The Tribune, Chandigarh, India

World markets remain rattled over Greek bailout fears

Milan, November 2
World markets remained rattled Wednesday over whether the Greek prime minister's decision to take his country's latest rescue package to a referendum was a huge miscalculation. Worries over Italy kept investors on edge too.

The combination prevented stocks from recovering much of Tuesday's hefty losses when investors fretted over a possible disorderly Greek debt default and even the country's exit from the euro.

“Investors remain nervous about the potential fallout from Greece's referendum,'' said Sal Guatieri, an analyst at BMO Capital Markets.

In Europe, Britain's FTSE 100 dropped 0.4 per cent to 5,402, while Germany's DAX rose 0.7 per cent to 5,876. France's CAC-40 rose 0.7 per cent to 3,088.18.

Wall Street also appeared headed for modest gains, with Dow futures up 0.2 per cent at 11,700 and the broader Standard & Poor's 500 futures 0.3 per cent higher at 1,228.

Traders will have plenty of news to mull over the rest of the day though Europe's debt crisis will remain the focal point. Some diversion may come from the latest policy statement from the US Federal Reserve and the ensuing press conference from its chairman Ben Bernanke.

Greek Prime Minister George Papandreou will be in the hot seat later when he will likely face a grilling from French President Nicolas Sarkozy and German Chancellor Angela Merkel about his surprise move to put the rescue package to a popular vote.

The Greek leader faces a confidence vote in Greek parliament on Friday. If he falls, the referendum would be off, and Greece would be headed to early elections.

Meanwhile, Italian Premier Silvio Berlusconi was locked in meetings with his finance minister hammering out measures to weather the crisis. A spike in Italian borrowing costs this week has heightened calls for Berlusconi's immediate resignation — a move the markets have been clamoring for ever since ratings agencies downgraded Italy's sovereign debt rating citing a dysfunctional government.

Stocks have struggled since Monday, when Greece's prime minister unexpectedly announced he would call a national vote on Europe's latest plan, agreed only last Thursday. The euro has also faced big selling pressure this week but has rebounded 0.9 per cent Wednesday to $1.3773. — Reuters

Wall Street opens higher after slump

Stocks rose sharply in early trading, a day after renewed worries over Europe's debt crisis roiled markets around the world. Strong corporate earnings and a better employment report helped turn markets around. The Dow Jones industrial average rose 136 points, or 1.2%, to 11,796 as of 10 a.m. (1400 GMT). The S&P 500 index rose 16 points, or 1.3%, to 1,234. Energy and materials companies were among the leaders. The Nasdaq composite rose 19 points, or 0.7%, to 2,626. The results beat analysts' expectations. — AP

G20 nations must maintain economic growth: China

Flags bearing the G20 logo fly in Cannes, southern France, on Wednesday, the eve of the two-day G20 summit, which will tackle a raft of issues including food and commodity prices, reforming the global currency system and curbing market excesses. — AFP

Beijing, November 2
The G20 should give top priority to maintaining economic growth, said Chinese President Hu Jintao on Wednesday. Hu made the remarks in an interview with the French newspaper Le Figaro, ahead of the Nov 3-4 G20 summit being held in the French city of Cannes.

Hu said the international community should look at the connections between robust growth, sustained growth and balanced growth objectively, reported Xinhua.

"To achieve sustainable growth is the long-term goal, and to realise balanced growth through economic structure adjustment is an objective demand. Meanwhile, it is a primary task in the present stage to achieve robust world economic growth, which is also a premise of ensuring balanced and sustainable growth," said the Chinese president.

He urged the international community to correctly recognise the causes of imbalances in the global economy. "Imbalances are external performances rather than the fundamental reason for deeper problems of the world economy," he said.

Hu said the root cause of world economic imbalances are structural, including the imbalances in the world economic structure, international division of labour and international monetary system.

"In order to address world economic imbalances, countries around the world should make joint efforts to adjust their economic structure," he said, adding it is a long-term process which cannot be accomplished overnight. — IANS

India Inc to be part of summit

New Delhi, November 2
India Inc will join global industry leaders who will be holding business summit at Cannes in France, along with the political leadership of world's 20 most influential economies from Thursday.

The Indian industry delegation will be led by CII president and Tata Steel vice chairman B Muthuraman. Infosys CEO & MD S Gopalakrishnan would also be part of the delegation. The two Indian honchos will meet France President Nicolas Sarkozy tomorrow, according to a CII release here. Prime Minister Manmohan Singh is leaving for Cannes tomorrow to attend the summit. — PTI

With trade gap widening, India ups currency pressure on China

Mumbai, November 2
China and India rarely lock horns in public — but that might be about to change. Sick of a ballooning trade deficit, Indian trade negotiators are ramping up pressure on China with talk of duties on some goods, starting with power equipment. Tit-for-tat tariffs don't help anyone, but if India took a more aggressive stance on its trade partner's undervalued currency, it would add weight to the debate.

China and India have come a long way since they last went to war in 1962. While border disputes still linger, economic ties are booming. In 2008, China emerged as India's largest trading partner, surpassing the United States.

Last week, India's former foreign affairs minister, Shashi Tharoor, argued that growing trade has reduced chances of a further military conflict.

Still, India is increasingly uneasy over the trade deficit which has emerged in China's favour. Over the past 10 years, the deficit has grown from $1 billion to over $20 billion. Meanwhile the Chinese yuan has depreciated 16.7 percent against the rupee, according to a paper by India's central bank. The bank argues that an undervalued yuan invariably and distinctly gives China a competitive advantage over trade partners.

Trade tariffs, now being discussed in Delhi, aren't the solution. Proposed duties on imports of Chinese power equipment would do little more than reverse an earlier tax cut that made imports cheap when India faced supply shortages. Talk of higher tariffs on most goods and a complete ban on specific items would hit harder, but might just incur retaliation that isn't in India's economic interest.

Speaking up may be India's best bet. Delhi's rumblings suggest it may join the United States in pressing China over its currency. This would open an important new front. China has been able dismiss US calls for a stronger yuan as sour grapes from a country that has borrowed and consumed too much. A clear message from the developing world would be harder to ignore.

Meanwhile, Indian heavy industries minister Praful Patel is reported to have called a meeting on November 3 to discuss the imposition of customs duties on imports of Chinese power equipment. — Reuters

India may mull funding Eurozone bailout: FM

New Delhi, November 2
Finance Minister Pranab Mukherjee on Wednesday hinted at financing for sorting out Eurozone crisis after a credible assessment of solvency problem is made. "Our assessment of the situation is let them (Eurozone) make a credible assessment of solvency issue, try to sort out those problems and then after supplementary financing could be considered. Let us see what the leaders decide," he told reporters.

He was replying to a query on the Greece government's decision to seek referendum on a proposed EU rescue package which has created a fresh turmoil in the financial markets.

Mukherjee said at even at the G20 finance ministers meeting in Paris, India had maintained that the European solvency issue should be sorted out by the European nations themselves.

Prime Minister Manmohan Singh has left for France to participate in the two-day summit of world's 20 leading economies (G20) to signal a "strong and coordinated approach" to put the global economy back on track.

Several European nations, including Greece, Portugal and Spain, are facing financial problems and a sovereign default is expected to have a severe impact on the whole region. — PTI

Google to offer free websites to Indian SMEs

New Delhi, November 2
Google Inc said it will offer free websites to small and medium businesses in India in a move to boost Internet usage in Asia's third-largest economy and aims to get half a million of these businesses online in the next three years.

India is the world's second-biggest mobile phone market with about 870 million users, but Internet penetration is low. About 100 million, or less than a tenth of a country of 1.2 billion people, use Internet although that still makes it the world's third-biggest Internet user market.

The country is home to an estimated 8 million small and medium businesses, of which about 400,000 have a website and 100,000 have active online presence, Google said in a presentation on Wednesday.

The online commerce, or e-commerce, market in India is small now but few people doubt one day it will be a big business in the country. Google said in the presentation e-commerce in India has hit an "inflection point."

"We want to build an ecosystem...We are investing in the market," Nikesh Arora, Google's chief business officer, told reporters in Delhi, adding the country was not a big revenue market yet but a good user market.

Rajan Anandan, managing director of Google's Indian unit, said the Internet search giant was making "significant" investments in the free web hosting initiative but had no "near-term revenue expectations" from it.

Google and its partner web hosting firm HostGator will facilitate free web domain names. — Reuters

SAIL, Posco likely to have equal stake in JV

New Delhi, November 2
An equal joint venture agreement between state-run SAIL and South Korean major Posco is likely to be inked during Steel Minister Beni Prasad Verma's proposed visit to Korea starting November 5.

The shareholding pattern of the proposed venture is seen as a hurdle in signing the pact. The proposed joint venture aims to set up a plant at an investment of Rs 16,000 crore in Bokaro to produce three million tonne auto-grade steel.

"We may have 51% equity or it could be 50:50," Verma told reporters when asked about the likely shareholding pattern in the JV.

A senior official in the ministry, however, said the two parties have nearly reached an understanding to make it an equal joint venture.

Posco's patented Finex technology, which would be used in the proposed new plant, is not being used any company other than Posco. Finex is an environment-friendly iron-making process where iron ore fines are directly used.

There is also the iron ore price issue which is yet to be resolved, Verma said, adding that if all the pending issues were not cleared within next two days, he might even cancel his tour.

The official, however, ruled out cancellation of the minister's visit to Korea.

Verma is slated to leave Korea for Russia on November 9 and come back to India on November 12.

In Russia, he will attend the memorandum of understanding (MoU) signing ceremony between state-run iron ore miner NMDC and Russia's Severstal.

NMDC had earlier signed a pact with Severstal for setting up a three million tonne per annum steel plant, expandable to 5 mtpa, plant in Karnataka entailing an investment of about Rs 25,000 crore. — PTI

Allahabad Bank Q2 net up 21.2% to Rs 488.01 crore

New Delhi, November 2
Public sector lender Allahabad Bank has reported a 21.22 per cent jump in net profit to Rs 488.01 crore for the quarter ended September 30, 2011. The bank had posted a net profit of Rs 402.57 crore for the second quarter last fiscal.

Operating profit of the bank jumped 21.47 per cent to Rs 949.29 crore during the quarter from Rs 781.53 crore in the year-ago period.

The bank's net interest margin was 3.68% during the second quarter, as against 3.34% in the corresponding quarter of the previous fiscal, Allahabad Bank chairman & MD JP Dua said while announcing the results here on Wednesday.

He said there was no concern regarding asset quality so far and the bank was able to recover Rs 443 crore during the first half of the current fiscal. The percentage of gross nonperforming assets (NPAs) to gross advances was flat at 1.77% during Q2, while the percentage of its net NPAs to net advances declined from 0.79% to 0.69%, Dua said.

H said the bank had approached the government for a capital infusion of Rs 1,000 crore. The bank's capital adequacy ratio (CAR) stood at 12.99 per cent at the end of September, 2011.

With business touching Rs 2,38,897 crore at the end of the second quarter, Dua said the bank was confident it would rise to Rs 2,80,000 crore by the end of this fiscal.

On new initiatives, he said the bank will install 2,000 point-of-sales (POS) terminals in the country by the end of March, 2012. The bank has also applied for licences for opening overseas branches in Shanghai, Singapore, Dhaka and Kowloon in Hong Kong. The bank already has a branch in Hong Kong. — PTI

Arvind sells stake in JV with VF Corp to reduce debt

New Delhi, November 2
Apparel maker Arvind Ltd said Wednesday it had divested its entire 40 percent stake in its joint venture with VF Mauritius for Rs 2.57 billion in an effort to reduce debt.

VF Arvind Brands Pvt Ltd, a 60:40 joint venture formed in 2006, between VF Mauritius, part of global lifestyle apparel giant VF Corporation, and Arvind, makes products under the brands 'Lee' and 'Wrangler'.

The joint venture agreement had a divestment clause in which VF had the right to acquire shares from Arvind at the end of 5 years, the company said in a statement.

In 2006, VF paid roughly $33 million to Arvind for transferring its licensed operations of Lee and Wrangler to a JV majority owned by the US fashion firm. — Reuters

Kingfisher asks for more cushion from banks

Mumbai, November 2
Kingfisher Airlines on Wednesday sought further cushion from banks to ease its debt burden, but denied it was seeking another debt restructuring. The Vijay Mallya-controlled carrier has sought lenders' help to substitute high-cost rupee borrowings with lower-cost foreign currency debt, Ravi Nedungadi, president and group CFO said in a statement on Wednesday.

It has also asked banks to take into account the changes in the rupee-dollar exchange rate as well as global fuel prices as they appraise the carrier's working capital requirements. The rupee has fallen nearly 11% against the dollar since a late July peak, making imported fuel more expensive.

The cash-strapped airline has also sought help from banks to release cash deposited with leasing companies. — Reuters

Cellcos join hands to defend 3G roaming

New Delhi, November 2
The country's four leading telecom service providers — Bharti, Vodafone, Idea and Tatas — have joined hands to defend their 3G roaming pacts, saying the agreements are "legal and permissible".

In a letter to Telecom Minister Kapil Sibal, the players said any adverse move could "negatively impact investor sentiment and do irreparable damage to India's long standing as an investment destination with serious consequences on the future growth and development of the sector" and sought his intervention to resolve the situation.

"We are now dismayed and astonished by the disingenuous and protracted disinformation campaign against the intracircle roaming arrangements being followed by number of industry entities," the four telecom operators said in the letter. — PTI