SEOUL, April 29 (Xinhua) -- South Korea's business sentiment index for May rose to a one-year high on hopes of economic recovery, an industry survey showed Wednesday.
The monthly business sentiment index, an indicator of companies' outlook for the coming month, hit 103.8 for May, compared with 86.7 for April, according to the survey by Federation of Korean Industries, the nation's top business lobby group.
The May figure is the first time in 11 months that the index rose above 100, which means companies with optimistic views on the economy exceed those with pessimistic forecasts.
The rise in the index comes as corporate earnings are better than earlier expected, the federation said.
JAKARTA, April 29 (Xinhua) -- Indonesia's efforts toward sustainable development, poverty eradication and a stronger economy are under serious threat from climate change, according to an ADB report quoted by the Jakarta Post on Wednesday.
The report said climate change would increase the frequency and intensity of extreme weather events such as heat waves, droughts, floods and tropical cyclones.
The climate change "is exacerbating water shortages, constraining agricultural production, threatening food security, triggering forest fires, coastal degradation and increasing health risks," it added.
Rainfall would also decline in the next 20 to 30 years in Indonesia, the report claimed.
"Climate change seriously threatens Indonesia's economic development. The worst is yet to come," ADB assistant chief Juzhong Zhung said in the report, adding that combating climate change required urgent action on both adaptation and mitigation as soon as possible.
The report also warned that hundreds of small islands across the country are under serious threat of sinking as climate change contributes to rising sea levels.
Indonesia has 5.8 million square kilometers of sea with coastlines stretching 81,000 kilometers, which serve as home to millions of people.
Data from the Indonesian Ministry of Environment shows that 65 percent of people on Java, Indonesia's most populous island, live in and around coastal areas. The country also has about 17,500 small islands.
SEOUL, April 29 (Xinhua) -- South Korea's current account surplus marked a record high in March thanks to a great leap in the goods balance surplus, the central bank said Wednesday.
The current account surplus reached 6.65 billion U.S. dollars last month, sharply up from 3.56 billion U.S. dollars in February, according to a report by the Bank of Korea (BOK).
The March figure stands at the largest level since January 1980 when the BOK started compiling related data.
The record surplus can be attributed to a jump in the goods balance surplus, according to the BOK.
The goods balance marked a surplus of 6.98 billion U.S. dollars in March, more than doubling from the previous month when the figure hit 3.11 billion U.S. dollars.
The increase in the goods balance came as an on-year fall of 35.8 percent in imports exceeded that of 17.8 percent in exports, the BOK said.
Meanwhile, the service account and the income account stood in the negative territory in March, with a deficit of 645.7 million U.S. dollars and 215.7 million U.S. dollars, respectively.
The capital account posted a net outflow of 2.18 billion U.S. dollars last month, close to a 2.98 billion-U.S. dollar outflow a month earlier.
As the trade surplus is expected to keep moving upward, reaching around 4 to 5 billion U.S. dollars for April, the country's current account surplus may hit about 3 billion U.S. dollars for the month, a high official at the BOK told a press conference.
WELLINGTON, April 29 (Xinhua) -- New Zealand Prime Minister John Key warned on Wednesday that the swine flu confirmations might have side-impact on New Zealand tourism.
He made his comment to reporters on Wednesday morning following the laboratory confirmation Tuesday night of three cases of swine flu and the Ministry of Health revealing that 179 people in New Zealand were in isolation.
Key, who also serves as tourism minister, said India had issued a travel warning and some Japanese tourists had canceled trips to New Zealand.
"It is important to put it in perspective," he said. "It is highly likely that most countries will have some outbreak of swine flu."
New Zealand was handling it well and had high stocks of Tamiflu.
"But obviously it is of concern to us that there could be a side-impact on tourism here in New Zealand," he said.
Key said he understood that India had issued a travel warning on a large number of countries, including the United States, Canada and Britain.
New Zealand is the sixth country in the world to have confirmed cases of the virus.
On Wednesday morning, health officials announced 14 cases of influenza A had been confirmed in the Auckland region, including the three people who had the new swine flu strain of influenza A.
Twelve of the influenza A cases are from a 25-person Rangitoto College group which returned from Mexico on Saturday.
MANILA, April 28 (Xinhua) -- The Philippine government is gearing up for a "rebound mode" following upbeat indicators in the global economy, officials said on Tuesday.
At a Cabinet meeting, President Gloria Macapagal-Arroyo ordered the country's economic managers to prepare for a possible rebound this year after the National Economic and Development Authority (NEDA) reported positive developments in the world economy, but said preparations for the worst should still continue, according to Cabinet Secretary Silvestre Bello III. NEDA is the social and economic development planning and policy coordinating body of the Philippines.
At a news briefing after the Cabinet meeting, Bello said that based on the NEDA presentation, the global economy is now getting better and "we are now expecting a rebounding mode."
"They (the economic managers) said that in two to three years there will be a rebound but apparently in less than one year there is already a rebound mode so the President wants to make sure that the government is very prepared to react to this rebound mode," Bello said.
NEDA Deputy Director-General Rolando Tungpalan said that based on various sources from the United States, Europe and Asia, "there seems to be growing consensus of the bottoming out of the recession."
"Last month, we were all uncertain about the situation -- how long the recession globally would happen and how deep -- but the numbers have been showing that indeed there is a reduction in the fall. It is still falling but at a lower pace," Tungpalan said.
He said that because of positive developments at home and abroad, the Philippines remains "very hopeful" that it can meet its current macroeconomic targets, but added that the latter can still be revised upward or downward if necessary.
"We remain very hopeful. We still maintain our 3.1-4.1 (percent) growth target but being sensitive to global events...As the President had said this morning, let us be prepared for the worst, but also be prepared for the best," Tungpalan said.
On whether the government can meet its deficit target for the year, NEDA Director for Planning Dennis Arroyo said, "we shall revise upward or downward depending on the first quarter results. For now, we believe that we can meet the target of 199 billion pesos (4.10 billion U.S. dollars). That is 2.25 percent of GDP which is still within reasonable range."
The planning director said that the Philippines continues to have a thriving business process outsourcing (BPO) industry where hundreds of thousands of jobs have yet to be filled up.
The Philippine BPO industry's export revenues are forecast to grow by 20 percent to 30 percent in 2009, hitting over 7 billion U.S. dollars, as many foreign companies continue to outsource some of their functions to countries with cheaper but skilled labor force amid the global crisis. The Philippine BPO industry includesfirms such as call centers, animation companies, software developers and medical transcription firms and is considered among the country's sunrise industries. The BPO sector earned 6 billion dollars in export revenues in 2008, or 26 percent more than 2007. Call centers contributed 70 percent to total revenues.
According to Deputy Director-General Tungpalan, dollar remittances of Filipino workers abroad grew by 4.9 percent in February, very far from the -11 percent contraction assumed by "some quarters," apparently the International Monetary Fund (IMF), in predicting flat growth for the country this year. Filipino officials have dismissed IMF's forecast as too pessimistic.
The Philippines is one of the world's biggest labor-exporting countries, and remittances from migrant workers account for 10 percent of the Philippine economy. Remittances surged 14 percent on year to 16.4 billion dollars in 2008. Government officials forecasted that overseas remittances growth for this year will be flat.
NEW YORK, April 30 (Xinhua) -- Wall Street ended mixed Thursday after the third largest U.S. automaker Chrysler announced it will file for Chapter 11 bankruptcy.
Wall Street opened higher in the morning as investors welcomed a surprise decline in new jobless claims and earnings beating estimates.
The U.S. Labor Department said initial claims fell 14,000 to 631,000 last week. Economists had predicted a rise. But continuing claims jumped to a new record.
However, the U.S. Commerce Department reported Thursday that consumer spending dropped by 0.2 percent in March, worse than the 0.1 percent decline that economists had expected.
In a midday speech, U.S. President Barack Obama indicated that Chrysler will form an alliance with the Italian carmaker Fiat Group SpA.
Under the direction of the U.S. Treasury, the troubled automaker and 24 of its wholly owned U.S. subsidiaries filed voluntary petitions under Chapter 11 of the Bankruptcy Code in U.S. Bankruptcy Court.
In corporate news, many companies including Dow Chemical, PG, Exxon Mobil and Newmont Mining reported results topped analysts' expectations. And Motorola Inc. posted a loss during the first quarter, but smaller than analysts had predicted.
The Dow Jones industrial average fell 17.61 points, or 0.22 percent, to 8,168.12. The Standard Poor's 500 index dipped 0.83 of a point, or 0.09 percent, to 872.81. The Nasdaq Composite index was up 5.36 points, or 0.31 percent, to 1,717.30.
WASHINGTON, April 30 (Xinhua) -- U.S. consumer spending fell 0.2 percent in March, the first drop in three months, while income growth slipped for a second consecutive month, the Commerce Department reported Thursday.
The March drop followed gains of 1.1 percent in January and 0.4percent in February. The back-to-back increases came after consumer spending had posted six straight monthly declines as consumers slashed outlays in the face of a deepening recession.
Economists had been expecting a 0.1 percent decline for last month.
Personal income, the fuel for future spending, dropped by 0.3 percent in March, worse than the 0.2 percent dip that had been expected. Income rose by 0.1 percent in January and declined by 0.2 percent in February.
Americans' disposable personal income, or after-tax income, was flat in March, the same as the previous month.
But Americans were saving more. The personal saving rate, personal saving as a percentage of disposable personal income, increased to 4.2 percent last month from 4.0 percent in February.
Consumer spending, which accounts for two thirds of total economic activity, rose at an annual rate of 2.2 percent in the first quarter of this year after two consecutive quarters of declines.
However, many economists believe that consumer spending will dip back into negative territory in the current April-June period as the economy is still in a severe recession and the unemployment rate stands at 8.5 percent, the highest level since late 1983.
CHICAGO, April 30 (Xinhua) -- U.S. automaker Chrysler LLC has to file for Chapter 11 bankruptcy protection after talks between the Treasury Department and the company's creditors collapsed early Thursday morning, according to Detroit local reports.
Talks between the Treasury Department and Chrysler's lenders aimed at keeping the troubled automaker out of bankruptcy collapsed after the Obama administration's automotive task force worked into early morning on Thursday and failed to persuade several hedge funds and other lenders to accept a deal to reduce Chrysler's debt, said people involved in the talks.
J.P. Morgan Chase, which leads the creditor group as Chrysler's largest lender, gave the other 45 banks and hedge funds 90 minutes on Wednesday to vote on the deal. However, many funds voted no and refused to budge, meaning a trip to bankruptcy court is unavoidable for Chrysler by the deadline of Thursday.
No new talks are set for Thursday although Chrysler still has more than a dozen of hours before the 11:59 p.m. deadline to get concessions from its lenders, who had loaned the company 6.9 billion dollars. Chrysler officials had no comments on media's bankruptcy report.
U.S. President Barack Obama is scheduled to discuss the 85-yearold carmaker's future Thursday noon, when he is supposed to ask for the historic bankruptcy of Chrysler and announce a signed deal with Chrysler and Italian automaker Fiat.
Analysts said that the filing for bankruptcy will not mean the halt of operations or liquidation for the iconic old automaker, and it is really another kind of restructuring as the administration expects to use the bankruptcy process to join Chrysler with Fiat.
What's more, the United Auto Workers (UAW) union announced late Wednesday night that its membership at Chrysler had overwhelmingly ratified a concession contract reached between the company and union leadership on Sunday night, which means the way to reach a partnership deal has been paved.
President Obama said during a press conference Wednesday night that he was more confident than he was 30 days ago that Chrysler would be able to emerge from the process as a healthy, competitive company.
It is not the first time for the automaker giant to face bankruptcy. Chrysler narrowly avoided bankruptcy in 1980 after winning 1.5 billion dollars of government loans.
Chrysler was sold for 36 billion dollars to Daimler-Benz in 1998, but the deal ended in 2007, when the German automaker sold Chrysler to Cerberus Capital Management LP for 7 billion dollars.
Although Chrysler avoided collapse last December as the previous Bush administration provided 4 billion dollars as bailout loans, the company's sales fell 30 percent in 2008 -- compared with an industry decline of 18 percent. Chrysler's sales declined 46 percent in the first quarter this year.
A walking stop sign is seen in front of the logo of Chrysler at a car dealership in New York, the United States, April 7, 2009. The U.S. Treasury will provide a further five billion dollars in loans to General Motors and 500 million dollars to Chrysler as the automakers work on their viability plans, officials said Tuesday. (Xinhua/Liu Xin) Photo Gallery
CHICAGO, April 29 (Xinhua) -- Talks between the U.S. Treasury Department and Chrysler LLC lenders over the automaker's debt broke off late Wednesday, leaving bankruptcy the automaker's all but certain option, news agencies reported.
Chrysler will file for bankruptcy after the talks broke down, since its 80 percent of stocks are controlled by private-equity firm Cerberus Capital Management LP, Reuters reported, quoting the Wall Street Journal.
The Associated Press also reported that the talks "have disintegrated," citing its own sources.
"After allowing talks to continue late into the night Wednesday, the Treasury Department finally ended negotiations after the hedge funds were unable to come to an agreement," the AP report said.
The U.S. government had set an April 30 deadline for Chrysler to strike a deal with Fiat after concluding that the struggling automaker would not be viable on its own.
The talks between Chrysler LLC's lenders and the Treasury Department was aimed at reducing the automaker's 6.9 billion dollars in secured debt and keep it out of bankruptcy protection.
The breakdown also means further emergency government aid for Chrysler will be withheld.
Chrysler, Fiat to sign alliance deal U.S. gov't, Chrysler lenders reach deal U.S. Treasury to provide further loans to GM, Chrysler Chrysler seeks production plant in China
CHICAGO, April 29 (Xinhua) -- Italy's Fiat SpA will sign an agreement Thursday to form an alliance with the U.S. automaker Chrysler LLC, sources familiar with the negotiations said Wednesday.
The U.S. government had set an April 30 deadline for Chrysler to strike a deal with Fiat after concluding that the struggling automaker would not be viable on its own.
RIO DE JANEIRO, April 29 (Xinhua) -- The international financial crisis has led to a sharp fall in the Brazilian industry production indicator in the first quarter of this year, which hit a 10-year low, the country's National Industry Confederation (CNI)announced Wednesday.
According to a study released by the CNI, the indicator which measures Brazil's industry's production fell to 36.1 points in the quarter, lower than the previous quarter's 40.8 points and 52.2 percent in the first quarter of 2008.
The indicator goes from zero to 100. Any figure under 50 indicates a contraction in the activity, which means that production is downward.
The sharp decrease was a result of the expanded and intensified international financial crisis, said the CNI.
Out of the 27 sectors analyzed by the study, 26 registered a shrink in the production with the pharmaceutical industry as the sole exception.
The woodwork industry registered the most significant drop, whose indicator declined to 21.2 points.
The shrink in the industrial production led to a worse employment situation. According to the CNI, all 27 sectors registered decreases in the employment indicator.
Brazil's industrial employment indicator fell to 39.2 points in the quarter, down from 44 points in the previous quarter and 53.1 points in the same period of 2008. It was the worst picture since the CNI began the study in 1999.
The CNI said that Brazilian companies are still facing difficulties in obtaining financial support. Though the first quarter's indicator of access to credit reached the same 32.4 points as that of the fourth quarter in 2008, the figure is lower than the 47.6 points of the same period last year.
The level of satisfaction with the current economic situation also fell to 43.3 points from the previous quarter's 46.4 points. It was the indicator's third consecutive drop.
Despite the above bad figures, optimism still remained for the upcoming six months. The demand perspective indicator rose to 48.3points from the previous quarter's 39.7 points, while the employment perspectives indicator increased to 44.8 points from 40.5 points.
The CNI study surveyed 1,329 companies all over the country from April 1 to April 27.
RIO DE JANEIRO, April 29 (Xinhua) -- Brazilian Central Bank decided to cut the country's annual basic interest rate Selic from 11.25 to 10.25 percent, the bank's Monetary Policy Committee (Copom) said in a statement on Wednesday.
The new rate, the lowest since the Central Bank started the measurements in 1996, was the third consecutive cut in the Selic rate this year. The country cut the rate from 13.75 to 12.75 percent in January, and from 12.75 to 11.25 in March.
The cut, a unanimous decision by the members of the (Copom), matched the expectation of most economists, who considered that the Central Bank was unlikely to repeat the previous 1.5 percentage point reduction, due to the latest signs of economic recovery.
With the cut, Brazil is no longer the country with the highest real interest rate (interest rate minus inflation rate) in the world. The country's real interest rate of 5.8 percent is now the third highest, after China (6.6 percent) and Turkey (6.4 percent).
LA PAZ, April 29 (Xinhua) -- Bolivia banned Wednesday the imports of pork or sub products from Mexico, the United States and Canadam, a step taken to stop the entrance of swine flu to the country.
All the import requests of pork food must be sent to the National Unit of Animal Safety to be evaluated and wait for authorization, the National Service of Agriculture Sanity and Food Safety (Senasag) said.
The Senasag has ordered district chiefs to take measures regarding with pork food at the international control points, mainly at airports, where the authorities also plan to set high temperature detectors.
The government said they are seeking budget to buy masks, thermometers and antiviral medicine to face the disease.
MEXICO CITY, April 29 (Xinhua) -- The Bank of Mexico on Wednesday raised its inflation forecast by 0.25 points for the rest of this year after the first quarter figure reached 6.18 percent.
The central bank in its quarterly report estimated that inflation will reach as high as 6.0 percent, 5.25 percent and 4.5 percent in the next three quarters respectively.
"Although inflation expectations show a downward tendency for the coming months, this forecast is not exempt from risks," the bank said.
"Underlying inflation has maintained a rising trend which could be associated with the impact on the production cost structure caused by exchange rate depreciation," it said.
On Wednesday, Mexico's currency peso traded at around 13.68 to the dollar, compared with 9.86 in last August. A weaker peso means that manufacturers and consumers have to pay more for imports, which has a knock-on effect on all prices.
The bank estimated Mexico's economy will contract by 3.8 percent and 4.8 percent this year, and state-insured jobs will be reduced by 350,000 to 450,000 by the end of this year.
The Bank of Mexico on April 17 cut its target interest rate by 0.75 points to 6 percent to contain the economic fallout from the global recession.
NEW YORK, April 29 (Xinhua) -- The dollar fell against most major currencies on Wednesday as investors' risk appetite was boosted by comments from the U.S. Federal Reserve.
The Fed decided to keep the target range for the federal funds rate at zero to 0.25 percent, a record low. The central bank said in a statement that the economy has continued to contract, though the pace of contraction appears to be somewhat slower.
Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit, the Fed said.
The U.S. Commerce Department reported that U.S. gross domestic product decreased at an annual rate of 6.1 percent in the first quarter of 2009. The loss was larger than expected but slight higher than the previous quarter.
Personal consumption expenditures, which account for two-thirds of U.S. economic activities, increased 2.2 percent in the first quarter, in contrast to a decrease of 4.3 percent in the previous quarter. Durable goods increased 9.4 percent, nondurable goods increased 1.3 percent.
The euro bought 1.3289 dollars in late New York trading compared with 1.3147 dollars it bought late Tuesday. The pound rose to 1.4772 dollars from 1.4620 dollars.
The dollar fell to 1.2008 Canadian dollars from 1.2190 Canadian dollars, and fell to 1.1358 Swiss francs from 1.1440 Swiss francs. It rose to 97.68 Japanese yen from 96.45 Japanese yen.
WELLINGTON, April 30 (Xinhua) -- New Zealand's Reserve Bank on Thursday cut the official cash rate (OCR) by half a percentage point to a record low 2.5 percent.
Announcing the decision, Reserve Bank Governor Allan Bollard said he expected the rate to stay at 2.5 percent until the end of next year, but it "could still move modestly lower."
He said the world economy deteriorated further than expected in the first quarter of 2009 and "adverse economic forces" are expected "to remain dominant" throughout 2009.
Bollard said it is likely to be some time before economic activity returns to robust and healthy levels.
Thursday's 50 basis point cut in the OCR was widely expected by economists.
At the start of April, the Reserve Bank had been forced to say longer term interest rates would remain low for a prolonged period, after a rush to refinance home loans at cheap rates caused swap rates to spike.
New Zealand's OCR has been lowered in a series of cuts since July 24, 2008. It was set at 8.25 percent on Sept. 13, 2007. The previous 3 percent rate was set on March 12 2009.
"The timing and extent of global recovery remain highly uncertain," said the central bank governor.
"While the New Zealand economy has not experienced the same extreme falls in economic activity as seen in a number of our trading partners, it remains weak. Business sentiment is low, investment has been curtailed and employment reduced," he said.
The large decline in the OCR during the past year was expected to pass through to more borrowers in coming quarters as existing fixed-rate mortgages came up for re-pricing, Bollard said.
Global financial markets were showing some tentative signs of stabilization but much still needed to be done and sentiment remained fragile, Bollard said.
The New Zealand dollar plunged nearly 1 U.S. cent immediately after the OCR announcement from 57.34 U.S. cents to 56.46 U.S. cents before recovering slightly.
NEW YORK, April 29 (Xinhua) -- Wall Street rebounded strongly on Wednesday as the Federal Reserve's comment that the economic recession is easing helped boost market sentiment.
Major indexes of the U.S. stocks gained more than two percent, and the Dow Jones industrial average surged nearly 169 points to the highest close since February 9.
The Fed concluded its two-day monetary policy meeting on Wednesday afternoon and said in a statement that while the U.S. economy is still contracting, the pace of decline "appears to be somewhat slower." The Fed also decided to leave key interest rates at near-zero level.
Investors also reacted positively to the worse-than-expected gross domestic product report, focusing on the bright spots. U.S. GDP shrank at an annual rate of 6.1 percent in the first quarter, more than the five percent slide economists had expected. But consumer spending, which accounts for over two-thirds of U.S. economic activity, rose 2.2 percent, and business inventories saw a severe drop.
Elsewhere, Exxon Mobil Corp., the world's largest oil company, and Conoco Phillips advanced as crude rebounded near 51 dollars a barrel. And Citigroup Inc. and Bank of America gained as Fox-Pitt Kelton Cochran Caronia Waller lifted its stance on U.S. banks.
The Dow Jones jumped 168.78, or 2.11 percent, to 8,185.73. Broader indexes also moved higher. The Standard Poor's 500 index advanced 18.48, or 2.16 percent, to 873.64; and the Nasdaq rallied38.13, or 2.28 percent, to 1,711.94.
WASHINGTON, April 29 (Xinhua) -- The U.S. Federal Reserve on Wednesday held a key interest rate unchanged at a record low of between zero and 0.25 percent to support the struggling economy which has been in a recession since December 2007 and snatched 5.1million jobs.
Concluding a two-day policy-*** meeting, the central bank said it sees signs the recession may be easing, but warned that the economy is likely to remain weak.
"Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time," the Fed said in a statement following the meeting.
The Fed "continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability," it added.
In the statement, the Fed repeated its position that it "will employ all available tools to promote economic recovery and to preserve price stability."
It voted unanimously to maintain the target range for the federal funds rate, which commercial banks charge each other on overnight loans, at zero to 0.25 percent, and stated that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
Meanwhile, the central bank would carry out its vast program to purchase Treasury debt and other securities "to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets."
As announced in March, the Federal Reserve will purchase a total of up to 1.25 trillion dollars of agency mortgage-backed securities and up to 200 billion dollars of agency debt by the end of the year.
In addition, the Fed will buy up to 300 billion dollars of Treasury securities by autumn, as part of its plan to bring down interest rates it cannot directly control, according to the statement.
Doing so would help the ailing economy because many kinds of debt -- from mortgages to corporate bonds -- are linked to Treasury rates. Fed purchases could boost Treasury prices and drive down their rates. That would ripple through and lower rates on other kinds of debt.
The Fed's decision to leave the key interest rate unchanged was in line with economists' expectations.
Many economists now predict that the Fed will hold the bank lending rate in this low level for the rest of this year and for most -- if not all -- of next year.
Like many private economists, the Fed at present does not expect inflation to become a problem. In light of increasing economic slack here and abroad, the Fed expects that inflation will remain "subdued," the statement said.
Moreover, it sees "some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term."
Some economists, however, said that it's mindful of the risks of pumping more money into the economy, bailing out financial institutions and leaving the key rate at a record low for too long.
Those steps could ignite inflation when the economy begins recovery, put taxpayers' money in danger and encourage companies to make high-stake gambles, they warned.
Against this backdrop, the Fed pledged in the statement it will "continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments."
In the first quarter of this year, the U.S. economy shrank at an annual rate of 6.1 percent, only slightly smaller than the 6.3-percent drop in the previous quarter, the Commerce Department reported on Wednesday.
Many analysts were predicting the U.S. economy would shrink less in the current April-June period as the government's stimulus begins to take hold.
But the recent outbreak of swine flu, which started out in Mexico and has spread to the United States and elsewhere, poses a new potential danger. The flu could stifle trade and force consumers to cut back further, worsening the recession.
For all of this year, the economy of the United States, at the center of an intensifying global financial storm, is now projected by the International Monetary Fund (IMF) to contract by 2.8 percent in 2009, following the 1.1-percent growth in 2008, the smallest gain since 2001.
Despite large cuts in policy interest rates, credit is exceptionally costly or hard to get for many households and firms, reflecting severe strains in financial institutions, the IMF said last week in its latest World Economic Outlook report.
"In addition, households are being hit by large financial and housing wealth losses, much lower earnings prospects, and elevated uncertainty about job security, all of which have driven consumer confidence to record lows," it warned.
The Obama administration is counting on the 787-billion-dollar stimulus, which combines tax cuts and increased government spending on public projects, to help bolster economic activity later this year.
OTTAWA, April 29 (Xinhua) -- Although Finance Minister Jim Flaherty said it remains unclear how the spreading swine flu will affect the economy, some of Canada's industries are already feeling the pinch and experts have warned about serious challenges ahead.
"It's definitely nothing to play down lightly ... This threatens to exacerbate what is already the most serious downturn of the post-war period," said Bank of Montreal economist Douglas Porter.
Canada has so far confirmed 13 mild cases of human infection of the swine flu. Chief public officer of health David Butler-Jones has warned that more severe cases may appear and may even result in deaths.
Agriculture and travel industries are among the biggest victims of the outbreak. On Monday, investors' worries already sent shares of pork producers lower on the stock markets, ignoring reassurances that the meat is not the source of the flu.
"They could've called it anything they wanted, but they've called it swine flu, so of course, it hits the hog industry real hard," said pork farmer John Pruen from southern Manitoba, which province produces a large share of Canada's pork.
"It could do a lot of damage to our industry," Jodi Bakke, director of policy and communications for Alberta Pork told reporters on Wednesday, adding precautions have been taken in the industry including keeping people with flu symptoms away from pigs.
Producers worry the swine flu will devastate hog farmers in the same way bovine spongiform encephalopathy, commonly known as mad cow disease, affected cattle farming a few years ago.
Reports say many countries including China and Russia are already banning the import of North American pork, which relies a lot on exports. The province of Manitoba alone exports four million hogs a year.
Even worse than the pork industry, the swine flu outbreak could have a disastrous effect on Canadian agricultural producers, many of whom rely on Mexican workers to plant and harvest crops.
More than 15,000 Mexican workers are entering Canada this year under a seasonal farm workers' program. Although Canada has not banned Mexican workers from coming, it is tightening admissions by asking all workers to be checked and undergo test before entering.
A reduction in farm workers could result in a disastrous season for the agricultural industry and for consumers, according to Doug Connery, the labor chairman of the Vegetable Growers Association of Manitoba.
Connery, who farms asparagus, carrots, green onions and broccoli on more than 300 hectares, usually brings in 80 migrant workers each year. He said he stands to lose half of his revenue if he cannot use workers from Mexico.
Connery also estimates Canadians would lose up to 30 percent of the food supply coming to this country if transport from Mexico is halted.
Meanwhile, the struggling airline and travel industries will also take a big hit if the virus continues to spread.
Some countries have issued warnings against traveling to Canada while Canada has issued official warnings against unnecessary trips to Mexico.
About 1 million Canadians head to Mexico every year, *** it one of the most popular destinations for the country. However, the growing public concern over the illness could freeze international travel and spell doom for an industry already reeling from low consumer confidence.
Several travel and air companies have canceled flights and vacation packages to Mexico, among which, Transat AT postponed all planned flights to Mexico through June 1; Air Canada and Air Canada Vacations suspended all operations to Cancun, Cozumel and Puerto Vallarta, Mexico, until June 1. The airline will maintain its flights to Mexico City.
In a bid to keep business going, Air Canada and Westjet are offering to re-route passengers headed to Mexico to other destinations.
Still, at least one industry should benefit from the growing health worries: the pharmaceutical sector.
David Howell, who operates pandemic preparedness company AMI Business Resilience, said that some companies are already stocking up on anti-viral drugs, just in case.
"A lot of corporations, for their critical employees, are buying anti-virals to make sure they can maintain a business as usual arena and get through it," said Howell.
WASHINGTON, April 29 (Xinhua) -- The U.S. Treasury Department announced on Wednesday that the number of times it auctions 30-year bonds will be increased to 12 times a year in an effort to deal with the government's soaring debt.
This was the second time this year the Treasury decided to boost the number of auction times of 30-year bonds. Just three months ago, it doubled the frequency of the auctions from four times annually to eight.
At the same time, the Treasury said it will raise 71.0 billion dollars in a series of auctions next week to refund approximately 52.2 billion dollars of privately held securities maturing or called on May 15, 2009 and to raise approximately 18.8 billion dollars.
The upcoming refunding will include auctions of three-year and 10-year notes and the 30-year bonds, according to a statement by the Treasury.
The 71 billion dollars will be part of the government's total borrowing needs for the April-June quarter. The government will have to borrow 361 billion dollars in the second quarter, a record amount for the April-June period, the Treasury estimated on Monday.
It is the third consecutive quarter the government's borrowing needs have set records for those periods.
And the estimate for borrowing this current quarter was much larger than borrowing needs of just 13 billion dollars in the year-ago period.
During the July-September quarter, the government will need to borrow 515 billion dollars, down slightly from the year-earlier level of 530 billion dollars, the Treasury also estimated.
The government borrowed 481 billion dollars in the first quarter of this year.
The huge borrowing needs reflect the soaring costs of the government's economic stimulus package and financial rescue program, and the recession, which has resulted in a sharp decline in tax revenue.
The recession, which started in December 2007, also has boosted government spending for benefit programs such as unemployment insurance and food stamps.
The Obama administration is projecting the federal budget deficit to rise to 1.75 trillion dollars in fiscal year 2009, which ends on Sept. 30, 2009, from the previous record of 454.8 billion dollars set in fiscal year 2008.
To cover the government's borrowing needs, U.S. Congress boosted the limit for the national debt to 12.1 trillion dollars in February this year. The national debt now stands at 11.1 trillion dollars.
WASHINGTON, April 29 (Xinhua) -- The U.S. economy shrank at an annual rate of 6.1 percent in the first quarter of 2009, compared with the 6.3 percent drop in the previous quarter, the Commerce Department reported on Wednesday.
Analysts had been expecting a decrease of 5 percent for the first three months of this year. The worse-than-expected decline marked the third straight quarter of contraction for the world's biggest economy and signaled little improvement in a deep recession.
"The decrease in real GDP in the first quarter primarily reflected negative contributions from exports, private inventory investment, equipment and software, non-residential structures, and residential fixed investment that were partly offset by a positive contribution from personal consumption expenditures," the department said.
"Imports, which are a subtraction in the calculation of GDP, decreased," it said.
Spending on equipment and software by businesses dropped by 33.8 percent, compared with a 28.1 percent decrease in the final quarter of last year.
Meanwhile, builders slashed their spending on commercial construction projects by 44.2 percent, much bigger than the 9.4 percent decline in the previous quarter.
Their residential spending also fell by 38 percent, the steepest drop since the second quarter of 1980.
Exports of goods in the January-to-March period plummeted at a 30 percent pace, the biggest drop since the first quarter of 1969,following the 23.6 percent plunge in the previous quarter.
Government spending decreased by 3.9 percent in the first quarter, the biggest decrease since the end of 1995. It also marked the first drop in government spending since the fourth quarter of 2007 following an increase of 7 percent in the fourth quarter of 2008.
However, consumers, who have been cutting their expenditure for two consecutive quarters, boosted spending by 2.2 percent in the first three months. The 2.2 percent growth rate was the strongest in two years.
Many analysts had predicted that the U.S. economy would shrink less in the current April-June period as the government's stimulus measures begin to take hold.
However, the recent outbreak of swine flu, which started in Mexico and has spread to the United States and elsewhere, poses a new potential danger. The flu could stifle trade and force consumers to cut back further on spending thus worsening the recession.
The International Monetary Fund (IMF) predicted the economy of the United States, at the center of a worsening global financial storm, will contract by 2.8 percent in 2009.
Despite large cuts in policy interest rates, credit is exceptionally costly or hard to get for many households and companies, which reflects severe strains on financial institutions, the IMF said last week in its latest World Economic Outlook report.
"In addition, households are being hit by large financial and housing wealth losses, much lower earnings prospects, and elevated uncertainty about job security, all of which have driven consumer confidence to record lows," it said.
The U.S. administration under Barack Obama is counting on the 787-billion-dollar stimulus package, which combines tax cuts and increased government spending on public projects, to help bolster economic activity later this year.
The administration has also unveiled a series of measures to rescue banks, curb home foreclosures and spur lending to businesses and consumers.
WASHINGTON, April 28 (Xinhua) -- Having officials from developing countries hold key posts in the International Monetary Fund (IMF) "would happen in the future," said IMF's Managing Director Dominique Strauss-Kahn here on Tuesday.
During an interview with Xinhua, Strauss-Kahn characterized the traditional power-sharing structure at the World Bank and the IMF, the world's two leading financial agencies, as "the old world," where by the entities' by-laws, the World Bank president has to bean American citizen and the managing director of the IMF has to be a European.
Strauss-Kahn said the original arrangement under the Bretton Woods System that created the IMF was "a little bit outdated" right now, as people are living in a "new world."
As the global financial crisis spreads to more countries, many governments are requesting the IMF to strengthen its monitoring and surveillance functions to keep the world's major financial firms in check, in order to prevent similar crisis from happening again.
The IMF chief said although it is not up to the IMF to make new financial regulations for its member countries, the agency will exercise strong supervision once such regulations are in place.
"If an official from an emerging market country takes the lead of such a task within the IMF, the position and its occupier will undoubtedly attract worldwide attention," said Strauss-Kahn.
Strauss-Kahn's remarks echo emerging economies' calls for increasing their decision-*** power and influence within the organization.
The IMF chief said in an earlier interview with Chinese reporters that there are many ways to increase developing countries' say in the IMF, in addition to the augmentation of fund quota and voting rights among member states.
Strauss-Kahn also talked about the new "debt bonds" to be discussed and released by the IMF soon. The new type of bonds will give countries with large foreign reserves such as China a good investment opportunity, he said, as the IMF bonds will be "totally secure" and "have better returns than U.S. Treasury bonds."
BEIJING, April 29 (Xinhua) -- The news of further layoffs by big companies and the increasing concern about swine flu are casting new shadows over the U.S. economy. As new college graduates are pouring into the labor market, job creation becomes a real "Stress Test" for the U.S. government.
JOBLESS NEWS KEEPS GOING
According to General Motor's updated viability plan unveiled on Monday, 21,000 hourly workers will be shed by 2010. Salaried employees are also expected to be cut further.
The struggling auto giant is not the only big employer that joined the laying off trend that has worsened since the outbreak of the global financial crisis last September. Leading Internet company Yahoo said on April 21 that it would cut 5 percent of its global workforce following a significant drop in the first quarter results. Apple Inc., the iPod maker was reported by Dow Jones News Agency on April 23 that it secretly dismissed about 1,600 full-time jobs.
"The unemployment rate will worsen. According to our research, the potential unemployment rate, which includes people who were finding jobs a year ago and many part-time workers, is about 15 percent," said John Challenger, CEO of Challenger, Gray Christmas, Inc., the U.S. premier outplacement consulting firm, in a recent interview with Xinhua.
The Labor Department said on April 23 that initial claims for unemployment compensation rose to a seasonally adjusted 640,000, up from a revised 613,000 the previous week. That was slightly above analysts' expectations of 635,000.
In another sign of labor market weakness, the number of people continuing to claim benefits rose to 6.13 million, setting a record for the 12th straight week, and the total jobless benefit rolls are the highest since January 1983.
A double digit unemployment rate in 2010 is widely predicted by economists.
"This summer will be a real hard time for the U.S. economy since nearly 6 million college graduates are entering the work force, inflicting a great pressure on the labor market," said Huang Jing, former senior researcher at the Washington-based Brookings Institute told Xinhua.
ECONOMIC OUTLOOK REMAINS CHALLENGING
In February, the Obama administration predicted that the economy would shrink 1.2 percent in 2009. Again, the forecast would probably fall behind the curve.
OECD projected at the beginning of April that the world economy would contract by 3 percent, and world trade would decrease 13.2 percent.
In the World Economic Outlook report released on April 22, the International Monetary Fund (IMF) projected that the U.S. economy would contract by 2.8 percent in 2009. This is the third consecutive times that the organization lowered its forecast for the U.S. economy within six months.
A latest survey released by the Wall Street Journal showed that economists forecasted that the economy will not be able to recover enough to bring down unemployment until the second half of 2010.
The economists' forecasts indicate that the peak in the unemployment rate is likely to coincide with the midterm elections that will decide which party controls Congress -- possibly bad news for Democrats. Even if the economy is growing, Americans still will be feeling the effects of the recession and could blame the incumbent.
The first-quarter gross domestic product report, due from the Commerce Department on Wednesday, could offer some clues about what a recovery might look like.
Economists think GDP shrank at an annual rate of 4.6 percent in the first quarter, one of the worst since World War II, but not as terrible as the 6.3 percent shrinkage in the fourth quarter of 2008.
¡¡¡¡NEW UNCERTAIN FACTORS ARISE
As people are wondering where the U.S. economy might go following the report of mixed economic index in April, an unexpected epidemic disease brings new uncertain factors to the world economy. The outbreak of swine flu triggers worldwide alert in recent days.
"Fears over swine flu threatened to knock a vulnerable global economy into deeper turmoil, hammering travel and tourism as nervous consumers and businesses delayed spending plans," reported the Wall Street Journal.
Spooked investors dumped airline shares Monday, fearing airline finances might suffer a new blow.
"This certainly could exacerbate the recession," said Sherman Chan, an economist with Moody's in Australia. "The next couple weeks will be crucial. If this (swine flu) persists it could become a more serious concern and really cripple the economy."
In a worst-case scenario, the U.S. economy would shrink by an extra 0.3 percent this year, on top of a predicted 3.5 percent decline, says Brian Bethune, economist at IHS Global Insight.
This will inevitably transmit into the labor market and exert more stress on the spending of consumers.
Although one of the crucial goals of President Obama's New Dealis to create jobs, historically, employment always lags behind the recovery of the economy from a recession.
One of the biggest worries facing economists is what would happen if unemployment rises beyond expectations and unleashes another wave of spending contractions and lower corporate profits.
At present, the world is expecting the final result, due on May4, of the stress test of the big U.S. banks, which seems to be not that positive as the share prices of Bank of America, Citi group and other banks fell Tuesday. However, the news about unemployment might be a bigger concern that deserves close watching.
RIO DE JANEIRO, April 28 (Xinhua) -- Brazil's mining giant Companhia Vale do Rio Doce (Vale) announced on Tuesday that its iron ore output totaled 46.86 million metric tons in the first quarter of 2009, down 37.1 percent from the same period last year.
Vale's iron ore output fell 25.9 percent compared to the last quarter of 2008, which already saw a substantial decrease of production.
Vale, the largest iron ore producer in the world, stated that it had been facing "unprecedented weak demand conditions" caused by sharp decrease of global industrial production, which was an effect of the international financial crisis.
In order to reduce costs and adjust production to the decreasing demand, the company decided to shut down its mines with higher cost and lower quality while maintaining operational flexibility at the other mines.
The production of iron pellets registered an even worse decrease in the first quarter, totaling 2.885 million metric tons, down 69.9 percent from the fourth quarter 2008 and 73.4 percent from the same period last year.
Due to the weak demand, Vale kept only three of its nine pellet production units in operation in the quarter. In March, two other units restarted operation under an increased demand for iron pellets from China.
Manganese ore production in the first quarter was 113,000 metric tons, down 79.2 percent from the same period last year. Vale's largest manganese mine Azul was shut down for almost the entire quarter due to the decrease of demand.
The output of ferroalloys totaled 48,000 metric tons, down 63.6percent from the same period in 2008. Nickel 65,200 metric tons, down 10.9 percent from the last quarter but up 7.3 percent from the same period last year.
Vale has already laid off 1,300 employees since the end of 2008 because of the crisis. Another 5,500 employees were given collective vacations. The company entered into an agreement with several trade unions recently, which foresaw no dismissals until May 31. It is still not known whether the agreement will be renewed.
CHICAGO, April 28 (Xinhua) -- Soybean futures in the Chicago Board of Trade fell for the second straight session on Tuesday due to the wet weather forecasts. Corn and wheat both rose slightly.
Soybean future for July delivery fell 14 cents to 9.83 U.S. dollars per bushel. July corn gained 2.75 cents, closing at 3.835 dollars a bushel. July wheat was up 2.5 cents, settled on 5.22 dollars per bushel.
Soybeans continue the downward trend from Monday, pressured by concerns of an acreage shift from corn to soybeans as weather delays continue in the eastern corn belt.
The weekly crop progress report released on Monday showed corn planting at 22 percent last week compared to the five year average of 28 percent and last year's same week plantings of 9 percent, which was considered to be bullish to corn.
Weather also remains a factor in wheat with improved moisture levels in the central and southern Plains bringing an improvement on Monday's Crop Conditions Report, according to which winter wheat in 18 states was rated 45 percent good to excellent and 27 percent poor to very poor, a little improved from the previous week.
The ideas that the spreading swine flu would reduce grains consumption continued to weigh on the soy market, said analysts.
NEW YORK, April 28 (Xinhua) -- The dollar fell against most major currencies on Tuesday as U.S. consumer confidence soared and house price decline slowed.
The Conference Board reported on Tuesday that its consumer confidence index soared from 26.9 in March to 39.2 in April, the highest since November. It was much higher than economists' forecast of 29.0.
The report shows that U.S. consumers are gaining confidence about future economic conditions. But the index remains at low level, compared to a reading over 110 in July 2007.
U.S. house prices continued to fall at a rapid but slightly slower pace in February, according to the Case-Shiller house price index released on Tuesday.
House prices in the 20 largest U.S. metropolitan areas fell by 18.6 percent year-on-year, up from the record loss of 19 percent in January. It was slightly better than analysts' expectation, suggesting that house prices are getting closer to a bottom.
Worries about swine flu threat partly offset the positive economic reports. The World Health Organization (WHO) on Monday raised its pandemic alert level from Phase 3 to Phase 4, warning of a significant increase in the risk of a pandemic.
Investors worried that a possible pandemic may deal another severe blow to the struggling global economy, reverse any progress of recovery.
The euro bought 1.3147 dollars in late New York trading compared with 1.3019 dollars it bought late Monday. The pound fell to 1.4620 dollars from 1.4633 dollars.
The dollar fell to 1.2190 Canadian dollars from 1.2197, and fell to 1.1440 Swiss francs from 1.1568. It fell to 96.45 Japanese yen from 96.74.
NEW YORK, April 28 (Xinhua) -- Crude prices fell for the second day on Tuesday as concerns over the swine flu outbreak weighed the markets.
The swine flu virus which has killed more than 100 people in Mexico has spread to more countries. The number of confirmed human swine flu cases in the United States has risen to 64 on Tuesday.
Investors are worrying that the outbreak of swine flu could curb the global economy recovery and further depress fuel demand.
The prices were also dragged down by a forecast on U.S. crude inventories. Analysts said the U.S. inventories would rise 2.1 million barrels last week due to slumping demand.
Light, sweet crude futures for June delivery was down 22 cents to settle at 49.92 U.S. dollars a barrel on the New York Mercantile Exchange. London Brent fell 33 cents to 49.99 dollars a barrel.
NEW YORK, April 28 (Xinhua) -- Wall Street traded flat on Tuesday, as bigger-than-expected increase in consumer confidence and a slower drop in home prices offset concerns about the swine flu outbreak and the banking industry.
The U.S. Conference Board, an economic research group, said its consumer confidence index rose to 39.2 in April, up from a revised 26.9 in March. The reading marks the highest level since November and surpasses the reading of 29.5 economists had expected.
Moreover, the Standard Poor's/Case-Shiller index showed home prices in 20 major cities tumbled by 18.6 percent in February from a year ago. It is the first time the index didn't set a record since January 2007 and was slightly better than January's 19-percent decline.
Airlines stocks still got hammered on Tuesday on fears that worried travelers would stay home, as the deadly swine flu virus is rampant in Mexico.
Banking stocks were traded lower after the U.S. government said Bank of America Corp. and Citigroup Inc. may need more capital.
The Dow Jones industrial average was down 8.05 points, or 0.10 percent, to 8,016.95. The Standard Poor's 500 index dropped 2.35points, or 0.27 percent, to 855.16. The Nasdaq composite index fell 5.60 points, or 0.33 percent, to 1,673.81.
¡¤Progress has been made to keep Chrysler out of bankruptcy protection. ¡¤Four banks will forgo claims to their portion of Chrysler's 6.9-billion-dollar debt. ¡¤The Treasury needs to persuade all 46 banks and hedge funds that hold Chrysler debt to go along.
A walking stop sign is seen in front of the logo of Chrysler at a car dealership in New York, the United States, April 7, 2009. The U.S. Treasury will provide a further five billion dollars in loans to General Motors and 500 million dollars to Chrysler as the automakers work on their viability plans, officials said Tuesday. (Xinhua/Liu Xin) Photo Gallery
WASHINGTON, April 28 (Xinhua) -- Progress has been made to keep Chrysler out of bankruptcy protection as the Treasury Department has reached a tentative agreement with four of the troubled U.S. automaker's major debt holders.
Under the agreement, the four banks will forgo claims to their portion of Chrysler's 6.9-billion-dollar debt in exchange for 2 billion dollars in cash when the deal closes, the Associated Press reported on Tuesday, quoting two people familiar with the talks.
"We view this as a huge step forward," said one of the people, who spoke on condition of anonymity because the agreement has not been formally announced.
The Treasury needs to persuade all 46 banks and hedge funds that hold Chrysler debt to go along. If not, a bankruptcy filing could still be possible for the nation's third largest automaker, the people said.
If the remaining debt holders agree to the deal, that leaves a partnership with Italian automaker Fiat Group SpA as the lone remaining hurdle to Chrysler meeting a government-imposed deadline on Thursday to complete a number of major restructuring steps and become eligible for further government aid, according to the AP report.
Two days ago, the United Auto Workers (UAW) union reached a deal with Chrysler that would give it a 55-percent stake in the company and assurances over issues like health care.
The accord will help pave the way for Chrysler to forge an alliance with Fiat before the Thursday deadline to obtain additional rescue loan from the government.
Chrysler has been living off 4 billion dollars in government funds since the start of the year and would likely need more to avoid bankruptcy.
Also on Tuesday, a top Fiat executive said he was "confident" ahead of an announcement due on Thursday on a planned alliance between Fiat and Chrysler that could save the struggling U.S. car maker from possible bankruptcy, according to news reports.
"We are confident but we have to wait until Thursday and respect the decision that will be taken. Negotiations are now in the hands of the U.S. task force, the auto working group put together by President Barack Obama," John Elkann, the deputy head of Fiat, was quoted as saying.
The file photo taken on April 15, 2009 shows the GM logo outside the GM headquarters in Detroit, the United States. General Motors announced restructuring plans on April 27, 2009, to cut 23,000 U.S. jobs by 2011, drop its storied Pontiac brand and slash 40% of its dealer network in its latest bid to stay out of bankruptcy.(Xinhua/Gu Xinrong) Photo Gallery
GM plans major revamp to get government aid
BEIJING, April 28 -- General Motors Corp said Monday that it will cut 21,000 factory jobs in the United States by next year, phase out its Pontiac brand and ask the government to take company stock in exchange for half of GM's government debt as part of a major restructuring effort needed to get more government aid.
The struggling auto maker also said it will offer 225 shares of common stock for every US$1,000 in notes held by bondholders as part of a debt-for-equity swap. The announcements came in a filing with the Securities and Exchange Commission. Full story
General Motors expected to dump Pontiac
CHICAGO, April 25 (Xinhua) -- The U.S. largest automaker General Motors Corp. is expected to announce Monday its decision to kill the Pontiac brand as part of a tougher restructuring plan being overseen by the government, reports from Detroit said Saturday.
GM has started reaching out to Pontiac dealers ahead of a public announcement about the brand's future, when the automaker likely will also outline permanent plant closures, more job cuts and a tougher offer to bondholders to slash the automaker's 28 billion U.S. dollars in unsecured debt. Full story
Fiat still pursuing deal with Chrysler
BEIJING, April 28 -- Fiat Group SpA still wants to forge an alliance with Chrysler LLC if the United States auto maker is forced to file Chapter 11 bankruptcy protection from creditors, a source close to the Turin-based auto maker said Monday.
Fiat is continuing talks to reach a deal by the Thursday deadline, the source said. Full story
Canada auto workers approve union agreement with Chrysler
OTTAWA, April 26 (Xinhua) -- The workers of the Canadian branch of Chrysler have voted in favor of a deal between their union and the automaker, which would serve as a precondition for Chrysler to partner with Fiat to avoid bankruptcy.
The deal was approved by 87 percent of those Chrysler Canada workers who voted, the Canadian Auto Workers Union (CAW) said in a release Sunday. Full story
NEW YORK, April 28 (Xinhua) -- U.S. consumer confidence improved considerably in April, boosted by the hope that the worst may be over for the economy, according to a survey whose result was released on Tuesday.
The New York-based Conference Board said in a statement that its Consumer Confidence Index rose more than 12 points to 39.2, up from a revised 26.9 in March. The surprise jump easily passed economists' expectations for 29.5 and is the highest level since last November's 44.7.
The survey showed that consumers' short-term outlook of the economic conditions and job market improved substantially.
"Consumer Confidence rose in April to its highest reading in 2009, driven primarily by a significant improvement in the short-term outlook," Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement. "The sharp increase in the Expectations Index suggests that consumers believe the economy is nearing a bottom, however, this Index still remains well below levels associated with strong economic growth."
The April jump in consumer confidence comes after a small increase in March, following a huge slide in February. The current reading remains well below the year-ago level of 62.8.
"The Present Situation Index posted a moderate gain, a sign that conditions have not deteriorated further, and may even moderately improve, in the second quarter," Franco said.
The market reacted positively to the survey result with Wall Street paring early losses.
ATUX, Xinjiang, April 29 (Xinhua) -- China is building a 315-million-U.S.-dollar hydropower station in the Pamirs to improve irrigation, power generation and flood control in the northwestern Xinjiang Uygur Autonomous Region.
The project, whose construction began Tuesday at 3,300 meters above sea level, will be the first and largest of planned five hydropower stations along the Gez River in the Kirgiz Autonomous Prefecture of Kizilsu, said Hou Daiping, vice president of the Guangxi Water Resources and Electric Power Group Co., Ltd.
The total investment will be 2.2 billion yuan, according to Hou.
"It will consist of three power generating units with an installed capacity of 200 megawatts," said Hou, whose company -- based in Nanning of south China's Guangxi Zhuang Autonomous Region-- is the lead contractor.
Upon completion in 2012, the project is forecast to generate 673 million kilowatt-hours of electricity a year, said Hou.
The other four stations will be completed within six years to increase the annual output to 2.27 billion kw/hrs, he added.
"They will ease the power supply bottleneck in Kizilsu and neighboring Kashi Prefecture," said Yan Fenxin, a top official in Kizilsu Prefecture.
He said the new stations would exploit the Gez River more efficiently, ensure irrigation of nearly 100,000 hectares of cropland and forests and reduce flood risks in the lower reaches of the river.
Kizilsu Prefecture borders Kyrgyzstan and Tajikistan and is a major water source for Xinjiang.
Its seven rivers, with a combined annual water flow of 14 billion cubic meters, can provide at least 5 million kilowatts of electricity a year.
BEIJING, April 29 (Xinhua) -- Gome, China's largest consumer electronics retailer in terms of number of stores, announced its net profit for 2008 fell by seven percent from a year earlier, the first ever since listing.
The company did not say when it will resume trading, according to Wednesday's Shanghai Securities News.
The company has suspended trading for five months due to the investigation of Gome's founder Huang Guangyu who was in police custody for alleged illegal share trading.
Company executives attributed the profit decline to the sluggish electronics market in the country due to the financial crisis, and more importantly, to the ongoing investigation on Huang Guangyu.
As Gome's 2008 financial report showed, the company posted a profit of 1.05 billion yuan last year, falling from 1.13 billion yuan in 2007, on sales of 45.9 billion yuan.
BEIJING,April 29-- Boeing will complete the first-phase construction of its aircraft maintenance, repair and overhaul (MRO) facilities in Shanghai in October as scheduled despite the sluggish aviation market, the U.S. company said Tuesday.
But the sharp drop in freight traffic as a result of declining world trade has forced Boeing to slow down its plans to perform passenger-to-freighter conversion at the factory.
The factory, Boeing Shanghai Aviation Services Co, was reportedly planned as a major base for Boeing to convert B767-300 passenger jets into freighters.
"The economic downturn has slowed the demand for freighters. Getting into the business where there is little demand will be difficult," said James Brunke, CEO of Boeing Shanghai Aviation Services Co.
International freight traffic started its decline in June 2008, before passenger markets were hit. Cargo traffic plunged 21.4 percent year-on-year in March, which was the fourth consecutive month that international cargo demand was over 20 percent below the 2008 level, according to statistics from the International Air Transport Association (IATA).
Boeing Shanghai Aviation Services Co was launched in 2006. Boeing holds a 60-percent-stake in the company, while Shanghai Airport Authority and Shanghai Airlines hold 25 and 15 percent stakes respectively. It is the first time that Boeing has taken a controlling share in an MRO joint venture.
The company leases a hangar from Shanghai Airlines to perform line maintenance, heavy maintenance checks and borescope services for five airlines. Its own hangar located at the Shanghai Pudong International Airport will be completed in October and can accommodate two wide-body aircraft simultaneously.
"I do believe China is still a viable market. Regardless of what the economic crisis is, it is still important for us to complete the hangar, to develop capabilities and to increase our staff numbers," Brunke said.
The company has 350 employees and it plans to employ over 800 people in the future.
Shanghai Aircraft Manufacturing Factory (SAMF) yesterday delivered the 1,500th shipset of B737-NG horizontal stabilizers to Boeing.
Horizontal stabilizers are placed at the rear of an aircraft and provide stability while the aircraft is flying straight.
SAMF signed a follow-on contract in April last year to supply another 1,400 shipsets to Boeing. The factory is now able to produce 24 shipsets a month.
SAMF also produces doorframes for Airbus A320 freighters.
BEIJING, April 28 (Xinhua) -- China Petroleum and Chemical Corporation (Sinopec) reported Tuesday that its net profit in the first quarter rose 85.1 percent year on year, because of lower international crude oil prices and adjusted refined oil prices on the domestic market.
Net profit totaled 11.219 billion yuan (1.64 billion U.S. dollars) in the first quarter, due to the country's adjusted refined oil pricing mechanism since the beginning of this year, the company said in a statement to the Shanghai and Hong Kong stock markets.
Sinopec saw its net profit drop by 69 percent to about 6 billion yuan in the first three months of 2008 because of China's price ceilings on refined oil products and global oil price rises.
The slump in the international crude oil prices has given a positive boost to the performance of Sinopec, the country's top refiner, as the government launched the new pricing mechanism for refined products in 2009, which ensured profits of oil refiners, despite the still weak demand in the domestic market.
The company predicted its net profit for the first half of 2009would increase by more than 50 percent year on year.
In contrast, PetroChina Company Limited, reported Monday its net profit in the first quarter slid 35.3 percent year on year to 18.956 billion yuan, pulled down by the low price of crude oil and less demand.
PetroChina is the leading oil producer of China, with most crude oil it refined produced by the company itself, while Sinopec has over 70 percent of its crude oil imported.
The amount of crude oil refined by Sinopec fell 3.27 percent year on year, but was up 1.21 percent quarter on quarter. The company attributed these movements to the macro-economic situation, but it gave no details on this and did not specify the production figures.
Listed in Hong Kong, New York, London and Shanghai, Sinopec is the listed subsidiary of China Petrochemical Corporation (Sinopec Group).
Share prices of the company in the mainland A-share market dropped by 2.38 percent to 9.44 yuan on Tuesday, and down 4.11 percent in the Hong Kong market to 5.6 Hong Kong dollars (72 cents).
BEIJING, April 28 (Xinhua) -- Luo Bingsheng, vice chairman of China Steel Industry Association, said Tuesday that China had no intention of giving up the "initial pricing power" of the ongoing iron ore price negotiations.
Chinese steelmakers are asking for price cuts of more than 40 percent for annual contracts of iron ore. Rio Tinto and Vale have accepted a 20-percent price cut.
There were reports that if Japan and the Republic of Korea (ROK) settled the iron ore price earlier this year in the negotiation, steelmakers in different countries might get a better price, as the steel output in the two countries was declining sharply in the first quarter despite an output increase in China.
Crude steel output rose 1.74 million tonnes year on year in the first quarter to 124.7 million tonnes in China, while large and medium-sized producers lost 3.31 billion yuan (484.9 million U.S. dollars) in the first quarter as steel prices returned to 1994 levels.
Japanese steel output in March fell 46.7 percent year on year to 5.74 million tonnes, dropping for the sixth straight month and that of the ROK was down 21.2 percent to 3.7 million tonnes as global demand for cars and electronics slowed.
"If the iron ore price was in line with our requirements, we would accept it. If others' agreements are not in line with our requirements, we will stick to our own claim," Luo told reporters Tuesday.
He said various miners and steel producers had come to the agreement that the global steel industry would generally see an over-supply this year, so miners should cut iron ore prices for the 2009 annual deal, but there was no agreement on the scale of the cuts.
In the similar development, Michael Zhu, Vale's China president, said Tuesday at an industry conference in Beijing that the Brazilian mining giant would cut iron ore output by 25 percent this year.
The 65-percent price rise of iron ore agreed last February between Japanese, ROK steelmakers and leading Brazilian iron ore supplier Vale set the 2008 benchmark price.
China's leading steelmaker Baosteel in December 2006 beat other buyers in setting the iron ore price for fiscal 2007 with a slight9.5-percent price rise. The lower-than-expected increase was deemed a success for Chinese buyers.
BRUSSELS, April 29 (Xinhua) -- Eurozone economic sentiment picked up from a record low in April, for the first time since May2007, a survey conducted by the European Commission showed on Wednesday.
The economic sentiment indicator in the 16-nation bloc sharing the euro increased by 2.5 points to 67.2 in April, after having kept falling in the past two years and reached a record low of 64.7 last month.
In the 27-nation European Union (EU), the monthly indicator, based on business and consumer surveys, also rose by 3.5 points in April to 63.9.
The surveys are conducted in different sectors of the economy, namely industry, services, construction and retail trade, as well as among consumers.
The rebound in April resulted from a clear improvement in sentiment in industry and among consumers, which in both the euro zone and the EU rose by the same amount of 3 points, and a smaller increase in services, a rise of 1 point in both regions.
Retail trade sentiment grew by 2 points in the EU, but fell by 2 points in the euro zone. Construction, in contrast, declined in both areas, by 1 point in the EU and by 2 points in the euro zone.
The majority of EU member states registered an improvement in April. Among the largest ones, economic sentiment in Italy rose the most, up 6.4 points, followed by Britain and the Netherlands, up 5.1 and 4.2 points respectively, while the rise was less sizable in France and Germany, up 1.0 and 0.8 points respectively.
The financial services confidence indicator, which is not included in the economic sentiment, improved markedly in both areas, by 11 points in the EU and by 16 points in the euro zone.
Compared to March, managers' assessment of business situation and demand for their services augmented significantly. Managers' expectations of demand improved strongly and became positive for the fist time since October 2008.
Meanwhile, the business climate indicator (BCI) for the euro zone also increased in April, the first improvement since May 2008,the commission said in a separate survey.
The rise in the BCI reflected an improving situation in most of its underlying components. Managers' production expectations picked up clearly in April, while the production trend observed in recent months improved only slightly. Their assessment of current overall order books and stocks of finished goods recovered marginally from last month's level, though export order books continued to worsen.
However, the commission said the indicator remained at a very low level, pointing to another negative outcome for year-on-year industrial production growth in March, after the record fall registered in February.
"Given the current levels, it also suggests that annual industrial production growth will remain clearly subdued in April," it said.
BRUSSELS, April 29 (Xinhua) -- The European Commission on Wednesday set out guidelines on the bonuses of risk-taking staff in the financial services sector in response to the global financial crisis.
The guidelines cover the structure of pay, design and implementation of remuneration policies, and the role of supervisory authorities in reviewing these policies.
According to the guidelines, financial institutions should have consistent remuneration policies on risk-taking staff and promote sound and effective risk-management.
"There have been far too many perverse incentives in place in the financial services industry," EU Internal Market Commissioner Charlie McCreevy said, adding that staff's bonuses should not encourage risky behavior for short-term gain.
McCreevy said staff's remuneration levels should continue to reflect their long-term performance.
BERLIN, April 29 (Xinhua) -- The German economy is expected to shrink 6 percent this year, the biggest decline in Europe's largest economy since World War II, the Economy Ministry said Wednesday.
However, the ministry predicted that, with the help of fiscal stimulus packages and a revival of export growth, Germany's GDP will see a slight growth of 0.5 percent next year.
The German economy went into recession in the third quarter of last year.
Workers wearing protective masks wait for a bakery to open in Mexico City April 28, 2009. (Xinhua/Reuters Photo) Photo Gallery
by Rob Welham, Wang Dongying
LONDON, April 29 (Xinhua) -- The spread of swine flu has raised concerns across the world as governments plan for a possible pandemic.
It is also creating fluctuations on stock markets, with some firms capitalizing on the flu scare and others reeling from losses as travel restrictions and worries about possible health risks hit the tourist industry.
PHARMACEUTICAL GAINS
Swine Flu Prevention
，How do people catch swine flu?
，What should one do if getting sick?
，Precautionary measures
，Medicines to treat swine fluPharmaceutical companies have profited from the news that swine fever is spreading. Several pharmaceutical stocks started this week with significant rises.
Roche, who markets Tamiflu, one of the antivirus used to treat the H1N1 virus, saw its shares rise 3.5 percent on Monday and edge up further on Tuesday. The company has already seen large revenue increases as authorities around the world stock up on the drug.
Since the global onset of avian flu in 2006, many governments have built up large stockpiles of Roche's Tamiflu as well as Relenza made by British pharmaceutical giant Glaxosmithkline (GSK). The GSK has also made gains as its share price lifted by 6 percent on Monday with further increases on Tuesday.
Worldwide, Roche saw sales in excess of 347 million U.S. dollars for the first quarter of 2009. The company has said that 264 million dollars worth of the drug was for stockpiling while around 84 million dollars worth was for general seasonal use.
While many developed countries are prepared for a medical emergency, the timing of the crisis is adding to the economic instability around the globe. The combination of a banking crisis and swine flu is creating worries and stress in many sectors.
Russia has already banned imports of products from Mexico as well as the U.S. states of California and Texas despite the fact that pork and under goods pose no biological threat.
TRAVEL, TOURISM AFFECTED
EU Health Commissioner Androulla Vassiliou has said there's no need to panic, but her suggestion on avoiding travel to Mexico and other affected areas has aroused some anger.
Mexico City is said to be losing more than 85 million dollars per day in business. Many public buildings have closed and some restaurants and coffee shops are also shutting their doors. The number of tourists visiting Mexico is dropping and British travel agency Thomas Cook on Tuesday cancelled all its flights to the country for seven days.
Outbound passengers at Manchester Airport found themselves stranded on Tuesday morning with the 09:30 flight to Cancun, Mexico grounded. Tourism and travel related stocks have been hit by the potential health crisis.
British travel company Thomas Cook saw their share price drop 4.42 percent on Monday and 1.67 percent on Tuesday.
Several airlines saw significant falls with Lufthansa sinking nearly 10 percent and British Airways dropping nearly 8 percent on Monday. Further falls were also seen as trading began on Tuesday.
Most major indices around the global all saw drops, adding to the economic uncertainty which has gripped the financial markets in recent months.
The World Health Organization on Tuesday raised its threat level to Phase 4, meaning that the virus cannot be contained. Such a pandemic could also damage confidence in the market.
The World Bank has said that a pandemic on the scale of that seen in 1918 could cost the world economy around 3 trillion dollars. However, medicine has improved greatly over the last century, as has people's general health status.
There has been criticism that the threat is being over-hyped by the media. Front pages of many news***s in Britain have carried sensational headlines. The Daily Express shouted the headline, "Killer Pig Flu Fear in Britain".
And it is not just confined to the tabloids. Suggestions that up to 1 million could die and 9 million could contract the virus in Britain have adorned many front pages.
In response, one media analyst said: "The sheer volume of coverage creates the impression that the story is bigger than it really is."
FACE MASKS "NO DEFENCE"
The repetition of headlines and pictures of people wearing masks on rolling news channels are adding to the panic. Britain's Secretary of State for Health Alan Johnson has dismissed the usefulness of face masks.
"Many people will wish to know whether they should wear face masks. Although we are aware that face masks are being given out to the public in Mexico, the available scientific evidence does not support the general wearing of face masks by those who are not ill whilst going about their normal activities," he said.
However, he said the British government was looking to increase stockpiles of face masks for healthcare workers who are treating sick patients.
In the U.S. Centers for Disease Control (CDC), officials have also said the use of masks was unnecessary at this time. In contrast to statements given by the officials, the website of U.S. Federal Drug Administration says that N95 face masks "help protect the caregiver and patient against microorganisms, body fluids, and small particles in the air."
Some firms are already cashing in on people's fear. One company trading under the name Active Training Network is selling what it calls a Pandemic Kit for 44.99 pounds (65 U.S. dollars). The kit, containing three face masks, two biohazard bags, gloves and disinfectant spray, is marketed as a protection against epidemics such as bird flu.
Despite the experts' and governments' saying that face masks provide little protection, many suppliers said they were flying off their shelves.
After several hours' use, the masks would become damp and more porous and decrease their efficiency in preventing germs from passing through. There is also the problem of how to dispose of millions of potentially infected masks. This may trigger an even greater public health hazard.
However, many Britons shun the idea of wearing masks even if it proved to be useful. This is because these people consider it looks "uncool" to wear a face mask.
Three more die of swine flu in Mexico City, authorities say measures working
MEXICO CITY, April 28 (Xinhua) -- Three more people died in the last 24 hours of swine flu, Mexico City officials told a Tuesday press conference, adding that local authorities had ordered the closure of more public places.
The total number of deaths in the city believed to be related to swine flu is now 25, while 89 people are in hospital with swine-flu symptoms, said Armando Ahued Ortega, head of the city's health department. He said that 31 people had been hospitalized on Monday while 14 had been discharged from hospital. Full story
U.S. confirmed swine flu cases rise to 64, 5 hospitalized
WASHINGTON, April 28 (Xinhua) -- The number of confirmed human swine flu cases in the United States has risen to 64, with at least five patients having been hospitalized, a health official said Tuesday.
"I fully expect we will see deaths from this infection," as swine flu cases are investigated, said Richard Besser, acting director of the U.S. Centers for Disease Control and Prevention in Atlanta (CDC). Full story
White House asks for $1.5 bln for fighting swine flu
WASHINGTON, April 28 (Xinhua) -- The White House asked Congress to approve 1.5 billion U.S. dollars on Tuesday in a response to the fast spreading swine flu outbreak that has sickened over 60 in the United States.
White House spokesman Robert Gibbs told a press conference that President Barack Obama raised the request to Congress in a letter "out of an abundance of caution" in order to "enhance our nation's capability to respond to the potential spread of this outbreak." Full story
Chinese President Hu calls for stepped-up efforts to prevent swine flu
BEIJING, April 28 (Xinhua) -- China went on full alert Tuesday to guard against swine flu, as authorities ordered round-the-clock monitoring of the deadly virus and suspension of pork imports from Mexico and the United States.
Chinese President Hu Jintao Tuesday ordered the country to step up inspection and quarantine measures to prevent swine flu from entering China and ensure public health and safety. Full story
WHO raises pandemic alert level from Phase 3 to Phase 4
GENEVA, April 27 (Xinhua) -- Amid the rapid spread of swine flu in some countries, the World Health Organization (WHO) on Monday raised its pandemic alert level from Phase 3 to Phase 4, warning of a significant increase in the risk of a pandemic.
Following the advice and guidance of an emergency committee, WHO Director-general Margaret Chan decided to raise the alert level from the current Phase 3 to Phase 4, a WHO official told the media on a teleconference. Full story
Swine flu has become "most serious concerns" of international community, UN chief says
UNITED NATIONS, April 27 (Xinhua) -- The unique strain of swine influenza suspected of killing nearly 150 people in Mexico and spreading rapidly to other countries is of "the most serious concern" to the international community, including the United Nations, UN Secretary-General Ban-Ki moon told reporters here on Monday.
"We are concerned that this virus could cause a new influenza pandemic," he said in a statement read to the press here. "It could be mild, in its effects, or potentially severe." Full story
Report: ROK confirms first swine flu case
SEOUL, April 28 (Xinhua) -- The Republic of Korea (ROK) confirmed on Tuesday the first case of human infection of swine influenza, the Yonhap news agency reported. Full story
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