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.

Japan in surprise economy boost

Industrial output in Japan rose in March for the first time in six months, according to government figures.

Production rose by 1.6% in March compared with February, after months of dramatic decline.

The larger-than-expected increase is being seen as a sign that the country's plunge in production and exports may be nearing an end.

The world's second biggest economy has been hit hard by the global downturn, sliding into a sharp recession.

These are grim times for Japan's economy but the latest figures from the government show a small improvement.

But the new figures are a sign that the strategy of Japan's manufacturers - to mothball production lines, reduce shifts and lay off staff - may be working.

With stockpiles of unsold goods diminishing some factories are starting to come back to life.

Japan has been hit badly by the downturn because worldwide demand has collapsed for its cars and electronics.

The increase follows figures earlier this month showing that exports have also risen slightly, although shipments are still running at just over half the levels of a year ago.

A government survey of manufacturers showed they expect industrial production to continue to rise, by 4.3% during April and by 6.1% in May.

Chrysler approaches key deadline

Chrysler is just hours away from a deadline that could force it to file for bankruptcy protection.

Continuing efforts to restructure the business focus on persuading its main lenders to write off its debts, but reports say these talks have stalled.

Chrysler is also continuing discussions to form an alliance with Fiat, another key demand of the US government.

President Barack Obama said Chrysler could emerge stronger afterwards if a bankruptcy filing proved necessary.

"It would be a very quick type of bankruptcy and they could continue operating and emerge on the other side in a much stronger position," he said.

Government assistance

The US government has told the carmaker it would be given a further $6bn (£4bn) of vital state loans if the restructuring is completed by 30 April. So far Chrysler has managed to persuade its main union to back the restructuring and agree a cost-cutting deal.

The sticking point remains whether the carmaker can persuade its main lenders to accept $2bn in cash in exchange for writing off all of Chrysler's $6.9bn secured debt.

The company, the smallest of the US "Big Three" carmakers after General Motors (GM) and Ford, secured a $4bn loan from the US government in January, and has since gained $500m more.

GM has also received multi-billion government loans. While Ford has yet to require any money, the government has agreed to give it financial support, should it be needed.

All three firms have seen sales slump in their home market as the recession has intensified.

Rupee bounces back by 47 paise vs dollar

The Indian rupee on Wednesday bounced back by 47 paise to close at 50.04/05 against the dollar, in the midst of firm equity markets and a weak US currency overseas.

Fresh capital outflows amid dollar selling by foreign banks also helped the rupee recovery.



At the Interbank Foreign Exchange (Forex) market, the local currency resumed higher at 50.26/28 a dollar and moved up further to settle the day at 50.04/05, a rise of 0.93 per cent over its previous close of 50.51/52 per dollar.



It moved in a range of 50.04 and 50.30. In the last two sessions, the rupee had dropped by 71 paise or 1.43 per cent.



A sharp recovery in the Indian equity markets mainly helped the rupee rise.



The dollar's weakness against its major rivals also boosted rupee sentiment, a forex dealer said, adding that foreign banks were seen selling dollars on expectations of further fall in the American currency.

GM to cut a further 21,000 jobs

General Motors (GM) is to cut a further 21,000 US jobs this year and phase out its Pontiac brand, as it aims to meet a 1 June deadline to revamp its business.

GM has to complete its restructuring by that date to gain the extra multi-billion dollar government loans it needs to avoid bankruptcy protection.

The firm also said it hoped to halve its debts by persuading bondholders to swap $27bn (£19bn) of bonds for shares.

GM also wants the government to swap half its current loans for a 50% stake.

The government has so far given GM $15.4bn in loans.

Falling sales

GM said it also wants its main union, the United Auto Workers, to accept shares in the firm in exchange for cancelling 50% of the $20bn the firm must pay into a union-run healthcare trust. The carmaker said it would phase out the Pontiac brand by the end of the year in order to focus on four brands in the US - Chevrolet, Cadillac, Buick and GMC.

GM also said it would reduce the number of its US dealerships.

After all the proposed changes, existing GM shareholders would own only 1% of the firm.

GM has already cut 10,000 US jobs this year, announced in February. Following the completion of the latest 21,000 reductions, its American workforce will be reduced to 40,000.

'New path'

Like US rivals Ford and Chrysler, GM has seen sales fall sharply in its core home market in recent years, a decline that has intensified as the recession has continued.

The White House's car industry taskforce said it welcomed GM's latest announcements, but added that the government had yet to make a decision regarding the carmaker's proposal that it exchange half the current loans for a 50% stake in the firm.

"The interim plan that GM laid out in this filing reflects the work GM has done since 30 March to chart a new path to financial viability," it said in a statement.

"We will continue to work with GM's management as it refines and finalises this plan and with all of GM's stakeholders to help GM restructure consistent with the president's commitment to a strong, vibrant American auto industry."

Japan expects slump in economy

Japan says it expects its economy to shrink by 3.3% over the coming year - the country's worst slump in at least half a century.

The news comes as the government prepares to present a 15.4 trillion yen ($159bn; £109bn) economic stimulus plan to parliament.

The projected downturn for the 2009 fiscal year would be the worst since Tokyo began measuring growth in 1955.

It follows an estimated decline of 3.1% in 2008, the government said.

Finance Minister Kaoru Yosano said the world's second biggest economy remained vulnerable to fresh turmoil overseas.

"Exports have plunged much harder than our expectation," he said.

Government estimates of the decline have been revised radically downward, in what officials described as quickly changing conditions.

"The global economic crisis and economic downturn is increasing in severity, and Japan's export market is rapidly shrinking," the Cabinet Office said in a statement.

Microsoft suffers first sales dip

Microsoft has said sales in the first three months of 2009 fell 6% from the previous year - its first quarterly drop in 23 years as a public company.

The world's largest software maker said profit dropped by 32% to $2.98bn (£2bn). Sales slipped to $13.65bn.

Microsoft makes most of its profit selling the Windows operating system and business software such as Office.

However demand has been hit by falling sales of personal computers as consumers and businesses trim spending.

Microsoft chief executive Steve Ballmer told the BBC World Service that its results had been "impacted" by the downturn in the world economy.

He also admitted the company would have had less total sales "than we would have had before the downturn". We expect the weakness to continue through at least the next quarter," said the firm's chief financial officer, Chris Liddell.

Microsoft - which became a public company in 1986 - has been looking at ways of cutting costs.

In January, it said it would cut up to 5,000 jobs over the next 18 months, including 1,400 immediately.

Oil prices lower in Asian trade

Oil prices were lower in Asian trade on Friday, below USD 50 a barrel, after posting modest overnight gains, with the economic downturn remaining a concern for investors.

New York's main futures contract, light sweet crude for June, fell 32 cents to USD 49.30 a barrel, while Brent North Sea crude for delivery in June was down 43 cents to USD 49.68.

Analysts said the market will remain volatile as countries worldwide seek a way out of the economic slump, which has weakened energy demand and pulled down oil prices.

The International Monetary Fund on Wednesday forecast a severe global contraction this year, sharply downgrading its already bleak outlook from earlier in the year.

It projected the global economy would shrink 1.3 percent in 2009, saying the financial crisis was proving more entrenched than expected.

Ford loss smaller than expected

Carmaker Ford has reported better-than-expected results for the first quarter of 2009 and says it does not intend to take government aid.

While it still reported a loss for the quarter, of $1.4bn (£0.96bn), this was better than analysts had forecast.

The news sent Ford's shares up more than 16% in early trading.

Carmakers across the world have been struggling to cope with a massive slump in demand for cars as consumers hold back on making expensive purchases.

Two of Ford's biggest rivals, General Motors and Chrysler, have taken billions of dollars in US government aid and still face bankruptcy.

The latest results show that Ford has $21.3bn in cash and reiterate that, "based on current planning assumptions, it does not expect to seek a bridge loan from the US government".