Bush urges joint crisis response

US President George W Bush has called for co-ordinated action by leading industrialised countries to tackle the worldwide credit crunch.

A common response must be "well thought-out", Mr Bush said.

The International Monetary Fund has also called for joint action estimating financial losses at $1.4 trillion.

This was double the US rescue package agreed last week, which has failed to stop market turmoil. On Tuesday, the Dow Jones reached a five-year low.

Mr Bush said finance ministers from G7 nations would meet in Washington at the weekend to discuss the crisis.

US President George W Bush has called for co-ordinated action by leading industrialised countries to tackle the worldwide credit crunch.

A common response must be "well thought-out", Mr Bush said.

The International Monetary Fund has also called for joint action estimating financial losses at $1.4 trillion.

This was double the US rescue package agreed last week, which has failed to stop market turmoil. On Tuesday, the Dow Jones reached a five-year low.

Mr Bush said finance ministers from G7 nations would meet in Washington at the weekend to discuss the crisis.

India for change in global financial regulatory systems

In wake of the global economic crises, India has strongly favoured a change in financial regulatory systems while advocating that developing countries have options to chose from available policy interventions in dealing with similar situations.


India also pitched in for the new financial regulatory systems to encourage highest standards of business conduct and compliance with closer official scrutiny.

"The financial crisis has sent a message for change in financial regulatory systems," Union Power Minister Sushilkumar Shinde said during the General Debate of the Second Committee in United Nations on Monday.

"In crafting new approaches to financial regulation we must take into account its international dimension. New regulatory regimes should encourage the highest standards of business conduct and compliance and go hand-in-hand with closer official scrutiny," he said.

Shinde pointed out that the developed countries have the luxury of trying out a variety of tools at their disposal to address financial problems and developing countries too should have a choice to select from such policy tools.

"This policy space is not being sought in order to renege on international commitments, but to ensure that, when faced with crises, all possible mechanisms are available to developing countries as they make a choice as to the one most relevant to their particular situation," he said.

Shinde called for a review of Bretton Woods institutions and demanded greater participation of developing countries in such an exercise.

The UN must regain its traditional role in guiding international economic policy, the minister said.

More turmoil hits Asian markets

Asian markets have plummeted in early trading amid fears the financial crisis may prompt a prolonged global downturn.

Japan's main index opened sharply down, a fall mirrored in Australian, South Korean and Hong Kong stocks.


On Tuesday, US stocks hit their lowest levels in five years as investors continued to worry over the strength of the world's banking institutions.

US President George W Bush has called for unified action to combat the world's financial crisis.

At the midday interval, Japan's benchmark Nikkei index was down 4.54%, dipping below the psychologically significant 10,000 mark for the second day running.

Australia's decline came despite the central bank's efforts to stem the crisis by cutting its official interest rate by 1% on Tuesday.

Hong Kong, which was on public holiday on Tuesday, opened down 5.1% on Wednesday.

Bush call

New York's main stock market index, the Dow Jones, rallied briefly on Tuesday before closing down more than 5%. The index has lost nearly 13% of its value in its past five sessions

Federal Reserve Chairman Ben Bernanke gave financial markets little reassurance when he said the US was tackling a financial crisis "of historic dimensions".

He signalled that the Fed - which is invoking emergency powers to buy up company's short-term debts - might be prepared to cut interest rates to support the economy.

Mr Bush telephoned the leaders of France, Britain and Italy to discuss ways of tackling the markets turmoil.

He called for co-ordinated action by leading industrialised countries to tackle the worldwide credit crunch.

The International Monetary Fund said losses on loans in the US, and on financial assets based on those loans, were likely to be double the $700bn provided in a rescue package agreed by Congress.

London's main FTSE 100 index had earlier rallied ahead of an anticipated announcement of a package to rescue the UK's beleaguered banks.

Britain's Finance Minister Alistair Darling is due to make a statement on the crisis before London's financial markets open, a day after shares in British banking giants HBOS and Royal Bank of Scotland shed nearly a third of their value.

As depositors took grew increasingly anxious their savings were at risk, EU finance ministers agreed to increase the guarantee for customers' bank savings accounts to at least 50,000 euros.

US stocks sink to five-year low

US stocks have hit their lowest levels in five years as fears grew that the financial crisis would trigger a deep economic recession.

World stock markets have seen mixed performances in Tuesday trading as investors continued to worry over the strength of financial institutions.

London's FTSE 100 and France's main stock index ended higher.

But US stocks took fright after Federal Reserve Chairman Ben Bernanke said the US economy looked set to deteriorate.

The Dow Jones industrial average sank 508.39 points, or 5.1% to end at 9,447.11. It has lost more than 1,400 points over the past five sessions, nearly 13% of its value.

The broader S&P 500 index fell to its lowest level since September 2003 at 996.25 points.

'Historic dimensions'

Having shed 7.8% on Monday, the key London FTSE 100 index closed up 0.35% despite HBOS and Royal Bank of Scotland both losing more than 30%.

France's Cac 40 index, which lost 9% in the previous session, ended 0.55% higher.

Earlier, Japan's Nikkei 225 index sank more than 5% before recovering slightly to close down 3%.

However, Australia's financial markets rallied after the country's central bank cut its official interest rate from 7% to 6%.

Fed chairman Mr Bernanke said the US was tackling a financial crisis "of historic dimensions" and signalled that the central bank might be prepared to cut interest rates to support the economy.

He said the outlook for inflation had improved as oil and other commodity prices had fallen.

"In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate," Mr Bernanke said.

Main developments on Tuesday included:

US President George W Bush called for co-ordinated action by leading industrialised countries to tackle the worldwide credit crunch
The UK government is poised to announce details of a comprehensive rescue package for the banking system
Spain, Belgium and the Netherlands have significantly increased the amount of savers' deposits they will protect
European Union finance ministers agreed to increase the guarantee for customers' bank savings accounts to at least 50,000 euros
EU moves to reassure bank savers
The Icelandic government took control of the country's second biggest bank, Landsbanki, which owns UK internet bank Icesave
Iceland takes over Landsbanki
Taiwan said that it would fully protect depositors' savings should a bank fail
The US Federal Reserve announced plans to buy massive amounts of short-term debt from companies in an effort to unfreeze the money markets
The British Chamber of Commerce said that the UK was already in recession
UK economy 'already in recession'
Australia's central bank trimmed interest rates from 7% to 6% - despite inflation being well ahead of government targets
Australia slashes interest rates
Moscow's two main stock exchanges opened several hours late on Tuesday having suffered heavy losses on Monday
Falls halt Russian market trading

Tatas to set up Nano car project in Sanand, Gujarat

After a controversial stay in West Bengal, Tatas shifted their Rs one-lakh car Nano project to Sanand near Ahmedabad at an investment of Rs 2,000 crore, delcaring that efforts will be made to roll out the world's cheapest car from a make-shift plant to meet the deadline.


"This is an extremely momentous and happy day for us because we have been through a rather sad experience from a small quarter of residents of West Bengal despite the state government's efforts," Tata Group Chief Ratan Tata said at a joint press conference with Cheif Minister Narendra Modi in Ahmedabad on Tuesday.

The MoU was signed by Tata Motors Managing Director Ravi Kant and Industrial Secretary Gouri Kumar

Praising Modi for speedy allocation of about 1,100 acres of centrally located land, Tata said the company had a great deal of urgency in having a new location and was driven by the reputation of the state.

"The site in Gujarat, already under the possession of the state government, will help Tata Motors establish a new dedicated mother plant with the shortest possible time lag and least possible increment project cost," he said.

Together with Tata Motors, about 60 vendors would also move to the new location.

Asked about the over-all deal offered by the Gujarat government, Tata said, "it is as good as or slightly better than the one we had previously (in West Bengal)."

Gujarat was one of many states in the race for Nano car manufacturing facility.



Welcoming Tatas, the Chief Minister said, "Tatas and Gujarat have started a new chapter of partnership which will give a new direction and dimension to the state. "After the Nano car project, Gujarat will make an important place in surface transport."



To begin with, Tata Motors would produce 2.5-3 lakh cars annually and the capacity is expandable up to five lakh cars per annum, Tata said.



When asked about the timing of launching Nano, Tata said, "It will be our endeavour to be close to the timeline so that we can keep our promise."

He, however, did not specify any timeline and said the company would make an announcement in this regard later.

"Building this plant in Gujarat will take some time and we have some make-shift plan to introduce Nano in the market in the interim month while the plant is being built," he said.

A company statement said it would explore the possibility of manufacturing Nano at its existing facilities in Pune and Pantnagar and would launch the car in the last quarter (Jan-March) of the current financial year.

Meanwhile, reports from Uttarakhand said 'limited production' of the world's cheapest car will take place in Pantnagar.

"Tata Motors officials have conveyed to the state government that limited production of Nano will be held in Pantnagar despite their decision to take the mother plant to Gujarat," said Uttarakhand media advisory committee Chairman Devendra Bhasin quoting Chief Minister B C Khanduri.

Tata Motors also plans to have CNG, electric and exports variants manufactured at the mother plant in Sanand, Tata said.

Talking about the size of investment, company's Managing Director Ravi Kant said it would be about Rs 2,000 crore.

"... there will be some more things that we are talking about. We expect more number of vendors to come here. The size of the plant would be much bigger than what we had planned for West Bengal," he added.



As per the agreement, Tatas would also undertake a number of initiatives for human resource development in the state, including setting up of ITIs.



When asked about the loss incurred due to pulling out of West Bengal, Tata said, "We would be retrieving most of our costs out of Singur and I don't believe that there will be a need to have any appreciable loss reflected in our financials in the current year."



"The cost of moving out would be the cost of dismantling and the cost of moving to a new location," he said.



According to the agreement, the homegrown auto major would purchase land from the Gujarat government at current market prices.



Last week, Tata Motors withdrew its Rs one-lakh Nano car project from West Bengal, with a disappointed Ratan Tata blaming the Trinamool Congress leader Mamata Banerjee for the "unfortunate and painful" decision.



Hitting out at Mamata, Tata had said, "Agitation by the opposition party has been the sole reason for this decision... How can we go into production when people are saying that we will continue agitation... I think Banerjee pulled the trigger".



Retaliating, Banerjee had said it was a "joint game plan" by the Tatas and the state government during Durga Puja festival.



Tatas had evacuated entire work force from Singur, complaining intimidation and violence from the agitators who had cordoned of the entire area since August to prevent progress on the project.



In the auto space, Gujarat so far has a General Motors plant in Halol, Bombardier's bus body making facility and Asia Motor Works' truck manufacturing unit at Bhuj.

Rupee fell to 47.30 against US dollar in early trade

The Indian rupee on Monday plunged by 21 paise to 47.30 against the US dollar in early trade on Monday on fears of capital outflow by foreign funds due to melting stock markets.


At the Interbank Foreign Exchange market (Forex), the domestic currency, which ended 47 paise lower to five-year low of 47.09/10 a dollar on Friday, depreciated by another 21 paise despite selling of dollars by state-run banks to curb fall in rupee value.


The Bombay Stock Exchange benchmark Sensex was down by 340.40 points to 12,185.92 in opening trade.
Similarly, Nifty fell by 119.95 points to 3,698.35.

Bush to sign nuke deal legislation on Wednesday

Asserting that that there are "no open issues" on the nuclear deal, the US President George W Bush will sign the legislation on the Indo-US nuclear deal, approved by the Congress, into a law on Wednesday.


Bush will sign the Bill H R 7081, named after Howard Berman, a Democrat who was strongly opposed to the deal on non-proliferation grounds but was brought around to accept it recently, on 8th October at the White House.

"The President will sign the legislation (passed by the US Congress) very soon. He wants to do it very soon. There are administrative reasons," US Secretary of State Condoleezza Rice told a press conference after talks with External Affairs Minister Pranab Mukherjee.

The bill once passed has to be transmitted to the White House.

It has been a busy time for last several weeks, she said explaining the reasons for the delay in signing the legislation by Bush.

Rice's visit coming shortly after the Congress approval of the legislation sparked speculation that the 123 would come up for signing with Mukherjee today.

In fact, she had rescheduled the visit by a couple of days.

"The President is looking forward to signing it very soon. The Hyde Act is completely consistent with 123 agreement....123 agreement is consistent with the Hyde Act. The US will keep its commitments to both," she said in reply to a question why there has been a delay and whether there were concerns on the Indian side.

"We don't have open issues," Rice said adding it was a matter of administrative and procedural details which would be worked out.

In his reply Mukherjee said once the President signs it into law and the process is complete "we will be in a position to sign the agreement on a mutually convenient date.
"I hope it will be signed shortly."

In their opening remarks at the joint press conference, both the leaders expressed satisfaction over their talks and the state of bilateral relations between the two countries.

"India-US relations are today better than ever before and have transformed into a truly strategic partnership," Mukherjee said.

Reciprocating his feelings, Rice said the two countries were executing the vision of Prime Minister Manmohan Singh and President Bush for closer and deeper relations between the two countries.

"The civil nuclear initiative is a historic agreement and historic achievement. The US will stand by its commitments," she said adding the US cooperated with India in the IAEA in view of its track record in non-proliferation.

"It gives us a new platform for cooperation in energy matters to develop civil nuclear power. We have opened new channels with India in areas of technology, agriculture, education and defence cooperation."

She said it was now now one of the broadest relations US enjoyed with India.

She also hoped that whoever succeeds Bush as President (after the November elections) would continue to build on the "strongest relationship" that the two leaders initiated in 2005.

Mukherjee said India-US relationship today had more than bilateral significance and the two countries were working together on a wide range issues including climate change and on UN Security Council.

He said the vision of this relationship chalked out by Singh and Bush would serve the interest of not not only India but the people of the region and the world.

Brussels moves to salvage Fortis

Belgium and Luxembourg have said they will take steps to protect the remaining assets of Fortis after its Netherlands business was nationalised.

Belgian Prime Minister Yves Leterme said he aimed to have a solution in place before the European stock markets opened on Monday.

He said the government was in talks with potential suitors, but would not rule out further state intervention.

The news comes after a cross-border rescue plan failed.

Last week, the governments of Belgium, the Netherlands and Luxembourg agreed to to put 11.2bn euros ($15.5bn; £8.7bn) into Fortis to reassure savers and clients about the financial health of the cross-border bank.

Under that deal, each government would have taken a 49% stake in the bank in their respective countries.

But unable to restore confidence in its balance sheet, the Dutch government took full control of its operations in the Netherlands on Friday.

Crisis of confidence

Governments across Europe are scrambling to restore trust in the region's financial system as the crisis that broke Wall Street financial giant Lehman Brothers sweeps across the Atlantic.

German property lender Hypo Real Estate, Franco-Belgian bank Dexia and UK bank Bradford & Bingley have all had to be propped up in one way or another by their respective governments.

Analysts say Fortis' funding problems began after it joined forces with Britain's Royal Bank of Scotland and Spain's Santander to buy Dutch bank ABN Amro for 70bn euros last year.

The purchase was agreed just before the US sub-prime mortgage market collapsed, wiping billions of dollars off banks' investments and paralysing the credit markets.

In interviews with Belgian television and radio stations, Belgian Prime Minister Yves Leterme said takeover talks were being discussed, but that he would not sell the bank in a rushed, cheap deal.

"Fortis is an important and healthy company that has good future prospects," he said.

"There are other possibilities than just leaving it to a private partner."

Tata scouts sites in Karna, AP for Nano; Modi presses hard

The Tata Nano car project has been vigorously wooed by Karnataka, Andhra Pradesh and Gujarat as its top officials carried out site inspections after the group exited West Bengal following political opposition.


The Tata Motors team led by its Managing Director G Ravikant and accompanied by Karnataka Industry Minister Murugesh Nirani visited three places in and around the twin cities of Hubli-Dharwad in Karnataka.



The Belur Industrial area, Mummiatti and another area around the airport near Hubli were the three sites which were offered by the government.


The team met Chief Minister B S Yeddyurappa and discussed with him the offer made by the state to the company to shift the Nano project to Karnataka.


The Nano officials, who attended the meeting besides Ravikant were Girish Wagh, who is heading the small car project, Tapan Mukhopadhya, GM (Finance) A S Puri, Legal Adviser.


Speaking to reporters after the meeting, Yeddyurappa said "I have made an offer and assured them of all facilities, including land, water and power".


"Now it is for them (the Tatas) to communicate", he said adding "I will also hold talks with Tata Chairma Ratan Tata."


It is the fourth round of discussions that Karnataka is having with the Tatas after it pulled out of Singur.


The team later flew to Hyderabad and held talks with Chief Minister Y S Rajashekara Reddy.


After the talks, Ravikant said "We want to know what they have to offer(for the Nano project)."


Chief Minister Narendra Modi pressed hard for the small car project to be shited to Gujarat saying there is "no place for red tapism in his state and it is only red carpet" for anyone wanting to set up shop.

Germany clinches bank rescue deal

Germany's finance ministry has agreed a 50bn euro ($70bn; £40bn) plan to save one of the country's biggest banks.

The deal, reached with private banks, to save Hypo Real Estate is worth 15m euros more than the first rescue attempt, which fell apart on Saturday.

Germany earlier announced an unlimited guarantee for all private savings, and Denmark later followed suit.

The steps brought little comfort to Asian markets, where Tokyo's Nikkei index tumbled 3.6% to a four-year low.

The South Korean currency also fell nearly 5%, hit by foreign currency shortages.

Monday saw the first session of the Asian markets since the US agreed a $700bn (£394bn) rescue plan for its beleaguered financial sector on Friday.

The problems of Hypo Real Estate have put further strain on other financial institutions struggling against a crisis of confidence in the global financial system.

French giant BNP Paribas confirmed on Sunday night it had agreed to buy 75% of Belgium and Luxembourg holdings of the giant Fortis financial group.

The governments of Belgium and Luxembourg will in return take a minority stake in BNP Paribas. The Dutch arm of Fortis has been nationalised by the Netherlands government.

And the Icelandic government agreed measures for the country's banks to sell off some foreign assets in a bid to shore up its entire financial system.

Iceland's currency last week plummeted by a fifth against the dollar and the government was forced to bail out the country's third largest bank, Glitnir.

'Irresponsible behaviour'

Berlin's finance ministry said it had acted to stop Hypo Real Estate's collapse in order to avoid "incalculably large" damage to Germany and financial services providers in Europe.

German Chancellor Angela Merkel said managers at financial institutions should be held accountable for "irresponsible behaviour".

Earlier, she moved to reassure German savers all their deposits would be safe.

Similar unilateral guarantees issued by the Irish and Greek governments last week were criticised in Berlin and other European capitals.

But after an emergency meeting with the central bank, Ms Merkel said: "We tell all savings account holders that your deposits are safe. The federal government assures it."

US job cuts at a five-year high

US employers cut 159,000 jobs in September, the most in more than five years, Labor Department figures show.

The data also showed the nation's unemployment rate was steady at 6.1% as more workers were added to the ranks of the unemployed than analysts predicted.

The figures mark the ninth month in a row that the economy has lost jobs.

Meanwhile, revised figures show that employers cut 73,000 jobs in August, slightly less than the 84,000 originally estimated.

But the job losses in July turned out to be a bit deeper - 67,000 versus the 60,000 previously reported.

The number of jobs axed in September was the largest amount since March 2003, when the labour market was still reeling from the 2001 recession.

"The employment figures were weak in every important dimension," said Pierre Ellis, senior economist at Decision Economics in New York.

"We've seen weaker data in history, but these look pretty decisively to be the beginning of something worse. Employment declines were widespread and large."

Manufacturers shed 51,000 jobs, construction companies cut 35,000 jobs, retailers lost 40,000 posts, business services axed 27,000 positions and financial services slashed 17,000 jobs.

There were also 17,000 posts cut in the leisure and hospitality sector.

The number of jobs being shed outstripped hiring gains by the government in education, health and other sectors.