Obama vows aid for car industry

US President-elect Barack Obama says he will not allow the country's car industry to collapse, but any state help must come with strict conditions.

The industry and its stakeholders would have to restructure, he told NBC television's Meet the Press.

Congress and the White House have been holding talks on a plan to rescue the beleaguered US car industry.

Mr Obama warned the economy would get worse before it improved, but any aid plan needed strong regulations.

He also named Japanese-American General Eric Shinseki as Veterans' Affairs chief.

He said Gen Shinseki was exactly the right person to honour returning soldiers.

The general left his former job as US Army chief of staff after disagreeing with the then Defence Secretary, Donald Rumsfeld, over the number of US troops needed to control Iraq after the invasion.

Financial controls

The country's struggling carmakers have asked for a $34bn (£23bn) rescue plan. Congress and the White House have been holding weekend talks to find a solution.

There had been disagreement over where the money should come from, with Congressional Democrats opposing President George Bush's proposal to modify a $25bn fund which was set up to promote fuel-efficient technologies.

But according to Congressional sources, House Speaker Nancy Pelosi, a Democrat, has suggested that the fund could be used under certain conditions.

The plan is a stop-gap measure intended to help the three firms survive until Mr Obama's administration takes over in January and can craft a longer-term solution, correspondents say.

In the NBC interview, Mr Obama avoided going into detail about the car industry rescue plan, but said letting major carmakers such as General Motors, Ford and Chrysler go bankrupt was not an option.

"That means we're going to have to figure out how to put the pressure in the same way a bankruptcy court would... but do so in a way that allows them to keep their factory doors open," he said.

The 2008 winner of the Nobel economics prize Paul Krugman said he doubted the US car sector would survive, but that it was worth supporting it in the short term.

"In the end these companies will probably disappear," the economics professor at Princeton University said.

Mr Obama said he also wanted to see tighter controls on the financial sector as a whole.

"As part of our economic recovery package what you will see coming out of my administration right at the centre is a strong set of financial regulations which banks, ratings agencies, mortgage brokers, a whole bunch of folks (will) start having to be much more accountable and behave much more responsibly."

UK car parts firm Wagon collapses

The UK arm of leading European car parts business, Wagon Automotive, is to go into administration after talks on a new funding deal with its banks failed.

Wagon Automotive employs 500 workers in the West Midlands and supplies parts to Ford, Honda, General Motors and Nissan.

The firm said it hoped some of its plants in other countries would be able to avoid going into administration.

Birmingham-based Wagon employs over 4,000 workers across Europe, and has struggled due to the car market slump.

Several of its customers have cut back production or temporarily shut plants in order to reduce their own costs.

The corporate restructuring group, Zolfo Cooper, is expected to act as Wagon's UK administrator.

In a statement the company said: "Decisions on the overseas group companies have not been made."

"It is anticipated that some may be able to continue to trade without needing insolvency protection," it said.

The firm has plants in Coventry and Walsall.

Funding problems

Shares in Wagon were suspended in October after it reported a "steep deterioration" in the European car market and said it was in funding talks with its lenders.

The firm - which is controlled by the American billionaire Wilbur Ross - failed to persuade its banks to led it more money.

The banks, led by the Royal Bank of Scotland and including Lloyds TSB, both of which are now largely controlled by the government, declined to contribute 12m euros (£10.3m; $15.2m) to a 50m-euro funding package.

Wagon's carmaking clients had put up 30m euros and Mr Ross was understood to have been prepared to contribute 10m euros through the purchase of one of its subsidiaries.

The funding package would have kept the firm running for another three months. The banks had already agreed loans totalling 155m euros during the summer.

The Chancellor, Alistair Darling, is set to chair the inaugural meeting of the Lending Panel later this week, which was set up in the pre-Budget report to monitor closely banks' lending practices to companies and individuals.

The company traces its roots back to Wagon Repairs, a business set up at the end of World War I to maintain railway rolling stock.

India unveils $4bn stimulus plan

India has announced $4bn (£2.72bn) in extra spending to boost its economy as the global financial crisis unfolds.

The government said it was also planning a substantial spending increase in next year's budget.

The move came as the Reserve Bank of India cut its key interest rate by one percentage point, from 7.5% to 6.5%, on Saturday to encourage spending.

It is the third time since October the central bank has cut rates, which are now at their lowest since June 2006.

As well as the global financial situation, business confidence in India has also fallen in the wake of the Mumbai attacks that left at least 170 dead.

Growth stimulus

Prime Minister Manmohan Singh's office said in a statement: "The government has decided to seek authorisation for additional planned expenditure of up to 200bn rupees ($4bn) in the current year."

The prime minister's office said the government was keeping a close watch on the economic situation and would take any additional needed to "maintain the pace of economic activity".

Under the plan, various categories of value-added tax will be cut by up to 4 percentage points to encourage consumer spending.

The package also includes measures to boost infrastructure spending, help businesses, and aid labour-intensive export sectors such as textiles and handicrafts.

Mr Singh, who recently took control of the finance ministry, last week forecast that India's economy would grow by 7.5% in the year to March 2009.

However, economists say growth could be as low as 6.8% this financial year, and 5.5% the following year.

Business leaders had hoped the government would do more.

Amit Mitra, secretary general of the Federation of Indian Chambers of Commerce and Industry, said the package was pointing in the right direction, but "could have done even more" to help boost growth.

India's rising budget deficit means it can do far less than a country like China - which last month announced a $586bn stimulus package - to spend its way out of economic problems.

Until now, India has focused on using monetary policy to counter the effects of the global slowdown.

Since mid-September, the Reserve Bank of India has injected $60.2bn into the financial system to boost liquidity.

Oil prices up on talk of Opec cut

Oil prices have rebounded from four-year lows after Opec's president said the oil cartel could announce a large reduction in oil production.

US light, sweet crude rose $2.55 to $43.36 a barrel and London's Brent crude went up $2.51 to $42.25 a barrel.

On Friday, oil prices fell to a low of $40.50 after weak US economic data.

Opec President Chakib Khelil said on Saturday the cartel could "surprise" markets with an output cut at its meeting on 17 December in Algeria.

He did not specify how big the cut could be, but said that some analysts were expecting a reduction of up to 2 million barrels per day.

"The possibility of Opec moving to tighten up the oil market is real," said David Moore at Commonwealth Bank of Australia.

A jump in stock markets and hopes for a stimulus plan for US carmakers also helped support oil prices.

Oil prices reached an all-time record of $147 a barrel in July.

Now analysts forecast much lower prices amid the worsening situation in the global economy.

Merrill Lynch said crude prices could fall to $25 a barrel if China is hit hard by the global recession.

Markets surge on stimulus hopes

European and Asian shares have surged on hopes that new stimulus plans in the US and other countries will revive global economic growth.

In the UK, the benchmark FTSE 100 jumped almost 5%, while the German Dax and France's Cac 40 rose even higher, up almost 7%.

Earlier, Asian stock markets also rallied. Korea's Kospi index rose 7.5% to a near four-week high.

Hong Kong's Hang Seng ended up almost 9%, while Japan's Nikkei added 5.2%.

Stock markets in India and mainland China also rose.

Great expectations

US President-elect Barack Obama said on Saturday his recovery plan would offer the biggest infrastructure investment since the creation of an interstate highway in the 1950s and create at least 2.5 million new jobs.

Hopes that Congress will soon pass legislation that will save the "big three" Detroit car makers from collapse also helped to cheer investors after a dire session on Friday fuelled by grim US unemployment figures.

South Korea and India also unveiled measures to help firms and boost their economies.

"Despite bad US jobs data [announced on Friday], markets are gaining on a sense that they've hit the bottom and expectations for economic stimulus measures being put out by many governments," said Hiroake Osakabe at Chibagin Asset Management.

"There was also talk about further actions by the Chinese government to protect its growth," said Kim Seung-han at HI Investment & Securities.

The UK FTSE rose 197.8 points to 4,247, while Germany's Dax climbed 304.2 points to 4,685 and France's Cac added 192.4 points to 3,180.4.

Mining and construction groups and firms that make machinery were the biggest gainers on hopes that they will benefit from increased investment on infrastructure.

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.