US crisis deal looks close

February 6, 2009
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, WASHINGTON, February  6 – US lawmakers lurched towards compromise on a vast package to rescue the US economy, the kingpin of the world financial crisis that ripped ever deeper into corporate results on Friday.

A top supporter of President Barack Obama\’s 900-billion-dollar scheme said he thought that objections of wasteful spending would be overcome in a fifth day of debate, and reports suggested it might be cut by 30-100 billion dollars.

As the Senate worked on the contentious bill, which has also raised international concern over a protectionist amendment, now watered down, companies across the world in the auto, finance, airline, electronics and media sectors rolled out more dire results.

On the US stimulus package of spending and tax-cutting measures, Democratic Senate Majority leader Harry Reid said late Thursday: "I would hope that we can complete this legislation tomorrow."

The lawmakers were thought to be working on cuts of 30-100 billion dollars to satisfy charges of wasteful spending by opposition Republicans, while not alienating Democrats.

And a spokeswoman for US Treasury Secretary Timothy Geithner said he would unveil a new plan Monday to prop up the US banking sector.

This is seen here as critical to efforts to help banks on their knees after the collapse of the US subprime home-loan market and the domino damage on balance sheets.

The Treasury has been working on ways of using the second half of a 700-billion-dollar Troubled Asset Relief Program set up by the previous administration.

On the markets, Tokyo shares closed with a 1.60-percent gain, following a Wall Street rally on prospects of Senate approval for the stimulus package.

European shares opened with gains in a range of 0.30-0.65 percent.

The dollar slipped in Tokyo to 90.97 yen from 91.13 in New York, and the euro firmed to 1.2792 dollars from 1.2787, with analysts saying they were waiting for US jobs data.

In Singapore, the New York contract for March fell 35 cents to 40.82 dollars a barrel and the March Brent North Sea price fell five cents to 46.41 dollars.

In Europe overnight, French President Nicolas Sarkozy sought in a television interview to calm the nation after protests that his crisis measures had helped banks but not ordinary workers brought a million people on to the streets across the country last week.

He insisted that money his government was lending to French banks would not be a burden on taxpayers but was earning big interest income to be spent on welfare measures.

He said he would demand international reforms in financial markets ranging from pressure on so-called tax havens to changes in pay for traders in finance.

But he also signalled tax cuts for the French middle classes and for businesses, and said that deep reforms to cut the cost of public administration had to continue.

In the business world, the grim reapers of financial and economic crisis cut deep into more corporate results.

The world\’s biggest auto maker Toyota warned that for 2008 it would show its first annual operating loss, of 4.9 billion dollars.

"It was a really tough period," said top Toyota executive Mitsuo Kinoshita. "We cannot tell what will happen for the next fiscal year, but we hope we are now hitting the bottom."

In Frankfurt, BMW reported a five-percent fall in sales in 2008, and Swedish truck maker Volvo showed a 33-percent slump in annual net earnings. "We do not see a return of demand during the first half (of 2009), chief executive Leif Johansson said.

In the airline sector, Japan Airlines, the biggest carrier in Asia, said it expected a net loss equivalent to 374 million dollars in the year to March.

And British Airways in London reported a net loss of 127 million pounds (186 million dollars) in the first nine months of its financial year, a switch from a profit of 642 million pounds 12 in the equivalent period of the previous fiscal period.

The biggest Japanese bank, Mitsubishi UFJ Financial Group, reported a nine-month loss amounting to 462 million dollars, and the top securities firm Nomura said it would issue shares to raise more than 3.0 billion dollars, after being hit by the collapse of US investment bank Lehman Brothers.

The Japanese Sharp Company electrical equipment giant forecast a first operating loss, of 335 million dollars, in the year to March and said it would shed 1,500 jobs.
Overnight, in New York, the global media giant News Corp reported a quarterly loss of 6.41 billion dollars.

"Our results for the quarter are a direct reflection of the grim economic climate," chairman Rupert Murdoch said, echoing the sentiments of multitudes of chief executives around the globe.

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