EU companies: debt crisis is hurting recoverya

BRUSSELS: European companies warned Monday that the region's debt crisis risks damaging a fragile economic recovery by hiking costs for businesses to borrow and invest.

The euro has shed some 20 percent of its value over the past six months as financial markets lost confidence in European governments' ability to rein in massive debt levels while growth remains low.

Philippe de Buck, who heads the BusinessEurope group representing some 20 million companies, told reporters that "business is more than concerned about the credibility of the euro" after its sharp drop in value.

The group says that businesses are seeing the real impact of recent months' volatile markets in higher costs for borrowing and more difficulty in getting credit. It says this holds companies back from investing more in the economy.

It is calling on European Union leaders to bolster confidence in the euro currency and their own finances by making the public spending cuts they need to balance their books — and also make longer-term reforms to boost growth by opening up the labor market and shedding business barriers across the 27-nation bloc.

EU leaders meet for talks on June 17 on a new 10-year growth strategy for the region to build on a weak recovery.

Manufacturing is among the few sector picking up in Europe, fueled by exports that BusinessEurope says will grow 5 percent in 2010 and 2011 — and helped by the lower value of the euro which makes eurozone products cheaper for U.S. customers and Asian buyers using the dollar.

Eurozone industrial output grew 0.8 percent in April from the previous month, according to the EU statistics agency, and increased 0.5 percent in the entire EU.

But BusinessEurope says economic growth is stabilizing "at a too low level" — and companies are still very cautious about the recovery. The region's jobless rate will likely stay at record highs until employers start hiring again in late 2011, it forecasts.

The Spanish government was trying Monday to win back market confidence by pushing on with efforts to curb public spending, this time by selling crucial labor reforms to skeptical opposition parties that would loosen up rigid hiring and firing rules.

The ruling Socialist Party says this could encourage companies to hire more workers — reducing a jobless rate that is the highest in the eurozone — and help to kick start economic growth.

The measures also aim to appease markets and EU nations worried that Spain could be the next eurozone country to require a bailout. Spain must refinance €40 billion ($49 billion) in debt in June and July, according to Deutsche Bank.

Greece has already sought a bailout from other European Union nations and the International Monetary Fund and some economists believe other indebted nations — such as Spain and Portugal — may also need financial rescue if they can't borrow what they need from wary investors.

EU and German officials on Monday denied German media reports that Spain was likely to seek help soon.

European Commission Amadeu Altafaj Tardio told reporters in Brussels that there was "no such request and no plan whatsoever to provide financial assistance." German finance ministry spokesman Michael Offer also said "we see no need for action at this point."

Separately, French Prime Minister Francois Fillon expressed concern that Europe's drive toward austerity could go too far and trigger a new economic downturn.

"It is difficult for the European states to balance debt reduction ... while simultaneously tightening and not triggering a new recession," he told reporters in Oslo.

BusinessEurope's de Buck said government spending cuts had to be accompanied by moves to stoke growth.

"Discipline and growth can go hand in hand even it can be difficult," he said, calling for governments to shun "indulgence" and become more efficient with their spending.

Merkel, Sarkozy discussing the economy

BERLIN: The German chancellor and the French president met Monday to prepare for a European Union summit later this week, amid speculation of a rift in German-French views on economic policy.

Angela Merkel welcomed Nicolas Sarkozy to discuss a joint strategy on how to curb the debt crisis that has dragged down the common European currency and rattled economies across the continent.

The leaders of the eurozone's most important economies were to have held talks last week, but the meeting was canceled with only a few hours notice, fueling rumors the two are split on how Europe should best handle the financial crisis.

Germany is calling for sanctions on countries with high deficits and advocates the path of austerity as a model for Europe after presenting its own package of budget cuts on June 7, worth €80 billion ($97 billion) by 2014.

But the French government minister in charge of stimulus efforts, Patrick Devedjian, last week explicitly warned that German-style austerity measures "would be dangerous because it risks killing growth" in France.

The next test for the 16 countries sharing the euro currency — who passed a €110 billion rescue package for Greece and then set up a wider bailout found for countries in financial trouble worth €750 billion — could be ahead as pressure mounts on Spain to curb its deficit.

EU leaders meet for talks on June 17 on a new 10-year growth strategy for the region to build on a weak recovery.

While Sarkozy supporter creating an independent economic government for the eurozone, Merkel insists such decisions should be made by all EU leaders, such as the European Council.

Despite recent tension over the bailout packages for Greece and the eurozone, Sarkozy and Merkel last week showed that France and Germany were still working together closely, and wrote a joint letter urging the European Commission to speed up efforts to regulate financial markets.

The combined economic output of Germany and France, with their respective GDP in 2009 standing at €2,400 billion and €1,950 billion according to EU statistics, represents almost half of the eurozone's GDP of some €9,000 billion.

Asian stocks post tepid gains amid Europe anxiety

TOKYO: Asian shares rose Tuesday but gains were tepid after Wall Street succumbed to anxiety about Europe's economy.

Japan's Nikkei 225 stock average fell 0.2 percent to 9,861.87, with investors taking profits after Monday's jump of almost 2 percent. Australia's S&P/ASX 200 gained less than 0.1 percent to 4,507.70 while Hong Kong's Hang Seng added 0.1 percent to 20,075.11.

Elsewhere, South Korea's Kospi was fractionally higher at 1,691.47 and Singapore's market rose 0.1 percent. Taiwan's benchmark was 0.3 percent higher. Financial markets in mainland China were closed for a holiday.

In New York on Monday, the Dow Jones industrial average erased early gains to end down 0.2 percent at 10,190.89. The S&P 500 index fell 0.2 percent to 1,089.63, while the Nasdaq composite index rose less than 0.1 percent 2,243.96.

Stocks began higher following encouraging industrial production data from Europe. But that wasn't enough to overcome ongoing fears about the continent's problems, especially after Moody's lowered its rating on Greece's debt to "junk" status.

The fallout in Asia was mild, however, with most benchmarks showing little definitive direction ahead of U.S. industrial production numbers due Wednesday.

In Tokyo, insurance names were among the day's losers, with Tokio Marine Holdings Inc. down 1.8 percent. Tech shares were also having a lackluster day. Canon Inc. fell 1.1 percent, and Sony Corp. lost 0.6 percent.

In currencies, the dollar slipped to 91.43 yen from 91.58 yen late Monday in New York. The euro rose to $1.2217 from $1.2210.

Benchmark crude for July delivery was up 10 cents at $76.38 in electronic trading on the New York Mercantile Exchange.

United, US Airways in merger talks

MINNEAPOLIS: The CEOs of United Airlines and US Airways have both been up front about their desire to merge with another airline. Now it appears they're talking to each other.

The two are in talks about a combination that would create the nation's second-biggest airline, a person with knowledge of the situation told The Associated Press on Wednesday. The person insisted on anonymity because of the sensitive nature of the talks, which the person said appear to be getting more serious.

This person said a deal would be modeled on the Delta-Northwest combination, which was a stock swap without a cash component.

United Chairman and CEO Glenn Tilton and US Airways Chairman and CEO Doug Parker were both involved when their companies talked about combining in 2008. They walked away then citing high fuel prices, but didn't rule out a future deal. That same year, Continental Airlines Inc. rejected United's attempt at a combination.

"We don't comment on rumors or speculation," United spokeswoman Jean Medina said Wednesday. "We've been consistent on our position on consolidation generally for several years, and that position is well known."

US Airways spokesman Jim Olson also said the airline doesn't comment on rumors.

Integrating their unionized work forces would be one of the most difficult tasks if United Airlines and US Airways got together. The person who spoke to AP said the companies have a plan for dealing with that issue.

US Airways, which is based in Tempe, Ariz., still runs separate pilot and flight attendant groups after it was bought in 2005 by America West. And its pilots formed their own union after leaving the Air Line Pilots Association, the union that represents United aviators.

Executives at Delta and Northwest put their deal on hold in early 2008 so their pilots could work out an agreement on combining their ranks.

Pilots at US Airways have not been involved in any talks with United, said James Ray, a spokesman for the US Airline Pilots Association.

"We'll support anything that would be good for our pilot group," he said.

A spokesman for the United branch of the Air Line Pilots Association did not immediately return a phone message seeking comment.

"Mergers in the airline business are notoriously difficult," said Doug Abbey, an independent airline consultant in Washington. He added, though, that Delta's purchase of Northwest has gone well.

"The discussions certainly wouldn't surprise me," he said. "This is a combination that has been embraced as plausible by a lot of people."

Based on 2009 traffic, a combined United-US Airways would be nearly as big as Delta Air Lines Inc., which became the world's largest airline after buying Northwest. It is unclear which name would survive, where the combined company would be based, or who would run it.

Like Northwest before it, one of United's main attractions is its Pacific routes, which it bought from Pan-Am in 1985.

Both airlines have been shrinking to cope with the recession. United cut capacity 7.4 percent last year, while US Airways shrank 4.6 percent. US Airways is cutting most flying that doesn't pass through either Washington or its hubs in Charlotte, N.C., Philadelphia, or Phoenix.

US Airways lost $205 million in 2009, and revenue fell almost 14 percent to $10.46 billion. UAL lost $651 million, while revenue fell 19.1 percent to $16.34 billion.

Shares US Airways rose $1.39, or 20.4 percent, to $8.21 in after-hours trading Wednesday. United parent UAL Corp. fell 18 cents to $18.77.

China gold demand to double in a decade

BEIJING: China's gold demand is expected to double over the next decade from current levels due to jewellery consumption and investment needs, the World Gold Council (WGC) said in report released on Monday. Currently the world's second-largest gold consumer after India, China has seen its gold demand grow at an average rate of 13 percent per year over the past five years. Demand from China's two largest sectors -- jewellery and investment -- reached a combined total of 423 tonnes in 2009, with 314 tonnes supplied by domestic mines. "This shortfall creates a snowball effect as China's gold industry may not be able to keep pace with the annual leap in domestic consumption despite rising to be the world's largest gold producer since 2007," WGC said in the report. The Chinese per capita consumption of gold jewellery is one of the lowest, at 0.26 grams, compared with other major gold consuming countries. If gold were consumed at the same rate per capita as in India, Hong Kong or Saudi Arabia, annual Chinese demand could increase by at least 100 tonnes or as much as 4,000 tonnes in the sector alone, it said. If the central bank boosts gold holdings to 2.2 percent of forex reserves, a peak level seen in 2002, from the current 1.6 percent, China's total incremental demand would rise by 400 tonnes at the current gold price, the report added. China's share of global gold demand doubled from 5 percent in 2002 to 11 percent in 2009, and the council predicted that China's domestic gold mines could be exhausted within six years. "The Chinese gold industry is simply not responding fast enough to bring in new supply," it said.

Toyota global sales up 13% in February

TOKYO: Crisis-hit Toyota said on Monday global sales rose 13 percent year-on-year in February, but analysts warned that the fall-out from recent mass safety recalls would continue to hang over the car giant.

The Toyota group, which includes brands Daihatsu and Hino trucks, sold 613,845 vehicles worldwide last month, up from 543,435 a year earlier, a spokesman said.

The group's global production in the same period jumped 69.2 percent to 734,631 units, of which 655,180 were for Toyota in an 82.7 percent jump for the brand.

Analysts said the figures were unsurprising given the auto industry's troubles a year earlier as the economic downturn eroded demand, and a low basis of comparison offset Toyota's reduced output in response to a global recall.

"The robust figures were largely due to a rebound from its sizeable slump a year earlier. There was no surprise. The figures were within expectations," said Mamoru Kato, auto analyst at Tokai Tokyo Research Centre.

"It is too early to be optimistic about the fate of Toyota."

One of Japan's most famed companies, Toyota has been battered by both the global economic downturn and by its massive safety woes over faulty accelerator and brake systems.

In recent months, the world's largest automaker has been forced to recall more than eight million vehicles worldwide mostly due to problems with sudden acceleration, which have been blamed for 58 deaths in the United States.

Domestic sales continue to rise however, surging 32.1 percent year-on-year to 210,767 units, with sales in the Toyota brand alone up 49.9 percent.

The figures were largely boosted by the success of the Prius hybrid model, the best selling car in Japan for the ninth consecutive month, according to statistics released earlier by a professional body.

Vehicle exports from Japan more than doubled to 161,533 units, Toyota said in a statement.

However, "the negative impact of its mass recall is being felt in developed countries except Japan," said Kato. "The prospect for Toyota's business activities is still uncertain."

The increases came even as the company suspended some production lines at five North American plants for five days in early February following the decision to halt sales of eight models due to accelerator pedal problems.

Toyota decided to suspend other production operations in the US and Europe in March and April, and in Japan from the spring of this year.

It said last week that it aims to finalise a plan to streamline output operations in Japan by summer.

In Tokyo trade, Toyota Motor shares closed 0.53 percent lower at 3,740 yen Monday.

"The impact of the recalls will emerge gradually," Mizuno Credit Authority analyst Tatsuya Mizuno told Dow Jones Newswires.

Earlier this month, the automaker said sales in the United States fell 8.7 percent year-on-year in February to 100,027 units.

The company last week faced its first US courtroom challenge as lawyers pressed for angry car owners to be allowed to bring a multi-billion-dollar suit against the Japanese firm.

It also announced a North American "quality task force" as it struggles to repair its reputation, that will answer to Toyota chief executive Akio Toyoda, the grandson of the company's founder.

Other Japanese auto giants also reported on Monday strong year-on-year increases in production and sales in February as demand continued to pick up.

Japan's second biggest automaker Honda said production worldwide increased 49.3 percent to 284,711 units while Mazda production surged 73.7 percent to 100,126.

Nissan saw worldwide sales gain 21.7 percent year-on-year.

Oil hovers above $82

SINGAPORE: Oil prices were steady above $82 a barrel Tuesday in Asia, pausing after a leap the previous day fueled by a U.S. dollar drop and surging equity markets.

Benchmark crude for May delivery was up 6 cents to $82.23 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract jumped $2.17 to settle at $82.17 on Tuesday.

Crude prices have been buoyed by a yearlong rally of global stock markets. Oil traders often look to equity markets as a measure of overall investor sentiment.

The Dow Jones industrial average rose 0.5 percent Monday to its highest level since September 2008, and most Asian indexes rose Tuesday. The euro was steady against the dollar Tuesday.

"The oil complex has grabbed on to the stock indexes as a proxy for future oil demand," Ritterbusch and Associates said in a report. "As long as a low interest rate policy is nurtured by the Fed, oil values appear poised to go up easier than they go down."

In other Nymex trading in April contracts, heating oil fell 0.32 cent to $2.116 a gallon, and gasoline held at $2.26 a gallon. Natural gas was steady at $3.842 per 1,000 cubic feet.

In London, Brent crude was up 7 cents at $81.24 on the ICE futures exchange.

Sarkozy urges new world finance rules

NEW YORK: French President Nicolas Sarkozy, in an upfront speech in New York, urged the United States to lead the way in imposing new global financial regulations — and to pay more attention to the rest of the world.

Sarkozy stood firm against terrorism, pledging to keep up the fight in Afghanistan and rallying behind Russia after deadly subway attacks.

But his main message was spurring the United States — and President Barack Obama, who will host the French leader at the White House on Tuesday — to prevent future economic crises.

"You should reflect on what it means to be the world's No. 1 power," he said, during his speech at Columbia University, repeatedly pointing his finger at the hundreds of students and faculty gathered for his speech.

His wife, Carla Bruni-Sarkozy, nodded supportively in the front row, after the two climbed the steps of the elite university's library hand-in-hand.

"The world does not stop at the East Coast, the world does not stop at the West Coast," Sarkozy said. "The world needs an open America, a generous America, an America that shows the way, an America that listens."

Sarkozy wants the United States to champion firm regulations of financial systems, from tax havens to hedge funds. His ideas were shared by many in the immediate wake of the financial crisis but momentum for dramatic changes has since slowed.

"We should invent a new global monetary order," he said Monday, insisting that new regulations would "save capitalism."

After wagging his finger at American bankers, he stressed that France remains a friend and ally to the United States, especially in fighting terrorism.

"When New York was attacked, it was all the democracies of the world who were attacked," he said. "When Moscow is attacked, it is all of us who are attacked," he said of deadly bombings Monday in the Moscow metro.

In Afghanistan, Sarkozy told his U.S. audience, "We will remain at your side." That is a sentiment he's certain to share with Obama, who is just back from an Afghan trip. Obama wants European allies to send more troops and trainers.

Sarkozy's room for maneuvering is limited. France has 3,750 troops in Afghanistan, but public support in France for the war is low — as is public support for Sarkozy, whose conservative party lost big in regional elections a week ago and poll ratings are down as low as 30 percent.

Columbia organizers said the French flew in a special podium and rug just for him, and procured a special espresso machine at his request, too. Sarkozy entered the Low Library rotunda not from behind a curtain as most speakers do, but by climbing the grand staircase that faces the campus.

More than two hours before Sarkozy was to deliver his speech, hundreds of people lined up in the rain to pass through stringent airport-style security and nab seats.

Sarkozy's speech was meant to cover the 200-year-old French-American friendship but instead primarily focused on current affairs.

The French president had loaded words of praise for the U.S. health care reform law just signed by Obama last week. The law is expected to extend coverage to 32 million uninsured Americans and aim to crack down on unpopular insurance industry practices such as denying coverage for people with pre-existing medical conditions.

From the European perspective, "when we look at the American debate on reforming health care, it's difficult to believe ... the very fact that there should have been such a violent debate simply on the fact that the poorest of Americans should not be left out in the streets without a cent to look after them."

"You can't let people simply die," he said. Then he delivered the line that brought his hearty applause from the audience: "If you come to France and something happens to you, you won't be asked for your credit card before you're rushed to the hospital."

Sarkozy meets later in the day with U.N. Secretary-General Ban Ki-moon, with the stalled Mideast peace process and Iran's nuclear program on the agenda. Sarkozy also visited with his third son, Louis, who goes to school in New York and lives primarily with Sarkozy's ex-wife Cecilia.

Sarkozy and the first lady will join the Obamas for a private dinner in the White House on Tuesday.

Asian stocks gain after US consumer report

HONG KONG: Asian stock markets gained modestly early Tuesday after a report showing U.S. consumers continued to spend last month buoyed optimism about growth in the world's largest economy.

The dollar slipped against the yen and was little changed against the euro, and oil prices hovered above $82 a barrel.

Helping sentiment were overnight gains in the U.S., where Wall Street was boosted by news that consumer spending rose for a fifth straight month in February. Consumers' spending is by far the biggest source of economic activity in the U.S. and drives Asian export demand, and the 0.3 percent rise added to hopes they are regaining confidence.

Japan's Nikkei 225 stock average rose 51.61 points, or 0.5 percent, to 11,038.08, and South Korea's Kospi was up 8.54 points, or 0.5 percent, at 1,700.53. Hong Kong's Hang Seng index rose 122.55, or 0.6 percent, to 21,357.21.

Elsewhere, markets in Taiwan and Singapore rose. Shanghai was off 0.1 percent.

In currencies, the dollar was trading at 92.30 yen from 92.51 yen. The euro was flat at $1.3477.

The benchmark oil contract was flat at $82.17 a barrel.

Investors were also keeping watch over Greece's debt crisis, with the good news of a bailout plan offset by caution about the details.

The debt-strapped Greek government raised $6.74 billion Monday by issuing seven-year bonds. The country's ability to borrow is an important sign of confidence after European leaders and the International Monetary Fund last week agreed to provide a financial safety net for Greece and other countries that use the euro if they couldn't issue debt.

In the U.S. on Monday, the Dow rose 45.50, or 0.4 percent, to 10,895.86. The index is at its highest level since September 2008 and closer to the psychological threshold of 11,000.

The broader Standard & Poor's 500 index rose 6.63, or 0.6 percent, to 1,173.22, and the Nasdaq composite index rose 9.23, or 0.4 percent, to 2,404.36.

Australia worries about Rio Tinto verdict

SYDNEY – Australia's prime minister said Tuesday that secrecy surrounding China's trial of four Rio Tinto workers for commercial spying leaves room for doubt about the convictions and a major Australian commerce group said the result could harm business confidence.

The Chinese government rejected criticism that the trial was not open enough and accused Australia of making "irresponsible remarks."

Canberra says the jail sentence handed to Australian citizen Stern Hu on bribery charges was harsh, and has criticized the decision to keep media and diplomats out of the court while it considered the other charges of stealing commercial secrets. Nevertheless, Australia says the case will not harm its relations with China.

Hu, Rio Tinto's executive in charge of iron ore negotiations in China before his arrest last July, was sentenced in a Shanghai court on Monday to a total 10 years in prison. Three Chinese colleagues were imprisoned for between seven and 14 years.

The case was closely watched by foreign companies operating in China. The rulings suggest Chinese authorities are taking a sterner stance toward foreign companies caught violating the country's often selectively enforced corruption code.

Australia Prime Minister Kevin Rudd, a Chinese-speaking former diplomat to Beijing, said closing the court during the commercial secrets part of the trial left "serious unanswered questions about this conviction."

"In holding this part of the trial in secret, China I believe has missed an opportunity to demonstrate to the world at large transparency that would be consistent with its emerging global role," he told reporters.

In Beijing, Chinese Foreign Ministry spokesman Qin Gang was asked at a briefing to respond to the Australian claim about transparency.

"We express serious concern about that," Qin said. "The Rio Tinto case is an individual criminal case and relevant judicial authorities have issued the verdict of the first trial. The Australian side should respect that result and should stop making such irresponsible remarks."

London-based Rio Tinto is a key industry negotiator in price talks with China's state-owned steel mills, and the arrests of its employees last August were initially thought linked to Beijing's anger over high prices it paid for iron ore — a key commodity for China's booming economy. That belief was shaken last week after the four pleaded guilty to taking bribes from steel mills trying to get preferential access to ore supplies.

Australia said Hu's sentence wouldn't affect ties with China, but some experts said the trial underlined worries companies already have about doing business in a country where legal proceedings are often opaque.

The Australian Chamber of Commerce and Industry, which represents 350,000 companies, said Hu's case raised issues about foreigners operating in China that need to be clarified. These included rules in China about detention without trial and a lack of transparency.

"These broader issues are important for the Australia-China relationship and the necessary confidence Australian business executives require when doing business abroad," said Nathan Backhouse, the chamber's international affairs spokesman, in a statement.

The verdict also comes as other faultlines appear between Beijing and the global corporations eager to tap its fast-growing market of 1.3 billion people.

A recent survey showed a growing number of foreign businesses in China feel shut out under government policies meant to promote homegrown technology. Internet search giant Google's high-profile decision to move its Chinese site to Hong Kong after a spat over censorship and hacking added to the unease.

China has chronic problems with corruption so the Rio case "is not as simple as China sending a warning message to a particular country or company" said Jin Linbo, a senior research fellow with the China Institute of International Studies. "It's time China should deal with this problem or more serious cases will emerge."

Beijing has staged repeated anticorruption crackdowns but big foreign companies are rarely targeted.

Australian Foreign Minister Stephen Smith and Rio Tinto said separately they were satisfied that there was substantial evidence that bribery had occurred.

Rio Tinto said if would fire Hu and his colleagues.

"I am determined that the unacceptable conduct of these four employees will not prevent Rio Tinto from continuing to build its important relationship with China," CEO Tom Albanese said in a statement. The company is increasingly dependent on its business with China.

Smith said corporations would be disappointed at the secrecy of the commercial secrets elements of the trial.

"Clearly the international business community has been watching and transparency and clarity on this point would have been of assistance," he told reporters.

France, Germany agree on eurozone, IMF bailout

BRUSSELS: Diplomats say France and Germany are backing a eurozone and International Monetary Fund bailout program for Greece and other troubled members of Europe's currency union.

They were speaking on condition of anonymity Thursday because details have not been agreed by all 16 nations that use the euro.

One diplomat said France and Germany struck a deal "that precisely describes the conditions in which the euro member states intervene" and "goes well beyond Greece."

Another diplomat said an agreement would be announced later tonight after markets close that would offer some €22 billion aid for Greece, combining individual loans from the IMF and eurozone nations, with the largest share of the aid coming from Europe.

World trade to see 9.5 pct growth in 2010: WTO

GENEVA: The World Trade Organization said Friday that it expected 9.5 percent growth in merchandise trade this year, in a strong recovery from the steepest commercial contraction since the Great Depression.

The rebound will be led by an 11 percent growth in exports from developing countries such as China, India and Brazil, the WTO said. Exports from wealthy nations should rise 7.5 percent.

World trade shrunk by 12 percent in 2009, as the economic crisis destroyed consumer confidence, weakened demand, damaged credit lines for exporters and, in some instances, led to increased protectionism from governments.

The WTO said it was the "sharpest decline in more than 70 years."

Greece plan to stabilize euro: Eurozone leaders

BRUSSELS: A hard-won deal to provide a safety net for Greece provided the debt-ridden country with some welcome relief Friday, with its cost of borrowing on international markets edging down slightly and labor unions at home saying they would hold off on any further strikes — at least for now.

Prime Minister George Papandreou said that while Greece still faced problems, the new plan would give it breathing space to implement his Socialist government's harsh austerity program, designed to reduce its massive budget deficit and pull Greece out of a financial crisis that has rocked the European Union's common currency.

Greece's 12.7 percent deficit for 2009 is four times over the EU limit, pointing to the eurozone's inability to restrict members' debt and deficits. Worries of a Greek default also highlighted the lack of a European only safety net for eurozone countries that can't pay their bills.

"Europe and Greece come out of this crisis much stronger," Papandreou said. "We know we're not yet out of the woods. We are on a track of implementing our (austerity plan) and we're determined to do so. But we have shown... that we have a strong will to take tough, indeed unprecedented measures, to react swiflty to the difficult circumstances."

The plan agreed on Thursday by the 16 eurozone countries would provide individual loans from other eurozone countries and funding from the International Monetary Fund, in order to rescue Greece if the country found itself unable to borrow or pay its debts.

However, the short text outlining the rescue package — which is short on details — specifies it can only be used as a last resort, and requires unanimous agreement of all eurozone members.

The agreement was reached after months of European wrangling, notably between Germany, which strongly opposed having to pay to bail out a country that had been overspending for years and consistently falsified its financial statistics, and France, which argued that a eurozone memeber should be supported and could not be allowed to sink.

Papandreou insisted he did not believe he would ever have to ask for a rescue.

"We do hope and we believe we will never need to use this mechanism, but the fact that it is there is a very positive signal. Europe is backing us," he said, adding that the plan's existance "will allow us in a very calm and organized fashion to implement our program."

The day after the announcement, the euro recovered from a 10-month low against the U.S. dollar, to $1.3374 in midday trading in Europe from below $1.33 on Thursday. The interest rate gap, or spread, between Greek 10-year bonds and equivalent German issues — a key indicator of market trust — narrowed to 305 basis points from about 330 Thursday. The narrower the spread, the more confidence markets are showing in Greece.

EU Commission President Jose Manuel Barroso echoed the sentiment, saying that "I hope that financial markets will now act on fact and not on fiction."

The deal also won the Greek government a slight reprieve from labor unions at home, who have staged a series of strikes to protest the austerity plan. Greece's largest umbrella union, GSEE, said Friday that while it feared a spike in unemployment, it would hold off on staging more strikes to help the government improve public finances.

"We have an appreciation of the situation the country is in ... We maintain a realistic and responsible position of readiness," GSEE spokesman Stathis Anestis told the newsmen.

German Chancellor Angela Merkel, who vociferously had opposed an immediate bailout for Greece, said she was "very satisfied" with the outcome.

"I think that it demonstrated Europe's capability to handle things and at the same time did something for the stability of the euro and for solidarity with a country that is in difficulty," Merkel said Friday.

"For us, it is also important in the long term that the euro, which is such a success for peace and unity, remains stable. Yesterday was an important day for the euro," she said.

French President Nicolas Sarkozy said the eurozone would offer around two-thirds of any loan package with the IMF taking the remaining third.

US dollar gains against euro

KARACHI: The US dollar has gained ground against the euro last week.

The US currency soared by 0.9 in the week to reach to 1.34 per euro from 1.35.

The investors losing interest in euro due to Greece economic crisis and preferring dollar over the European currency, analysts said.

British Airways cabin crews strike for 2nd day

LONDON: British Airways cabin crews walked off the job for a second day Sunday, upsetting travel plans for scores of customers, but the airline said its contingency plans were working well and more planes were taking off than expected.

The airline — locked in a bitter dispute with workers over a pay freeze and changing working conditions — said it was able to add several extra flights because many crew members ignored the three-day strike call.

"Our contingency plans are continuing to work well on Sunday morning around the world," it said in a statement.

BA said all long-haul aircraft from overseas airports were able to arrive in London as planned on Sunday morning. The airline added there has been no evidence of strikes at any overseas airports directed at its flights.

Union leaders, however, dispute those claims. Unite, the union representing BA cabin crew, said scores of BA planes were grounded and that 10,000 members walked out on Saturday.

BA was able to avoid extended chaos because it leased planes and crew from rival carriers to take up some of the shortfall. About 1,100 flights out of the 1,950 BA flights scheduled to operate during the three-day walkout were expected to be canceled.

The airline had said at the start of the strike that it could handle as many as 49,000 passengers a day on both Saturday and Sunday — compared to the average 75,000 for a normal weekend day in March.

The airline on Sunday declined to provide details of whether that goal was achieved or discuss the number of flights canceled or delayed, but it said that it managed to reinstate more than a dozen of the canceled flights — including those to Paris, Miami and Los Angeles.

The acrimonious dispute with its workers will be financially crippling for BA. Analysts estimated it could cost the airline more than the 63 million pounds ($95 million) that Chief Executive Willie Walsh is trying to save through the changes to workers' pay and conditions.

BA argues that the disputed changes — including a pay freeze in 2010, a switch to part-time work for 3,000 staff and a reduction in cabin crew sizes from 15 to 14 on long-haul flights from Heathrow airport in London — are critical for its survival. The union argues it was not properly consulted on the changes.

Unite planned a second, four-day walkout due to begin March 27 and had said more strikes will be scheduled after April 14 if the dispute is not resolved. The union has pledged not to walk out over the busy Easter period.

Europe divided on aid to Greece before summit

BERLIN: European leaders sent out conflicting signals at the weekend over aid to Greece, with Germany's Angela Merkel urging Athens to solve its debt problems alone and Italy's Silvio Berlusconi strongly backing EU support.

The 16-nation euro zone is divided over whether and how best to provide financial help to Greece, whose struggles to cope with soaring debt and deficits have plunged the currency bloc into the deepest crisis of its 11-year existence.

Chancellor Merkel, who faces a key state election in May, is keenly aware that the German electorate overwhelmingly opposes a bailout for Greece and has hardened her line against the EU making a concrete pledge of financial support.

An FT/Harris poll to be published in Monday's Financial Times shows a third of Germans think Greece should be asked to leave the euro, while 40 percent believe Germany would be better off outside the currency bloc.

Merkel's stance pits her against Brussels and major European partners, who favour strong action to end a speculative assault on Greek assets that has made it twice as expensive for Greece to borrow as for Germany.

On German radio Merkel denied Greece had any "acute financial needs" and rejected suggestions by European Commission President Jose Manuel Barroso that EU leaders agree a standby aid package for Athens at a summit this week.

"I don't see that Greece needs money at the moment and the Greek government has confirmed that. That's why I'd urge us not to stir up turbulence in the markets by raising false expectations for Thursday's council meeting," Merkel said, referring to the March 25-26 summit.

"Aid will not be on the agenda at the meeting on Thursday because Greece says itself it doesn't need help right now."

Barroso told Monday's edition of the Handelsblatt newspaper that the European Union urgently needed to resolve the Greece problem "regardless of the political agenda in member states".

"Securing the stability of the currency union is in Germany's interest," Barroso told the German daily. "I'm sure Germany will make a constructive contribution to resolving the current crisis."

Gas the next fuel to fire Australia boom

KARRATHA: First gold, then coal and iron ore. Now, a new bonanza is about to be unleashed from beneath Down Under: Australia's got gas.

Projects being ramped up to tap huge undersea fields off the country's northwest could quadruple Australia's exports of liquefied natural gas in the next few years and turn it into what the country's resources minister has called an "energy superpower."

It will be the next stage of a long boom that has enriched Australia and made it a key supplier of the raw materials underpinning Asia's development — from the girders in city skyscrapers to the fuel burned to light them.

"We have what the world, and particularly the rapidly growing economies of Asia, want — iron ore, energy and minerals," said Colin Barnett, the premier of Western Australia state, which is at the heart of the new boom.

The mostly desert state has become known for a frontier atmosphere not unlike that of Australia's 19th century gold rush, the country's first mining boom that drew enough migrants to almost triple Australia's population within a decade.

As a major source of the materials driving Asia's economic surge, Australia has increasingly been drawn into the orbit of emerging giants China and India, spawning tensions and discord. There are also nagging worries over economic overheating and long-lasting environmental damage caused by its thriving resource industry.

Gas was discovered off Australia's remote northwest coast in the 1970s. But its exploitation has lagged behind iron ore and coal that have been easier to get and more in demand.

Now, gas is gaining popularity as a cleaner-burning alternative to coal in power generation, with a fraction of the greenhouse gas emissions.

The biggest boost in the sector came last September, when Chevron and joint venture partners ExxonMobil and Royal Dutch Shell announced they would go ahead with the massive Gorgon project.

The venture will drill fields about 80 miles (130 kilometers) offshore to tap into an estimated 40 trillion cubic feet of gas, build pipelines and a liquefaction plant and port for about AU$43 billion ($41 billion) — roughly the size of Guatemala's gross national product.

If that sounds big, the numbers stack up. The decision to proceed came on the heels of news that ExxonMobil Corp. had signed a 20-year deal worth about AU$50 billion to supply PetroChina Co. with LNG from its share of Gorgon. Similar deals for Gorgon gas worth another AU$70 billion were struck with power companies in Japan, South Korea and India.

The Australian government says Gorgon could generate exports worth AU$300 billion during the next 20 years. And that's just one project. There are at least a half dozen other large gas plans in the works, including Australian company Woodside's $12 billion plan to tap the Browse fields holding an estimated 20 trillion cubic feet of gas.

Yet even as the projects pile up, Australia is trying to tamp down strains with China that have taken some of the gloss of its mineral and energy endowments.

On Monday an Australian executive of mining giant Rio Tinto will face court in China charged with stealing commercial secrets in a trial Australian lawmakers are concerned is linked to Beijing's unsuccessful campaign to get lower iron ore prices. The case has added to unease about close China relations after a string of deals for state-owned Chinese firms to buy into Australian resource projects.

Other problems are local but no less intractable.

35 business concerns to visit Malaysia

ISLAMABAD: A 35-member delegation of the leading businessmen of Lahore Chamber of Commerce and Industry will visit Malaysia on March 16 to explore joint industrial and marketing opportunities and identify potential areas to enhance Pak-Malaysia trade.

The delegation led by Engineer Sohail Lashari, former senior vice president, Lahore Chamber of Commerce and Industry will undergo a four-week visit, the Commercial Counselor for Pakistan in Malaysia Wajiullah Kundi said in Kuala Lumpur.

Kundi said the visit reflects the importance being given to Malaysia in South East Asia by Pakistan in terms of building strategic ties in bilateral trade, investment and business sectors.

He said these ongoing frequents bilateral visits by the private sectors of both the countries will certainly pave the way for greater cooperation leading to substantial increase in trade investment and business activities.

Wajiullah Kundi while giving detail of the visit said the delegation comprises members belonging to important sectors including agricultural machinery and implements, paper and board, iron and steel, electronics and automobiles, livestock and poultry, importer of used Heavy Agricultural Machinery, importer of Electronic Surveillance and Security Systems, power generation and solar energy, manufacturer of cables machinery, dairy and livestock related machines and textile made-ups (embroidery works).

He said during its stay in Malaysia the delegation is expected to hold meetings with the President and members of the Federation of Malaysian Manufacturers, President and members of the Associated Chinese Chamber of Commerce and Industry Malaysia (ACCCIM) followed by B-to-B meeting.

The delegation will also visit MATRADE Exhibition and Convention Centre (MECC) wherein meetings will also be arranged.

Bilateral trade between the two countries have received a boost after signing of Malaysia Pakistan Comprehensive Economic Partnership Agreement (MPCEPA) in Nov, 2007 which has reduced duties taxes and levies on trade between the two countries, he added.