Pound falls back against dollar

Sterling has fallen back against the dollar after the US currency rallied in early trade and a Bank of England policymaker warned of "false dawns".

The pound capped a rise in recent weeks by hitting $1.60 on Wednesday for the first time since November last year.

But it fell to $1.5925 on Thursday as investors took profits and the dollar rose against a range of currencies.

The Bank of England's David Blanchflower warned that the worst of the global crisis may not be over.

"My worry is that there can be many false dawns and we shouldn't assume that everything is over," he said in an interview with the Times newspaper.

Retail sales down

Separately, a survey by the CBI provided more gloomy news on the UK economy.

The CBI's distributive trends survey said that UK retail sales had fallen by more than expected in May and that retailers were expecting a further deterioration next month.

But analysts expect the pound to remain strong as it rebounds from the 23-year low of $1.3620 against the dollar in January.

"The bullish momentum is stronger than it has been since December 2006," said Nicole Elliott of Mizuho Corporate Bank.

An early rally by the dollar also saw it strengthen against the euro. One euro dropped to $1.3867 from $1.3965 on Wednesday.

US begins GM bankruptcy planning

General Motors and the US Treasury have improved the offer to GM's bondholders, as they prepare for the firm's move into bankruptcy protection.

Bondholders with $27bn (£17bn) of GM debt are now being offered the option to buy an extra 15% of GM shares as part of a proposed bankruptcy deal.

This is on top of the 10% they had previously been offered.

If bondholders back the new offer, it will allow GM to exit bankruptcy protection more quickly.

The US car giant is expected to apply for bankruptcy protection by 1 June.

GM said it had already secured the backing for the new offer from bondholders representing 20% of the bond debt.

Under its plans to reorganising its share base, the US government will take a 72.5% stake.

Sensex soars 350 pts in opening trade on global cues

The Bombay Stock Exchange benchmark Sensex surged by over 350 points in early trade on Wednesday on increased buying by funds as well as retail investors after strong rally in the global markets.

The 30-share index surged by 354.22 points to 13,943.45 points with most of the index stocks rising sharply.

The BSE barometer had lost 323.99 points on Tuesday.


The wide-based National Stock Exchange index Nifty rose by 103.90 points, or 2.52 percent, to 4,220.60 points.

Marketmen said sentiments were largely bolstered on firming trends in global markets after US consumer confidence showed its biggest monthly jump in six years.


Short-covering by speculators ahead of tomorrow's May month expiry in the derivatives segment also supported the rally, they added.

Major gainers were Reliance Industries (1.54 per cent at Rs 2,177.00), Infosys (1.93 per cent at Rs 1,573.00) and ICICI Bank (4.71 per cent at Rs 698.50).

Reliance Communications spurted by 5.51 per cent to Rs 307.50, DLF Ltd by 3.44 per cent to Rs 348.50, Tata Steel by 3.66 per cent to Rs 374.20, Sterlite Industries by 4.65 per cent to Rs 565.00, Larsen and Toubro by 2.94 per cent to Rs 1,291.70, State Bank of India by 2.91 per cent to Rs 1,737.

Meanwhile, Hong Kong's Hang Seng was up 3.86 per cent and Japan's Nikkei gained 1.84 per cent in early trade.

Surprise trade surplus for Japan

Japan's export slump eased in April, leading to an unexpected trade surplus for the world's second largest economy, official figures show.

Exports fell by 39.1% compared with the same month last year, slightly better than the 45.6% fall recorded in March.

This resulted in a trade surplus of 68.9bn yen ($722.7bn; £452.7bn), much better than economists had expected and Japan's third straight monthly surplus.

Japan's economy shrank at a record rate in the first three months of this year.

'Optimistic'

"Today's release supports our view that exports are past the worst," said Chiwoong Lee at Goldman Sachs.

A slump in exports, triggered by the global economic slowdown that hit demand for Japanese cars, electronics and other goods, led to an economic contraction of 4% between January and March this year.

But some economists are predicting a turnaround in the country's economic fortunes.

Government stimulus and a recovery in exports should ensure that the economy avoids contraction in the current quarter, said Masamichi Adachi at JP Morgan.

"In the short term, we are rather optimistic. But after that, there are many challenges facing the Japanese economy," he added.

Last week, Japan's central bank upgraded its economic outlook, saying the worst of the recession might be over.

Rupee surges 41 paise against dollar in opening trade

The Indian rupee on Wednesday soared by 41 paise against the dollar on anticipation of heavy foreign capital inflows as stock market may open higher in tandem with other Asian markets.

At the Interbank Foreign Exchange (Forex) market, the domestic unit was quoted at 47.51 a dollar in the opening trade, a rise of 41 paise over the previous close.

Rupee had nosedived by 64 paise to close at 47.92/93 on Tuesday, its biggest fall in almost three months.


Dealers said expectations of a surge in the domestic stock markets in line with other firming Asian markets leading to capital inflows strengthened the rupee sentiments.


However, month-end dollar demand from importers and refiners capped the rupee's gains to some extent, they added.


The Asian equity markets rose by up to 3.7 per cent in the morning trade on Wednesday.

Consumer confidence buoys market

US shares have risen after a survey suggested US consumer confidence was at its highest level since last September.

The Conference Board's Consumer Confidence Index jumped to 54.9 for May from 40.8 last month - well beyond the average 42.3 predicted by economists.

The indicator is being closely watched as a guide to whether consumers are likely to start shopping again.

The Dow Jones added 2.4%, despite other data showing record house price falls in the first quarter of 2009.

The Conference Board index suggested consumer confidence had hit its highest level since last September.

That was when the collapse of Lehman Brothers accelerated the global financial crisis.

No recovery signs

House prices fell by 19.1% in the first three months of the year from the same time last year, the Standard & Poor's/Case-Shiller National Home Price index suggested.

It also showed home prices had fallen 32.2% since peaking in the second quarter of 2006.

However, it suggested that the pace of month-on-month declines had slowed.

The housing index, which looks at 20 key cities, saw prices fall by 18.7% in March from the year before.

These declines were slightly better than February's falls, and it was the second straight month that indexes did not post record drops.

But there were still no signs that home prices had hit the bottom, said David M Blitzer, chairman of the S&P index committee.

"We see no evidence that a recovery in home prices has begun," he said.

Rupee down 22 paise against USD in early trade

The Indian rupee depreciated 22 paise against the US dollar in early trade on Monday, snapping its six-session upward journey, on expectations of fresh capital outflow by foreign funds as domestic bourses may open in the negative zone, in line with other Asian markets.

At the Interbank Foreign Exchange (Forex) market, the local unit, which had gained nearly 4.9 per cent during the last week, turned weak and fell 22 paise to 47.32 a dollar.


On Friday, the domestic currency had ended 27 paise higher at 47.10/12 against the greenback.


Forex dealers said the benchmark Sensex is likely to open on a weak note in line with other Asian markets, which are down up to 1.5 per cent, leading to capital outflow by foreign funds.


Month-end dollar demand also put pressure on the rupee, they added.

Oil holds above USD 60 in Asia

Oil held above USD 60 a barrel in Asian trade on Monday ahead of a meeting this week of the Organisation of Petroleum Exporting Countries (OPEC).

New York's main futures contract, light sweet crude for delivery in July, was down 33 cents to USD 61.34 a barrel in morning trade.


Brent North Sea crude for July delivery retreated 23 cents to USD 60.55.


Prices eased as investors cashed in on profits ahead of the OPEC meeting on Thursday.


"Traders are taking profit from the markets," said Mark Pervan, a senior commodities analyst with ANZ Bank in Melbourne.


"It's probably a view that there is less likelihood of an output cut. OPEC has been fairly quiet on cutbacks so far," he said.


Algerian oil Minister Chakib Khelil was quoted by Newswires as saying that he expected oil prices to hit USD 70 dollars a barrel next year.



Oil at USD 70 a barrel is widely seen as the sustainable level for producers to resume large efforts to search for oil and gas.


The global economic crisis which towards the end of 2008 has seen energy demand plummets, dragging prices along with it.


Oil prices have fell from a record around USD 147 per barrel in July to about USD 32 in December as demand dropped off but have since risen gradually.

Shares rebound after test shock

Shares in South Korea suffered sharp falls following news of North Korea's nuclear test, before recovering.

South Korea's Kospi index fell as much as 6%, before rebounding strongly to end just 2.85 points lower at 1400.90.

There was little impact elsewhere in the region, with Tokyo's Nikkei index closing up 1.3% and Hong Kong's Hang Seng closing up 0.35%.

European markets opened lower, while the UK and the US markets are closed for a public holiday.

At 1000 BST France's Cac 40 index was less than 1% down at 3198.66 points. In Frankfurt the Dax was 1.2% lower at 4858.16.

Rupee breaches 47 level to hit five-mth high of 46.98 a dlr

The Indian rupee continued its upward march for the sixth consecutive day and breached the crucial 47-level against the US currency for the first time after 19th December, 2008, on sliding dollar in the overseas markets.

The rupee also drew support from encouraging trend in the local stocks and continued optimism about faster reforms in the financial sector paving the way for increased capital inflows.



At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed stronger at 47.15/20 a dollar from its previous close of 47.37/38 a dollar and later hit a five-month high of 46.98 against the American currency.



It, however, pared gains and was quoted at 47.14/15 a dollar in late morning trade.



Forex dealers said weak dollar overseas provided a fresh impetus to the Indian currency.



The dollar fell to its recent lows against the basket of currencies on fears about the US losing the AAA rating.



They said the rupee trimmed its gains due to some dollar buying by banks, probably on behalf of oil companies.

Japan upgrades economic outlook

Japan's central bank has upgraded its economic outlook, saying the worst of the recession might be over.

The move came after the bank's two-day policy meeting, at which it opted to keep interest rates on hold at 0.1%.

While domestic demand is expected to remain low, the bank said exports, on which Japan is heavily reliant, were forecast to pick up.

Data on Thursday showed Japan's economy shrank in the first quarter at its fastest rate since records began.

Output contracted by 4% during the first three months of the year, or by 15.2% on an annual basis, as exports fell, according to official figures.

Recovering

"The pace of deterioration in the Japanese economy will likely moderate," the Bank of Japan said.

"Going forward, although domestic private demand is likely to continue to weaken, exports and production, after levelling out, are expected to start recovering and public investment to increase."

The latest outlook is more optimistic than the bank's forecast in April, when it said economic conditions had "deteriorated significantly".

While the bank did not provide new growth forecasts with numbers, it said it would expand the types of collateral on offer in order to encourage lending.

High costs fuel record loss at BA

British Airways has announced the biggest loss since the company was privatised in 1987.

BA reported a loss before tax of £401m for the year to 31 March, after seeing its results hit by a weak pound and higher fuel costs.

BA made a revised profit of £922m in the previous year.

Although revenues increased to almost £9bn, BA faced a near-£3bn fuel bill. Chief executive Willie Walsh said he saw "no signs of recovery anywhere".

Fuel costs rose 44.5% after the price of oil soared last year. The weaker pound also contributed to rising costs as fuel is bought in US dollars.

The results included redundancy-related costs of £78m.

BA said it had cut more than 2,500 jobs since last summer and added that it was in talks with unions about "pay and productivity changes".

"The prolonged nature of the global downturn makes this the harshest trading environment we have ever faced and, with no immediate improvement visible, market conditions remain challenging," Mr Walsh said.

PM for pushing reforms, jobs and investment

Set to begin a new term in office, Prime Minister Manmohan Singh on Tuesday spoke of the need for reforms and reverse the slowing down of investment and employment generation caused by global economic slowdown.

Shortly after he was elected leader of the Congress Parliamentary Party paving way for him to become the Prime Minister for the second term, Singh said, "There is some slowing down of investment and employment generation. We have to reverse this. We have to revive growth and make it even more inclusive."

The Prime Minister said sustaining growth requires new investment and better management of government finances. This also "requires reform of the economy... Revitalisation of agriculture and acceleration of industrial development".

After growing by an average annual nine per cent for the last four years, the Indian economy came under pressure of the global meltdown and expanded at a slower pace of around seven per cent in 2008-09.

"...The global economic slowdown has hurt us.," Singh said. He said he would ask every minister to set time-bound targets for implementation of the election promises of the Congress Party and policies of the each ministry. "We will undertake quarterly review of the programme implementation by each ministry," he said.

The savings and investment rates have to be kept high to remain globally competitive in the face of economic challenges, he said.

Pound strengthens against dollar

The pound has strengthened against the dollar, after Bank of England minutes revealed that policymakers considered boosting money supplies.

The prospect of the move, which could encourage lending - stimulating the economy - boosted sterling.

By Wednesday afternoon, one pound could buy $1.5514, up from Tuesday's close of $1.5350. A day earlier, sterling had reached a five-month high of $1.5525.

The dollar was also weaker against both the euro and the yen.

At noon, the euro was trading at 88.16p.

Meanwhile, the yen was hit by the announcement that the Japanese economy had shrunk by more than 4% in the first quarter of 2009.

With analysts seeing indications of economic recovery, there are signs that investors are moving away from the greenback, often deemed a safe haven.

In January, the pound hit a 23-year low of $1.35 against the dollar.

Last July, the pound was worth more than $2 but its value plunged as signs emerged over the degree of the downturn in the UK.

The May minutes also showed members had unanimously voted in favour of keeping interest rate unchanged at 0.5%.

The Bank of England's minutes showed the bank was open to increasing its quantitative easing plan by the maximum £75bn permitted, which would help encourage lending.

Oil prices rise to six-month high

Oil prices have hit six-month highs, breaking through $60 a barrel as investors wait for key US inventory figures later on Wednesday.

US light crude rose to $60.70 a barrel, while London Brent climbed to $59.18.

US crude slipped below $60 on Tuesday, dragged lower by official data showing a record fall in the number of new homes built in the US.

Investors are hoping to see a fall in US inventories that would indicate an increase in demand for oil.

But some analysts believe the price will climb, even if inventories rise.

"I expect the market to push higher even if there's a build in the inventories, just because that's where the momentum is," said Jonathan Kornafel at Hudson Capital Energy.

Oil prices have risen from $50 a barrel over the last three weeks, as optimism about the state of the world economy has grown.

And it has jumped from $32 levels seen in January, though remains well below the record high of $147 touched last July.

Toyota unveils new Prius hybrid

Toyota, the world's biggest carmaker, has revealed the latest revamp of its Prius petrol-electric hybrid in Japan.

The carmaker said it has had 80,000 advance orders in Japan. It is aiming for sales of 400,000 a year globally.

Incoming president Akio Toyoda, the grandson of the company's founder, said the future of cars rests on this model.

Prius is the world's best-selling hybrid, but Toyota's dominance of the sector has been challenged by rival Honda's cheaper Insight model.

The new Prius gets a combined 50 miles per gallon, compared with 46 mpg for the 2009 model, Toyota said.

It has not yet announced when the new version will be available outside Japan.

Worst loss

The carmaker is pinning its hopes on a new Prius boosting sales, after this month reporting its worst annual loss of 436.94bn yen ($4.4bn; £2.9bn) in the year to 31 March, due to the deepening recession and strong yen.

The Prius, launched in 1997, is now in its third generation.

By the end of April, Toyota said it had sold 1,028,000 of the cars worldwide, more than half of them in North America.

Toyota said its Japan prices for the Prius would start at just over 2m yen, or about £13,800 ($20,900), which is cheaper than the current Prius.

It also announced it will cut the price of the second-generation model on sale now, to 1.89m yen, the same price as Honda's Insight.

Stock market into buying frenzy; trading suspended for day

Hailing the decisive mandate to the Congress-led UPA, investors went into a buying frenzy, resulting in an unprecedented surge in the BSE Sensex, which rose by nearly 2,100 points and forced the authorities to suspend trading for the day.

Trading was suspended for two hours within seconds of opening of the market after the BSE surged by over 1,300 points and the authorities closed the floor immediately after trading resumed at 1155 hours. The BSE sensex closed 17 percent higher at 14,272.63.

Echoing the sentiment, the NSE index also rose by 20 percent, prompting the authorities to suspend trading for the day.



In two bursts, the 50-share Nifty rose over 712 points, a buoyancy that led to an all-round appreciation in share prices, which marketmen say is the first of its kind.

The BSE 30-share index zoomed to close at 14,272, up by nearly 2,100 points. The NSE index surpassed all the three upper limits of 10, 15 and 20 percent, forcing the authorities to suspend trading for the day.

With the UPA getting near a clear majority in the 15th Lok Sabha, economic reforms are set to get pace in all the sectors, a leading broker said.

Venezuela seizes US pasta company

Venezuelan officials accompanied by soldiers have seized "temporary" control of a US-owned pasta producer.

Venezuela says the plant, owned by the big US firm Cargill, had violated regulations on price controls intended to guarantee cheap food for the poor.

The move further increases President Hugo Chavez's hold on the economy, after a series of recent take-overs of private and foreign-owned businesses.

They include a Cargill rice plant, and services companies in the oil industry.

Deputy Food Minister Rafael Coronado said the government would run the factory for 90 days, and would reassess the situation after that.

He said it has not been producing sufficient quantities of a type of pasta sold at cheap, government-established prices.

Price control

A rice mill owned by Cargill was taken over earlier this year, on the grounds that it was not producing rice at government-set prices.

Cargill had said it did not break the government's pricing rules on rice because the mill did not produce the plain rice which is regulated.

Venezuela has set quotas and prices for 12 basic foods including rice, powdered milk, cheese and tomato sauce.

Under the measure, 80% of all rice produced must be basic white rice. The measure also includes 95% of all cooking oil, coffee and sugar.

Last week Mr Chavez sent troops to take over oil service companies including hundreds of supply boats, and two American owned gas facilities.

He nationalised Venezuela's oil reserves, one of the largest in the Americas, two years ago.

GM to close up to 1,100 dealers

General Motors (GM) has announced plans to close up to 1,100 of its dealerships in the US as it desperately tries to cut costs and stave off bankruptcy.

It also plans to cut ties with another 470 Saturn, Hummer and Saab dealers.

Closures announced today represent one quarter of the dealership network. GM plans to cut the total number of dealers by 42% by the end of 2010.

On Thursday, rival Chrysler said it would be closing 789 US dealers as part of a massive restructuring programme. GM is also in negotiations with unions to reduce wage costs.

Oil prices fall towards USD 58

Oil prices fell towards USD 58 on Friday as news of a deepening recession for Europe further dampened hopes of a quick rebound in energy demand, analysts said.

New York's main futures contract, light sweet crude for delivery in June, dropped 27 cents to USD 58.35 a barrel after rising earlier on Friday in line with firmer stock markets.



Brent North Sea crude for July delivery shed 52 cents to USD 58.07. The June contract expired yesterday priced at USD 56.69.



"Markets were a little lower ... after data from Europe disappointed," said Nimit Khamar, energy analyst at Sucden brokers in London.



The 16 nation eurozone economy contracted a record 2.5 per cent in the first quarter as Europe lurched deeper into recession while Germany suffered its biggest blow for 40 years.



Accounting for a third of eurozone output, Germany contracted 3.8 per cent in the first three months compared to the final quarter of 2008, when the economy shrank 2.2 per cent, the statistics office said.



France, Germany's main partner and the second-biggest eurozone economy, meanwhile entered recession as output fell 1.2 per cent after a 1.5 per cent drop in the last quarter of 2008.

Suzuki boosted by sales in India

Suzuki Motors has avoided reporting a loss for the January to March quarter, helped by growth in India, but was downbeat about future sales.

The carmaker made a net profit of 5.8bn yen ($59m; £39m), during its fiscal fourth quarter, down 27% on a year ago.

Suzuki controls about half of the car market in India through its local unit Maruti Suzuki, which has seen sales rise for four months in a row.

The firm now expects global profits to fall 82% in its current financial year.

Suzuki predicts they will decline to 5bn yen due to the global slump in demand for new cars.

It also expects it will be affected by the continuing strong yen, which eats into its overseas earnings.

Indian boom

In India, Maruti's sales rose to 64,857 vehicles in April, helped by its bestselling Alto car and new models such as the A-Star and Swift DZire.

The rise in Indian sales contrasts with falling demand in the US, Europe and Japan, which Suzuki's rivals Toyota and Honda have been more exposed to.

On Friday Toyota said it forecast an annual loss of 550bn yen and expected to sell one million fewer cars this year.

Suzuki's revenues for the January to March period declined 27% to 670bn yen.

Bharti Airtel becomes India's biggest music company

Indian telecom giant Bharti Airtel has now become the country's biggest music company, overtaking the industry leader Saregama, on the back of its music-related value-added mobile services, a top executive has said.

"Music Bharti has become the largest music company in India, overtaking Saregama India Ltd in terms of revenue," Bharti Airtel's Deputy CEO Sanjay Kapoor said.

While Kapoor did not disclose the exact revenue earned by Music Bharti, which provides music services like hello tunes, call-back tunes and music on demand, Saregama had a annual revenue of about Rs 150 crore in the fiscal ended 31st March 2008.

Bharti Airtel, flagship company of Sunil Mittal-led Bharti Group, recently entered into an exclusive multi-million dollar deal with Machester United here, under which it would offer its mobile subscribers access to the mobile content related to the British soccer club.

"We are growing fast in the music segment," Kapoor said, adding there was huge growth potential for the company in other value-added service segments like mobile commerce also.



"About 80 per cent of Indians are unbanked and mobile- commerce, as also money transfer through mobiles, would bring in financial inclusion," Kapoor said.

"These services are catching up very fast among Indians and have a huge potential for generating revenues at Bharti Airtel," he added.

Late last year, Bharti Airtel had bagged the 'Best Mobile Music, TV or Video Service' award at the GSMA Asia Mobile Award 2008 at Macau.



Airtel's Music-On-Demand was awarded for creating a uniquely intuitive, personalised user experience of music on mobile.

Airtel had bagged the prestigious award among stiff competition from global leaders such as Telstra Corporation, Australia, Geodesic Inc, US, Artificial Life Inc, Hong Kong and Gracenote, US.

The company was also recognised as the best among its global peers for its Music-On-Demand service.



At that time, the company had said, "At Airtel, we believe that music in its various forms, genres strikes a universal chord with mobile users. Today an increasing number of customers are looking at the mobile as their single device for all entertainment needs."

India to receive uranium from Kazakhstan

India could soon receive up to 2500 tonnes of uranium from Kazakhstan as an agreement in this regard is set to be signed between the two sides by the month-end.

Nuclear Power Corporation of India Limited (NPCIL) and Kazatomprom are holding talks and a contract for supply of uranium is expected to be signed by the end of this month, Kazakh Ambassador Kairat Umarov told a news agency in New Delhi.



The fuel will be meant for the existing nuclear plants that are under IAEA safeguards, he said.



On the quantity of uranium to be supplied under the contract, Umarov said he was not aware as the companies were dealing with the issue directly.



Sources, however, said the discussions centered around supply of 2500 tonnes, a quantity which India wanted for running its reactors to full capacity.



Incidentally, China recently signed an agreement with Kazakhstan, one of the largest producers of uranium, for supply of 23000 tonnes of the nuclear fuel till 2020.



China is expanding its nuclear industry and in this regard is building 50 nuclear power stations.



Umarov expressed hope that the first contract between the companies of India and Kazakhstan would lay foundation for to long-term association.

Prices in China continue to fall

China's consumer prices fell by 1.5% in the year to April, figures show, the third consecutive month of declines.

The drop came after food and energy prices eased from last year's high levels, and followed annual falls of 1.2% in March and 1.6% in February.

Food prices were down 1.3% in April from a year ago.

A key factor was the drop in the price of pork, which was down 28.6% from a year earlier. In 2008, shortages had sent pork prices sharply higher.

Costs for fuel and raw materials were 9.6% lower than the same period a year ago.

The fall in prices had been expected.

"The sharp rise in food prices in early 2008 and subsequent declines explain much of the year-on-year fall in CPI inflation," said Jing Ulrich, chairman of China equities at JP Morgan.

"Deflationary concerns appear to be subsiding as the economy shows signs of recovery."

Fears over Opel plant 'very big'

The head of the German state that is home to Opel's threatened engine and parts plant has said that his fears for its future are now "very, very big".

The comments of Kurt Beck, the state premier of Rhineland-Palatinate, came following a meeting with Fiat chief executive Sergio Marchionne.

Mr Machinonne met regional German leaders as he continues plans to buy Opel from its US owner General Motors.

Fiat has already said the engine plant in Kaiserslautern is likely to shut.

This is because Fiat already makes many of the same engines at its own facility in southern Italy.

'Growing fears'

Following the meeting with Mr Marchionne, Mr Beck said that "the question marks concerning the interests of Opel and its German production plants - above all Kaiserslautern - have grown rather than diminished". The Kaiserslautern facility employs about 3,400 people.

Fiat wishes to buy General Motor's European business, which is called GM Europe.

GM Europe makes Opel cars, which are called Vauxhall in the UK.

It also includes Sweden-based Saab, but reports suggest Fiat is not interested in buying that business.

Germany's Economy Minister Karl-Theodor zu Guttenberg said on Friday that he hoped Canadian car parts firm Magna would continue with its rival interest in buying GM Europe. However, analysts say Fiat still remains by far the most likely buyer.

Pace of US job losses is slowing

The US economy lost 539,000 jobs in April, fewer than in previous months, in a sign that the US jobs market might be beginning to improve.

April's figure was better than the 600,000 economists were expecting and below March's revised 699,000 jobs.

The Labor Department said that the unemployment rate rose to 8.9%, its highest level since 1983 and up from 8.5% in March.

Since December 2007, the US economy has lost 5.7 million jobs.

The data showed job losses across most sectors of the economy, although hiring picked up in education, health services and government. Chris Rupkey, an economist at Bank of Tokyo Mitsubishi said the economy may have reached a turning point and the labour market could begin to improve.

"The economy doesn't turn on a dime but it does look as if the pace of job losses is starting to slow from the turn of the year," Mr Rupkey said.

"You can make the case that the panic layoffs that we saw at the turn of the year are starting to ease."

There have been some signs that the worst of the recession in the US may be over.

Consumer spending, which plunged in the last half of 2008, grew in the first quarter of this year and some recent data on the housing market has been more upbeat.

The head of the US central bank, Ben Bernanke, has said he expects the recession to end this year unless there is a major financial setback.

But others are less optimistic and predict that unemployment will decline further.

"It's a terrible number but an improvement relative to the very terrible numbers we had before," said Jay Mueller, senior portfolio manager at Wells Capital Management.

"The big question is, has the peak in job losses hit? I am somewhat sceptical that we have seen the absolute worst of it."

Banks unveil cash-raising plans

US bank Wells Fargo has said it plans to raise $7.5bn (£4.9bn) from selling new shares, a day after the US Treasury said 10 banks needed to boost reserves.

Morgan Stanley is also hoping to raise $3.5bn from share sales.

Bank of America said it planned to sell assets and raise capital to secure the $33.9bn it needs.

On Thursday, the US Treasury said that 10 of America's 19 largest banks needed to raise a combined total of $74.6bn of extra funds.

That was the main finding of the so-called "stress tests" which were carried out to see if the banks had sufficient capital to cope should the recession worsen.

The banks that require extra capital have been given until 8 June to finalise their plans to do so, and get them approved by regulators.

Separately, Fannie Mae, the mortgage finance company, has said it needs an extra $19bn in government aid after reporting a loss of $23.2bn for the first quarter.