ArcelorMittal warns of layoffs at US plant

ArcelorMittal, the world's largest steelmaker, has warned that as many as 2,444 employees at a steel plant in northwestern Indiana could be laid off indefinitely in January.

The company announced that it had notified the United Steelworkers labour union and other interested parties about the possibility of an "indefinite layoff" at its Burns Harbor plant in the second half of January.



The recent drop-off in global steel production and the company's previously announced plan to reduce production in North American by 40 per cent factored into the decision, the company said.



"Potential work force reductions are a direct result of the extraordinary economic environment we are facing, and the company hopes to return workers to their jobs as market conditions warrant," ArcelorMittal said in a statement on Friday.



Jim Robinson, director of United Steelworkers District 7, said the union is negotiating with ArcelorMittal to minimise the number of layoffs.



Union leaders at the international level "certainly knew what was going on," Robinson said. "They see the fact there aren't any orders. We're not making a lot of steel."



Robinson said the global economic crisis that has resulted in the cut in steel production calls for action by elected officials.



"They need to step up to the plate and quit worrying about investment bankers and CEOs and start acting on behalf of average, middle-class American workers," Robinson said.


Luxembourg-based ArcelorMittal SA, which operates 21 plants in the United States, employs more than 320,000 people in over 60 countries

Cobra Beer mulls sale or alliance

Cobra Beer, a "less gassy" brand of lager aimed at Indian restaurants, has been put up for sale by its founder, Lord Bilimoria.

It has appointed Rothschild to assist with either a sale or a "strategic partnership", the company's spokesman has said.

Cobra is sold in 6,000 restaurants in the UK and wants to expand in India.

In September the firm raised £15m ($22m) from its investors after failing to sell a stake to drinks giant Diageo.

Cobra Beer hopes a sale or partnership would help achieve its goal of taking 10% of the Indian market by 2012.

It is thought that any sale would value the company at around £200m.

Lord Bilimoria set up the company in 1989, after graduating from Cambridge.

Cobra Beer has been brewed in the UK since 1997.

It was produced initially in Bangalore, India, and imported to the United Kingdom.

The company reported 37% volume growth and retail sales of £178m in October, in line with expectations, despite what it called a "tough economic environment".

Oil prices rise above USD 50 on Obama economy team

Oil prices rose above USD 50 a barrel on Monday in Asia as investors gained some confidence from reports that US President-elect Barack Obama has chosen an economic team to tackle what could be the worst slowdown in decades.

Light, sweet crude for January delivery was up 37 cents to USD 50.30 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.

The January contract Friday rose 51 cents to settle at USD 49.93.

News that Obama plans to name New York Federal Reserve Bank President Timothy Geithner as treasury secretary, Lawrence Summers as director of the National Economic Council and New Mexico Governor Bill Richardson as commerce secretary helped boost US stocks.

The Dow Jones industrial average rose 6.5 percent Friday but Asian markets on on Monday were mostly lower with Hong Kong's Hang Seng index down 1.5 per cent and South Korea's Kospi down 2.4 per cent.

Oil futures have followed stock markets recently, using equities as a proxy for economic outlook and investor sentiment.

"The lack of clarity as to who exactly is in charge of steering the US economy is really hurting the equity markets," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore

US rescues ailing Citigroup bank

The US government has announced a rescue plan for troubled banking giant Citigroup after its shares plunged by more than 60% last week.

The US Treasury is set to invest $20bn (£13.4bn) in return for preferred shares in Citigroup.

The Treasury and the Federal Deposit Insurance Corp will also guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books.

The plan follows a $25bn injection of public funds in the bank last month.

Citigroup's market value fell to $20.5bn on Friday, compared with $270bn in 2006.

Last week the company announced 52,000 job losses worldwide, on top of 23,000 job cuts previously announced. It employs around 12,000 people in the UK.

Citigroup has lost more than $20bn in the past year because of the global financial crisis, suffering four straight quarterly losses.

Citibank UK deposit holders are covered by the Financial Services Authority. The Financial Services Compensation Scheme guarantees up to £50,000 per Citibank account holder, should the bank go bust.

'Protecting taxpayers'

The action plan was announced after emergency talks over the weekend between the bank and the treasury department, the Federal Reserve and the Federal Deposit Insurance Corp.

Citigroup is one of the leading US banks and has operations in more than 100 countries.

Many analysts had calculated that the huge financial institution was too big to allow to fail.

"With these transactions, the US government is taking the actions necessary to strengthen the financial system and protect US taxpayers and the US economy," the three agencies said in a statement.

"We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks," they added.

The cash injection will come from the $700bn financial bail-out fund created last month.

Saudi Arabia cuts interest rate

Saudi Arabia has cut a key interest rate and taken steps to encourage lending as it faces the slowdown.

The central bank reduced the repo interest rate from 4% to 3%, in an attempt to boost liquidity.

It also reduced the cash reserve requirements for banks, seen as a way to improve the availability of credit.

The move came a day after the benchmark Tadawul All Share Index fell to its lowest level in five years, hit by the global slowdown and falling oil prices.

The index shed 9.2% on Saturday, the start of its trading week. Since the start of the year the index is down more than 60%.

The Gulf region has been hard hit by a huge fall in oil prices, a key export.

Oil prices are around two thirds lower than they were in July when they hit a record above $147 a barrel.

Honda Swindon closing for 50 days

Honda has announced plans to cut production at its plant in Swindon, which will close for 50 days next year.

Honda said it plans to make 61,000 fewer vehicles in Japan and Europe as it struggles to cope with slowing global demand.

It will make 21,000 fewer vehicles at the Wiltshire plant, home to the popular Civic model.

The 50-day shutdown will mean the Swindon plant will close for the whole of February and March 2009.

The company said that there are "no plans for redundancies" at the Swindon plant.

"This is unexpected bad news," said Jim D'Avilia, labour union Unite's regional officer.

"The union, staff and the company need to work together to minimise any financial hardship and to find ways to protect pay and long-term job security," he added.

The car maker had already announced plans to stop production at the plant for 13 days during the two months. The extension of this period means that no vehicles will be produced in Swindon during February and March.

Dramatic cuts

Earlier this year, Honda announced that it would cut output at Swindon by 32,000 units. With Friday's announcement of further production cuts, the Swindon plant will now produce 175,000 vehicles this financial year, down 23% from an original forecast of 225,000 vehicles.

Friday's announcement also means that Honda will have reduced its overall global annual vehicle production by 150,000 vehicles.

Rival Japanese carmaker Toyota is also suffering from the economic slowdown. It announced on Friday plans to cut its domestic temporary workforce in half.

"We will not be renewing contracts for 3,000 of our temporary workers at the end of March 2009," the company said.

Mazda, another of Japan's largest car markers, announced on Thursday that it would cut 1,300 jobs and cut production for the current year by 48,000 units.

Isuzu, one of Japan's biggest truck makers, also announced on Thursday that it would cut 1,400 domestic jobs and cut production for the year by 10%.

Tough economic conditions and banks' unwillingness to lend money mean global demand for cars is slowing dramatically.

In the US, General Motors, Ford and Chrysler are seeking a cash injection from the government after a collapse in sales.

Russian oil giant circles Repsol

Spanish savings bank La Caixa may sell its 14% stake in struggling Spanish-Argentine energy firm Repsol to Russian firm Lukoil, it said.

The sale is tied to the acquisition by Lukoil of a 20% stake held in Repsol by construction group Sacyr Vallehermoso.

If Lukoil strikes deals with La Caixa and Sacyr Vallehermoso, it would become Repsol's largest shareholder.

Spain's industry minister Miguel Sebastien has said Repsol should remain "Spanish and independent".

He said the government should do "everything possible" to achieve this.

Spain's Prime Minister Jose Rodriguez Zapatero said it respected Repsol's right to bring partners in the firm, stressing that Lukoil was a private company with more than one shareholder.

US oil firm Conoco Philips holds a 20% stake in Lukoil.

Controversy

Builder Sacyr Vallehermoso, struggling with large debts and a falling property market, said in September it was ready to sell its 20% stake in Repsol.

Spanish media has speculated that Lukoil wants, at most, a stake of 29.9% in Repsol as, under Spanish law, a shareholder must launch an offer for the whole company if it passes the 30% threshold.

Repsol, which operates in 30 countries in Latin America, the Middle East, and North Africa, has been facing increasing competition lately. It saw a 5.8% drop in third-quarter profits.

EU warns against car subsidy race

EU Competition Commissioner Neelie Kroes has told France and Germany not to start a "subsidy race" with the US to save the car industry.

She said the European Union's existing mechanisms could help automakers, hard hit by falling demand.

General Motors has been seeking support from the German government for its local subsidiary, Adam Opel GmbH.

On Thursday the Congress told US carmakers to present a recovery plan if they want a $25bn (£17bn) rescue.

Poorly-handled subsidies would not solve the car industry's problems, Neelie Kroes said.

However, she added that auto makers could benefit from the European Union's funds for research and environment.

European car makers have been reportedly seeking loans of up to 40bn euro (£33.6bn) , at preferential interest rates, to support production.

GM is demanding state aid from the five German states where it manufactures its European brand, Opel, which sells under the Vauxhall badge in the UK.

New car sales in Europe fell by 14.5% in October, the sixth monthly fall in a row, according to Acea, the European carmakers' association

US shares up on 'Treasury choice'

US shares have risen sharply, following a report that US President-elect Barack Obama has chosen his treasury secretary, reassuring investors.

The Dow Jones Industrial Average added 494 points or 6.5% to end at 8,046.66. The Standard & Poor's 500 climbed 6.3%.

The NBC television network reported the president of the Federal Reserve Bank of New York, Timothy Geithner, would be nominated as treasury secretary.

Mr Obama is expected to announce his economic team on Monday.

The NBC report was welcomed by investors in what has been yet another volatile week of trading amid ongoing fears over the scale of the economic contraction.
It is a bit of good news in that it takes the uncertainty out," said Joe Saluzzi, co-manager of trading at Themis Trading.

Mr Geithner has worked closely with outgoing Treasury Secretary Henry Paulson in addressing the credit crisis and finding ways to boost the economy.

The 47-year-old played a crucial role in talks with Lehman Brothers before the investment bank went bankrupt.

He was also instrumental in the deals involving insurer AIG and JP Morgan, another bank.

The NBC report was enough to counter concerns over the finance sector and in particular the future over banking giant Citigroup, which saw its shares plummet 20% as board members met.

Rising commodity prices helped boost mining and energy firms.

Aluminium company Alcoa added 23% while Exxon climbed 10%, after the price of oil recovered from its lowest level in more than three years.

Clash over $700bn bank bail-out

US Treasury Secretary Henry Paulson has clashed with members of Congress over the $700bn US financial bail-out plan.

Mr Paulson told a Congressional committee that injecting cash into banks was the most effective way to stabilise the financial system.

However critics on the committee said that more of the money should be used to help struggling homeowners avoid losing their homes.

Mr Paulson said the bail-out would not be "a panacea" to cure economic woes.

"It will take a while to get lending going and repair our financial system, which is essential to an economic recovery," Mr Paulson said.

Mr Paulson and Federal Reserve chairman Mr Bernanke were giving evidence to the House financial services committee about the Troubled Asset Relief Programme (TARP) scheme.

The scheme was approved by Congress last month to shore up the US banking system and prevent financial collapse.

Earlier this month, the White House abandoned the original strategy behind the rescue.

Instead of buying up the banks' toxic mortgage debts, as first proposed under the deal, the bail-out fund is being used to buy shares in banks to help boost their balance sheets.

'Financial stabilisation'

Mr Paulson told the committee it was vital the administration be nimble in assessing changing conditions and adapting the bail-out strategy accordingly.

"If we have learned anything throughout this year, we have learned that this financial crisis is unpredictable and difficult to counteract," Mr Paulson said.

About $290bn of the first $350bn authorised under the programme already has been used or committed for use, and Mr Paulson said he wanted to reserve the balance of it for the incoming administration of President-elect Barack Obama, who takes office on 20 January.

HP's profits exceed expectations

The world's biggest PC maker, Hewlett-Packard (HP), has beaten forecasts by posting a better-than-expected net profit in the fourth quarter.

HP said it made a $1.03 (£0.68) net profit per share excluding charges, 3% higher than the Wall Street analysts expected.

Hewlett-Packard shares rose 10% on the news.

HP chief executive Mark Hurd said the company was gaining market share despite "a challenging marketplace".

He added that HP was in a better position than its rivals thanks to its global reach, broad customer base and ongoing cost cuts.

Hewlett-Packard's sales rose 19%, to $33.6 billion, also exceeding expectations.

In September HP announced it would lay off over 24,000 employees following its acquisition of Electronic Data Systems.

"HP is gaining market share in an extremely strong competitive position. They've got share gains, combined with very aggressive cost reduction", said Shannon Cross, analyst at Cross Research.

Hewlett-Packard shares have lost a third of their value in the past two months on fears that the economic slowdown would hit the market for personal computers.

Last year, HP overtook Dell to become the biggest seller of PCs.

The company will reveal its full results on 24 November.