South Africa cancels Airbus deal

South Africa has cancelled a multi-billion dollar contract for eight military aircraft with Airbus, citing escalating costs and delivery delays.

The deal for the A400M planes was signed a number of years ago, when the proposed cost of the planes was significantly less.

A government spokesman said the cost was now too great given its more limited resources during the downturn.

The A400M has suffered technical problems and has been delayed.

It was due to fly for the first time in March.

New contracts

"The cost escalation would have placed an unaffordable burden on the taxpayer at a time when the national [finances] are under pressure due to the economic downturn," said South African government spokesman Themba Maseko.

He said the planes would now cost 47bn rand ($6.2bn; £3.7bn), compared with 6.4bn rand when they were ordered.

Airbus said it was "surprised" by the decision.

"We regret this all the more since it comes at a time when the programme is making major progress towards a test flight before the end of the year," it added.

The A400M received a boost this summer, when seven European countries pledged to continue supporting the troubled plane.

Ministers from Belgium, France, Germany, Luxembourg, Spain, Turkey and the UK said they hoped to agree a new contract for the plane by the end of the year.

The project was launched in 2003 as a replacement for the main Nato military transport aircraft, the US-built Lockheed Martin Hercules.

UBS fined £8m by the UK regulator

The Financial Services Authority (FSA) has fined Swiss banking giant UBS £8m for failing to stop its employees making unauthorised transactions.

The FSA said four UBS employees had carried out the transactions using customer money on at least 39 accounts.

The unauthorised activities took place between January 2006 and December 2007. The FSA also said the trades involved foreign exchange and precious metals.

In a statement, UBS said it "deeply regrets this incident".

"Having fully co-operated with the FSA's investigation, we are now pleased that this matter has been settled so that we can move forward," the bank said, adding it had already taken full steps to deal with the problem.

Earlier this week, UBS reported a loss for the July to September quarter.

Venezuela step closer to Mercosur

Brazil's Senate Foreign Relations Committee has approved Venezuela's request to join the South American trade bloc Mercosur.

The committee voted by 12 to five in favour of Venezuela's application, and the proposal will now go before the Senate to gain full approval.

Paraguay's parliament must also approve Venezuela's membership before it will be allowed to join Mercosur.

Venezuela has been trying to join the bloc for three years.

The country officially teamed up with Brazil, Argentina, Paraguay and Uruguay as part of their Mercosur trading bloc in July 2006.

But, so far, its membership has only been approved by the Uruguayan, Argentine and Venezuelan parliaments.

Correspondents say a rejection by Brazil's Foreign Relations Committee would have been severely embarrassing for the Brazilian President, Luiz Inacio Lula da Silva, who is visiting Venezuela this week.

Mercosur was established in March 1991.

Obama signs military budget bill; Pak to get USD 2.3 billion

US President Barack Obama signed a USD 680-billion defence budget bill that provides USD 2.3 billion military assistance to Pakistan with tough condition to make sure that the funds are not squandered or diverted to affect the "balance of power in the region".

Obama said the Defence Authorisation Bill for 2010 eliminates some of the waste and inefficiency in the defence process that will better protect the nation, troops and save taxpayers tens of billions of dollars.


"The bill includes a commitment to the stability of Afghanistan and Pakistan, expanded programmes to keep nuclear weapons out of the hands of rogue states and terrorists, and a reformed system of defence acquisition to save taxpayer money," said House Majority Leader Steny H Hoyer.


The military aid money to Pakistan for the fiscal 2010 as mentioned in the bill has two major components USD 1.6 billion for the Coalition Support Fund and USD 700 million for the Pakistan Counterinsurgency Capability Fund.


For the USD 1.6 billion Coalition Support Fund, the bill would require that, before any more such money is spent, the Obama administration must certify that doing so is in the US national interest and will not adversely affect the region's balance of power.


India feels that the American assistance to Pakistan should be more focused on building counter-insurgency capabilities rather than conventional defence equipment which can be diverted for other purposes.

India's growth rate to accelerate to 6.5 pc in 2010: IMF

International Monetary Fund (IMF) on Thursday said India's economic growth rate will accelerate to 6.5 per cent in 2010 on account of robust domestic demand and rising private investment.

"India's growth is expected to accelerate to 6.5 per cent in 2010 from 5.33 per cent in 2009, on the back of strong domestic demand," the IMF said in its regional economic outlook.

"In particular, the normalisation of financial conditions is expected to support a rebound of private investment, sustaining demand even as the fiscal stimulus wanes," it added.

In its twice-yearly World Economic Outlook released in Istanbul earlier this month, the Fund had pegged the economic growth rate at 6.4 per cent for next year.

The World Economic Outlook had projected India's growth at 5.4 per cent for 2009.

Earlier this week, RBI retained economic growth projection at six per cent with upward bias for 2009-10 in its second quarterly review of monetary policy.

Even Prime Minister Manmohan Singh had recently said that the Indian economy would grow by 6-6.5 per cent in the current fiscal despite being affected by the global financial crisis and drought in the country.

On account of global financial meltdown, India's economic growth slowed down to 6.7 per cent during 2008-09, from over 9 per cent recorded in the previous three years.

In the first quarter of the current fiscal, Indian economy grew by 6.1 per cent.

The IMF said emerging Asia, in particular China and India are rebounding much more quickly that the western world.

It added that the economic recovery in Asia is faster than the rest of the world and is projected to grow by 5.75 per cent during 2010.

"The region (Asia) is out pacing other parts of the world, with the "green shoots" of recovery appearing earlier and taking firmer roots than elsewhere," the IMF said.

IMF forecasts suggest Asia will grow by 5.75 per cent in 2010, higher than the 1.25 per cent predicted for the G-7 economies, but short of the 6.66 per cent average recorded for the region over the past decade.

It added that the pickup in core inflation and inflation expectations in India suggest that demand pressures are already playing a role in pushing up inflation.

Inflation rose fastest in six months to stand at 1.51 per cent for the week ended 17th October, much in line with the RBI's warning that inflationary pressures are building up in the economy.

RBI, in its monetary policy has projected inflation to touch 6.5 per cent mark with upward bias by end of the current fiscal.

Oil above USD 80 a barrel on US growth

Oil prices surged back above USD 80 a barrel in Asian trade on Friday on news the United States has emerged from a long and painful recession after posting its strongest growth in two years.

New York's main contract, light sweet crude for December delivery, was trading at USD 80.08 in morning trade, up 21 cents from the previous day.


Brent North Sea crude for December was up 10 cents to USD 78.14.


After four consecutive contractions, the world's largest economy grew at a seasonally adjusted 3.5 per cent in the September quarter from the previous three months, the Commerce Department said.


The rise was the biggest since the 2007 third quarter, when the subprime mortgage market sparked a global financial crisis that spilled over into the world economy.


"The good news is that the 3.5 per cent annualised rebound in the third quarter GDP (gross domestic product) confirms the most severe and longest recession since the 1930s is over," consultancy Capital Economics said.


"We expect economic growth to continue at about the same pace for the next few quarters as pent-up investment demand is released, inventories are restocked and the boost from the fiscal stimulus continues," it said.


The US is the world's biggest energy consumer and the health of its economy and the consumption patterns of Americans are key influences in the oil market.

Honda profit hit by falling sales

Honda's profits for the July to September period more than halved after car sales continued to fall during the global economic downturn.

Net profit came in at 54bn yen ($587m; £359m) for the quarter, down 56% on the 123.3bn yen recorded a year earlier.

Japan's second-largest carmaker said the strong yen had contributed to a fall in sales in overseas markets.

But the fall in profits was less than had been expected, and the carmaker tripled its full-year profit forecast.

Honda says it will now make a net profit of 155bn yen for the year to the end of March, up from its previous forecast of 55bn yen.

It also raised its full-year sales forecast, to 3.4 million cars from 3.29 million cars.

Despite the increase in projected future sales, revenue in the third quarter fell by 27% from a year ago.

This was largely due to falling car sales in overseas markets.

Sales in Japan have been less affected, largely due to government tax breaks and incentives on hybrids such as the new Honda Insight.

"Honda's numbers came in a bit better than forecast and the biggest factor seems to be the year-on-year reduction in production costs," said Andrew Phillips at KBC Securities.

Nokia 'seeking Apple royalties'

Mobile phone maker Nokia is suing Apple to try to extract royalty payments, an analyst has suggested.

Nokia said on Thursday that it was suing Apple for infringing patents on mobile phone technology for the iPhone.

Piper Jaffray analyst Gene Munster estimates that the Finnish company might be looking to force royalty payments of 1-2% on every iPhone sold.

With more than 30 million sold, that would work out to $6 to $12 per phone sold, or as much as $400m.

That would be a relatively small amount compared with Apple's income.

Apple recently reported profits of $1.67bn (£1bn) for the three months to 26 September - partly due to a 7% growth in iPhone sales.

Nokia did not say in the lawsuit what form of penalties it was seeking.

'Uncertain' resolution

Mr Munster, a respected Apple watcher, called the maximum figure of $12 a phone "unlikely" and said even if it was enforced in court, it "would not change our positive thesis on the iPhone and Apple".

"Ultimately, the resolution is uncertain," he said.

An Apple spokesman told the BBC that the firm did not comment on pending litigation.

The 10 alleged patent infringements, which apply to all models of the iPhone since its launch in 2007, involve wireless data, speech coding, security and encryption.

Nokia accused Apple of "trying to get a free ride on the back of Nokia's innovation".

Record recession for UK economy

The UK economy unexpectedly contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession.

It is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955.

But the figures could still be revised up or down at a later date, because this figure is only the first estimate.

GDP measures the total amount of goods and services produced by a country.

Sensex sheds 219 pts to dip below 17,000 level

The benchmark Sensex fell for the third straight session on Thursday losing 219 points on heavy selling in realty and banking shares by investors, who took cues from weak overseas markets.

The Bombay Stock Exchange barometer, which had lost 317 points in the last two sessions, fell by 219.43 points to close at 16,789.74 points.

The wide-based National Stock Exchange index Nifty lost 75 points to close at 4,988.60 points.



Brokers said trading sentiment turned bearish after weak Asian markets. Inflation climbing to 1.21 percent for the week ended 10th October was another negative factor, they added.



Downward march was further fueled as Moody's Investors Service downgraded the ratings of 13 Indian commercial banks after its global review of systemic support indicators for individual banking systems, brokers said.



State-run SBI lost 2.50 percent to Rs 2,325.70 and ICICI Bank fell by 4.08 percent to Rs 891.05.



The BSE realty index fell the most losing 4.59 percent to 4,524.28 points after Jaiprakash Associates and DLF registered heavy losses. Jaiprakash Associates plunged by 6.84 percent. Realty major DLF closed lower by 4.93 percent.



Among key Asian indices, Hong Kong's Heng Sang fell by 0.48 percent, while Japan's Nikkei lost 0.64 percent.



China's Shanghai Composite closed down by 0.62 percent, while Kospi dipped by 1.42 percent.



The heaviest and energy giant Reliance Industries fell 2.24 percent to Rs 2,133.55.



Capital goods index fell by 2.69 per cent to 13,644.31. Consumer durable index by 2.65 percent to 3,620.37 and banking index by 2.05 percent to 10,098.65 points.



However, select FMCG and IT counters attracted good buying support. FMCG index rose by 0.95 percent to 2,741.73, IT index by 0.79 percent to 4,437.81 and tech index by 0.61 percent to 2,996.09.



As the profit selling spilled over a wide front, midcap index fell by 2.12 percent to 6,444.27 points and smallcap index by 1.96 per cent to 7,647.77 points.

China economic growth accelerates

China has said it is on track to hit its growth target of 8% this year, after the economy grew 8.9% from a year ago in the third quarter.

The figure is up from the 7.9% rate seen in the previous quarter and is the country's fastest GDP growth since the third quarter of last year.

Separate reports show that industrial production and retail sales also accelerated in September.

The economy grew by 7.7% in the nine months to September.

Retail sales growth was 15.1% in the first three quarters of the year, the National Statistics Bureau said.

China's car market has become the world's largest, with sales up 34% to 9.66 million vehicles in the first nine months of the year.