a B-list of everyone else, the Journal said.



The new programme, which will use up to about half the IMF's resources, represents a big break from such requirements. "Exceptional times call for an exceptional response," it quoted IMF managing director Dominique Strauss-Kahn as saying.

India can buy uranium anytime and stockpile: Canada

Canada, one of the key members of the Nuclear Suppliers Group (NSG), on Thursday said that India can order for uranium anytime and can even stockpile.

"India can place order for uranium anytime and they can also stockpile it," Gerald W Grandey, President and chief Executive Officer of Cameco Corporation of Canada (largest suppliers of uranium) told reporters on the sidelines of Homi Bhabha's Centenary celebrations' inauguration.

"We have been waiting for a long time for the Indo-US deal to come through and since IAEA India specific agreement and NSG's waiver are in place, we are keen that India buys uranium from Canada anytime," Grandey, a key person who helped in the Indo-US deal process, said.

"Now it is up to India how soon they want and how much and under what conditions," he said adding "we are ready, the decision lies with New Delhi as the customer is always right."

Grandey said, the contractual agreements are not done overnight, it takes its own time and since they had been waiting for long, they wanted India to do it fast.

Replying a query on stockpiling, Grandey said, "stockpiling is a normal thing and under the general policy, one can stockpile for one or two years. Since in Asian countries due to scarcity of supply of uranium, they can stockpile even up to three years of inventories just as Japan has done."

When asked about the price of uranium, he said if it is bought in the spot market, it would cost USD 45 per pound while when bought on a long-term contract it would be USD 70 per pound.

"However, there are varieties of contracts and depending on the relationship between the suppliers and utility (in this case NPCIL) one can fix the price favourably for future delivery," he added.

Grandey said Canada is also interested in cooperation in other parallel fuel cycle process as both India and Canada are having Pressurised Heavy Water Reactor programme.

"We are going to have great opportunity of cooperation in the coming years," he added.

Meanwhile, chief of Canadian Atomic Energy commission is expected to visit India on November six to discuss civil nuclear cooperation, said Chairman and Managing director of Nuclear Power Corporation of India, S K Jain.

Jain said, "although NPCIL can go ahead to buy uranium for the first two units of Tarapur Atomic plants and Rajasthan atomic plants, which are under separate safeguards agreement with IAEA, we will wait till the Indo-US deal is ratified by India and US."

Since NSG waiver is there, some steps can be taken immediately," he added.

Inflation eases to 10.68 pc after over four months

Inflation eased below the 11 percent mark after four months to 10.68 per cent, thanks to lower prices of fuel and manufactured goods, which might goad the Reserve Bank to cut key rates further.

The wholesale prices-based inflation slipped 0.39 per cent in the week ended 18th October, while it stood at 3.11 per cent in the year-ago period.

Inflation, which was 8.75 per cent as of June first week, suddenly jumped to two-digits after the government hiked the administered prices of petrol, diesel and LPG.

The fall in the rate of rising prices might prompt RBI to further cut cash reserve ratio or repo rate, which might result in lower borrowing costs in the economy and spur spending.

During the week, prices of food articles like pulses fruits and wheat declined.

However, prices of vegetables rose by 2.3 per cent and spices by half per cent.

Declining prices of crude oil in the international markets led to fall in prices of furnace oil, which was cheaper by six per cent while prices of light diesel oil declined by three per cent.

Besides, in the manufactured product category, prices of iron and steel declined by half per cent and zinc prices slipped by 11 per cent.

Dreamworks posts fall in profits

Dreamworks Animation has seen third quarter profit fall 21% as revenue fell despite the strong performance of film Kung Fu Panda.

In the quarter to October earnings fell to $37.4m(£23.4m) from $47m in 2007.

However the results were ahead of analyst predictions and shares were up in after-hours trading.

The firm also said David Geffen, who co-founded DreamWorks with Steven Spielberg and Jeffrey Katzenberg, is stepping down from the board.

In after the bell trading, shares were up $1.69, or 6.6%, to $27.30, after gaining $1.88 to $27.49 during the regular session.

Kung Fu Panda contributed $63.3m to quarterly revenue, mostly from international box office receipts.

Another record profit for Exxon

Exxon Mobil made a profit of $14.83bn (£8.97bn) between July and September, smashing its own record for the highest quarterly profit by a US company.

In the second quarter this year, when oil prices were still rising, the oil giant made a profit of $11.68bn.

The new record represents a 58% rise on profits compared with the same period last year.

Profit for the first nine months of this year was $37.4bn, up 29% on the same period last year.

The $1.6bn sale of a natural gas transportation business in Germany helped boost profits.

Rex W Tillerson, chief executive of the company, said: "Exxon Mobil's strong results demonstrate the continued success of our disciplined business approach."

Stormy conditions

The profits could have been even higher, had it not been for falling oil prices and extreme weather.

Hurricanes Gustav and Ike affected the company's Gulf Coast operations and resulted in an increase of $50m in pre-tax costs. Exxon estimates that the impact of both hurricanes will reduce fourth-quarter earnings by about $500m.

Massive profits have allowed Exxon to invest heavily in exploration. In the third quarter, capital and exploration project spending increased to $6.9bn, up 26% on the same period last year.

They have also allowed Exxon to distribute significant cash to shareholders - it paid out $2.1bn in dividends over the quarter.

Japan unveils new stimulus plan

Japanese Prime Minister Taro Aso has unveiled Japan's second economic stimulus package in as many months.

The 5 trillion yen ($51bn; £31bn) package includes cutting highway tolls and increasing loan guarantees that have been offered to small companies.

There will also be a package of tax cuts and other benefits for Japan's struggling households.

It comes on top of the 11.7 trillion yen package unveiled in August by Mr Aso's predecessor, Yasuo Fukuda.

The new package also includes an expansion of tax-exempt housing loans to boost the struggling property market, funding for care of children and the elderly, and support for unemployed young people.

"In this kind of situation, we need to relieve people's insecurities," Mr Aso said.

"We should not be fearful of the violent storm, nor should we just stand and let the typhoon blow us away."

Election delay

But the prime minister also said that if economic conditions allowed, he would like to be able to raise consumption taxes in three years.

Mr Aso said he would wait to call elections until his economic measures had taken effect.

"I would like to ask for people's approval after seeing the achievements of my policies," he said.

The election must take place before September 2009. Before the financial crisis worsened, there had been speculation about a possible snap election in November.

Euro and pound move up on dollar

The euro and the pound both rose strongly on Thursday against the dollar after the Federal Reserve's decision to cut US rates to 1% on Wednesday.

The euro rose to $1.315 against the dollar in morning trading, compared with $1.285 on Wednesday night.

The pound rose to $1.661, up from $1.631 on Wednesday night and almost 14 cents higher than last Friday's six-year low of $1.526.

Despite the rate cut, the dollar edged higher against the yen, to 98.52 yen.

The rate cut ensures that "the dollar remains under pressure, at least in the short term", said Gary Thompson, head of sales trading at CMC Markets.

The rally may be short-lived, however, as both the European Central Bank and the Bank of England are expected to cut interest rates next week.

Interest rate cuts make currencies less attractive, as they reduce the rate of return for investors.

US economy officially shrinking

The US economy shrank at an annualised rate of 0.3% between July and September, according to figures from the Commerce Department.

The gross domestic product (GDP) figures were better than expected, although they show the sharpest contraction of the economy since 2001.

Consumer spending, which makes up two-thirds of the US economy, shrank by 3.1%, the first contraction since 1991.

The 0.3% fall followed 2.8% growth in the previous three-month period.

Recession judgement

Spending on non-durable goods, which are smaller purchases such as food and paper, dropped at its sharpest rate since 1950.

The economic shrinkage means that the US economy is halfway to the standard definition of a recession, which is two consecutive quarters of negative growth.

But the official definition in the US is different, meaning that the US economy is never officially in recession until the National Bureau of Economic Research decides it is.

Nonetheless, the Federal Reserve is clearly concerned about the prospect of a recession and cut its key interest rate from 1.5% to 1% on Wednesday.

"Consumer spending is about 70% of GDP and this looks like the lowest it has been in two decades, which goes to show that in the fourth quarter, we are going into recession," said Bill Walsh, president of Hennion and Walsh in New Jersey.

The GDP figures were accompanied by Labor Department figures showing the number of new claims for jobless benefits last week.

There were 479,000 new claims in the week ending 25 October, which was the same number as the previous week, but still a high number, suggesting that the problems in the economy are feeding through to the job market.

Sharp fall in profits for Honda

Honda Motor has reported a 41% drop in three-month profits, hit by falling sales and the strengthening yen.

Net profit came in at 123bn yen ($1.3bn; £829m) for the three months from July to September.

Japan's second-biggest carmaker has cut its profit forecast for the full year to 485bn yen, down 19% on last year.

Honda is considered one of the better-placed carmakers to deal with the global downturn, thanks to its line-up of smaller, more fuel-efficient models.

But it is vulnerable to the strong yen, estimating that a fall of one yen in the dollar exchange rate cuts about 20bn yen from its operating profit.

The desire to consume is being hurt by the credit crisis

Koichi Kondo, Honda executive vice president

The dollar has fallen by about 16% against the yen since the start of the year.

The strong yen makes Honda's vehicles more expensive in the US, where its customers are already struggling with the economic downturn.

Honda has predicted that its US sales in October will be more than 20% below the level for the same month last year.

Its executive vice president Koichi Kondo said the fall in sales was not just across its light trucks and SUVs, which have been struggling as a result of higher petrol prices.

"Now passenger cars have started to fall too, and that seems to suggest that the desire to consume is being hurt by the credit crisis," he told a news conference.

BG Group to buy Australian firm

British energy firm BG Group has agreed a takeover bid for Australian gas producer Queensland Gas Co worth 5.6bn Australian dollars ($3.4bn; £2.2bn).

The move is BG Group's most recent attempt to expand in the Asia-Pacific region after it abandoned an attempt to take over Origin Energy in September.

Under the terms of the offer, BG Group will pay A$5.75 in cash for every QGC share it does not already own.

The British company already owns some 10% of the Australian firm.

The deal was unanimously recommended to shareholders by QGC's directors and its largest shareholder - AGL Energy, which holds a 25% stake - has already announced it has accepted the offer.

The offer has a 15 December deadline.

Last month, BG Group dropped its plans to take over Australia's second-largest power retailer, Origin Energy.

Origin instead announced it would embark on a natural gas joint venture with US energy company ConocoPhillips worth A$9.6bn.

Airlines to lose over US$ 5.2 bn: IATA

Global airline industry is expected to lose more than an estimated USD 5.2 billion this year as international passenger traffic has substantially declined despite a fall in oil prices by half.


Airlines in the Asia-Pacific region, including India and China, experienced a sharp fall of 6.8 percent in September compared with the same month last year.

The latest figures were released by the International Air Transport Association (IATA) at the Freedom Summit in Istanbul, which concluded on Sunday, with the global airline body asking governments to take urgent steps to help the industry and do away with archaic rules.

"The deterioration in traffic is alarmingly fast-paced and widespread. We have not seen such a decline in passenger traffic since SARS in 2003," said IATA chief Giovanni Bisignani at the Summit.

"Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand. At this rate, losses may be even deeper than our than our forecast of USD 5.2 billion," he said, adding that airlines in all major regions reported shrinking of passenger traffic.

On the cargo front, the Asia-Pacific region's carriers reported a 10.6 percent decline, the "most alarming drop" experienced by the largest players in the market, the IATA said in its latest report.

Up to August, the drop in international passenger traffic was isolated to Asia-Pacific carriers.



"The economies of the region's two major growth markets-- China and India-- slowed and Japan saw industrial production drop five per cent, the IATA figures showed. The cargo market saw the "worst decline since the technology bubble burst in 2001", the report said.



Pointing out that the crisis facing the industry was deepening, the IATA Director General and CEO said "but unlike other companies, they are denied some basic commercial freedom-- access to markets and to global capital-- that could help them manage their business in this difficult time."



He said a "web of 3,500 bilateral air service agreements" governing the international air transport "denies market access until specifically agreed. And the ownership clauses that are contained in these agreements preclude merger across borders."



In this context, Bisignani pointed towards the banking industry and said it was accessing global capital and carrying out mergers.



On the other hand, "airlines are not asking for handouts (bailout packages). But today's crisis highlights the need for airlines to be able to run their businesses like normal global businesses," he argued at the Freedom Summit which is being attended by government representatives of 15 countries including India.



At the Summit, IATA circulated a paper for these governments to examine solutions within the bilateral system that could be quickly implemented to expand opportunities for airlines to access markets and global capital.

IMF aid for Ukraine and Hungary

The International Monetary Fund (IMF) is to offer a $16.5bn (£10.4bn) loan to Ukraine and has agreed an as yet undisclosed package with Hungary.

Ukraine is to receive the loan to help it "maintain confidence and economic and financial stability", the IMF said.

The country has seen its stocks, banks and currency badly shaken by the global credit crunch.

The "substantial financing package" for Hungary is due to be finalised in the next few days, the IMF said.

It is conditional upon Hungary adopting "strong policies" and will be drawn from the IMF, the EU, and some individual European governments "together with regional and other multilateral institutions", IMF Managing Director Dominique Strauss-Kahn said in a statement.

"The policies Hungary envisages justify an exceptional level of access to fund resources," he added.

Hungary's currency, the forint, has seen a sharp fall, stocks have tumbled and the country has cut its growth forecast for 2009.

Currency plunge

Internal political turmoil has delayed economic development in Ukraine and the IMF loan depends on the ex-Soviet state being able to balance its budget and make reforms to its banking sector.

Last week, the IMF said it was to give Iceland a £2.1bn loan as its banking system came close to collapse.

Pakistan and Belarus are also in talks about accessing IMF funding.

"The authorities' programme is intended to support Ukraine's return to economic and financial stability, by addressing financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation," said Mr Strauss-Kahn.

"At the same time, it will guard against a deep output decline by insulating household and corporations to the extent possible."

Easy credit and a property boom have seen Ukraine's capital Kiev expand rapidly but the global downturn has seen investors and those willing to offer loans withdraw.

Ukraine also relies heavily on steel, but prices have collapsed and its currency, the hryvnia, has fallen sharply in the past two weeks.

Global shares recover lost ground

European shares opened higher on Tuesday after Asian stock markets staged late rallies, clawing back some of their recent losses.

In early trading, the FTSE 100 was up 2.2%, the Dax in Frankfurt rose 8.0% and the Cac 40 in Paris was unchanged.

Trading is expected to remain volatile as concerns remain about the depth of the global downturn.

The Nikkei 225 in Tokyo fell below 7,000 for the first time in 26 years before recovering to close up 6.4%.

Authorities said that to stabilise markets, they would bring forward a ban on traders selling shares that they did not already own and had not borrowed.

The Nikkei closed up 459.02 points at 7,621.92.

Exporters were helped by a sharp fall in the value of the Japanese yen against the US dollar.

The yen has been appreciating against the dollar recently, but on Tuesday, its value fell to 95.51 yen to the dollar from 93.01.

Asian gains

Share prices across Asia had initially lost ground again on opening, following volatile trading throughout the world.

Hong Kong's Hang Seng closed up 14.4%, which was its biggest daily percentage gain for 11 years.

It followed a 12.7% decline on Monday.

Even after Tuesday's gains, the Nikkei and Hang Seng had fallen more than 30% since the beginning of the month.

South Korea's Kospi index initially dropped 2.6%, but later rose to finish 5% up on the day.

Early ban

Japan's Finance Minister Shoichi Nakagawa told reporters that the ban on naked short-selling, which had been due to come into force on 4 November, would be brought forward.

Naked short-selling involves making a deal to sell shares that you do not own and relying on being able to buy the shares before the deal has to be settled.

It is done by traders who hope that the price of the shares will fall between the sale and the purchase of the shares, allowing them to pocket the difference.

The announcement follows similar moves by governments in the US, Australia and Europe.

"I decided on the measure because these few days will be critical and stock exchanges are facing risks unless we take quick action," said Mr Nakagawa.

"Japan was easily under pressure from other sources and that is why it was important to change the rules to US and European standards."

Japan's Prime Minister Taro Aso has said he will delay calling a general election in order to handle the economic crisis, according to the Kyodo news agency.

Mr Aso, who took office a month ago, had been widely expected to call an early election to address the deep divisions in the Japanese parliament.

Iceland ups interest rate to 18%

Iceland's central bank has raised its key interest rate to 18% from 12% as the country battles against financial collapse

The move came as Iceland's prime minister said the country needed another $4bn (£2.6bn) in loans.

"It's not a precise number, it's not a scientific number but we are looking in that neighborhood," Geir Haarde said.

The country has already agreed a $2bn loan from the International Monetary Fund (IMF).

Oil falls to USD 63 as investors eye falling demand

Oil prices fell to 17-month lows at USD 63 a barrel on Monday in Asia as investors weighed Friday's OPEC output cut against growing evidence of a severe global economic slowdown that would undermine crude demand.


Light, sweet crude for December delivery fell 32 cents to USD 63.83 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.



Investors brushed off a 1.5 million barrel-a-day cut announced by the Organisation of Petroleum Exporting Countries on Friday, focusing instead on falling crude demand as economies across the globe reel from the impact of a credit crisis.



On Friday, oil fell USD 3.69 to settle at USD 64.15. Prices have plunged 57 per cent from a record USD 147.27 on 11th July.



"The mood is fairly negative reflecting worry about the international economic outlook," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.



"If there is further weak economic data in the US or Europe, prices could come under more downward pressure."



Iran's OPEC governor Mohammad Ali Khatibi said on Sunday a reduction in production "will be considered" at the group's next meeting in Algiers in December - a meeting that might even be held early if necessary.



"I thought the OPEC cut was a fairly decisive act, but concerns of recession in the major economies remain dominant," Moore said. "OPEC's cut does take a step toward tightening the market."



Investors have been paying close attention to signs that a slowing economy and higher gasoline prices earlier this year have hurt crude demand in the US, the world's largest oil consumer.



The US Department of Transportation said Friday that Americans drove 5.6 per cent less, or 15 billion fewer miles (24 billion fewer kilometers), in August compared with same month a year ago - the biggest single monthly decline since the data was first collected regularly in 1942.



Oil investors have also been eyeing stock markets to gauge sentiment on global economic health.



Most Asian stock indexes fell on Monday, led by Hong Kong, South Korea and Australia. Japanese shares rebounded slightly after plummeting last week.



The Dow Jones industrial average fell 3.6 per cent Friday.



"If we're looking a severe economic downturn, it's hard to say what the bottom of any commodity price will be," Moore said.



In other Nymex trading, heating oil futures rose 0.13 cent to USD 1.95 a gallon, while natural gas for November delivery fell 19.8 cents to USD 6.04 per 1,000 cubic feet.



In London, November Brent crude was down 60 cents to USD 61.45 a barrel on the ICE Futures exchange.

Asia stocks crash, Nikkei hits 26 yr low

Japan's Nikkei slumped nearly 500 points on Monday to its lowest close in 26 years as the yen advanced on the dollar, battering exporters such as Toyota amid a slide in Asian shares.


The benchmark Nikkei 6.4per cent to 7,163, its lowest close since October 1982.



The yen rose against the dollar and was approaching a 13-year high as the risk of a global recession and an extended slump in the world's stock markets prompted investors to slash carry trades.



The Bank of Korea slashed interest rates by the most ever in an attempt to restore confidence after stocks lost a fifth of their value and the won fell to a decade low last week.



Elsewhere in Asia, stocks continue to trade deep in red.



Meanwhile world oil prices weakened in Asian trade today with OPEC's decision to cut supply at a time of global financial turmoil seen as hurting already weak energy demand further, dealers said.

Sensex down 191 points in pre-close trade

After dipping below 8,000-points level, the benchmark Sensex recovered most of its early losses, to quote 191 points down in pre-close trading on the back of buying by domestic financial institutions and short-covering by speculators.


The 30-share index, which had lost over 1,000 points at midsession on major sell-off by jittery funds, recovered partially to trade 191.89 points down at 8,509.18 points after touching the day's low of 7,697.39, a level last seen on October 2005.

The wide-based National Stock Exchange index Nifty was down by 79.80 points at 2,504.20 points after dropping to 2,252.75 points at one stage.

Marketmen said emergence of buying by domestic financial institutions and covering-up of short positions by speculators at prevailing lower levels helped Sensex to recover part of lost ground.

Porsche raises Volkswagen stake

Porsche has increased its stake in Volkswagen, saying it hopes to have a majority holding in Europe's biggest carmaker by the end of the year.

Porsche revealed its stake had risen to 42.6% - saying it had chosen to make the announcement because of uncertainty in the car market.

It had previously already been been the largest shareholder, holding about 35%.

Porsche has said it did not want to merge with VW - but create an alliance that could take on competition.

It has also argued that it needs a strong influence at VW, which makes components for a third of Porsche cars.

The car industry, which is often seen as a barometer of the world economy, is entering a deep recession, with sales and profits tumbling.

Manufacturing plants are closing, production is being cut back, jobs are being axed and car company share prices are tumbling as a consequence.

United plans

Last week Porsche said disagreements between family members in the company had been resolved.

Two cousins, Wolfgang Porsche and Ferdinand Piech, have held conflicting opinions on how to take over VW.

Mr Piech - who is both the Porsche boss and head of the VW supervisory board - has backed unions who object to the takeover of their company.

But Mr Porsche said that the families were "united" on plans including the idea of co-management of both companies.

The so-called "VW Law" - which essentially gives German authorities the right to veto strategic decisions Volkswagen - will also be scrapped.

Global shares continue to slide

European markets have fallen sharply in morning trade, touching five-year lows, as investors continue to fret about the depth of the global economic slowdown.

The UK's FTSE 100 fell 5.6% to 3,665 at one point, its lowest level since April 2003, before recovering slightly to 3,693, down 4.9% from Friday's close.

Its decline came after Japan's Nikkei index earlier ended at a 26-year low.

The pound also continued its recent falls, dropping against the dollar to $1.5341 in early trading.

The euro was also lower, sliding to $1.2377, around levels last seen in April 2006.

Earlier on Monday the Group of Seven (G7) industrialised nations issued a statement warning that the strength of the yen was a threat to economic stability, which was taken as a threat of co-ordinated action to reduce the value of the currency.

While the yen briefly weakened, it soon climbed back towards Friday's 13-year high against the dollar.

The yen has been strengthening as a result of the end of the carry trade, in which traders borrowed the Japanese currency and used it to buy currencies with higher interest rates.

As the difference between Japanese rates and those elsewhere in the world has fallen, traders have been unwinding the carry trade, which means they have been using other currencies to buy yen, which has boosted the Japanese currency.

In other currency news, the Australian government intervened for a second time to support its currency, which was trading at a 5-year low against the US dollar. One US dollar was worth 0.6122 Australian dollars.

The Australian central bank last intervened more than a year ago and before that had not done so since 2001

Sensex opens lower; Suzlon, Unitech surge

MUMBAI: Equities extended overnight losses to open with a gap down Friday. Bombay Stock Exchange’s Sensex was at 8588.86, down 112.21 points and National Stock Exchange’s Nifty was down 34.25 points at 2549.75.

Banking major State Bank of India, on standalone basis, has posted a net profit of Rs 2259.72 crore for the quarter ended Sep 30, 2008 against Rs 1611.42 crore in the same quarter of 2007. Interest earned stood at Rs 15566.50 crore against Rs 11616.28 crore previous year. Interest expended was Rs 10111.15 crore against Rs 7853.36 crore same quarter last year. The scrip was down 2.73 per cent at Rs 1133.

Beaten down scrips Suzlon and Unitech were up over 12.53 per cent 28.39 per cent respectively.

Asian markets continued to remain under pressure. Hang Seng fell 4.53 per cent, Shanghai Composite was down 2.73 per cent, Taiwan Weighted plunged 5.52 per cent and Nikkei average was 0.40 per cent higher.
US markets ended with heavy losses Friday. Dow Jones ended 3.59 per cent lower, Nasdaq closed 3.23 per cent down and S&P 500 closed 3.45 per cent down.

Mutual funds may see some redemptions pressure and jittery traders are expected to off-load their positions to minimise losses after the carnage in Indian bourses Friday.

Equities all over the world including India witnessed one of the worst trading session as cash-strapped foreign investors hammered the market.

Russia in steps to boost rouble

Russia has spent more of its reserves in the past week to boost its currency, recent central bank figures show.

Gold and foreign exchange reserves have fallen by $15bn (£9.3bn) to $515.7bn in seven days.

Separately, the country's State Duma has amended its budget to boost funds for the financial sector.

And foreign investors have been withdrawing money from Russia following its intervention in Georgia, adding to fears over the economy's stability.

As the price of oil has weakened, the value of Russia's reserves have fallen recently.

"A sliding oil price will uncertainly test the government's resolve and willingness to use ever large amounts of the country's monetary reserves to defend the rouble," said Chris Weafer, an analyst with Uralsib.

The amount of Russia's reserves is viewed as key for rating agencies to assess the quality of Russia's debt rating. Lower reserve levels make the cost of insuring sovereign Russian debt against default more expensive.

'World practices'

Meanwhile, the government has been taking steps to calm recent market jitters.

The lower house of parliament has passed changes to the budget allocating 175bn roubles (£4bn) to help financial firms, Itar-Tass news agency reported.

The Deposits Insurance Agency will get a further 200bn roubles, while depositors will gain more protection.

Global shares have fluctuated sharply in recent days amid continued uncertainty over the state of the world economy and fears of a widespread recession.

Russia has closed its main stock market on a number of occasions in response to high volatility.

Vladislav Reznik, the chairman of the State Duma's financial market committee, said the current financial turmoil justified special interference by the state.

"Such an approach matches world practices. It was tested in Russia after the financial crisis of 1998," he said.

Bush to host world finance summit

President George W Bush will host the world's first global financial summit in the US on 15 November, a White House official has said.

The meeting - the first in a series - will discuss the financial crisis and ways to prevent it recurring.

Leaders from the G20 group of nations - the world's leading industrialised countries and major developing nations - will attend.

The winner of the US presidential election will also attend the summit.

The meeting, to be held in the Washington DC area, will consider the reforms needed to avoid another financial crisis and look at the progress being made so far.

"The leaders will review progress being made to address the current financial crisis," said White House spokeswoman Dana Perino.

In order to avoid a repetition of the crisis, she said they would "agree on a common set of principles for reform of the regulatory and institutional regimes for the world's financial sectors".

Worldwide crisis

Later summits will focus on working out the details of the reforms needed.

Some European leaders had pushed for a summit before the end of the year, and French President Nicolas Sarkozy had said it should take place in New York.

Among those expected to attend the summit will be leaders from the G20 group of nations, which includes the G7 group of major industrial economies, as well as key emerging-market countries such as China, India and Brazil.

The head of the International Monetary Fund, the president of the World Bank, the United Nations secretary general and the chairman of the Financial Stability Forum have also been invited to participate

Pound tumbles to a five-year low

The pound has tumbled almost 3% against the US dollar - falling to its lowest level in five years on recession fears.

Sterling's fall came after the Bank of England governor, Mervyn King, warned that Britain was probably entering its first recession in 16 years.

The pound dropped as low as $1.620 overnight, its lowest since September 2003. It later recovered to $1.6398.

The euro fell as low as $1.2736 against the dollar before rising to $1.2895 later in the day.

The dollar has also been rising against other currencies. It has jumped to a two-year high against a basket of currencies as investors have bet that interest rates outside the US will be cut sharply to try to bolster global growth.

In the UK both Prime Minister Gordon Brown and Bank of England governor, Mervyn King, have warned of the danger of recession, boosting expectations of lower interest rates.

Referring to the pound and the dollar, Simon Derrick, head of currency research at the Bank of New York Mellon, said: "I think it is a combination of both strength in the dollar and weakness in sterling.

"I certainly believe this was a very direct reaction to Mr King's comments overnight.

"The recession talk is clearly undermining investors in the equity markets and therefore people are bringing their money home."

Meanwhile, concerns there may be a deep slowdown in the world economy have prompted investors to cash in more of their bets against the US dollar which had built up in recent years.

"Investors continue to flock to the dollar as speculation mounts that central banks elsewhere will continue with aggressive rate cuts in an attempt to stimulate growth in the near term," said James Hughes, an analyst at CMC Markets in London.

"The pound has to be the stand-out, with losses here being compounded by unprecedented comments from Mervyn King last night, essentially confirming the fact that the British economy is now in a recession and any recovery will be far from swift," he added

UK borrowing hits a 60-year high

The UK government borrowed a record amount last month, Office for National Statistics (ONS) data shows.

Public sector net borrowing hit £8.092bn in September, up from £4.775bn in the same period a year earlier, marking a record for the month.

The amount borrowed so far this financial year stands at £37.6bn - the highest since records began in 1946.

The government has said it will keep investing money into public works to prevent a recession

Record borrowing

Prime Minister Gordon Brown insisted Britain's economy remained in a strong position to weather the downturn.

The United Kingdom cannot insulate itself from this global downturn," he said.

"But with interest rates low and falling, inflation expected to come down over the next year, these underlying economic indicators - particularly interest rates - make us stronger than at any other previous downturn, " he added.

Conservative leader David Cameron said the government had to take responsibility for the country's economic woes.

"The government keeps saying - and the Prime Minister I think said it at least three times in his statement - this is a crisis from America, as if no-one in Britain has any responsibility for anything that went wrong," said Mr Cameron.

Liberal Democrat leader Nick Clegg said the government should over tax cuts for people on low and middle incomes.

Slowdown

On a net cash requirement basis the government borrowed £12.65bn last month, compared with a deficit of £8.72bn in the same period a year ago.

This was also more than expected; analysts had forecast that public borrowing would reach around £10.1bn in September.

The cumulative borrowing for the period from April to September of £37.59bn is up from the £21.46bn borrowed in the same period a year earlier, and represents the largest total for a six month period since records began in 1946.

The figures come a day after Ernst & Young Item's Club said the UK economy was already in a recession and would see the economy shrink by 1% next year, before growing by 1% in 2010.

In response to the latest figures the Item Club said: "The UK's public finances are in a complete state and in much worse shape than a year ago".

Figures later this week are expected to show that the UK economy shrank in the third quarter - the first contraction since 1992.


Chancellor Alistair Darling had forecast in his Budget statement in March that public sector public borrowing for the full financial year - up to April 2009 - would reach £43bn.

But the Item Club believes borrowing will reach £60bn in the financial year 2008-09, with a current budget deficit of £27 billion, "much higher than the government's own projection".

In light of this, the club said it was clear "substantial revisions will be necessary in the Pre-Budget Report".

Unemployment is already rising and forecast to continue doing so, which will will add further pressure on the government's finances.

And recent data has underlined the weakness in the housing sector; mortgage lending fell to its lowest level for more than three and a half years in September, according to the Council of Mortgage Lenders.

The UK and other governments recently took emergency steps to shore up the banking system in a bid to increase liquidity and stabilise the markets.

Oil prices fall to 16-month lows

Oil prices have fallen to 16-month lows on growing signs that a global economic slowdown is reducing demand.

The declines came as official US data showed that US crude stocks rose by 3.2 million barrels in the week to 17 October, higher than expectations.

Highlighting a fall in sales of petrol and other refined fuels, US light crude fell as low as $66.73 a barrel, its lowest point since June 2007.

Oil producers group Opec is due to cut output on Friday to help lift prices.

US light crude finished the day's trading down $5.43 to $66.75.

Brent crude fell $5.20 to $64.52 a barrel, after earlier touching $64.59, also a 16-month low.

Steadily fallen

Despite Opec's expected reduction in production, oil analysts said crude prices could fall as low at $60 as signs that the world is heading for recession continue to grow.

Opec's meeting as been brought forward by three weeks, reflecting the 12-nation group's concern at falling prices.

Oil hit an all-time high of $147 a barrel back in July, but has since fallen back steadily.

Opec members include Saudi Arabia, Iran, Iraq and Venezuela.

Recession fears drag shares lower

US stocks fell in morning trading in New York, echoing declines in Europe and Asia as fears of a global recession continued to hit investor confidence.

Wall Street's main Dow Jones index was down 2.9%, while in Europe, the UK's FTSE 100 lost 4.5%, Germany's Dax fell 5%, and France's Cac gave up 5.1%.

had lost 4.5% in late trading, and Germany's Dax ended down 5%.

Job cuts at Yahoo and drugs firm Merck have increased economic concerns.

The falls came as the White House said a global summit to tackle the financial crisis will be held next month.

The meeting will debate the reforms needed to avoid another financial crisis and look at the progress currently being made.

Leaders from the G20 group of nations - the world's leading industrialised countries and major developing nations - will attend

'Rapid deterioration'

Investor sentiment was also hit on Wednesday by warnings from both UK Prime Minister Gordon Brown and Bank of England Governor Mervyn King that Britain was most likely now entering its first recession in 16 years.

In the short term, the comments made by Mervyn King highlighting the fact that the economic environment has deteriorated quite rapidly over the past year have sent a shudder through the foreign exchange and equity markets," said Henk Potts, an equity strategist at Barclays Wealth.

"There's been a housing slump, the labour market has been suffering and business confidence has been hammered - it's no surprise that investors are spooked," he added.

Stocks were also dragged down by commodity stocks tracking weaker oil and copper prices.

Parmalat shares hit by US ruling

Shares in Italian dairy group Parmalat have dived after the firm was ordered to pay Citigroup $364m in damages.

Parmalat had accused Citigroup of actions that contributed to its collapse in 2003, but a New Jersey court found in favour of Citigroup.

Parmalat had been seeking about $2bn in damages from Citigroup, but the US bank had countersued.

Parmalat's shares were suspended early on Tuesday morning, and when trading resumed they fell almost 19%.

Hiding losses

Parmalat collapsed in December 2003 after uncovering a 4bn-euro hole in its accounts. It sued Citigroup, accusing the bank of helping to cover up the corrupt activities of Parmalat officials.

Specifically, it accused the US bank of ignoring warning signs at the Italian company in order to secure high advisory fees and bonuses for its bankers, and of helping the company to hide its losses by providing loans that did not appear as debt on Parmalat's balance sheet.

Citigroup argued that it believed Parmalat was financially healthy and that it was deceived by the diary giant.

It claimed to have lost $699m at the time of Parmalat's bankruptcy filing.

Legal battle

Following the ruling by the New Jersey court, Parmalat said it planned to "continue to pursue all legal remedies at its disposal to hold Citigroup accountable for its role".

Parmalat also said the damages award was subject to review by a bankruptcy court in Parma, Italy.

Andrea Hurst, spokeswoman for Citigroup, said: "Citi is pleased with the verdict. We have said from the beginning that we have done nothing wrong."

Parmalat emerged from bankruptcy in 2005. Chief executive Enrico Bondi has filed many lawsuits against former Parmalat bankers and auditors, including Bank of America and auditor Grant Thornton International.

Growth worries force euro lower

The euro fell to a 19-month low against the dollar in early Tuesday trading on growing concerns among investors about faltering European economic growth.

The single European currency dropped to a low of 1.3237 dollars before rallying slightly to 1.3243 near mid-afternoon.

The US dollar gained strength after US Federal Reserve boss Ben Bernanke signalled on Monday there could be new plans to stimulate the US economy.

The news calmed investors, with the Dow Jones index closing up 4.7%.

There are growing fears that the world's largest economy is heading towards recession and although Mr Bernanke stopped short of saying the US was in recession, he said the American economy was now in a "very serious slowdown".

Speaking to the US House of Representatives' budget committee on Monday, he said consideration of a fiscal package by the Congress now seemed "appropriate".

On 15 July, the dollar hit $1.6038 to the euro - a record low in value for the greenback against the single European currency.

But since then, the dollar has gained 20%, fuelled by speculation it will take advantage of a slowing European economy.

'More inequality' in rich nations

The gap between rich and poor in most wealthy nations has widened, the Organisation for Economic Co-operation and Development (OECD) has said.

Across the 24 OECD countries where data was available, the cumulative rise in inequality was 7% over the past 20 years, the Paris-based group said.

But this was not as large a rise as had been expected, it said.

Since 2000, income inequality had risen sharply in the US and Germany and declined in the UK, Mexico and Greece.

But the OECD report, which covers a period of two decades between 1985 and 2005, said the UK still had one of the highest levels of income inequality in the developed world.

The 'Hello' effect

The report found that the income of the richest 10% of people was, on average, nearly nine times that of the poorest 10%.

But the size of the income differentials varies, with the greatest disparity in Mexico, which has a ratio of 25 to one, followed by Turkey and the US.

The most equal distribution of wealth is in the Nordic countries, including Denmark, Sweden and Finland.

"The increase in inequality, though widespread and significant, has not been as spectacular as most people probably think it has been," the report said.

It added that the difference between what the data indicated and what people thought was likely to reflect the "Hello magazine effect", meaning that people read widely about the super-rich and imagined many people lived the life of luxury.

Children and low-skilled workers were more likely to be poor than the population in general, said the OECD, which represents the world's richest countries.

Meanwhile, pensioner poverty has fallen in many countries, with those around retirement age seeing the biggest increases in incomes over the past 20 years.

Labour market changes

Launching the report in Paris, OECD Secretary-General Angel Gurría warned of the dangers posed by inequality and the need for governments to tackle it.

"Growing inequality is divisive. It polarises societies, it divides regions within countries, and it carves up the world between rich and poor," he added.

In developed countries, governments had been taxing more and spending more on social benefits to offset the trend towards more inequality, but the effectiveness of these policies had declined, the OECD said.

As an example, OECD countries spend three times more on family policies than they did 20 years ago and yet single-parent households are three times as likely to be poor.

Poverty is defined as applying to households with less than half the median income.

"Trying to patch the gaps in income distribution solely through more social spending is like treating the symptoms instead of the disease," said Mr Gurría.

He urged governments to act to increase education opportunities and job prospects for blue collar workers and to offer welfare-in-work to working-class families to boost income.

Bernanke supports higher spending

US Federal Reserve chief Ben Bernanke has said more government spending may be needed to combat economic weakness.

A fresh round of stimulus would be a good idea, he told the US House of Representatives budget committee.

Although Mr Bernanke stopped short of saying the US was in recession, he said the American economy was now in a "very serious slowdown".

Hopes of a fresh economic stimulus package pleased investors, with the main Dow Jones index ending up 4.7%.

"Consideration of a fiscal package by the Congress at this juncture seems appropriate," said Mr Bernanke.

His comments were welcomed by Democratic leaders in Congress, who called on Republicans and the White House to work together to formulate a plan.

A White House spokesman said it would have to wait and see what Democrats, who control both halves of Congress, put forward.

'Serious consequences'

A series of crises in the housing, credit and financial sectors have badly hit the US economy.

Many analysts are forecasting the US economy will shrink later this year and early next year. This would meet the classic definition of a recession - which is two quarters of negative growth.

However, some economists believe the economy is already in a recession, something that Mr Bernanke more than hinted at.

"We are in a very serious slowdown in the economy which has very serious consequences for the public," he said.

"Whether it's called a recession or not is of no consequence."

'Promoting growth'

In his speech before the committee, Mr Bernanke suggested that Congress should design a stimulus package so that it would be "timely and well-targeted".

He said it should limit the longer-term impact on the government's budget deficit, which hit a record high in the last financial year.

Any government spending would need to kick in quickly to encourage people and businesses to boost spending and help the economy during the period in which economic activity would be otherwise weak, he said.

The Federal Reserve chairman also said the package should include provisions that would aid the jammed credit markets, which has been a major factor in the economy's slowdown.

"If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, home buyers, businesses and other borrowers," he said.

"Such actions might be particularly effective at promoting economic growth and job creation," he added.

Tech firms warn of lower profits

Texas Instruments (TI) and computer hardware maker Sun Microsystems have both warned of lower future profits.

Based on recent weak order trends, TI said it now expected earnings per share of 30-36 cents in the last three months of 2008, below forecasts.

The warning came as the chip firm reported quarterly net income of $563m, down from $776m last year.

Sun Microsystems warned it would report a wider-than-expected loss in the final quarter of the year.

As most industries suffer from the global squeeze on credit and a consumer slowdown, so many technology firms are feeling the effects from a drop in demand.

Streamlining

"Our outlook for the fourth quarter is for revenue to decline substantially based on weak order trends over the past few months," said Rich Templeton, TI chairman, president and chief executive.

As a result, the Dallas-based firm said it had aggressively reduced inventory and would continue to do so until the end of the year.

TI also said it was in talks to sell part of its business of making wireless chips - the division that makes off-the-shelf chips for mobile phone handsets.

It said the move would help it cut costs by more than $200m a year.

The Dallas-based firm said it would focus on investing in custom-design chips, which are used in many smartphones.

Separately, Sun said it expected to report a net loss for the final three months of 2008 of 25-35 cents a share, surprising analysts who had expected the firm to post a net loss of 16 cents a share.

"Sun and its customers are seeing the impact of a slowing economy," said chief executive Jonathan Schwartz in a prepared statement.

Chinese economy growth rate slows

China's economic growth rate has fallen for the third quarter in succession, amid fears that the economy could be heading for a severe downturn.

The National Bureau of Statistics said the economy had grown at a rate of 9% in the three months to September - down from 10.1% over the previous quarter.

Spokesman Li Xiaochao said the impact of the global financial crisis had far exceeded the government's expectations.

Meanwhile shares rose in Asia. Japan's Nikkei index ended the day up 3.59%.

Share values also rose in Hong Kong, Australia, and South Korea.

No signs of recovery'

The third quarter growth rate announced on Monday marked a significant fall from the 10.4% growth of the first half of 2008, and the 12.2% growth seen in the first three quarters of 2007.

"There are no signs of a definite recovery from the financial crisis," statistics bureau spokesman Li Xiaochao told a news conference.

"The growth rate of the world economy has slowed down noticeably. There are more uncertain and volatile factors in the international economic climate," he said. "All these factors have started to release their negative impact on China's economy."

Correspondents say indicators from steel prices to housing sales suggest a severe economic slowdown could be in prospect.

Chinese factories are reporting that export orders are down sharply. Last week, the government said that half the country's toymakers had gone out of business.

Mr Li said the government had initiated timely measures to deal with the economic slowdown and cushion the impact from the global credit crisis, including falling exports and a restricted credit supply.

These included changing its focus from preventing the overheating of the economy and preventing structural inflation to the "preserving growth" and "controlling" inflation, he added.

Officials said over the weekend that the government was preparing to announce tax cuts and increased infrastructure investment. Curbs on the housing market in certain areas may also be relaxed.

The People's Bank of China has cut interest rates twice and reduced banks' required reserves since mid-September. A third interest rate cut is expected later this year.

The BBC's Quentin Sommerville in Shanghai says that although the government it is doing what it can to boost demand at home, China's new middle class is already feeling the pinch.

The stock market is sharply down, so too are house prices, while car sales have slowed dramatically. Consumers are cutting down on spending as they believe there are tougher times ahead, he says.

The National Bureau of Statistics also announced on Monday that consumer price inflation had cooled to a 15-month low of 4.6% in September. In February, inflation had hit a 12-year-peak of 8.7%.

Mr Li said the slowdown in inflation showed that the policies initiated by regulators to control it had been effective.

Indian shares on US bourses defy global gloom, gain USD 7 bn

Even as the Indian markets took a beating this week, their counterparts listed on American bourses gained nearly seven billion dollars, defying the worldwide market gloom.


Led by IT major Wipro and private sector lender ICICI Bank, the 16 Indian companies trading as American Depository Receipts coughed up about 6.86 billion dollars for the week ending 17th October.



Wipro witnessed a gain of 2.44 billion dollars while ICICI Bank scrip, which had taken a severe beating in recent times in the domestic market, rose as much as 1.25 billion dollars.



Another leading private sector lender HDFC Bank's market capitalisation rose 494 million dollars.



Swinging between the extremes, global markets including the American bourses had seen high volatility, with Japan's Nikkei touching a 20-year low.



Further, the US benchmark Dow Jones Industrial Average witnessed one of the worst trading sessions in decades, before the closing the week in the green.



However, Indian benchmark index, Sensex plunged below the psychological 10,000 level on Friday last week, its lowest level in over two-years, with major bluechips taking a heavy beating.



In contrast, the 16 Indian shares listed on Nasdaq and the New York Stock Exchange collectively saw a value increase of over 11.54 billion dollars on 13th October (Monday) against the cumulative loss of 19.45 billion dollars they suffered during the week ending 10th October.



Other major gainers are IT bellwether Infosys which posted a jump of 1.17 billion dollars in market capitalisation and software exporter Satyam Computer Services gained 664 million dollars.



ICICI had recently announced mark-to-market losses to the tune of 93 million dollars, owing to its exposure in instruments of troubled financial institutions including the bankrupt Lehman Brothers.



Interestingly, in the domestic bourse, the scrip had touched an all-time high of Rs 1,465 in January this year before tumbling to a two-year low of Rs 364.



BPO firms - ExlService Holdings and Genpact; internet companies - Sify Technologies and Rediff; telecom entity Tata Communication, pharma major Dr Reddy's and copper producer Sterlite Industries, also gained during the week.



However, outsourcing firm WNS, IT company Patni Computer Systems, telecom entity Mahanagar Telephone Nigam Ltd and auto maker Tata Motors saw marginal declines in their market capitalisation.

S Korea guarantees foreign loans

South Korea's government has agreed to guarantee foreign-currency borrowing by the country's banks to help stabilise financial markets.

The finance ministry, the central bank and the financial services commission said about $100bn of borrowing would be covered by the package.

The government will also provide $30bn of liquidity to banks, and there will be more aid to small businesses.

South Korea's economy is the third largest in Asia and 13th in the world.

It enjoys major export success in a number of manufacturing industries, but especially shipbuilding, car-making, and electronics.

However, the country has appeared particularly vulnerable to the global credit crisis because its banks lacked sufficient dollars to service maturing foreign debt.

Falling currency

In a statement, the government said it would guarantee for three years all external debt taken on by South Korean banks before 30 June 2009 in order "to avoid placing domestic banks at a comparative disadvantage in terms of overseas funding and to allay fears in the financial market".

A further $750m will be injected into the Industrial Bank of Korea, so it can expand lending to small businesses.

The shortage of dollars is having a dramatic effect on the country's exchange rate, making it more difficult for businesses and individuals to get access to credit, says the BBC's John Sudworth in Seoul.

The South Korean won has fallen by almost 30% against the dollar this year making it Asia's worst performing major currency.

The government said that despite the crisis, the economy and the financial sector were "sound", and that its foreign exchange reserves were "sufficient".

The US, the EU and other governments have also announced multi-billion dollar packages aimed at stabilising markets.

French bank admits trading loss

French Finance Minister Christine Lagarde has called for a special audit of all French banks after Caisse d'Epargne admitted a big trading loss.

The mutual savings bank said it lost 600m euros ($807m; £466m) in a derivatives trading incident last week.

In a statement, the bank said that the losses would not threaten its financial viability or affect its customers.

It blamed the "extreme volatility" in the markets in the week of 6 October for the incident.

A Caisse d'Epargne spokesman said the loss was caused by a "small team", which had been sanctioned for exceeding its trading risk limit.

The bank said that it had sacked one of the assistants to finance director Julien Carmona.

Merger plans

Caisse d'Epargne said this latest incident would not affect its plans, announced on 8 October, to merge with another mutual bank, Banque Populaire.

The merger would create one of France's biggest banks with 480bn euros of deposits and more than six million customers.

The two banks together are the majority shareholders in the investment bank Natixis, which has been among the worst-hit in France by the US sub-prime mortgage crisis.

Seperately, rumours of a big derivatives loss forced Societe Generale and Dexia to issue denials earlier in the week.