Gold continues to lose shine

Persistent stockists offerings due to negative global advices, pulled down gold prices for the third consecutive day by another Rs 270 per ten grams to Rs 12,190 on the bullion market in Mumbai on Saturday.

Silver prices also dropped further on lack of industrial demand.

Gold prices fell sharply as a bleak U.S. jobs report led to a higher dollar, triggering wholesale liquidation across the board from stocks to oil and commodities.

A US government report showed that employers axed payrolls by 533,000 jobs in November, the most in 34 years and far more than expected.

According to report, job losses were widespread, hitting manufacturing, construction, retail, financial and other sectors.

Spot gold ended at $755.25 an ounce from Thursday's close of $765.70 an ounce.

Gold for February delivery dropped by $13.30 to settle at $752.20 an ounce on the New York Mercentile Exchange.

March silver lost nine cents to $9.43 an ounce.

In the local market, standard gold (99.5 purity) dropped by Rs 270 per ten grams to Rs 12,190 from Rs 12,460 previously.

Pure gold (99.9 purity) also fell to Rs 12,250 from Rs 12,520.

Silver ready (.999 fineness) moved down by Rs 110 per per kilo to Rs 16,525 from Rs 16,635.

UK Honda staff facing redundancy

Staff at Honda in Brackley, Northamptonshire, have been warned they face redundancy after news the Formula One team has been put up for sale.

They have been told they will receive a letter before Christmas confirming they should expect to be made redundant.

The total number of staff in the UK is around 800 and up to 200 others work for the team indirectly.

The Honda Motor Company said it was pulling out of Formula One because of the world financial crisis.

Chief executive Takeo Fukui said that difficult business conditions had led to the decision to pull out of Formula One racing.

The company also said it has no plans to continue as a supplier of engines for Formula One cars.

Team bosses Ross Brawn and Nick Fry fear Honda could close the Brackley-based team within weeks, according to the Reuters news agency.

It is believed the team have enough money to continue to March, but have set a deadline of the end of January to find a buyer.

'Stunning shock'

Honda will assume the existing debts, and, it is understood, will sell the team for a nominal figure - perhaps as little as £1, said BBC sport correspondent Adam Parsons.

Honda have won only one race in the past three seasons and last year achieved only one podium position thanks to Rubens Barrichello.

Jenson Button is the other driver in the team.

The team's total budget for the past year, including work done in Britain and Japan, is believed to be just short of $500m.

Adam Parsons said this was "a stunning shock" for motor racing.

He said Honda was considered one of the best funded and most dedicated teams, despite its poor results.

Terror attack, recession hits Kerala tourism industry

An innovative package to market Kerala's traditional ceremonial wedding abroad in a bid to woo tourists has run into rough weather as the tourism industry in the God's Own Country, already reeling under global recession, has been badly hit by the Mumbai terror attack.

According to P K Anish Kumar, Managing Director of Travel Planners, which had launched the package, they have already got at least four cancellations from UK tourists.

Some tourists have not confirmed their plans after enquiries. "No new enquries are coming," he said.

Earlier, they were getting about 20 to 25 enquiries a day, which has now dwindled to just about two, he said.

The bookings are for January-February, the peak tourist season. "The coming year is going to be a disaster", he said.

During 2007-08, Travel Planners had 2,500 bookings. If the hotels slash prices, some tourists could get attracted, he says.

The latest set back has come at a time when the Travel Planners were trying to woo tourists with the 'Wedding Package', promising a typical traditional Kerala wedding in a temple or in a place of the guests choice.

The package includes dressed girls with lamps in their hands to receive guests, ritual arrangements necessary for a marriage, traditional bedroom arrangements, lunch and a dinner party for guests.

The food is served on banana leaves. The company also arranges a traditional host marriage treat from a local family, prepares special wedding garlands and a tailor dress make up for groom and Kerala sari for the bride.

They were hoping to do well this year when the disaster struck in the form of recession and now the Mumbai blasts.

Downturn to hit Philips profits

Europe's biggest consumer electronics firm Philips has warned that it will make less revenue as the economic downturn takes its toll.

Gerard Kleisterlee, Philips' chief executive, said the downturn was "faster" and "deeper" than expected and was without "recent comparison".

Rivals Sony, Sharp and Panasonic have also warned that profits could be hit.

And US chipmaker AMD warned on Thursday that its fourth-quarter revenue would drop by about 25%.

Philips said that its lighting and consumer products were being hardest hit.

"The speed and ferocity by which the weakening economy is affecting demand in key markets is now also taking its toll on the financial performance of Philips," Mr Kleisterlee said.

The company also said it would write down the value of its stakes in LG Display and NXP, formerly Philips' semiconductors arm, taking a 1.1bn-euro ($1.4bn; £0.95bn) charge.

Philips cut sales targets for its lighting, health care and consumer electronics divisions and said it would not meet a target of doubling operating earnings by 2010.

Air travel to be cheaper, fuel surcharge cut by up to Rs 400

Bringing good news for air travellers just ahead of Christmas and New Year, major airlines including Kingfisher, Jet Airways, Air India andIndigo have reduced fuel surcharge on all domestic flights, which will result in airfares dropping by up to Rs 400.

The reduction follows successive cuts in aviation turbine fuel prices by oil marketing companies.



Travel by Kingfisher Red (formerly Air Deccan) will cost Rs 1,950 for distances up to 750 km, Rs 300 less than the Rs Rs 2,250 earlier. Distances over 750 km will cost Rs 2,700, Rs 200 less than the Rs 2,900 earlier.



For the full-service carrier, Kingfisher, flights up to 750 km will cost Rs 1,950, Rs 400 less than the Rs 2,350 earlier.



Fares for travelling more than 750 km will be down to Rs 2,700 from Rs 3,100.



The move followed an announcement by Jet Airways on Friday, which cut fuel surcharge by Rs 400 on all domestic sectors, together with a similar reduction on its low-cost entity JetLite.



The applicable fuel surcharge henceforth is Rs 1,950 for flights on distances less than 750 km and Rs 2,700 beyond that.



State-owned carrier Air India had in the beginning of the month said it would cut fuel surcharge by Rs 400 on all domestic flights.



Low-cost carrier IndiGo also announced a cut of Rs 400 in fuel surcharge on all domestic routes effective from Saturday.



"Effective December 6, IndiGo has reduced its fuel surcharge to match that of Air India, Jet Airways and

JetLite," IndiGo President Aditya Ghosh told a news agency in New Delhi.



Other low-cost airlines like SpiceJet were, however, non-committal on the reduction.



The fuel surcharge reduction by carriers follows the slashing of ATF prices by Rs 2,480 per kilolitre, effective December 1 -- the sixth such cut since August this year.



Civil Aviation Minister Praful Patel had a while ago appealed to all major airlines to make air travel affordable as fuel prices had come down substantially.



Fuel cost constitutes between 40 and 50 per cent of the total operational cost of an airline in Indi

Jobs figures depress oil prices

US oil prices have fallen to their lowest levels since December 2004 after figures in the US showed that 533,000 people lost their jobs last month.

The unexpectedly high losses sent US light, sweet crude down $2.82 to $40.85 a barrel, before recovering slightly.

In London, Brent crude closed even lower - down $2.42 at $39.86 a barrel.

Fresh signs of weakness in the US economy tend to depress the oil price because they suggest there will be less demand for oil in future.

At the close, US oil prices were down $1.93 at $41.74 a barrel.

Even before the fall in London, there had already been suggestions that the US oil price could soon be heading below $40 a barrel.

"We first hit $40 in 2004 and prices then started accelerating up from there. We still have to find where the bottom line is for the prices," said fund manager Tetsu Emori at Astmax.

Opec meeting

Oil prices are more than $100 below their $147 a barrel highs seen in July this year.

Many eyes are now on Opec, as the oil cartel decided not to cut production at its meeting last weekend.

On Thursday, Opec President Chakib Khelil urged the cartel to cut output at its next meeting in Algeria on 17 December.

Analysts at Merrill Lynch have said that prices may fall below $25 a barrel before they recover.

"A temporary drop below $25 is possible if the global recession extends to China," the US bank said in a research note.

Merrill Lynch has recently cut its forecast for average oil prices in 2009 from $90 to $50 a barrel.

BMW sales dip more than a quarter

German carmaker BMW has seen its global monthly sales fall by more than a quarter, as consumers tighten their belts amid the economic slowdown.

BMW brand sales fell 26.2% in November from the same month a year ago, said the firm, while sales of its UK-based Mini subsidiary declined 20.8%.

The firm has already said its Mini plant in Oxford will close on Friday for an extended Christmas shutdown.

It is closing the factory for four weeks instead of the usual two.

November sales at BMW's luxury Rolls-Royce arm were down 18.5%.

For the whole BMW group, sales fell 25.4% to 96,570 in November, compared with a much slower decrease of 8.3% to 113,005 in October.

Profit fall

"During the period to the end of November the BMW group performed better than the overall premium segment, and has increased its market share in the segment," said BMW board member Ian Robertson.

Last month BMW reported a sharp fall in profits and said it could not provide a forecast for 2008 and beyond because of the uncertain economic climate.

The German firm said net profit fell 63% for the three months to September to 298m euros ($375.5m; £236.5m).

During the quarter, sales dropped 9% to 12.6bn euros, from 14bn euros in the same three month period a year earlier.

Almost all of the world's carmakers have seen sales fall sharply since the summer, and Detroit's "Big Three" firms - General Motors, Ford and Chrysler - have asked the US government for $34bn (£23bn; 26.6bn euros) in emergency loans.

RBI cuts Repo, Reverse Repo rate by one pc

In a move that could help bring down commercial interest rates, the RBI on Saturday announced a slew of measures, including a one percentage point cut in short-term rates at which it lends and borrows from banks and pumped in Rs 11,000 crore to prop up realty and small industry sectors.

The repo rate, at which the apex bank lends overnight funds to banks, was reduced from 7.5 per cent to 6.5 per cent while the reverse repo rate, at which its accepts deposits from banks, was slashed to 5 per cent from 6 per cent with effect from 8th December.

"It is our expectation that the banks will take a signal from the rate cuts," RBI Governor D Subbarao said announcing the measures, which he said, along with steps taken since October, would infuse over Rs 3,00,000 crores into the system.



The liberal monetary policy stance has been prompted by the lowering of inflation, which Subbarao said would come down further due to the reduction in petrol and diesel prices announced on Friday.



Saturday’s package from RBI is aimed at furthering the economic growth, as Subbarao said, "There is evidence of economic activity slowing down, real GDP growth has moderated in the first half of 2008-09".



"Industrial activity, particularly in the manufacturing and infrastructure sector is decelerating... recent data indicate that the demand for bank credit is slackening despite comfortable liquidity. Higher input costs and dampened demand have denied corporate margins, while the uncertainty surrounding the crisis has affected business confidence," he said.



Sensing the impending crisis, the RBI had started liberalising the policy a reversal of earlier stance to control high inflation from October as part of which it cut Cash Reserve Ratio from 9 per cent 5.5 per cent till now.



But this is the first cut in reverse repo since 2003.



In order to improve credit flow to the fund-starved micro and small enterprises, the RBI announced a Rs 7,000 crore refinancing facility to SIDBI.



The banking regulator also announced a similar Rs 4,000 crore facility to National Housing Bank and would come out with the details of this package next week.



The apex bank also decided to classify housing loans below Rs 20 lakh from housing finance companies to individuals under the priority sector, but said banks can lend only five per cent of their total priority sector lending under this category.



Given the stress in realty sector, the apex bank also allowed banks to consider their commercial real estate exposure, which are restructured up to 30th June, under the standard category that would help lenders not consider these accounts as bad assets.



RBI steps to boost credit flow to realty sector



In order to increase the flow of funds to the sagging real estate sector, the RBI today announced a slew of measures including a Rs 4,000-crore refinance facility for the National Housing Bank and priority sector status for housing loans up to Rs 20 lakh.



"We are working on a refinance facility for the National Housing Bank (NHB) of an amount of Rs 4,000 crore," RBI Governor D Subbarao said.



According to current norms, a bank has to set aside 40 per cent of its deposits for lending under the priority sector head.



The RBI said banks can classify housing loans up to Rs 20 lakh as "priority sector" advances, subject to a ceiling of 5 per cent of their total priority sector target.



Loans by banks to housing finance companies (HFCs) for on-lending to individuals for purchasing or constructing dwelling units may be classified under the priority sector, provided the housing loans granted by HFCs do not exceed Rs 20 lakh per dwelling unit per family, the statement said.



The special dispensation for treating loans to HFCs as priority sector advances will boost lending to the housing sector, Subbarao said, adding this would apply to loans granted by banks to HFCs up to 31st March, 2010.



The RBI has also relaxed asset classification norms for commercial real estate advances to encourage banks to increase their exposure to the sector.



"The facilities for restructuring exposures will help soften pressures being faced by the commercial real estate and other sectors in the current environment", the Governor said.



Commenting on the RBI decisions, ICICI Bank Joint Managing Director Chanda Kochhar said, "We have brought down interest rates for housing loans below Rs 20 lakhs."



RBI said that under the existing norms, exposure to commercial real estate, capital market exposures and personal/ consumer loans are not eligible for the exceptional regulatory

treatment in retaining the asset classification of the restructured standard accounts in standard category.



"As the real estate sector is facing difficulties, it has been decided to extend exceptional/concessional treatment to the commercial real estate exposures which are restructured up to June 30, 2009," it added

US in a new push for auto bail out

The US authorities are stepping up efforts to agree a deal worth billions of dollars to bail out the country's three big carmakers.

Congress and the White House will hold talks over the weekend on a deal after two days of Congressional hearings.

A White House spokesman said progress was expected, and House Speaker Nancy Pelosi said she wanted a vote on the package next week.

Her comments followed news of huge job losses in the US in November.

In a dramatic indication of the worsening economic situation, the unemployment rate rose to a 15-year high of 6.7% from 6.5% in October, with more than 533,000 jobs lost.

President-elect Barack Obama has called for urgent measures to stimulate the economy and get people back to work.

"There are no quick or easy fixes to this crisis...and it's likely to get worse before it gets better," he said in response to the announcement.

Hope of progress

Bosses from the three big car companies, General Motors, Ford and Chrysler, appeared before two Congressional committees pleading for $34bn (£23bn) to prevent collapse.

The car manufacturers have warned that the collapse of any one of them would have disastrous effects on the whole US economy.

But there has been considerable opposition to a bailout plan - critics say the car manufacturers need to first show they can be more efficient.

But politicians who back the plans say to do nothing would be a disaster.

Late on Friday, White House spokesman Anthony Warren said: "We continue to talk with Congress and we hope to make progress this weekend."

The Democratic Senate majority leader, Harry Reid, said that support and co-operation from Republicans would determine when a vote would happen and whether it will succeed.

President George W Bush earlier said he wanted Congress to act next week on a rescue plan for the car industry by modifying a $25bn fund which was set up to promote fuel-efficient technologies.

Congressional Democrats have opposed this move and insisted the money should come from the bank rescue fund, known as the Troubled Asset Relief Programme (TARP).

But Ms Pelosi appeared to suggest that the $25bn fund could be used under certain conditions.

"We will not permit any funds to be borrowed from the advanced technology programme unless there is a guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative," she said.

"Regardless of the source, all funding needs will be tightly targeted with vigorous supervision and guaranteed taxpayer protection."

Do you work at one of the three affected companies? Is the bailout deal a good idea? Please send your comment using the form below: