“Extra Euro Crisis Summit Called”

EU leaders are to hold another summit by Wednesday, because they will not be able to agree a rescue plan for the euro on Sunday.

French President Nicolas Sarkozy and German Chancellor Angela Merkel said a crisis strategy would be discussed on Sunday and adopted at the next meeting. EU leaders need to agree a second bailout for Greece, how to recapitalise banks and a stronger bailout fund. President Sarkozy also called for talks with the private sector.

The private sector talks would be "to find an agreement allowing to strengthen the sustainability" of Greek debt. Previous disagreements between France and Germany about the bailout plans have centred on how much the private sector would have to contribute to any package.

A spokesman for Chancellor Merkel said the leaders agreed that a "comprehensive, ambitious" answer to the crisis was needed. The spokesman also said that the advantage of the additional summit would be that it would give the German parliament time to approve any changes to the bailout fund.

Chancellor Merkel had been due to address the Bundestag on Friday, but that has now been postponed.

President Sarkozy and Chancellor Merkel have also said they plan to meet on Saturday in the hope of making progress, ahead of the heads of government meeting on Sunday in Brussels.

Sunday's summit had already been delayed from 17-18 October because more time was needed to finalise a plan. The French and German leaders spoke on the phone on Thursday.

"We have made enormous progress but not enough to take final decisions on Friday," Chancellor Merkel's spokesman said. "In certain areas, we have reached agreement, in others, we are on the right track."

European shares fell on Thursday amid concern about whether enough progress would be made at the weekend summit.

( source : http://www.bbc.co.uk/news/business-15393260 )

"Apple Full Year Profits Rise 85%"

The world's biggest technology company Apple has reported full year results, showing net profit for the year to 25 September at $25.9bn (£16.5bn), up 85% from the previous year.

Even that was not enough to satisfy Wall Street, with the shares falling nearly 5% in after-hours trading. There was some disappointment with the fourth quarter of the year, when no major new products were released.

It is the first set of results since the death of co-founder Steve Jobs. In the fourth quarter of the year, Apple sold 17.1 million iPhones, which was a 21% increase on the same period last year, and 11.1 million iPads, which was a 166% increase.

But analysts had been expecting iPhone sales of 20 million in the quarter. Apple said sales were hurt in September by customers waiting for the new version, the iPhone 4S, which was released on 14 October.

It sold four million of the new models in the first three days after launch. "The numbers came in weak. They need to set records every time they report to keep up the momentum," said Colin Gillis, analyst at BGC Partners.

Apple sold 4.9 million Mac computers in the quarter - up 27% over the same period last year.

"The numbers are actually quite good. The reason why the stock is off - I think some of the analysts got carried away," said Shaw Wu, analyst at Sterne Agee.

( source : http://www.bbc.co.uk/news/business-15360697 )

"China's Economic Growth Slows to 9.1% in Third Quarter"

China's economic expansion slowed during the third quarter of the year as government measures to control inflation hurt growth.

China's economy grew by 9.1% in the three months to the end of September from a year earlier, down from 9.5% in the previous quarter. The data comes amid fears that a slowdown in the US and Europe's debt crisis may also hurt China's growth.

China is the world's second-largest economy.

"The national economy generally carried good development state and kept moving towards the expected direction of macroeconomic control," the National Bureau of Statistics said in a statement.

Tightening measures

China has witnessed robust growth in past few years. But the rapid expansion has come at a price. Consumer price inflation in the country has been above the central bank's target and there have been concerns of the formation of asset bubbles.

Chinese authorities have been targeting the country's inflation rate and the surge in property prices by tightening credit markets. The central bank has increased interest rates five times in the past year and has also raised the reserve ratio requirement for banks regularly, thus reducing the amount of money they can lend.

Analysts said that while the measures have helped to contain price growth, they have curbed growth.

"We are seeing a broad slowdown through the year," said Alistair Thornton, China analyst at IHS Global Insight. "The tightening measures they have put in place over the last year have had an impact, and growth has slowed as a consequence," said Mr Thornton.

Growth concerns

Data released on Tuesday showed that factory output in China grew by 18% in September from a year earlier. Though the figure was higher than the previous month, analysts said that China's export-led growth may slowdown further in the coming months.

There have been concerns that the debt crisis in Europe may hurt growth in the region and dent consumer demand.

That is likely to have a big impact on China's export sector as the European Union is the world's biggest purchaser of Chinese goods, with the market worth about $380bn (£241bn) in 2010.

These fears were fanned further after data out last week showed that China's annual rate of export growth weakened to 17.1% in September, down from 24.5% the previous month. Analysts said that developments in Europe are likely to have a big impact on China's economy.

"The trajectory of the Chinese economy in the next 18 months will be wholly reliant on the trajectory of European growth," said Mr Thornton from IHS. "If things don't quite go to plan in Europe, then we could be faced with a similar situation to 2008-2009."

Domestic boost

While there are concerns that a slowdown in external demand may hurt growth, some analysts said growing domestic demand may help China offset any such falls. China's economic growth has seen the rise of a more affluent middle class with higher disposable incomes, which is likely to boost demand.

At the same time, China has been trying to boost demand at home in a bid to rebalance its economy. Warren Hogan, chief economist of ANZ Bank told the BBC's Asia Business Report that domestic consumption was playing a key role in China's growth.

"Gross domestic product (GDP) figures today should send a message to the broader community that the Chinese economy is largely a domestic economy," he said. "Most of this growth is coming from domestic investment and consumption," he added.

( source : http://www.bbc.co.uk/news/business-15331523 )

"G20 Ministers Meeting to Discuss Eurozone Debt Crisis"

Finance ministers from the G20 group of nations are meeting in Paris to continue efforts to find a solution to the debt crisis in the eurozone.

While Greece remains the central focus, fears remain that the crisis could spread to other highly indebted eurozone countries such as Spain and Italy, and exposed European banks. Greece needs its next bailout loan next month to avoid defaulting on its debt. Spain was hit by a further credit rating cut on Thursday.

Standard & Poor's reduced Spain's long term rating by one notch, citing weak growth and high levels of private-sector debt. It came a week after fellow credit rating agency Fitch also cut Spain's rating.

On Thursday, Fitch also downgraded the creditworthiness of UK banks Lloyds and RBS, and also Switzerland's UBS.

Funding issues

The euro rose as high as $1.3828 against the dollar in Friday trading, on optimism about the meeting of G20 finance ministers.

However, analysts caution that any major decisions on tackling the eurozone debt crisis will not be announced until the meeting of European Union (EU) leaders on 23 October. These are expected to include an agreement on increasing the funding and powers of the European Financial Stability Facility (EFSF), the fund set up to help national governments in financial difficulty.

The European Commission President, Jose-Manuel Barroso, said on Friday that any decisions taken on banks or on the eurozone's EFSF rescue fund at that meeting should take effect immediately. Mr Barroso said: "Any decision should be enforced immediately, concerning the strengthening of the EFSF or concerning increased guarantees for our banks."

Warning

Measures to protect European banks with high levels of exposure to eurozone national debt are also expected to be decided by EU leaders. Prior to the meeting, South Africa's Finance Minister Pravin Gordhan warned that International Monetary Fund (IMF) and EU resources may be "inadequate" if the eurozone debt crisis worsened.

US Treasury Secretary Timothy Geithner disagreed, saying that both the IMF and EU already had sufficient funds. He said: "As we look at the world today, the IMF has very substantial, uncommitted, available financial resources. "Of course, Europe as a whole has resources available to help with the financial problems. "The problems that they are facing there in Europe are complicated to solve, but well within the resources that Europe has."

Mr Geithner also said the G20 was looking for a "clear commitment" from Europe to deal with the debt crisis. He told CNBC television from Paris: "What you need is the clear commitment by the governments, that they will do what is necessary to hold this together and put as much resources behind this as is necessary."

He said Europe "is clearly moving" to deal with the crisis. Mr Geithner is expected to make a fresh call at the G20 meeting for China to allow its currency, the yuan, to trade freely.

Washington has long accused Beijing of keeping the yuan undervalued to make Chinese exports artificially competitive.

Greek focus

Athens is now likely to get its next loan instalment in November after inspectors from the EU, International Monetary Fund (IMF) and European Central Bank said they had reached agreement with the Greek government on further austerity measures in the country.

The representatives from the so-called troika had been in Athens to check on whether the Greek government was carrying out sufficient spending cuts and tax raising measures. Greece's next 8bn euros ($11bn; £7bn) payment of EU and IMF funds has been delayed since the troika inspectors called off earlier inspections in Athens at the start of September.

However, inspections resumed after the Greek government pledged further austerity moves, despite widespread protests. Protests against spending cuts are also continuing in Spain.

( source : http://www.bbc.co.uk/news/business-15302908 )

"EU Summit 'will be Decisive' on Eurozone Crisis"

A European Union summit later this month will agree "decisive" measures to tackle the eurozone debt crisis, the French finance minister has said.

The summit would give "clear answers", said Francois Baroin at the end of talks between ministers from the G20 group of nations in Paris. He said central banks "would continue to supply banks with liquidity". The G20 statement also said ministers were "committed that the IMF must have adequate resources". The G20 meeting came amid continuing fears about the EU's debt-related problems spreading.

The US has expressed particular concern about the threat to its economy. US President Barack Obama and German Chancellor Angela Merkel spoke by phone on Friday to discuss the crisis.

The head of the International Monetary Fund (IMF) Christine Lagarde said emerging economies - whose growth helped support the world economy during the global crisis - are starting to be affected by weaknesses in the advanced economies. "The main thing is that the situation has got worse rather than having improved over the last three weeks," she said.

"We heard a lot from the emerging markets that they are very concerned about the risk of contagion," Mrs Lagarde said.

'Contagion'

Details of the rescue plan discussed in Paris include a bigger write-down than previously expected of Greek debt, a much more powerful European bailout fund and a re-capitalisation of weaker banks to arm them against inevitable losses.

The plan needs to be finalised by next weekend's EU summit in Brussels.

The BBC's Gavin Hewitt says all eyes now turn to whether the leaders of France and Germany will provide the summit with convincing detail.

"They clearly have more work to do, on both the strategy and the details," US Treasury Secretary Timothy Geithner said.

The G20 ministers said they welcomed the measures "to increase the capacity and the flexibility of the EFSF [European Financial Stability Facility]".

The statement added: "We look forward to further work to maximise the impact of the EFSF in order to avoid contagion, and to the outcome of the European Council on October 23 to decisively address the current challenges through a comprehensive plan."

The EFSF has been used to fund bailout packages for Ireland and Portugal but there have been fears it will not be able to cope if it is needed to rescue larger economies such as Spain and Italy, both of which have had their credit ratings downgraded in recent weeks.

Another area under discussion in Paris has been whether to strengthen the IMF.

Developing countries want to boost it, but the US in particular has been reluctant, wanting instead for the eurozone to take stronger action.

Athens is now likely to get its next loan instalment - totalling 8bn euros ($11bn; £7bn) - in November after inspectors from the EU, International Monetary Fund (IMF) and European Central Bank said they had reached agreement with the Greek government on further austerity measures in the country.

The representatives from the so-called troika had been in Athens to check on whether the Greek government was carrying out sufficient spending cuts and tax raising measures.

( source : http://www.bbc.co.uk/news/business-15319026 )

“Singapore Cuts Growth Forecast Amid Global Uncertainty”

Singapore has cut its growth forecast for 2011 amid concerns that the global economic recovery may be faltering.

The government said it expected the economy to grow by 5% this year, down from an earlier projection of between 5% to 6%. The cut comes amid fears that a slowdown in the US and Europe's debt crisis may hurt global growth.

The Monetary Authority of Singapore warned growth may slow even further next year. "With the weak external environment likely to persist, the Singapore economy will expand more slowly in 2012 and growth could be below its potential rate of 3-5%," it said in a statement.

Avoiding recession

Singapore's Ministry of Trade and Industry also released preliminery growth figures for the months of July to September.

According to the latest data, the country's economy grew 1.3% during the period from the previous three months. This was after it had contracted by 6.3% in the previous quarter. The expansion helped it avoid a technical recession, a term used when the economy contracts for two successive quarters.

Compared to the same period last year, the economy grew by 5.9%. However, analysts warned that despite the growth, things may get tougher in the coming months.

"Even if the economy managed to avert a recession in the third quarter, the risk of falling into the red in the fourth quarter cannot be ruled out," DBS bank said in a report.

( source http://www.bbc.co.uk/news/business-15302386 )

"China's Inflation Rate Eases Further in September"

Inflation in China eased slightly in September but high prices, especially for food, remain a concern for the country's population.

Consumer prices rose 6.1% last month, compared with the same month last year, the National Bureau of Statistics said. That is down from 6.2% in August and from 6.5% in July, a three-year high. The government had put policy tightening on hold as the eurozone and US debt crises threatened global growth.

Previously though, Chinese authorities had introduced a slew of measures to cool prices, lifting interest rates five times, and bank reserve requirements nine times since 2010.

Downward trend?

Some analysts said Friday's slight dip reinforced views that inflation is on a downward trend. "This confirms that inflation peaked in July," said Chi Sun, an economist with Nomura in Hong Kong.

"Policy will be on hold. We think inflation will slow down gradually in the coming months."

On Thursday, the International Monetary Fund (IMF) warned that inflation in some Asian countries is still too high. But it added that consumer prices could ease after peaking this year.

However, other market watchers said it was too soon to say that inflation was no longer a worry.

"The slowdown in [the] consumer price index last month is not drastic enough to reduce inflationary expectations, and it is still too early to confirm an easing trend in price pressures," said Qiao Yongyuan, from CEMB in Shanghai.

Food setback

Nonetheless, the high price of food continues to cause concern. The food component of inflation rose 13.4% in September from the same month last year, the data on Friday showed. That is unchanged from the level in August. The government has implemented measures, such as increasing supply, to bring down the price of pork, vegetables and other basic foods.

However, those efforts suffered a set back when summer storms destroyed crops.

( source : http://www.bbc.co.uk/news/business-15302091 )

“IMF Cuts Growth Forecast for Asia”

The International Monetary Fund (IMF) has cut its growth forecasts for Asia over worries about eurozone debt and new fears for the US economy.

The IMF said risks for Asia were "decidedly tilted to the downside" because of these concerns over its two major export zones. It said gross domestic product (GDP) growth across Asia would average 6.3% in 2011, and 6.7% in 2012.

In April, it had predicted close to 7% growth in both years. The body warned about a risk of capital outflows from the region, and the possibility that oversees investors may reverse the large positions they have built in Asian markets since 2009. In addition, inflation is still high in a number of Asian countries, the IMF said.

But it believes consumer prices could ease after peaking this year, as food and energy prices "gradually moderate". The IMF also said that Asian policymakers were faced with "a delicate balancing act".

"They need to guard against risks to growth but also limit the adverse impact of prolonged easy financial conditions on inflation," it noted.

( source : http://www.bbc.co.uk/news/business-15285447 )

“US Senate Passes Bill to Pressure China on Yuan”

The US Senate has voted through a bill which aims to punish China for keeping its currency artificially undervalued. Some lawmakers argue that the value of the Chinese yuan gives goods from the country an unfair advantage and costs American jobs.

The legislation passed the Democrat-led Senate 63-35, putting it through to the House of Representatives. China's foreign ministry reacted by opposing the bill, saying it "obstructs China-US economic relations and trade".

Imposing tariffs

US Lawmakers said the vote was a signal that it is time to confront China over its trade policies.

"There are always people who don't want to stand up to China and I think they are, frankly, undercutting our ability to stop the haemorrhaging in our manufacturing jobs," said Democrat Ohio Senator Sherrod Brown. The bill is designed to put pressure on countries the US says are keeping their currencies deliberately undervalued. If passed into law, it would allow Washington to impose so-called "countervailing duty" tariffs on imports that it sees as unfairly state-subsidised.

Most analysts say the Chinese yuan is undervalued against the US dollar by 25%-30%, with some US lawmakers putting the difference up to 40%. There has been some appreciation of the yuan in the past year, but not enough to appease critics.

Damaging relations?

Recent comments in the Chinese media have shown fierce opposition to the bill, saying the trade imbalance between the two countries is a result of US economic policies and not the exchange rate.

"China calls on the US to discard protectionism, stop politicising economic issues and take concrete action to create an enabling environment for the development of bilateral economic relations and trade," said Ma Zhaoxu, a spokesperson for the foreign ministry, in a statement on Wednesday.

The Chinese foreign ministry also urged the Obama administration not to support the bill. Many in the US are also worried that action against China would damage US-China relations. House Speaker John Boehner has said it would be "dangerous" for Congress to get involved with a foreign country's exchange rate. This sentiment puts the fate of the bill in question.

Secretary of State Hillary Clinton said to Reuters news agency: "I don't know whether this bill in the form that its passing the Senate will ever end up as a piece of legislation coming from the Congress".

"But it does reflect a great deal of frustration on the part of the American people."

( source : http://www.bbc.co.uk/news/business-15269123 )

"Chinese Bank Shares Rise after Beijing ups Stake"

Shares in China's big banks have moved higher, after the country's sovereign wealth fund announced it was increasing its stake in them. Central Huijin, the domestic arm of China Investment Corporation, bought shares in four major banks on Monday, said the official Xinhua news agency. The share purchase is the first since the global financial crisis in 2008.

Analysts said the move was aimed at boosting investor confidence shaken by foreign markets and domestic policy. Shares in Agricultural Bank of China surged more than 12% on Hong Kong's main index, while Industrial and Commercial Bank of China rose 7% in early trade.

Growth concerns

"They're showing confidence in the banks, and support from the central government," said Victor Wang from Macquarie Securities.

Chinese banks shares have fallen 30% in recent months, according to the Financial Times. Although Chinese growth continues to show strength, analysts say investors are concerned about the eurozone debt crisis and a slowdown in the US economy. Inflation is also a concern, currently near its highest level in three years.

Continuing support

The four Chinese lenders later gave details of the move by Central Huijin. Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank Corporation and Bank of China said 39.1 million, 14.6 million, 7.4 million and 3.5 million of their Shanghai-listed shares were bought on Monday. That only amounts to a small increase in the stake held by Central Huijin in the banks, which is already the largest shareholder in the country's big lenders.

It also said in a statement to the Hong Kong Stock Exchange that it would continue to increase its holdings in the four banks over the next year.

( source : http://www.bbc.co.uk/news/business-15251828 )

" Eurozone crisis: Merkel and Sarkozy 'agree key changes' "

The German and French leaders will propose "important changes" to the way the eurozone operates after talks on controlling the bloc's debt crisis. Chancellor Angela Merkel and President Nicolas Sarkozy said the aim was closer and more binding economic and financial cooperation between eurozone countries.The leaders said they would give further details by the end of October.

The nations were "determined to do the necessary to ensure... recapitalisation of Europe's banks", Mrs Merkel added. Germany and France have differed over how to recapitalise Europe's banks, said by some to require between 100bn (£86bn; $134bn) and 200bn euros to withstand the sovereign debt crisis.

Paris is believed to want to use the eurozone's bailout fund - the European Financial Stability Facility (EFSF) - to recapitalise its own banks, while Berlin is insisting the fund should be used as a last resort. But speaking after the talks in Berlin, Mr Sarkozy said it was "not the moment" to go into the agreement's details but said that the Franco-German accord was "total".

Mr Sarkozy told reporters: "We are very conscious that France and Germany have a particular responsibility to stabilise the euro. We need to deliver a response that is sustainable and comprehensive." The leaders suggested that their package of proposals would include a plan for recapitalising European banks, accelerating economic co-ordination in the eurozone and dealing with Greece's debt problems. Chancellor Merkel has insisted that the 17-18 October summit of European leaders in Brussels must send a clear signal on the issues in a bid to restore market confidence.

Other topics on the leaders' agenda were thought to have been the Franco-Belgian bank Dexia, Europe's first bank to fall victim to the debt crisis. Earlier on Sunday, the governments of France, Belgium and Luxembourg said they had agreed a plan to rescue the bank.

"The proposed solution, which is the result of intensive consultations between all involved parties, will be submitted to the Dexia board, whose responsibility it is to approve the plan," a joint statement said. The board was meeting on Sunday afternoon.

Greek bailout

Meanwhile, talks are continuing over the latest bailout tranche for Greece, which could run out of cash as soon as mid-November. The European Commission, the European Central Bank and the IMF are currently deciding whether to release about 8bn euros to help the Greek government pay its bills.

This is money from the original 110bn euro bailout agreed last summer. Another 109bn euro bailout package was also agreed by European leaders in July, but this has yet to be ratified.

Despite efforts by leaders to contain the crisis, there is little evidence that its end is nearing, analysts say. "There is a high risk that this crisis further escalates and broadens," German finance minister Wolfgang Schaeuble said.

On Friday, the international ratings agency Fitch downgraded the sovereign credit ratings of Italy and Spain, and another agency, Moody's, downgraded 12 banks in the UK and nine in Portugal. Plans to expand the EFSF, and give it greater powers, were also agreed in July and have been ratified by most national parliaments. Slovakia will vote on the proposals this week. However, these plans are now seen as inadequate and leaders have said they hope to announce new measures at a G20 meeting in Cannes at the beginning of November.

( source : http://www.bbc.co.uk/news/world-europe-15226953 )

"Embattled Dexia Bank in Line to be Bailed Out"

France, Belgium and Luxembourg have approved a plan to secure the future of the troubled bank Dexia, following fears it could go bankrupt.

Details were not released, but reports said the bank will be broken up and partly nationalised.

The plan came after French and German leaders agreed that Europe's crisis-hit banks need to be recapitalised. Dexia asked for help for the second time in three years after a liquidity squeeze sent its shares tumbling. The situation with Dexia is the latest warning sign over the health of Europe's lenders. It has a global credit risk exposure of around $700bn (£449.5bn), twice the gross domestic product of Greece. It is thought the plan will lead to the bank's Belgian retail unit and its French municipal finance operations coming under state control.

Belgium's Prime Minister, Yves Leterme, said: "The three governments have agreed to put a proposal to the board which fits completely with the goals of the Belgian government, which means to take over Dexia Bank Belgium, secure it and turn it into a very safe bank."The burden of bailing out Dexia led to a warning from the ratings agency Moody's that it could cut its rating on Belgium's government bonds.

( source : http://www.bbc.co.uk/news/business-15235915 )