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).