Rupee fell to 47.30 against US dollar in early trade

The Indian rupee on Monday plunged by 21 paise to 47.30 against the US dollar in early trade on Monday on fears of capital outflow by foreign funds due to melting stock markets.


At the Interbank Foreign Exchange market (Forex), the domestic currency, which ended 47 paise lower to five-year low of 47.09/10 a dollar on Friday, depreciated by another 21 paise despite selling of dollars by state-run banks to curb fall in rupee value.


The Bombay Stock Exchange benchmark Sensex was down by 340.40 points to 12,185.92 in opening trade.
Similarly, Nifty fell by 119.95 points to 3,698.35.

Bush to sign nuke deal legislation on Wednesday

Asserting that that there are "no open issues" on the nuclear deal, the US President George W Bush will sign the legislation on the Indo-US nuclear deal, approved by the Congress, into a law on Wednesday.


Bush will sign the Bill H R 7081, named after Howard Berman, a Democrat who was strongly opposed to the deal on non-proliferation grounds but was brought around to accept it recently, on 8th October at the White House.

"The President will sign the legislation (passed by the US Congress) very soon. He wants to do it very soon. There are administrative reasons," US Secretary of State Condoleezza Rice told a press conference after talks with External Affairs Minister Pranab Mukherjee.

The bill once passed has to be transmitted to the White House.

It has been a busy time for last several weeks, she said explaining the reasons for the delay in signing the legislation by Bush.

Rice's visit coming shortly after the Congress approval of the legislation sparked speculation that the 123 would come up for signing with Mukherjee today.

In fact, she had rescheduled the visit by a couple of days.

"The President is looking forward to signing it very soon. The Hyde Act is completely consistent with 123 agreement....123 agreement is consistent with the Hyde Act. The US will keep its commitments to both," she said in reply to a question why there has been a delay and whether there were concerns on the Indian side.

"We don't have open issues," Rice said adding it was a matter of administrative and procedural details which would be worked out.

In his reply Mukherjee said once the President signs it into law and the process is complete "we will be in a position to sign the agreement on a mutually convenient date.
"I hope it will be signed shortly."

In their opening remarks at the joint press conference, both the leaders expressed satisfaction over their talks and the state of bilateral relations between the two countries.

"India-US relations are today better than ever before and have transformed into a truly strategic partnership," Mukherjee said.

Reciprocating his feelings, Rice said the two countries were executing the vision of Prime Minister Manmohan Singh and President Bush for closer and deeper relations between the two countries.

"The civil nuclear initiative is a historic agreement and historic achievement. The US will stand by its commitments," she said adding the US cooperated with India in the IAEA in view of its track record in non-proliferation.

"It gives us a new platform for cooperation in energy matters to develop civil nuclear power. We have opened new channels with India in areas of technology, agriculture, education and defence cooperation."

She said it was now now one of the broadest relations US enjoyed with India.

She also hoped that whoever succeeds Bush as President (after the November elections) would continue to build on the "strongest relationship" that the two leaders initiated in 2005.

Mukherjee said India-US relationship today had more than bilateral significance and the two countries were working together on a wide range issues including climate change and on UN Security Council.

He said the vision of this relationship chalked out by Singh and Bush would serve the interest of not not only India but the people of the region and the world.

Brussels moves to salvage Fortis

Belgium and Luxembourg have said they will take steps to protect the remaining assets of Fortis after its Netherlands business was nationalised.

Belgian Prime Minister Yves Leterme said he aimed to have a solution in place before the European stock markets opened on Monday.

He said the government was in talks with potential suitors, but would not rule out further state intervention.

The news comes after a cross-border rescue plan failed.

Last week, the governments of Belgium, the Netherlands and Luxembourg agreed to to put 11.2bn euros ($15.5bn; £8.7bn) into Fortis to reassure savers and clients about the financial health of the cross-border bank.

Under that deal, each government would have taken a 49% stake in the bank in their respective countries.

But unable to restore confidence in its balance sheet, the Dutch government took full control of its operations in the Netherlands on Friday.

Crisis of confidence

Governments across Europe are scrambling to restore trust in the region's financial system as the crisis that broke Wall Street financial giant Lehman Brothers sweeps across the Atlantic.

German property lender Hypo Real Estate, Franco-Belgian bank Dexia and UK bank Bradford & Bingley have all had to be propped up in one way or another by their respective governments.

Analysts say Fortis' funding problems began after it joined forces with Britain's Royal Bank of Scotland and Spain's Santander to buy Dutch bank ABN Amro for 70bn euros last year.

The purchase was agreed just before the US sub-prime mortgage market collapsed, wiping billions of dollars off banks' investments and paralysing the credit markets.

In interviews with Belgian television and radio stations, Belgian Prime Minister Yves Leterme said takeover talks were being discussed, but that he would not sell the bank in a rushed, cheap deal.

"Fortis is an important and healthy company that has good future prospects," he said.

"There are other possibilities than just leaving it to a private partner."

Tata scouts sites in Karna, AP for Nano; Modi presses hard

The Tata Nano car project has been vigorously wooed by Karnataka, Andhra Pradesh and Gujarat as its top officials carried out site inspections after the group exited West Bengal following political opposition.


The Tata Motors team led by its Managing Director G Ravikant and accompanied by Karnataka Industry Minister Murugesh Nirani visited three places in and around the twin cities of Hubli-Dharwad in Karnataka.



The Belur Industrial area, Mummiatti and another area around the airport near Hubli were the three sites which were offered by the government.


The team met Chief Minister B S Yeddyurappa and discussed with him the offer made by the state to the company to shift the Nano project to Karnataka.


The Nano officials, who attended the meeting besides Ravikant were Girish Wagh, who is heading the small car project, Tapan Mukhopadhya, GM (Finance) A S Puri, Legal Adviser.


Speaking to reporters after the meeting, Yeddyurappa said "I have made an offer and assured them of all facilities, including land, water and power".


"Now it is for them (the Tatas) to communicate", he said adding "I will also hold talks with Tata Chairma Ratan Tata."


It is the fourth round of discussions that Karnataka is having with the Tatas after it pulled out of Singur.


The team later flew to Hyderabad and held talks with Chief Minister Y S Rajashekara Reddy.


After the talks, Ravikant said "We want to know what they have to offer(for the Nano project)."


Chief Minister Narendra Modi pressed hard for the small car project to be shited to Gujarat saying there is "no place for red tapism in his state and it is only red carpet" for anyone wanting to set up shop.

Germany clinches bank rescue deal

Germany's finance ministry has agreed a 50bn euro ($70bn; £40bn) plan to save one of the country's biggest banks.

The deal, reached with private banks, to save Hypo Real Estate is worth 15m euros more than the first rescue attempt, which fell apart on Saturday.

Germany earlier announced an unlimited guarantee for all private savings, and Denmark later followed suit.

The steps brought little comfort to Asian markets, where Tokyo's Nikkei index tumbled 3.6% to a four-year low.

The South Korean currency also fell nearly 5%, hit by foreign currency shortages.

Monday saw the first session of the Asian markets since the US agreed a $700bn (£394bn) rescue plan for its beleaguered financial sector on Friday.

The problems of Hypo Real Estate have put further strain on other financial institutions struggling against a crisis of confidence in the global financial system.

French giant BNP Paribas confirmed on Sunday night it had agreed to buy 75% of Belgium and Luxembourg holdings of the giant Fortis financial group.

The governments of Belgium and Luxembourg will in return take a minority stake in BNP Paribas. The Dutch arm of Fortis has been nationalised by the Netherlands government.

And the Icelandic government agreed measures for the country's banks to sell off some foreign assets in a bid to shore up its entire financial system.

Iceland's currency last week plummeted by a fifth against the dollar and the government was forced to bail out the country's third largest bank, Glitnir.

'Irresponsible behaviour'

Berlin's finance ministry said it had acted to stop Hypo Real Estate's collapse in order to avoid "incalculably large" damage to Germany and financial services providers in Europe.

German Chancellor Angela Merkel said managers at financial institutions should be held accountable for "irresponsible behaviour".

Earlier, she moved to reassure German savers all their deposits would be safe.

Similar unilateral guarantees issued by the Irish and Greek governments last week were criticised in Berlin and other European capitals.

But after an emergency meeting with the central bank, Ms Merkel said: "We tell all savings account holders that your deposits are safe. The federal government assures it."

US job cuts at a five-year high

US employers cut 159,000 jobs in September, the most in more than five years, Labor Department figures show.

The data also showed the nation's unemployment rate was steady at 6.1% as more workers were added to the ranks of the unemployed than analysts predicted.

The figures mark the ninth month in a row that the economy has lost jobs.

Meanwhile, revised figures show that employers cut 73,000 jobs in August, slightly less than the 84,000 originally estimated.

But the job losses in July turned out to be a bit deeper - 67,000 versus the 60,000 previously reported.

The number of jobs axed in September was the largest amount since March 2003, when the labour market was still reeling from the 2001 recession.

"The employment figures were weak in every important dimension," said Pierre Ellis, senior economist at Decision Economics in New York.

"We've seen weaker data in history, but these look pretty decisively to be the beginning of something worse. Employment declines were widespread and large."

Manufacturers shed 51,000 jobs, construction companies cut 35,000 jobs, retailers lost 40,000 posts, business services axed 27,000 positions and financial services slashed 17,000 jobs.

There were also 17,000 posts cut in the leisure and hospitality sector.

The number of jobs being shed outstripped hiring gains by the government in education, health and other sectors.

No banks bail-out fund for Europe

Europe's biggest economies have agreed to work together to support financial institutions - but without forming a joint bail-out fund.

French President Nicolas Sarkozy hosted the meeting of the leaders of Britain, Germany and Italy in Paris.

They agreed to seek a relaxation of the EU rules governing the amount of money individual states could borrow.

Mr Sarkozy announced a series of other measures - including unspecified action against the executives of failed banks.

Speaking after the meeting at a joint news conference, he said the four had agreed that the leaders of a financial institution that had to be rescued should be "sanctioned".

Mr Sarkozy added: "Each government will operate with its own methods and means, but in a co-ordinated manner."

Leaders were reminded of just how serious the crisis is as talks to rescue Germany's second largest mortgage lender collapsed.

Hypo Real Estate said the 35bn euro (£27.8bn, $51.21bn) deal had fallen apart after the banking consortium involved pulled out. The lender said it would seek to stay in business through "alternative measures".

Meanwhile, Mr Sarkozy suggested EU budget rules - requiring eurozone states to keep their budget deficits below 3% and overall public debt below 60% of gross domestic product - would be adapted to deal with the current "exceptional circumstances".

European Commission President Jose Manuel Barroso agreed that the budget rules would be applied with "flexibility".

European Central Bank chief Jean-Claude Trichet and the chairman of the eurozone group of finance ministers, Jean-Claude Juncker also attended the summit.

The leaders issued a joint call for a G8 summit "as soon as possible" to review the rules governing financial markets.

Ireland reproach

UK Prime Minister Gordon Brown said governments would continue to take measures to ease the credit shortage.

"The message to families and to businesses is that, as our central banks are already doing, liquidity will be assured in order to preserve confidence and stability," he told reporters after the mini-summit.

He said European leaders should send the message that "no sound, solvent bank should be allowed to fail through lack of liquidity".

Mr Brown also won approval at the summit for his proposal for a £12bn EU fund to help keep small businesses afloat during the economic crisis.

German Chancellor Angela Merkel - who said she was not happy with Ireland's action in guaranteeing bank deposits - said each country must act in "a balanced way" that did not cause harm to other EU member states.

"Each country must take its responsibilities at a national level," she said.

'Trial by fire'

The head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, had earlier urged the EU to take co-ordinated action, saying the financial crisis was presenting Europe with a "trial by fire".

He held talks with Mr Sarkozy before the EU leaders' meeting and said that although the EU was a more complex organisation than the US, Europe needed to take "concerted collective action".

He said: "It has to be indicated to the markets... that European countries will not react as every man for himself."

He also said he would be scaling back his world economic growth forecasts.

Ahead of the meeting, Germany had made clear its opposition to any co-ordinated European bail-out plan. Mr Brown was also sceptical of the need for any Europe-wide plan.

The president of the European Parliament has criticised the summit, warning that the leaders of Europe's four largest economies have no power to decide for the entire European Union.

Calls for European action follow the bail-out of both Bradford and Bingley in the UK and Fortis Bank by the governments of Belgium, Luxembourg and the Netherlands.