Oil only slightly higher despite fresh US bailout

World oil traded only slightly higher in Asia on Wednesday despite pledges of billions of dollars in fresh cash by US and European officials trying to battle a global credit crunch.

New York's main futures contract, light sweet crude for January delivery, rose 42 cents to USD 51.19 a barrel from a drop of USD 3.73 on Tuesday on the New York Mercantile Exchange, where the contract closed at USD 50.77.



Brent North Sea crude for January rose 35 cents to 50.70 after falling USD 3.58 dollars to 50.35 on Tuesday in London.



Prices could track sideways in the short-term but revised US GDP figures left the market "reeling", raising fresh

worries about the economic state of the world's biggest energy consumer, said Mark Pervan, senior commodities analyst at ANZ bank in Melbourne.



The US economy shrank at a 0.5 per cent pace in the third quarter, the government said in a revised estimate for gross domestic product that many analysts say is the start of a steep downturn.



Last month the Commerce Department, in its first estimate, had pegged the downturn in GDP at 0.3 per cent.



Also on Tuesday the US Federal Reserve, the central bank, said it would pump USD 800 billion more into the economy to try to stabilise the financial system.



Up to USD 600 billion will go towards purchases of mortgage securities, with another USD 200 billion for asset-backed securities to help get credit

to consumers, officials said.



In Brussels, draft legislation set to be unveiled on Wednesday called for a "significant" two-year stimulus campaign to jolt embattled European Union economies out of recession.

Ex-UBS bosses forgo $27.7m pay

Three former bosses at Swiss bank UBS are to forgo 33m Swiss francs ($27.7m; £18.1m) in salary and other payments.

Ex-chairman Marcel Ospel, former vice president Stephan Haeringer and ex-chief financial officer Marco Suter oversaw huge losses at the bank.

The Swiss government launched a bailout package for UBS last month, which was worth about $60bn.

UBS welcomed the voluntary gesture by the former bosses who left after the scale of the subprime losses emerged.

The three said they "want to make it clear that they are acing up to reality" said UBS, which has had to write-down almost $49bn since the sub-prime crisis started.

"The move to forfeit the remuneration is entirely voluntary and should in no way be construed as an admission of guilt in a legal sense," the bank added.

'Inconceivable'

Excessive bonuses paid to executives of financial institutions that have lost billions of pounds during the credit crunch have been widely criticised.

Indeed, governments across the world have insisted that excessive bonuses be addressed as a condition of bank bail out packages.

Mr Ospel said that after the government bailout he realised he must take "decisive action".

"I hope that my action will help to resolve a situation that was inconceivable to me until a short time ago."

Mr Haering and Mr Suter said that "as executive board members we helped shape the strategy of UBS over the years".

"From the start there was no question that in this difficult situation we would express solidarity to each other and be loyal to UBS."

Former chief executive Peter Wuffli, who left UBS in July 2007, said he would not take 12m Swiss francs he was to receive.

UBS has already said that it would stop paying a bonus to chairman Peter Kurer from next year. He has already forgone any bonus for 2007 and 2008.

Borders Inc ' no longer for sale'

US-based bookseller Borders has said it is no longer for sale despite reporting widening third-quarter losses.

It posted a net quarterly loss of $175.4m (£113m), or $2.90 per share, as against $161.1m, or $2.74 per share, in the third quarter of last year.

But it said applying a range of restructuring measures in the past year will allow the company to stand on its own despite the downturn.

"We have smiles on our faces", Borders chief executive George Jones said.

Like-for-like sales dropped 12.8% in Borders superstores, with revenue falling to $693m from $765m during the same quarter last year.

The news sent Borders share down 52% in after-hours trading.

The Michigan-based bookseller is still considering selling its stationery business to Pershing Capital Management for $65m.

In March, Borders said it had been evaluating a sale of its core business after facing increasing difficulties in accessing funds.

Since then it has cut staff, sold some business units and dramatically reduced unsold stock.

Borders sold its Borders and Books Etc branches in the UK and Republic of Ireland to private equity group Risk Capital Partners in 2007.

US Fed announces $800bn stimulus

The Federal Reserve is to inject another $800bn (£526.8bn) into the US economy in a further effort to stabilise the financial system.

US Treasury Secretary Henry Paulson said the stimulus package aimed to make more lending available to consumers.

About $600bn will be used to buy up mortgage-backed securities while $200bn is being targeted at unfreezing the consumer credit market.

Financial institutions are reluctant to lend, deepening the economic slowdown.

The situation has been exacerbated as the credit crisis has worsened.

Meanwhile US President-elect Barack Obama said budget reform was "imperative" with the economy in crisis.

"It is not an option. It's a necessity," he said.

'Troubling'

Key lending such as credit cards, car loans and student loans had essentially come to a halt in October, Mr Paulson said. He added that the new measures were aimed at getting these types of lending back to more normal levels.

"It will take time to work through the difficulties in our market and our economy and new challenges will continue to arise," he said.

"We are committed to using all the tools at our disposal to preserve the strength of our financial institutions and stabilise our financial markets to minimise the spill-over into the rest of the economy."

The announcement came as Commerce Department figures showed US economic output shrank between July and September at a faster pace than initially predicted, which the White House described as "troubling".

GDP fell at an annual rate of 0.5% in the third-quarter - from the 0.3% estimated a month ago - as consumers cut spending by the largest amount in 28 years.

"This is why we are having to take such bold actions," a White House spokeswoman said.

Meanwhile, the Standard & Poor's/Case-Shiller national home price index slumped by a record 16.6% during the quarter from the same period a year ago - taking prices down to levels not seen since early 2004.

Bail-out details

Under the latest rescue plan - which is in addition to the already-announced $700bn bank bail-out - the Fed is to buy up to $100bn in debt from the troubled mortgage giants Fannie Mae and Freddie Mac.

The central bank said it would also buy another $500bn in mortgage-backed securities - pools of mortgages that are bundled together and sold to investors.

The Fed said that the $600bn effort to support the mortgage market was being taken to reduce the cost of home mortgages and increase their availability.

Iceland inflation soars to 17.1%

The annual rate of inflation in Iceland has escalated to a record high of 17.1% as the country battles the worst financial crisis in its history.

The Icelandic statistics agency said prices rose in November alone by 1.74% compared to the previous month.

Food prices increased fastest, up 30.6% over the year, as the country's currency plummeted.

The agency warned that inflation rate could rise beyond 20% in the future, threatening the economy.

At its last meeting, at the beginning of November, the Icelandic central bank left interest rates unchanged at 18%, the highest level in Europe, in an effort to fight inflation.

Prices of imported goods have risen fast after the local currency, the Icelandic krona, plunged amid global financial turmoil.

The International Monetary Fund (IMF) has recently approved a $2.1bn (£1.4bn) loan for Iceland, after the country's banking system collapsed in October.

Iceland's government seized control of all three of the nation's major banks in a bid to keep the country's financial system afloat.

Europe announces 200bn-euro plan

The European Commission has unveiled an economic recovery plan worth 200bn euros (£170bn) which it hopes will save millions of jobs across the region.

Its president Jose Manuel Barroso said he thought the plan was "timely, temporary and targeted".

The EC expects member states to contribute 170bn euros while the European Union will give 30bn euros.

Mr Barroso said it was important that EU members acted together in a period of "exceptional crisis".

"Measures that member states are introducing should not be identical, but they need to be coordinated," said Mr Barroso.

"It's the best way to restore citizens' confidence and counter fears of a long and deep recession," he added.

The European Commission president said the bigger part of the package would be implemented in 2009 and some measures would continue into 2010.

The proposed plan will need to be approved at the next EU summit in December.

Germany's warning

The 27 member states need to decide whether to sign up to the plan.

Mr Barroso said he had been in touch with member states about the package and a consensus was emerging.

"I expect this package to receive strong support", he said.

Earlier, Chancellor Merkel express concern about getting "into the race for billions" by unveiling huge stimulus packages.

"We should walk a measured path and keep to the middle ground, which is made-to-measure for the situation in Germany," she told the Bundestag, the lower house of parliament.

A number of member states, including Germany, France and Italy, have already announced their own measures designed to stimulate their economies, including multi-billion injections into key industries and tax cuts.

Mr Barroso said that the plans already unveiled by member states were part of the Commission's recovery plan.

Earlier, France and Germany's leaders called on the EU to ease its fiscal rules to allow nations to spend more to boost their economies.

The requirement to hold public deficits below 3% of GDP in individual EU countries should be eased, France's Nicolas Sarkozy and Germany's Angela Merkel said.

The two leaders made their comments in a joint newspaper article in France's Le Figaro and Germany's Frankfurter Allgemeine Zeitung, saying that governments had to head off a "recessionary spiral" at home.