Clash over $700bn bank bail-out

US Treasury Secretary Henry Paulson has clashed with members of Congress over the $700bn US financial bail-out plan.

Mr Paulson told a Congressional committee that injecting cash into banks was the most effective way to stabilise the financial system.

However critics on the committee said that more of the money should be used to help struggling homeowners avoid losing their homes.

Mr Paulson said the bail-out would not be "a panacea" to cure economic woes.

"It will take a while to get lending going and repair our financial system, which is essential to an economic recovery," Mr Paulson said.

Mr Paulson and Federal Reserve chairman Mr Bernanke were giving evidence to the House financial services committee about the Troubled Asset Relief Programme (TARP) scheme.

The scheme was approved by Congress last month to shore up the US banking system and prevent financial collapse.

Earlier this month, the White House abandoned the original strategy behind the rescue.

Instead of buying up the banks' toxic mortgage debts, as first proposed under the deal, the bail-out fund is being used to buy shares in banks to help boost their balance sheets.

'Financial stabilisation'

Mr Paulson told the committee it was vital the administration be nimble in assessing changing conditions and adapting the bail-out strategy accordingly.

"If we have learned anything throughout this year, we have learned that this financial crisis is unpredictable and difficult to counteract," Mr Paulson said.

About $290bn of the first $350bn authorised under the programme already has been used or committed for use, and Mr Paulson said he wanted to reserve the balance of it for the incoming administration of President-elect Barack Obama, who takes office on 20 January.

HP's profits exceed expectations

The world's biggest PC maker, Hewlett-Packard (HP), has beaten forecasts by posting a better-than-expected net profit in the fourth quarter.

HP said it made a $1.03 (£0.68) net profit per share excluding charges, 3% higher than the Wall Street analysts expected.

Hewlett-Packard shares rose 10% on the news.

HP chief executive Mark Hurd said the company was gaining market share despite "a challenging marketplace".

He added that HP was in a better position than its rivals thanks to its global reach, broad customer base and ongoing cost cuts.

Hewlett-Packard's sales rose 19%, to $33.6 billion, also exceeding expectations.

In September HP announced it would lay off over 24,000 employees following its acquisition of Electronic Data Systems.

"HP is gaining market share in an extremely strong competitive position. They've got share gains, combined with very aggressive cost reduction", said Shannon Cross, analyst at Cross Research.

Hewlett-Packard shares have lost a third of their value in the past two months on fears that the economic slowdown would hit the market for personal computers.

Last year, HP overtook Dell to become the biggest seller of PCs.

The company will reveal its full results on 24 November.

InBev completes Budweiser merger

Belgium-based brewer InBev has said it had closed its $52bn (£35bn) takeover of the US's Anheuser-Busch to create the world's largest brewer.

"Effective today, InBev has changed its name to Anheuser-Busch InBev," InBev said in a statement.

The new company will be one of the leading consumer products firms in the world.

Anheuser makes Budweiser - the most popular beer in the US - while InBev produces Stella Artois and Beck's.

InBev agreed to sell its Labatt USA business and associated licenses to get approval from the US Justice Department on anti-trust grounds.

46 billion litres of beer

Some US politicians had expressed anger at the prospect of Anheuser-Busch being taken over by a foreign company.

InBev, itself formed by a giant merger of Brazil's AmBev and Belgium's Interbrew several years ago, has promised that Budweiser's headquarters would remain in St Louis, Missouri while none of Anheuser-Busch's US breweries will be closed.

The combined business will have annual sales of $36.4bn, equivalent to 46 billion litres of beer a year.

The two firms have said the deal will generate annual savings of $1.5bn but have suggested that job losses will be kept to a minimum because there is little current overlap between the two businesses.

Anheuser-Busch controls nearly half of the US market, while InBev is strong in Western European and Latin American markets.

It also owns stakes in Mexican brewer Grupo Modelo and Chinese brewer Tsingtao.

The deal should give Budweiser a platform to boost its growth in Europe where, apart from a number of markets like the UK, it has been relatively weak.

Mazda buys own shares from Ford

Japanese carmaker Mazda Motor has spent 17.8bn yen ($184m; £123m) to buy back almost 7% of its shares from troubled US carmaker Ford Motor.

The Japanese company made the announcement the day after Ford decided to cut its stake in Mazda from 33.4% to just over 13%.

Ford has been hit by falling global sales and is seeking to raise cash along with its Detroit competitors.

Shares in Mazda fell 2.1% on Wednesday on the news.

According to media reports on Tuesday, the rest of Ford's stake in Mazda might be bought by trading houses Sumitomo and Itochu, Japanese insurance companies and car parts maker Denso.

Earlier this week General Motors sold its 3% stake in Japanese carmaker Suzuki for $230m (£156m).

Declining value

The possible sale of a 20% stake in Mazda was first reported more than a month ago.

At that moment, the stake was valued at $850m. However, based on Mazda's share price on Tuesday, the value of the holding has fallen to $543m, a quarter of what the stake was worth a year ago.

Ford first bought a stake in Mazda in 1979. It took control of the Japanese carmaker in 1996, saving it from potential bankruptcy.

The "Big Three" US car firms Chrysler, Ford and GM are seeking a total $25bn in emergency US government loans.

Global liquidity crisis 'is over'

The head of Japan's largest brokerage, Nomura Holdings, has suggested the global liquidity crisis is over.

Nomura chief executive Kenichi Watanabe said the main problem now was how to revive the real economy.

"The next issue depends on how the nations of the world apply financial support," Mr Watanabe said.

He also said that the stronger yen was not necessarily bad for Japanese firms, as it could enable companies to seek overseas acquisitions.

"There are many Japanese firms that consider the yen's strength against the euro, pound and dollar as an opportunity," he said.

According to official data, the Japanese economy is now in recession for the first time since 2001.

Nomura is buying bankrupt Lehman Brothers's European, Asian-Pacific and Middle Eastern operations for $2bn (£1.34bn).

But Mr Watanabe said the company was not planning any significant job cuts.

Last month the brokerage reported its third quarterly net loss in a row because of the global financial crisis.

Opec 'lost $700bn on cheaper oil'

Opec members have lost about $700bn (£467bn) because of falling crude prices, the oil cartel's president Chakib Khelil said in an interview.

Oil prices have fallen 60% from their $147 peak, prompting speculation Opec will cut output again to boost prices.

However, speaking to Algerian newspaper El Khabar, Mr Khelil said Opec was unlikely to make a decision this month.

He said the following meeting on 17 December would be "the most important" as the cartel would get necessary data.

The data will show whether Opec's previous output cuts have been applied by its members.

The cartel, which controls 40% of the world's oil supply, agreed on a 1.5 million barrel-a-day reduction last month.

On Wednesday, US light, sweet crude stood at $54.47 a barrel, while Brent crude cost $51.84 a barrel.

"The Cairo meeting [on 29 November] is considered as an internal debate, while the meeting scheduled in Oran [on 17 December], will be more important in a sense that we will obtain, by that time, more information about the oil market trend," El Khabar quoted Mr Khelil as saying.

"All members... are very concerned about the economic situation which has worsened in the United States and Europe who have entered into a recession, followed by Japan," the Opec president said.

US car companies seek $25bn aid

The bosses of the three biggest US carmakers, Ford, GM and Chrysler, have asked Congress for a $25bn bail-out.

They told a Senate hearing that without the rescue package, their firms risked collapse, and warned of broader risks to the US economy.

GM chief executive Rick Wagoner said the firm needed a loan to span the "financial chasm" that had opened up.

However, Republicans and the White House do not want to use the $700bn bank rescue to help car firms.

GM has warned it could run out of cash in a matter of weeks and cannot wait until President-elect Barack Obama - who has promised to help the industry - is sworn in in January.

The BBC's Richard Lister in Washington says the last thing Mr Obama wants is to oversee the death of manufacturing icons during his first few months in office.

Inefficient production

Mr Wagoner told the Senate banking committee that the industry's predicament was not due to failures by management but because of the deepening global financial crisis
He warned millions of jobs and 4% of GDP could be lost without government action.

"It's about saving the US economy from a catastrophic collapse," he said.

But sympathy for the industry appeared to be sparse among senators from both sides, our correspondent says.

The committee chairman, Christopher Dodd, a Democrat, said that the industry was "seeking treatment for wounds that were largely self-inflicted".

But he agreed that "hundreds of thousands would lose their jobs" if the companies were allowed to collapse.

Alabama Senator Richard Shelby, a Republican, also voiced doubts about the rescue package.

"As we consider altering the Treasury bail-out programme to provide cash and assistance to the domestic auto-manufacturers, I'm concerned that, once again, we're about to employ the 'ready, fire, aim' approach to problem-solving," he said.

Republican critics say the larger financial crisis is not the only reason why the biggest US carmakers are in trouble.

They say that the Ford, GM and Chrysler's production was inefficient, and that their labour costs were higher than many of their foreign rivals.

Mr Wagoner said that despite some public perceptions that GM was not keeping pace with the times "we were well on the road to turning our North American business around".

"What exposes us to failure now is the global financial crisis, which has severely restricted credit availability and reduced industry sales to the lowest per-capita level since World War II," he said.

Economic impact

Car executives argue that the failure of the industry would have a catastrophic impact, with three million jobs lost within the first year.

Ford's president, Alan Mulally, said a failure at even one car company would have widespread consequences.

"The industry is so interdependent," he said.

"We're nearly 10% of the US GDP, and if one of the automobile manufacturers gets into serious trouble, it has just tremendous implications for the entire industry."

Congressional leaders are working behind the scenes in an effort to work out a compromise that could give some financial aid to the carmakers before the end of the year, but the outlook remains poor.

In an earlier hearing on Tuesday, Treasury Secretary Henry Paulson also resisted diverting funds to the US car industry.

Democrats have so far rejected the option favoured by the White House and Republicans, which is to let the industry use a $25bn loan programme designed to help the companies develop more fuel-efficient vehicles.

The hearings are due to continue later on Wednesday.