business headlines
Markets continue to stage recovery
Markets in Asia rose for the third day in a row as the US continued its recovery. The Standard & Poor's Index rose 3.5 per cent in New York yesterday, bringing its four-day recovery to 18 per cent, as President-elect Obama appointed former federal Reserve Chairman Paul Volcker to his economic advisory board. In Asia the MSCI Asia Pacific Index was up two per cent after China cut interest rates. Indian markets were closed in the wake of the country’s terrorist attacks. In London the FTSE 100 Index started the session up nearly one per cent.
Alexander Cockburn: A sense of bleak familiarity hangs over Thanksgiving 
China slashes interest rates
China cut its interest rates by the biggest amount in over a decade yesterday, reported the Financial Times. The move meant the rate dropped to 5.58 per cent, a decline of 1.08 per cent. The central bank was forced to take "aggressive policy steps" to prevent the world’s fourth-largest economy from slumping and is the "latest indication" that the Chinese economy is slowing more quickly than thought. Analysts predict further cuts in the months to come, taking rates down to as low as three per cent, amid slowing growth.
Japan's return from financial oblivion
Woolworths and MFI bankrupt
Woolworths went into administration on Wednesday, just after MFI, in "the bleakest day so far" for the UK retail sector, reported the Financial Times. Woolworths failed to get the required backing from its banks to get through its cash crisis and failed, in the biggest retail collapse for many years. Although 30,000 jobs are at risk, the government decided not to offer taxpayer cash, as it judged the failure to be due to the company’s business model. MFI sources indicated that it was "unlikely to re-emerge from administration".
Darling's VAT cut is sadly irrelevant
Dollar falls on deepening recession
The dollar fell against a basket of currencies after the biggest drop in US consumer spending in seven years increased speculation of further interest rate cuts, reported Bloomberg.com. As worries over a "prolonged" recession deepened, traders sold dollars, believing that the Federal Reserve's $800bn spending plan will weaken the central bank's balance sheet. The cost of insuring government bonds "jumped" to 0.56 per cent yesterday as a result. Some analysts predict that US interest rates will be reduced from one per cent to as low as 0.25 per cent in December.
Cash was king, now gold is God in the US
UK banks may be nationalised
Britain's banks will face the need to raise more capital if the economy contracts at the same pace as in the early 1980s, increasing the prospects of nationalisation, said UBS economist George Magnus. Losses would "engulf" the £50bn UK banks are currently raising if the economy contracted by five to six per cent, he said. Currently the expectation is for a two to three per cent decline, but this figure could be bigger. Magnus said that it was "quite possible" that the government would have "a second go" at the banks.
Bail-out is the biggest bank heist in history
DSG sees profits plunge
DSG International, owner of Currys and PC World, announced it was scrapping its dividend after "plunging into the red" in the first half of the year, said the Times. The company blamed "weak trading" across Europe for its £29.8m pre-tax loss, versus a £52.5m profit last year. The retailer has a debt reduction plan, having cut £75m of costs from the business, and aims to reduce capital spending by between £30m and £160m during the course of the year. This week it became one of the first to pass on the VAT cut.
...in brief..................
Northern Rock increases rates and Panasonic bid founders
Northern Rock has "defied" the government and increased rates on its home loans "just 10 days after reducing them", said the Financial Times. It raised the cost of its new fixed-rate mortgages by up to 0.3 per cent and increased its lowest rate from 3.99 to 4.19 per cent…………
Qantas Airways, Australia's biggest carrier, may cut routes, ground planes and defer orders of new aircraft if the global recession continues, its new chief executive Alan Joyce said yesterday. At the moment, however, the airline's domestic sales are offsetting international problems, he said…………
Struggling pub group Mitchells & Butlers scrapped its final dividend yesterday, and will not resume payments "for at least two years", reported the Independent. The move is part of the company’s attempts to address its debt problems and will save it £60m a year…………
Porsche boasted "turbo-charged" profits for last year, boosted by its controversial Volkswagen share trading, said the Daily Telegraph. Group profit rose 46 per cent to €8.57bn, exceeding the company's €7.47bn revenue from car manufacturing…………
How Porsche took the hedge funds to the cleaners
EasyJet founder Sir Stelios Haji-Ioannou has "raised the stakes" in his row with his board after warning on aircraft purchases, said the Daily Telegraph. Sir Stelios is "aghast" at plans to buy 109 Airbus aircraft by 2012 and said it could mean "game over" for shareholders…………
Japanese electronics manufacturer Panasonic's bid for Sanyo is "on the verge of collapse", reported the Guardian. Goldman Sachs ended its talks with the company about selling its stake over concerns on the price and structuring of the deal, a spokesman said…………
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