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.