business news.
Asian stocks fall after US gains
Stocks fell in Asia, even after the US markets gained for a third day yesterday, with the Standard & Poor's 500 Index ending the session up 0.6 per cent. However, in spite of the Federal Reserve's announcement that it was committing another $800bn to loosen credit, Asian markets continued to reflect the downturn in US spending. The MSCI Asia Pacific Index lost 0.3 per cent, after a gain yesterday of 4.1 per cent on the news that the US government was bailing out Citigroup. In London the FTSE 100 opened nearly two per cent lower.
Fed adds $800bn to revive credit
The US Federal Reserve increased its efforts to unblock the credit markets on Tuesday, by committing a further $800bn to help consumers, said the Financial Times. The move was aimed specifically at homebuyers, consumers, students and small businesses and initially had a "dramatic effect" on interest rates for mortgage-backed securities, which fell to their lowest level since January. The Fed plans to buy $600bn of mortgage bonds and lend $200bn to holders of securities backed by loans, although some analysts are already questioning the plan's likely effectiveness.
Alexander Cockburn: Economic woes pile into Obama's in-tray 
Treasury to boost bank lending
Chancellor Alistair Darling is preparing a list of measures designed to boost business lending, reported the Financial Times. He has already issued warnings to the banks that they risk full nationalisation "unless they reopen credit lines" to troubled companies, but he wants a comprehensive package of measures that will force banks to treat corporates more fairly. Key among these are giving more notice of changes in lending rates or withdrawal of credit lines and also being considered are extended guarantees on new lending.
The Pre-Budget Report was a purely political exercise
Labour in VAT rise row
A "fresh Pre-Budget row" has broken out in the wake of the publication of a Treasury document indicating that the government was planning a one per cent rise in VAT, reported the Times. The information, "inadvertently" disclosed on a government website, showed that ministers had recently considered raising VAT from 17.5 per cent to 18.5 per cent in 2011, to make up the shortfall created by the temporary 2.5 per cent cut which will expire in January 2010. The conservative party is calling the rise a "secret tax bombshell".
The Mole: Emergency debate scheduled as MPs ask 'What is plan B?'
US dividends disappear
US stock dividends are disappearing at their fastest rate in 50 years in the face of the deepening recession, reported Boomberg.com. As companies scramble to conserve cash, dividends to shareholders are bearing the brunt and 91 groups in total are reducing or suspending payouts this month. Citigroup, Genworth Financial and New York Times are leading the rush and the total number of companies involved this month is the most since May 1958. November’s figure compares to 81 in October and 60 in September.
America enters a new Depression
Fears grow on Government default
Investors are beginning to believe that there is a bigger chance of the UK Government defaulting on its debts than the banks, reported the Daily Telegraph. The cost of insurance against the Government defaulting on its bonds in the next five years "surged" yesterday to one per cent above Libor, while insurance on Lloyds TSB defaulting is only 0.95 per cent and HSBC 0.992 per cent. A year ago to insure against Government default would have cost just 0.02 per cent above Libor. The worries have arisen as a result of the ambitious Government spending programme just announced.
Bankrupt Britain: how it could happen
...in brief..................
Toyota debt downgraded and Topps Tiles profit down sharply
Toyota Motor's debt rating was cut by ratings agency Fitch, the carmaker's first downgrade in 10 years, said Bloomberg.com. Its unsecured debt was reduced from AAA to AA as the agency issued a negative report detailing the effect of the slump in US sales…………
New Star Asset Management's flagship international property fund was forced to suspend trading yesterday, after redemptions by clients left it "dangerously low on cash", reported the Financial Times. Shares in New Star fell another 33 per cent on the news…………
Sportswear retailer JD Sports has taken a 10 per cent stake in JJB Sports, buying 25 million shares for £8.1m, said the Independent. JJB subsequently announced that it has had a £100m approach for its Fitness Clubs, thought to be from original founder Dave Whelan, which would clear its debts…………
Two of the UK's best-known retailers – Woolworths and MFI – were close to collapse last night, said the Daily Telegraph. Failure for the two firms would send "shock waves" through the sector, squeezed by a collapse in sales. Both companies are involved in last gasp rescue efforts…………
The McDonald’s cheeseburger has become "the latest victim of food inflation", with a price-hike to take effect in the US on Monday, reported the Daily Telegraph. The problem centres on the price of cheese, which has risen along with other dairy and beef costs…………
Problems in the housing market have led to tiles specialist Topps Tiles reporting a 27 per cent fall in profits, said the Guardian. The retailer has also axed its dividend. Its shares lost 2.5p to close at 18.5p, their lowest level in ten years. Its chief executive said "dire" conditions would continue…………
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