Russia to host next BRIC summit

Russia will host the first stand-alone summit of the world's fastest emerging economies of Brazil, Russia, India and China, President Dmitry Medvedev has announced.

"Next year we will hold the summit in Russia," Medvedev was quoted as saying by the RIA Novosti after talks with his Brazilian counterpart Luiz Inacio Lula da Silva in Rio de Janeiro in Brazil.

The first summit of these nations, clubbed as the BRIC, was held in July 2008 in Hokkaido, Japan on the sidelines of the G-8 summit.

Earlier in May last, Russia had hosted a meeting of BRIC foreign ministers, in the Urals city of Yekaterinburg.

Medvedev said Russia's ties with Brazil and other BRIC members are particularly important in the context of the global financial crisis.

The term BRIC was first used in 2003 in a forecast published by the Goldman Sachs investment bank that named Brazil, Russia, India and China as the fast emerging economies likely to assume key global role.

According to the Kremlin, the dates and venue of the summit will be agreed through diplomatic channels

PC World owner reports £30m loss

The owner of Currys and PC World, DSG International, has reported a half-year loss of £29.8m, blaming a "tough and volatile" trading environment.

The loss, for the 24 weeks to 18 October, compared with a profit of £52.4m in the same period last year.

The company said that sales in stores open longer than a year were down 7% during the period.

It said that its computer business had held up well, but sales of electrical goods had been weak.

DSG added that the outlook for the Christmas trading period and 2009 was uncertain, but it said that the company was prepared for a recession.

To conserve cash, the firm said it would not pay shareholders a dividend. It had already announced plans to reduce investment by £30m.

"We are focused first on trading through the current tough economic environment in which we are prioritising cash generation," said chief executive John Browett.

As well as running the Currys and PC World chains in the UK, DSG trades as Elkjop in the Nordic region and UniEuro in Italy.

Oil rises as Russia threatens cut

Oil prices have risen after Russia said it might join producers' cartel Opec in cutting output, and following a fall in the US dollar.

China's interest rate cut also boosted prices on hopes the move might prevent a slowdown in the country's growth.

The developments helped counter more dour economic news and larger-than-expected fuel stockpiles.

US light, sweet crude climbed 83 cents to $51.60 a barrel. Brent crude rose 58 cents to $50.93 a barrel.

On Tuesday oil prices had fallen by more than $3.50 a barrel.

The dollar declined on Wednesday against the yen after new economic data from the US suggested the downturn was deepening.

Demand fears

Analysts say that the latest steps taken by governments to boost the global financial market and economy have had little effect on oil prices.

"There's been a lot of money thrown at the system and it hasn't done a lot yet," said Mark Pervan at ANZ bank in Melbourne.

Oil markets fear that the global economic downturn will dramatically reduce demand for crude.

The price of oil has fallen sharply from its record of more than $147 a barrel in July.

Opec, which accounts for about 40% of global oil production, cut output by 1.5 million barrels a day last month, but the move failed to stop prices from declining.

Russian output

Some of the cartel's members have been calling for a new cut at an Opec meeting in Cairo on 29 November.

And Russian energy minister Sergei Shmatko said his country would "co-ordinate with Opec to defend its interests."

Russia has been criticised by some analysts for increasing output for several years while Opec was cutting production to support oil prices.

Russia, one of the world's leading oil exporters, is not a member of the cartel.

Russia's Ural crude oil costs now less than $50 per barrel, while the Russian budget assumption for this year is $75 a barrel and for $95 a barrel in 2009.

The country's oil output stood at 491 million tonnes (3.7 billion barrels) in 2007 and will stay at the same level in 2008, according to a revised government forecast.

Porsche set to delay VW takeover

German luxury carmaker Porsche has pushed back its planned takeover of Volkswagen because of falling sales.

Porsche said it might not take majority control of VW this year, and that it would not pay "ridiculous" prices.

Porsche also reported pre-tax annual profits of 8.57bn euros (£7.2bn; $11.1bn), helped by a huge one-off profit from moves in VW's share price.

However, it said there were signs of a "serious slump" in the car industry, especially its important US market.

Falling sales

Porsche said its earnings for the four months to November would be 15% lower than a year ago because of the downturn.

"Worldwide, signs of a serious slump in the automobile industry are clearly visible," Porsche said in a statement.

Porsche's chief executive, Wendelin Wiedeking, declined to give a full-year profit forecast, saying that "it cannot be done reliably now".

On Monday, Porsche said it had stopped assembly lines for one day at its main plant and would be halting production for seven more work-days up to the end of January because of weaker demand.

Elsewhere, in further signs of falling car sales, the Japanese car firm Toyota said it would be closing a factory in France for two weeks in December, and would slash production at the plant from next year.

VW plans

Porsche said it was standing by its plan of building up its stake in VW to 75% in 2009.

However, Mr Wiedeking said Porsche might not exceed the 50% ownership mark by the end of this year as it had planned.

"In view of the current economic environment, it is becoming increasingly unlikely that we will reach this target in this calendar year. We are under no time pressure," he said.

Porsche already has effective control over the company, and would like to take full control over strategic decisions and VW's profits next year by raising its stake.

However, German law and VW's own statutes give VW's home state of Lower Saxony the right for now to veto these plans with its own 20% stake.

Porsche's finance chief, Holger Haerter, said Porsche was not willing to acquire shares for "economically ridiculous" prices.

'Manipulation' denial

Analysts have said Porsche is likely to have made huge profits in October after it triggered a squeeze on short-sellers of Volkswagen shares by announcing it had secured access to 74% of VW votes.

It meant that just under 6% of the company's shares were freely trading on the market, and VW's share price climbed stratospherically.

Although Porsche said the announcement would let short-sellers unwind their positions "without haste or considerable risk", VW's share price rocketed to over 1,000 euros - and briefly made VW the world's most valuable corporation.

It prompted scrutiny by German securities watchdog and a complaint from the head of the country's largest retail fund management firm, who accused Porsche of breaking the law.

The firm's chief financial officer, Holger Haerter, flatly denied manipulating the share price, saying Porsche "strictly abides by the law".

"Let me emphasise and make it quite clear that our decision to acquire a stake in Volkswagen was and is based solely and exclusively on our industrial logic and not on the wish to make money at the expense of a third party," he said.

Ex-Fed chief named Obama adviser

US President-elect Barack Obama has named former Federal Reserve chairman Paul Volcker to chair a new panel advising him on the economy.

Mr Volcker, 81, who advised Mr Obama on the economy during the election campaign, led the Fed under presidents Jimmy Carter and Ronald Regan.

The President's Economic Recovery Advisory Board is part of efforts to tackle problems in the ailing economy.

Mr Obama has pledged to focus on the US economic slowdown as his top priority.

He as also said he will cut billions of dollars in "wasteful spending".

This is designed to partially offset costly stimulus packages aimed at reviving the US economy.
Historic proportions'

The panel's staff director will be the University of Chicago economist, Austan Goolsbee, another Obama economic advisor.

It will bring in outside expertise so that the president-elect can build a consensus as he seeks to stabilise the financial markets.

Mr Obama said he hoped the new board would provide fresh thinking and detailed reports about what was happening across the country.

"It has become increasingly clear in recent months that we are facing an economic crisis of historic proportions," Mr Obama said.

"At this defining moment for our nation, the old ways of thinking and acting just won't do."

New York Federal Reserve President Tim Geithner has already been named as the President-elect's treasury secretary.

Deepening problem

The Federal Reserve this week said it would 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 latest rescue plan is in addition to the $700bn bank bail-out that was passed by Congress in October.

China tycoon's arrest confirmed

Police have confirmed that one of China's richest men, Huang Guangyu, is being held in custody while they investigate him for "economic crimes".

Mr Huang went missing last week and shares in his company Gome have been suspended from trading.

Officials gave no further details, but Chinese media point to alleged irregularities in the share price of a company controlled by his brother.

The billionaire electrical appliance tycoon is worth some $6bn (£4bn).

"We can confirm for you the news that Wong is being held for investigation by Beijing police in connection with economic crimes," a police spokesman said, referring to Mr Huang by his other name Wong Kwong-yu.

It was the first official confirmation of widespread reports that the founder and chairman of Gome Electrical Appliances Holdings - which sells one in six of the electronic products bought in China - is being questioned for alleged share trading violations or other crimes.

Correspondents say the 39-year-old entrepreneur is something of a legendary figure, a living example of a rise from rags to riches.

The delay in official confirmation of Mr Huang's detention prompted a rare rebuke in a commentary carried on Xinhua, the official news agency.

The agency complained that in the face of many rumours, media questions had gone answered, prompting people to feel "lost".

The BBC's Chris Hogg says some in China see the investigation as an indication the authorities need to remind the country's tycoons who is really in charge, despite the former leader Deng Xiaoping's claim that to get rich is glorious.

The company says its operations are not affected by Mr Huang's situation, but has refused further comment.

Indian markets shut after attacks

Financial markets in India have been closed after the attacks in Mumbai, the country's business capital.

But India's central bank said it would continue to make cash available on the interbank lending markets.

Analysts say the attacks could have a short-term effect on business and foreign investment in India in an already uncertain financial climate.

Since the start of 2008, the main stock index has fallen 50% while the rupee has fallen 20% against the dollar.

"In the short term, will have an impact. It will take time to heal. [But] I don't think it will have an effect on portfolio investments in the country," said Ranu Vohra at Avendus Advisors PVT.

Difficult times

Previous attacks in India were barely noticed by financial markets, analysts said. But current tough market conditions will exacerbate the impact of the attack on the economy.

"Clearly, it will be negative for the sentiment towards India at this point of time, the time when the world is already looking to be highly uncertain in terms of its growth prospects," said Joseph Tan at Credit Suisse, speaking about the Mumbai attacks.

"This will be negative for the rupee versus the dollar, but again I want to stress that the impact will be short-lived," he added.

"Business sentiment will be affected. It doesn't bode well for business," said Amar Lulla at Cipla, the drug company.

Chinese cut

Elsewhere in Asia, markets rose after China cut its interest rates to 5.58% from 6.66% on Wednesday. This was the country's largest rate cut in a decade.

Japan's Nikkei index rose 1.9%, Seoul's Kospi index was up 3.3% and the Hang Seng index in Hong Kong added 2.7%.

However, analysts remain cautious.

"The key ingredient that's driving the gloomy outlook is actual demand, especially from advanced economies," said Suan Teck Kin at United Overseas Bank in Singapore.

"These [China's rate cuts] would help spur some investment and spending activities and support the fiscal initiatives but the main driver would still be from actual spending," he added.