Shares up on eurozone debt hopes

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6 October 2011 Last updated at 09:47 GMT EC President Jose Manuel Barroso has fuelled expectations that Europe is preparing an action plan Stock markets have been boosted by expectations that European leaders are about to act to ease the debt crisis.

The main markets in London, Frankfurt and Paris were about 2% up, after Hong Kong closed 5.6% higher.

European Commission President Jose Manuel Barroso said in a television interview that there were plans for co-ordinated action to recapitalise banks.

More details of any action plan could come later at a European Central Bank press conference.

There have been a flurry of reports and comments in recent days that European authorities have negotiated plans to bolster banks and boost bailout funds.

On Thursday, Mr Barroso fuelled expectations further, telling Euronews TV that the EU executive was proposing "co-ordinated action" to the 27 European Union nations to bolster banks.

The intention was to "recapitalise banks and get rid of toxic assets they may have".

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You can see this as creeping progress towards putting adequate shock absorbers into the eurozone's financial system.”

End Quote Robert Peston Business editor, BBC News On Thursday afternoon, European Central Bank president Jean-Claude Trichet will lead a media briefing, which will come after the bank announces its decision on European interest rates.

Then German Chancellor Angela Merkel is due to hold talks in Berlin with Mr Trichet as well as the heads of the International Monetary Fund, the World Bank, the OECD and G20.

On Wednesday, Mr Merkel said she was in favour of a co-ordinated recapitalisation of European banks if that was deemed necessary.

Expectations that there will be action to bolster banks and boost European bailout funds began on Monday, when Olli Rehn, European commissioner for economic affairs, said there was "an increasingly shared view that we need a concerted, co-ordinated approach".

In an interview with the Financial Times, he said there was "a sense of urgency among ministers and we need to move on".

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Cairn makes strike in Sri Lanka

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3 October 2011 Last updated at 08:42 GMT The discovery of natural gas is the first in Sri Lanka for decades Edinburgh explorer Cairn Energy has made its first gas strike in Sri Lanka through its Indian subsidiary.

The offshore well was the first to be drilled in the country for 30 years.

Cairn India made the discovery after drilling almost a mile down offshore in the Mannar Basin, Sri Lanka.

Simon Thomson, chief executive, Cairn Energy said: "Cairn is delighted with this frontier exploration discovery, the first well in Cairn India's three well drilling programme in Sri Lanka."

Cairn Energy is in the process of selling off 30% of its 52% stake in Cairn India to the Vedanta Resources and recently won shareholder and Indian government approval for the deal.

The company's focus has moved to Greenland since it announced it was reducing its stake in its Indian unit.

However, it has had a number of disappointments after turning up several dry wells.

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VIDEO: Samsung's smartphone makes inroads

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7 October 2011 Last updated at 05:06 GMT Help

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American Airlines shares plummet

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3 October 2011 Last updated at 21:35 GMT American Airlines said it would have the youngest fleet in the US within five years Shares in American Airlines' parent company have ended the day down 33% on fears the airline may have to seek bankruptcy protection.

At one point shares in AMR fell by as much as 41% in New York on Monday, sparking automatic halts in trading.

American Airlines is the third largest carrier in the US but has been struggling with high debt loads and sluggish demand.

A spokesman said a Chapter 11 bankruptcy "is certainly not our goal".

More losses

American Airlines is expected to post its fourth straight year of losses in 2011, and analysts expect that to continue into 2012.

It's one of the few major carriers not to have restructured in a Chapter 11 bankruptcy, leaving it with higher costs and debts than competitors.

Several rumours about a possible restructuring appear to have sparked Monday's sell-off, including reports that a large number of pilots were retiring from the company early in case a filing affected their retirement plans.

Fears of a second recession in the United States also contributed towards the share drop, which affected other airline stocks as well.

"The market was ugly," Ray Neidl, an analyst with Maxim Group in New York told the BBC.

"Consumer variables such as airlines were down big time across the board as fears of recession grew bigger."

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Bernanke: US economy 'faltering'

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4 October 2011 Last updated at 20:35 GMT The Fed chairman also lent support to critics of China's exchange rate policies US Federal Reserve Chairman Ben Bernanke has told Congress that the US economy is "close to faltering" and more action may be needed.

Giving testimony to the US legislature, he said the Fed was "prepared to take further action as appropriate" to bolster the recovery.

His comments come after the Fed already decided to shift $400bn of investments into longer-term government debt.

Stock markets responded positively, with the Dow Jones rallying over 1%.

But US markets fell back again somewhat in afternoon trading, until a strong late rally just before the close, which left the Dow Jones Industrial Average uip 1.4% for the day.

China 'blocking'

He said the switch into longer-term government debt announced last month - dubbed Operation Twist - was the equivalent of a half-percentage-point cut in interest rates, and gave a "meaningful, but not an enormous support to the economy".

But he warned that the eurozone debt crisis, as well as overly hasty spending cuts by the federal government, risked undermining the US recovery.

When asked what additional action the Fed might take if the economy continued to weaken, he reiterated policy options he has laid out in past speeches:

giving clearer guidance as to how long interest rates will be held close to zero, and in what circumstances they would rise;increasing "quantitative easing" - the Fed's purchase of US government bonds and other debts;cutting the interest rate paid on excess cash that the banks hold at the Fed.

But he added that the US central bank's monetary policies were "no panacea".

Continue reading the main story The Fed chairman also appeared to lend support to those seeking to take action against China's policy of buying up US debts - which has the effect of holding down the value of the yuan at a more competitive exchange rate.

"Chinese policy is blocking what might be a more normal recovery process in the global economy," said Mr Bernanke, who said China was shifting demand away from the struggling US and European economies.

The US Senate has just begun a week-long debate on a bill that would threaten China, and other countries accused of keeping their currencies unfairly cheap, with trade sanctions.

On the subject of the eurozone debt crisis, Mr Bernanke said there was little help the US could offer.

"The problems are not really economic, they're political," he said. "Because what they are trying to do is find solutions that are acceptable to 17 different countries, which you can imagine is very difficult."

He said that the US was an "innocent bystander" to the crisis, and while the country's direct exposure to any debt default by Greece was limited, the real risk was that a disorderly default could trigger a run on other eurozone governments and a banking crisis, which would hit the US badly.

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VIDEO: Philippines aims to boost rice output

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7 October 2011 Last updated at 00:40 GMT Help

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US Senate postpones currency vote

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7 October 2011 Last updated at 04:02 GMT President Obama has said that any action by the US has to be consistent with international treaties The US senate has postponed its vote on the much-debated currency bill until next week amid differences between the Republicans and Democrats.

The bill would make it easier to impose penalties on goods from countries seen as keeping their currencies artificially low.

Politicians and some business groups have accused China of using its policy of limiting the yuan's value to boost exports.

Leaders differed on certain amendments.

"I think China needs to carefully think about and process the substance of what people are saying here on the floor of the United States Senate." said John Kerry, chairman of the Democratic Senate Foreign Relations Committee.

'Very aggressive'

The debate on China's currency policy has become the centre of attention amid a slowdown in the US economy.

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Whatever tools we put in place, let's make sure that these are tools that can actually work, that they're consistent with our international treaties and obligations”

End Quote Barack Obama US President President Barack Obama said "China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States."

"It is indisputable that they [China] intervene heavily in the currency markets and that the RMB [yuan], their currency, is lower than it probably would be if they weren't making all those purchases in the currency markets."

Politicians and policy makers have said that undervalued yuan has not only given an unfair advantage to Chinese exporters, it has also contributed to the unemployment situation in the US.

"We cannot continue to let China flaunt the rules," said Democratic Senator Chuck Schumer.

Mr Schumer added that if no action was taken against China's policies the US "may never recover as a country. This is serious stuff".

Cautious approach

However, President Obama warned that the US needed to take a cautious approach while handling the matter.

"My main concern and I've expressed this to Senator Schumer, is whatever tools we put in place, let's make sure that these are tools that can actually work, that they're consistent with our international treaties and obligations." he said.

President Obama's comments come as China has accused the US of using the currency dispute to take protectionist measures.

At the same time, some politicians and trade groups have said that such a bill may do more harm than good to the US economy.

They have warned that any such action by the US may start a trade war with China.

"Unilateral action by the United States will only serve to increase trade tensions and negatively impact the US economic recovery during this fragile period in the global economy," Bruce Josten of the US Chamber of Commerce wrote to the Senators earlier this week.

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