Fuel prices may be cut Saturday; crude may attract import duty

The government may cut retail fuel prices on Saturday, a move that would help rein in inflation and allow RBI to go for deeper policy rate cuts to push economic growth.

Official sources said besides the announcing the cut in petrol, diesel and LPG, a stimulus package to be announced by the government tomorrow may include re-imposition of customs duty on crude oil.



The government had abolished the five per cent customs duty on crude, when its price touched a record USD 147 a barrel in July this year.



With crude falling below USD 50 a barrel now, the Finance Ministry is looking at reimposing the levy.



International crude prices are ruling at four-year lows of near USD 45 a barrel. High crude prices earlier this year had prompted the government to increase petrol and diesel prices by Rs 5 and Rs 3 per litre respectively and that of LPG by Rs 50 a cylinder.



This had in turn fuelled inflation to double digits. Inflation has since cooled to 8.40 per cent for the week ended on 22nd November.



A cut in fuel prices may bring it down to a tolerable level and give room to RBI to increase money supply to keep the economy ticking despite the global slowdown.



The Petroleum Ministry has prepared a note for consideration of the Cabinet Committee on Economic Affairs and

is pressing for an early meeting, sources said.

Microsoft ropes in Yahoo's Qi Lu to head internet biz

Software giant Microsoft Corp has appointed former Yahoo Inc executive Qi Lu to head its online services group, overseeing internet offering for consumers, advertisers and publishers.

Qi Lu would join as president of online services group to lead its search and online advertising and all its online communications services, Microsoft Corp said in a statement.



He would report to Microsoft Chief Executive Officer Steve Ballmer, the statement added.



"Lu's deep technical expertise, leadership capabilities and hard-working mentality are well-known in the technology industry, and Microsoft will benefit from his addition to our executive management team," Ballmer said.



Prior to this role, Lu was vice president of engineering responsible for technology development of Yahoo's search and marketplace business unit, including its search, e-commerce, and local listings of businesses and products till August 2008, when he left after serving for 10 years.



"Microsoft has built a great foundation for its search and advertising technologies and put an amazing team of researchers and engineers in place to drive the next wave of innovation in online services," Lu said.



Lu would join Microsoft from 5th January, 2009 and in his role of running the online services group, he would oversee several groups including the advertiser and publisher solutions business, the statement added.



Besides, Brian McAndrews senior vice president of Microsoft's advertiser and publisher solutions group has decided to move out over the next few months and serve as consultant to Ballmer and Lu during that time.

India, Russia sign "milestone" agreement on Nuclear cooperation

India and Russia signed an agreement on civil nuclear cooperation with Prime Minister Manmohan Singh on Friday describing it as a "new milestone" in bilateral relations.

"The signing of the agreement on civil nuclear cooperation with Russia marks a new milestone in the history of our cooperation with Russia in the field of nuclear energy," Singh told a joint press conference with Russian President Dmitry Medvedev, who is on a three-day visit in New Delhi.



Under the agreement, Russia will build four additional atomic reactors in the Koodankulam nuclear plant in Tamil Nadu.



Besides signing a joint declaration, India and Russia also signed ten agreements on cooperation in various subjects including tourism and space.

Singh, after signing a joint declaration with Medvedev, said both the countries have taken "yet another step forward" through joint action in human space flight programme.

Observing that both countries have decided to increase the trade volume to USD 10 billion by 2010, the Prime Minister said they discussed the possibilities of greater cooperation between Indian and Russian companies, both in upstream and down stream sectors.

"We also agreed to increase defence cooperation," he said.

Noting that people of India have a "great goodwill" for Russia, Singh said New Delhi "appreciated" Moscow's expression of solidarity with the country after the Mumbai terror attacks.

House prices still falling fast

House prices fell another 2.6% in November, the Halifax says.

According to its latest survey, that increased the annual rate of house price falls to 14.9%, as against the 13.7% rate in the 12 months to October.

The Halifax said the average property in the UK was now valued at £163,605, a level last seen in July 2005.

Last week, the Nationwide building society said the pace of house price decline had eased off, with prices down 13.9% in the year to November.

But the Halifax figures suggest that house price falls are accelerating.

"The combination of high house prices in relation to earnings, constraints on householders' incomes and spending power, and the decline in the availability of mortgage finance since the summer of 2007 has curbed housing demand," said the Halifax's chief economist, Martin Ellis.

The mortgage lender calculates the annual rate of decline by comparing the average house price over the past three months with the average for the same three-month period the year before.

A straightforward monthly year-on-year comparison suggests that prices may have fallen even faster, by 16.1%, although the lender argues that this approach can be distorted by short-term price fluctuations.

Stabilising?

The Halifax's survey suggests that the average house price has now dropped by £31,485 in the past 12 months.

Mr Ellis said there were indications that sales, if not prices, had bottomed out.

"The number of mortgages approved to finance house purchase was broadly unchanged for the fourth successive month in October at a seasonally adjusted 32,000," he said.

"The recent flattening off in approvals suggests that housing market activity may be stabilising."

However, there are widespread fears that the current rationing of mortgages will become even worse in the coming year, unless the government's efforts to overcome the crisis in the banking industry and to revive mortgage lending come to fruition.

The Council of Mortgage Lenders (CML), among others, has warned that new lending may be negative in 2009, for the first time on record.

That means that there could be so little new lending by banks and building societies that it would be outstripped by borrowers paying off their mortgages.

That in turn would means sales falling even further, putting further downward pressure on prices.

More price falls

The Halifax will be publishing its formal house price prediction for 2009 later this month.

"We have said we were comfortable with the consensus that prices would fall by about 20% over the course of 2008 and 2009," said Mr Ellis.

"But we do need to look at that again," he added.

Other commentators have already suggested that prices will continue to fall fast, with some suggesting they could drop by another 15-20%.

"The speed at which this housing market correction is unfolding, already the fastest on record by a country mile, is likely to step up a gear over the coming months," said Seema Shah at the consultancy Capital Economics.

"We think that we are only half way through this correction."

France unveils huge stimulus plan

French President Nicolas Sarkozy has unveiled a 26bn-euro ($33bn; £23bn) stimulus plan to help France fend off financial crisis.

The measures include a 1bn-euro loan for carmakers and 5bn euros of new public sector investments.

The plan amounts to 1.3% of France's gross domestic product and should boost its economic growth by 0.6% in 2009.

It will also increase the budget deficit to 3.9% of GDP from the previously forecast 3.1%.

This is above the 3% ceiling demanded by the European Commission, but the rules have been eased to help members of the European Union tackle the crisis.

About 20bn euros will be added to the public debt.

"We will not give up our goal of sorting out our finances as soon as possible. Not doing anything now would have cost us much more," said President Sarkozy.

Telecom giant AT&T slashes jobs

The US telecommunications company, AT&T, has announced 12,000 job cuts, or 4% of its workforce, in an effort to significantly reduce costs.

The Texas-based firm cited economic pressures, a changing business environment and the need for a more efficient organisational structure.

AT&T said the staff cuts would start in December and would continue throughout 2009.

It also forecast a reduction in capital expenditures next year.

In a statement, AT&T added that, despite the cuts, it would continue to create jobs in other parts of the business, such as wireless, video and broadband.

AT&T said it had earmarked $600m (£410m) in the fourth quarter of 2008 to make redundancy payments to employees affected.

The firm provides telephone services and internet access to more than 70 million customers in the US.

In 2006, it acquired rival BellSouth in a $67bn takeover.

Pound hits new low against euro

The British pound has fallen to a historic low against the euro after a 1% cut in UK interest rates.

After a volatile day on the currency markets, the pound fell to 1.148 euros.

The UK currency also dropped against the dollar, to $1.447, the lowest level in almost seven years, before recovering to $1.465.

In July, the pound traded at more than $2, but it has lost ground as a number of economic reports forecast a particularly severe downturn in the UK.

On Thursday, the pound also hit a new low in more than 13 years against the Japanese yen.

At the same time, the euro rose slightly against the dollar, to $1.277.

The Bank of England slashed UK interest rates to 2% on Thursday, their lowest level since 1951.

However, analysts said the cut had been already priced into markets, as it was in line with expectations.

"Over the next few days the market will view this as a good move and we could see a little upside for sterling," said James Hughes, markets analyst at CMC Markets in London.

Such bounce could be short lived, however.

"Once consensus builds that there will be more cuts in January or February, then it is likely to come under pressure once more," Mr Hughes added.

Global crisis ends Honda F1 era

Honda is pulling out of Formula One, blaming the world economic crisis for plans to sell its team.

Sources told BBC Sport the team were "optimistic" they would continue, but an investor had not yet been found.

The decision leaves Englishman Jenson Button and 2009 team-mate Rubens Barrichello without drives, with only a few mid-ranking seats still available.

Honda, which spent more than £300m a year on F1, said it would also no longer supply the sport with engines.

A deadline of January has been set to find a buyer but workers at Honda's Brackley base have been told to expect redundancy letters before Christmas.

"Honda Motor Co. has come to the conclusion that we will withdraw from all Formula One activities, making 2008 the last season for participation," said Honda president Takeo Fukui at an emotional press conference.

"This difficult decision has been made in light of the quickly deteriorating operating environment facing the global auto industry... and the sudden contraction of the world economies," he added.

"Honda must protect its core business activities and secure the long term as widespread uncertainties in the economics around the globe continue to mount."

According to the Reuters news agency, team bosses Ross Brawn and Nick Fry told a meeting of the Formula One Teams' Association: "They have a month to find a buyer, otherwise they are closing the team."

If no buyer is found, Honda's decision will leave F1 with just 18 cars on the grid next season.

Honda said next year's Japanese Grand Prix at its Suzuka circuit would go ahead as planned.

Honda appointed Brawn, the man who masterminded seven world titles for Michael Schumacher at Benetton and Ferrari, as their team principal prior to the start of the 2008 season.

His arrival was seen as the signal for the start of a concerted push for success by the company after several seasons as also-rans.

The company returned to F1 as a team owner and car builder in 2005, having spent five years as an engine supplier to the British American Racing team.

But they have struggled to make an impact at the top levels of the sport.

Their sole victory of the modern era came with Button's win at the Hungarian Grand Prix in 2006.

But they have been uncompetitive in the last two seasons.

Honda's decision could also spell the end of Barrichello's 16-year F1 career.

The 36-year-old winner of nine Grands Prix was competing with his novice compatriot Bruno Senna, the nephew of F1 legend Ayrton Senna, for a seat at Honda in 2009.

Honda recently cut road vehicle production as a response to the global economic crisis - the company's sales in its key US market were down 30% last month.

"This has serious implications for F1, not just because there will be only 18 cars on the grid," said Croft.

"It's the start of the sport as a whole feeling the pinch. Williams are reported to be in financial difficulties, Toyota are trimming down their budget as well.

"Honda are a car company whose sales have dropped by 41% in the last quarter, they're closing their Swindon factory for two months at the start of next year, and obviously feeling the pinch on a global scale."

In November, Honda announced it would build fewer cars in Japan, Europe and the US to reflect bleak economic prospects in the vehicle manufacturing industry.

Sales of new cars in the UK suffered their biggest monthly drop in 28 years, while car makers Ford, GM and Chrysler have asked the US Congress for multi-billion dollar loans to guarantee their survival.

The last team to leave F1 were Honda-backed minnows Super Aguri, which folded for financial reasons in April.

Honda's own F1 team endured a deeply disappointing 2008 season on the track, earning just 14 points, leaving them the lowest of the nine points-scoring teams.

Button found himself ranked 18th in the drivers' list, contributing only three points.

Only four drivers, each without a point to their name, ranked below him. Barrichello earned the remaining 11 points - more than half of them earned with a third place in the wet British Grand Prix.

Honda initially entered F1 as a constructor in the 1960s, withdrawing at the end of 1968.

The company returned to F1 in the 1980s as an engine supplier with great success with the Williams and McLaren teams and then purchased a stake in the BAR team from British American Tobacco (BAT) in 2004.

Honda bought out BAT in 2005 to form the Honda team for the 2006 season.

While the team finished fourth in the 2006 constructors' championship, they have subsequently struggled to make an impact.

The 2009 Formula One season begins on 29 March, in Australia.

F1 is a notoriously expensive sport in which to compete, and teams have spent recent months in intensive discussions over cost-cutting measures.

Max Mosley, president of world motorsport governing body the FIA, recently urged teams to find ways to reduce costs.

In an exclusive interview with the BBC, Mosley described Honda's withdrawal as a significant warning to the rest of the teams to start cutting costs dramatically.

Mosley wants to make drastic changes for the 2010 season - including making a standard engine and gearbox available to all teams at a projected cost of 5m Euro (£4.4m) per team.

The idea is opposed by the road-car constructors still in F1, who are proposing a new engine formula of their own.

Considered a major player within F1, Honda bankrolled more than 800 staff at the team's Northamptonshire base and had one of the largest budgets in the sport.

"I am told that for £1 you can now buy the Honda F1 team," said BBC sports news correspondent Adam Parsons.

BBC Radio 5 Live's F1 commentator, David Croft, said Honda's withdrawal could have profound consequences for the sport.

US carmakers' plea under scrutiny

Bosses from America's big three car companies face a second day of grilling in Congress over their request for a multi-billion dollar bailout.

The chiefs of GM, Ford and Chrysler have already faced scepticism from US lawmakers as to whether $34bn (£23bn; 26.6bn euros) in aid would work.

On Friday the House financial services committee will hear their plea.

President George W Bush has said "we don't want to put good money after bad" no matter how key the auto industry is.

The House financial services committee chairman, Democrat Barney Frank, has called on President-elect Barack Obama to be rather more assertive on the issue than he has been so far.

Admitting mistakes

The appearance of the three executives in Washington is the second time they have appealed to government for help - just two weeks ago Congress rejected their request for a $25bn loan.

In a show of contrition and prudence, this time the men abandoned their private jets and drove to Washington in hybrid cars.

But their sense of urgency has only heightened, with General Motors boss Rick Wagoner warning that without help the company could go under within weeks.

The chief executives of Ford and GM have even offered to work for $1 a year if Congress approves the emergency aid.

On Thursday, Mr Wagoner and his Ford counterpart Alan Mulally admitted making mistakes in the way that they have run their businesses.

"We are here today because we made mistakes, and because circumstances beyond our control pushed us to the brink," Mr Wagoner told the Senate banking committee, referring to the global economic downturn.

Chrysler boss Bob Nardelli said that Chrysler had lost $16bn of revenue as a result of plunging car sales this year alone.

Mr Mulally admitted that Ford had "produced more vehicles than our customers wanted, then slashed prices".

Scepticism

The carmakers argued that the collapse of any one of them would have disastrous effects on the whole US economy.

Despite the warning and the view of the committee's chairman Chris Dodd that inaction was not an option, Thursday's six-hour hearing ended without consensus.

There was plenty of scepticism, mostly from Republicans, reinforced by President Bush who said that any bailout must ensure the companies' long-term viability.

Mr Wagoner, Ford's Alan Mulally and Chrysler boss Bob Nardelli all blamed the US recession for decimating sales and leaving their companies in desperate need of cash.