Tatas pull out Nano project from Singur

Tatas pulled out of West Bengal for its Rs one-lakh car Nano project, blaming it on continuing agitation by the opposition parties, spearheaded by Trinamool Congress leader Mamata Banerjee.


Addressing the media after meeting with Chief Minister Budhadeb Bhattacharjee, Ratan Tata, however, said that Nano will come out as per the committed time.

"Nano will come on time. We will make make-shift arrangement to meet deadline," Tata said in Kolkata on Friday.

"There was little choice but move out of Singur, he said.

The move has been prompted after taking into account issues such as well-being of its employees at the project and safety of contractors as well as that of its vendors.

The persisting agitation by the opposition parties has been the sole reason behind the decision to pull out the project, he said.

The company is exploring offers from three-four states about the new site of the project and the new location would be announced soon, Tata said.



"I am extremely pained. It has been an extremely painful decision. It has been a great disappointment for the people working on the ground, more than me," Tata said.

Talking about the vendors of the project, he said, "I think vendors will also move with us. They are an integral part of the project. We will try to protect the interest of the vendors."

On the question of process of acquiring land for the Nano project, he said, "To the best of my knowledge, the land was acquired legally... it was done transparently and the compensation was based fairly."

"We have not been a party to any land dispute. It is between West Bengal government and Trinamool Congress," he added.

Talking about the future association of Tatas with the state, he said the group already has considerable presence in the state and would open a cancer hospital in the next few months.

"I hope West Bengal prosper in the future. In the future we will be here again. We don't believe that we have lost our enthusiasm in investing in West Bengal and assure that we will invest in the state for new projects," he said, adding that he has assured the chief minister that as far as further investment in the state is concerned, this project would have no bearing.

Rice arrives in New Delhi; 123 pact not to be signed

US Secretary of State Condoleezza Rice arrived in New Delhi on Saturday on a day-long visit but the 123 Agreement will not be signed during her stay.


Rice will meet Prime Minister Manmohan Singh and hold talks with External Affairs Minister Pranab Mukherjee, on a wide range of issues, including the civil nuclear initiative.

The two sides had initially earmarked 2 pm as the tentative time for signing of the 123 Agreement, but procedural issues like delay in US President George W Bush signing the legislation passed by the Congress into law, forced the signing of the deal to be called off.



India wants to see Bush first sign the legislation into law as it expects the US President's accompanying statement to clarify certain aspects, particularly assurance of fuel supply, that have created apprehensions in New Delhi.


The US side which was keen to sign the agreement during this visit has said that it was not necessary for Bush to sign the legislation before the two countries ink the agreement and that he can do so later also.



Rice and Mukherjee will also discuss trade and counter-terrorism besides issues related to the region.



Rice will also meet BJP leader L K Advani.

Rupee falls to 47.11 against US dollar in early trade

The Indian rupee plunged by 49 paise to a five-year low of 47.11 against the US dollar in opening trade on Friday following increased demand for the greenback from importers.


At the Interbank Foreign Exchange market (Forex), the domestic currency, which touched a five-year low of 47.25 on Wednesday but closed the day stronger by 34 paise at 46.62/63, depreciated by 49 paise to 47.11 against the greenback.

The currency market was closed on Thursday on account of Gandhi Jayanti and Id-ur-Fitr.

Rice to travel to India today

US Secretary of State Condoleezza Rice will travel to India on Friday for a two-day visit, during which the 123 agreement may be signed.


The State Department said she will meet Prime Minister Manmohan Singh and hold talks with External Affairs Minister Pranab Mukherjee, discussing a wide range of issues, including the civil nuclear initiative.


"They (Rice and Indian leaders) are obviously going to talk about the (civil nuclear)agreement and what it means for the relationship," Department Spokesman McCormack said.



He, however, refused to say categorically whether the 123 agreement, which has been approved by the US Congress, would be signed during Rice's visit.



Sources in New Delhi, however, said the signing of the agreement was high on the agenda of the visit.



"The President has to sign it... I would expect that there will be a number of other administrative or bureaucratic steps along the way... If there are any further events, you know, signings or anything else around this agreement in India, we'll let you know.... Right now I don't have anything to announce," the Spokesman said.



"I'm sure that there are going to be other things that, you know -- for example, enrolling a bill for the president... to sign legislation."



"And I'm sure on the Indian side perhaps there are other such things. But, again, I'm not going to concern myself with those kind of bureaucratic things. It's not a question whether they are going to happen, but, you know, but when, and it's a matter of people doing those things. So I'm not trying to indicate any obstacles to this," McCormack said.



On the nuclear deal, he said, "It, in our view, will mean a different kind of relationship between the United States and India for decades to come."

EU leaders to discuss bank crisis

A European financial summit to discuss the current global crisis is set to take place in Paris on Saturday.

Leaders from Britain, Germany and Italy, together with the president of the European Commission and European Central Bank chief, will be attending.

President Nicolas Sarkozy hopes it will lead to a world summit later this year.

Rumours of a 300bn euros (£237bn, $417bn) EU-wide rescue similar to the plan being discussed by the US Congress have been denied by Sarkozy's office.

Calls for European action follow the bail-out of both Bradford and Bingley, which cost the UK government around £14bn, and Fortis Bank, which cost the governments of Belgium, Luxembourg and the Netherlands around £9bn.

Disadvantage

European leaders are keen to agree a co-ordinated response ahead of next week's meeting of the G8 finance ministers and central bank governors in Washington.

Meanwhile, the Irish government's unilateral move to safeguard all deposits, bonds and debts in the Republic of Ireland's biggest banks and building societies for the next two years has raised concerns about competitive disadvantage among UK banks.

However, according to Karel Lannoo from Brussels think tank the Centre for European Policy Studies, it is a mistake to allow individual European countries to deal with their own banks.

"Most of these banks, certainly the 50 largest European banks have outgrown their national boundaries," he said.

"They are no longer a Belgian or a French or a German bank - they have in many cases the majority of their employees outside their home country."

'Nation-by-nation'

However, the BBC's Emma Jane Kirby in Paris said there is little agreement on how the Paris talks should proceed.

Germany has made its opposition to any coordinated European bail-out plan known ahead of the meeting, while the chairman of eurozone finance ministers has also rejected any need for a European rescue fund for distressed banks.

Eurogroup chairman Jean-Claude Juncker said Europe did not need a similar programme to the US's $700bn (£396bn) plan to take so-called toxic assets off banks' balance sheets.

British Prime Minister Gordon Brown is also sceptical of the need for any Europe-wide plan.

According to the BBC's Europe correspondent, Mark Mardell: "Downing Street prefers the case-by-case, nation-by-nation solutions that have been happening so far."

However, a French civil servant is reported to have proposed a 300bn euro bail-out fund, and the Netherlands has proposed the creation of a European reserve fund to come to the aid of ailing banks before they fail.

Despite the differing views, Gordon Brown's spokesman said he did not expect discussion of an EU-wide bank fund at the meeting.

"The purpose of the meeting will be to discuss how each of the four major economies in Europe are responding to the global financial crisis," he said.

Bail-out doubts send shares lower

Shares of Asian firms have dropped, echoing steep falls on Wall Street due to uncertainty about the future of the $700bn (£395bn) bail-out plan.

While the Senate has backed a new version of the bill, it must go back to the House of Representatives, to gain approval. A vote is expected on Friday.

Hong Kong's Hang Seng index fell 2.3% while Japan's Nikkei index shed 1.6%. Leading US stocks had ended 3.2% down.

Even if the bail-out plan is passed, concerns over the world economy remain.

"The bail-out could move us toward a solution, but there are many unresolved issues," said Tim Rocks, Asia strategist at Macquarie Securities in Hong Kong.

"We're starting to suffer and this will have an impact on Asia exports through next year".

The US is a major customer for Asian countries, whose economies rely heavily on exports.

Economic figures released on Thursday were an example of the US slowdown. US factory orders slipped 4% in August compared with July, a greater fall than forecast.

While the rescue package has met fierce criticism from both Democrats and Republicans, there are concerns that the uncertainty has aggravated market volatility.

Xstrata cancels £5bn Lonmin bid

The mining group Xstrata has abandoned its £5bn ($8.9bn) bid for its rival Lonmin because of the credit crisis.

Xstrata said the current uncertainty in the markets meant borrowing the money needed to fund the takeover was not in its best interests.

Lonmin, an Anglo-African platinum miner, had already rejected the deal saying it undervalued the company.

Xstrata had announced its proposed bid for Lonmin in August. It had until 2 October to confirm its bid.

The UK's regulator, the takeover panel, had imposed the deadline on Xstrata - after which the firm would have had to hold off for six months before making a fresh approach.

Xstrata would have needed to borrow an estimated £8bn to pay for its purchase of Lonmin and to refinance some of its debts, according to news agency Reuters.

Under the terms of the planned loan Xstrata would have had to refinance a substantial portion of its new debts within 12 months.

Business outlook

In a statement Xstrata said it would not be in its best interests to take on the extra borrowing.

"The current lack of clarity and certainty regarding the future availability of credit introduces significant risks," said Xstrata chief executive Mick Davis.

"As a result, Xstrata has no current intention to make an offer for Lonmin."

Xstrata's share price has been hit hard by the turmoil on financial markets, but said the fundamental business outlook remained positive.

Xstrata, which is one of the world's biggest mining groups, said it was optimistic about prospects for commodity prices, even though prices might remain week in the short term.

Lonmin share price initially surged after Xstrata's approach, briefly trading above Xstrata's £33-per-share tentative offer price, but has gradually fallen back as doubts surfaced about a bid.

Following Xstrata's announcement, its share price is expected to rise, while Lonmin's is expected to slip, traders said.

US senators to vote on bail-out

If it passes, the House of Representatives could be under pressure to accept some of the changes when it meets on Thursday.

However, some members of Congress are continuing to press for more fundamental changes, for instance for a system of insurance for bad loans, rather than the removal of the loans from the books of financial companies, says the BBC's Americas editor Justin Webb.

Earlier President Bush had warned of "painful and lasting" consequences for the US should Congress fail to agree a rescue plan.

If it passes, the House of Representatives could be under pressure to accept some of the changes when it meets on Thursday.

However, some members of Congress are continuing to press for more fundamental changes, for instance for a system of insurance for bad loans, rather than the removal of the loans from the books of financial companies, says the BBC's Americas editor Justin Webb.

Earlier President Bush had warned of "painful and lasting" consequences for the US should Congress fail to agree a rescue plan.

The Dow Jones index closed up 4.7% on Tuesday, recouping some losses from Monday's rout, after the markets reacted favourably to the president's statement.

Markets in Japan and Australia saw gains as they opened on Wednesday morning, with the Nikkei climbing 1.2%.

Possible momentum

Analysts say the Senate is more likely to pass the bill because senators are not facing the same pressure from voters as members of the House.

All representatives face re-election in November compared with only one-third of senators.

The measure will require 60 of the 100 senators to vote in favour in order to pass.

The BBC's Jonathan Beale, in Washington, says a positive vote in the Senate is likely to give the bill momentum when it goes back to the House.

Presidential candidates John McCain and Barack Obama, who both support Mr Bush's efforts to bail out the economy, say they will return from campaigning to vote in the Senate.

'Not the end'

Mr Bush said at the White House: "We are in an urgent situation and the consequences will grow worse each day if we do not act."

The economy was depending on "decisive action on the part of our government", he added.

He said he wanted to "assure our citizens and citizens around the world that this is not the end of the legislative process".

"Our country is not facing a choice between government action and the smooth functioning of the free market," he said.

"We're facing a choice between action and the real prospect of economic hardship for millions of Americans," he warned.

UK confirms economy at standstill

The UK economy saw no growth in the second quarter of 2008, while the gap in the current account widened to its highest level in almost a year.

Data from the Office for National Statistics (ONS) showed economic output remained the same as in the first quarter, confirming previous estimates.

Growth was 0% in the second quarter - which was even lower than the 0.3% figure for the first quarter of 2008.

Some analysts think the Bank of England may cut interest rates as a result.

Output was revised up to 1.5% from a previous estimate of 1.4% year-on-year.

The new data takes into account improved methodology and was revised back to 1961. This adds £19.5bn to the 2007 gross domestic product (GDP) figures.

Gloomy forecast

The quarterly figures were the worst for sixteen years, and several analysts maintained a downbeat forecast for the UK economy.

"Overall, not much cheer here. We continue to think that the UK economy is poised for a recession and a prolonged period of weak activity as the excesses of the last decade unwind dramatically," said Paul Dales, an analyst at Capital Economics.

Separately, balance of payments information showed there was a deficit of some £11bn in the current account in the second quarter.

The current account deficit - which is the difference between imports and exports - widened by more than had been expected to £10.98bn, compared with £5.49bn in the first quarter.

This is the biggest the deficit has been since the third quarter of 2007 and it equates to 3% of GDP.

The increase has been due to increased interest payments from UK securities dealers and lower losses recorded by foreign banks operating in Britain.

Lena Komileva, an analyst at Tullett Prebon, said the figures showed the UK's weak spot.

"The negative surprise on the current account highlights the vulnerability of the UK economy to external flows. At a time of a global drain of financial liquidity, this is worrying."

US Senate to vote on N-deal on Wednesday

The US Senate plans to take up and vote on the Indo-US civil nuclear deal on Wednesday, three days after the House of Representatives approved the accord, Senate majority leader Harry Reid said on Tuesday.


The legislation on the deal will in all probability be taken up after sundown local time (early Thursday morning IST), after another pending legislation the Rail Safety Amtrak bill is voted on by lawmakers.


"... we're going to move to continue on the consideration of HR 2095, the Rail Safety Amtrak legislation debate today... there will be no roll call votes today in honour of the Rosh Hashanah holiday, but we will have votes tomorrow evening after sundown," Senator Reid said on the Floor of the Senate at the start of the day's proceedings.


"We're still working on agreement to consider the US-India nuclear agreement. I'm quite sure we can finalise that so there can be a vote on that tomorrow," Reid said before speaking on the implications of the financial stabilisation package that has been rejected by the House of Representatives.


Unlike the House of Representatives which needed a two-thirds majority, the Senate requires only a simple majority to approve the legislation.


Before the House rejected the USD 700 billion bailout package to rescue bankrupt financial institutions on Monday, Reid had said the "India nuclear agreement" will be coming up for a vote only on Wednesday along with the financial bill, when the Senate reconvenes after the Jewish holiday.


A clearance in the Senate will allow India and the US to sign the landmark accord and resume bilateral nuclear trade.



India today signed a civil atomic cooperation agreement with France today, ending 34-years of nuclear isolation.

Second Belgian bank gets bail-out

Dexia has become the latest European bank to be bailed out as the deepening credit crisis shakes the banks sector.

After all-night talks the Belgian, French and Luxembourg governments said they would put in 6.4bn euros ($9bn; £5bn) to keep it afloat.

Shares in the Belgian-French bank fell 30% on Monday before being suspended on Tuesday as the bail-out was announced.

It is the second bank rescue in days by Belgium and its neighbours. On Sunday Fortis bank was partly nationalised.

This latest move by European governments to shore up another bank under pressure came as global stock markets plunged after the US House of Representatives rejected the White House's planned $700bn bail-out package.

'Crisis situation'

Dexia is the one of the world's largest lenders to local governments, but has run up significant losses in its US operations.

In a statement the French government said the rescue was necessary to "guarantee continuity of funding for local authorities".

The Belgian government and Belgian shareholders will invest 3bn euros, the French government will also invest 3bn euros via its state investment arm, while Luxembourg will put in just under 400m euros.

Yves Leterme, the Belgian prime minister said: "Given the crisis situation around the Dexia group we took concrete and correct decisions to reinforce Dexia's health so that the group can face the events playing out in financial markets."

Borrowing problems

Last month Dexia announced it was overhauling its loss-making US bond insurance unit, Financial Security Assistance - which made a loss of $330m in the second quarter of this year because of the sub-prime housing crisis.

The group has also been hit by the collapse of the US investment bank Lehman Brothers.

Dexia - like its rival Fortis which was partly nationalised in a rescue at the weekend - has been finding it hard to borrow the money it needs, because banks have become less willing to lend to each other.

Dexia was created in 1996 from the merger of two banks which specialised in local government funding in Europe - Credit Communal de Belgique and Credit Local de France.

It was one of the first cross-border mergers in the European banking sector and the bank currently has 5.5 million customers in Belgium, Luxembourg, Slovakia and Turkey.