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Business


Inflation jumps in India amid expectation
of more tightening

(AFP) - India’s inflation jumped again to a more than three-year high, according to data on Friday, days ahead of a key meeting of central bankers who are expected to tighten monetary policy further.

Annual inflation accelerated nearly two-tenths of a percentage point to 7.33 percent for the week ended April 12, driven partly by higher food costs.

High inflation has become a central political issue in India with taming prices the key goal of the Congress-led government, which faces general elections within a year and a clutch of state polls in between.

India’s hundreds of millions of poor, whose support is vital at voting time, have been hit hardest by the inflation surge.
The latest jump, which comes amid soaring global commodity costs, was up from 7.14 percent the previous week according to the Wholesale Price Index, the most watched cost monitor.

The rise comes as economists predict further monetary tightening at the central bank’s annual policy meeting next Tuesday aimed at checking inflation.

Last week, the central bank told commercial banks to hike cash reserves to suck out excess money supply in a bid to cool inflation that has more than doubled in four months.

It pushed the so-called cash reserve ratio up by 50 basis points to a seven-year peak of eight percent, the latest in a series of aggressive tightening steps.

India found some relief earlier in the week when it forecast a record wheat and grain harvests which economists say should bring down food prices in coming months.

However, Goldman Sachs’ Tushar Poddar has predicted another quarter-point hike in the central bank’s main policy tool, the repo rate, which it uses to lend to commercial banks, at its policy meeting. Other economists have made similar forecasts. The rate is already at 7.75 percent -- a six-year high.

The tightening has already hit economic expansion with some economists saying growth could fall as low as seven percent in this fiscal year to March 2009 from around 8.7-8.8 percent last year and 9.6 percent the previous year.

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Maruti profits slide in fourth quarter

(AFP) -Top Indian car maker Maruti Suzuki announced Thursday a 33.6 percent fall in net profit in the fourth quarter, hit by increased competition and rising input and depreciation costs.

Maruti, majority owned by Japan’s Suzuki Motor Corp., reported net profit of 2.98 billion rupees (74 million dollars) against 4.49 billion rupees for the fourth quarter ended March 2007, on sales of 50.69 billion rupees.
For the full-year 2007-2008, Maruti’s profit rose 10.9 percent to 17.8 billion rupees on sales that climbed 23.2 percent to 188.23 billion rupees.

Maruti shares fell 15.2 rupees or two percent to close at 745.95, after recovering from the day’s low of 728.7. Its earnings were seen as in-line with expectations.

Depreciation in the fourth quarter surged to 3.11 billion rupees from 718.2 million rupees, the company said in a statement.
“For a tighter and more prudent financial reporting, the company has voluntarily adopted shorter depreciation cycles for its equipment and tooling assets,” it said.
Maruti, which commands the lion’s share of the fast-growing Indian car market, posted record sales in the fiscal year through to March 2008, at 764,842 vehicles.

“Maruti’s earnings met expectations. The company is likely to show strong sales in the year to March 2009 with new products in the pipeline,” said Abhishek Banerjee, an automobile analyst with brokerage Religare Securities.
“Maruti’s strategy is focussed on rural market expansion and innovation,” he said.

But competition is growing, notably from rivals Hyundai Motors and Tata Motors.
Interest rate hikes and other measures to curb credit growth amid high inflation have also slowed demand for cars in the world’s second-fastest growing automobile market.
In December, Suzuki said it would launch its next new car from India, aiming at European buyers, as it invests 1.8 billion dollars in making India a global production hub.

Analysts forecast India will continue to be one of the world’s fastest-expanding vehicle markets as middle-class incomes keep climbing and the government builds new highways to criss-cross the nation.
Maruti Udyog changed its official name earlier this year to Maruti Suzuki India.

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                                        New pipeline for Iranian gas                                        

Pakistani Oil Minister Khawja Asif (R) and his Indian counterpart Murli Deora (L) leave after the joint press conference in Islamabad on April 25, 2008 after a meeting. Deora arrived on a three day visit in Islamabad to discuss the construction of a multi-billion dollar project to transport Iranian gas across the subcontinent and also attend the technical level talks on the four-nation Turkmenistan Afghanistan Pakistan India (TAPI) gas pipeline project were held on April 23-24 in Islamabad. AFP

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Wal-Mart unit limits rice purchases

(AFP) - Top retailer Wal-Mart’s Sam’s Club unit said Wednesday it is limiting the amount of rice individual shoppers could buy at one time, as rice prices hit new records around the world.

Sam’s Club said it had temporarily placed limits of four 20-pound (nine-kilogram) bags a person for jasmine, basmati, and other long-grain white rice types.

“We currently have plenty of rice for Sam’s Club Members,” the company said in a statement.
“However, like our competitors, we’re just taking the precautionary step of limiting sales of the very large 20 pound bags” of imported white rice, it said.

Sam’s Club, a members-only bulk retailer chain owned by Wal-Mart, the world’s largest retailer, said smaller-sized bags of rice were not affected by the restrictions; nor did they extend to Wal-Mart stores.
“This temporary cap is intended to ensure there is plenty of rice for all our members. No other items are affected.”

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Chinese want cars that glide through gridlock

(AFP) - Traffic gridlock is emerging as a challenge to auto sales in China, with many potential buyers saying lack of space on the country’s roads is a major factor in whether or not they will buy a car.
Visitors to the ongoing Auto China 2008 in Beijing said they did not plan to buy cars that were so large the ability to manoeuvre was compromised.

“Hatchback cars are smaller and more convenient, especially when parking space is limited and expensive,” said Jeff Hu, a 30-year-old product designer from Shanghai looking for a vehicle for his family of three.
Clogged roads are a problem in all major Chinese cities. Beijing has three million cars, while in Shanghai, the country’s largest city, the number of automobiles increased 11.8 percent last year to 1.2 million.
The congestion is gradually becoming a severe constraint on expanding car ownership in China, according to Jia Xinguang, an independent auto analyst based in Beijing.

“In the past, people were saying cars were not affordable. Then it became ‘we can afford to buy but can’t afford to drive,’” he said, referring to the price of gas, toll fees and other costs.
“Now it is ‘we can afford buying and driving, but we just can’t move,’” he said.
The ability to buy a car is a sign of the rapid expansion of the middle classes, one of the most visible reflections of China’s economic reform.

According to estimates, the Chinese middle classes have grown from 65 million to 80 million -- in just two years.
This means that middle class households -- defined in China as having an annual income of 60,000 to 500,000 yuan (8,500 to 70,000 dollars) -- now make up six percent of the total population.
They are a major driver of auto sales in China, one of the most promising markets in the world.
A total of 1.85 million vehicles were sold in China in the first quarter of 2008, up 20 percent from a year earlier, as markets elsewhere in the world slumped, according to organisers of the auto show.

Zhang Jian, a 29-year-old human resources executive and another visitor to the auto show, is not buying a car just yet, mainly because fuel prices are too high. But that’s not the only reason.
“The traffic is too bad in Beijing. It’s better to take the metro and save your time than driving and being stuck on the road,” she said.

A slogan for a new model launched by Mazda -- “Zoom Zoom” -- hints at the promise of driving in a free and unhindered way, observers said, noting it may be a sign of the times.
“The design of more and more cars will make the exterior as small as possible while leaving the interior space relatively large,” said Zhao Chenxi, a Shanghai-based auto analyst with Haitong Securities.
Not that people necessarily want their cars small. “Traditionally Chinese people love big cars. Opting for small ones is a forced choice,” he said.

The gridlock has now become so bad that some officials have decided to abandon the laissez-faire attitude which has otherwise characterised auto policies in many parts of the nation.
In July last year, the mayor of Shenzhen, one of China’s showpiece economic cities in the south, urged his 11 million residents to stop buying cars in a bid to ease worsening traffic and pollution woes.

“Stop buying cars,” Xu Zongheng, the city’s mayor was quoted as saying, adding that people were buying vehicles “too quickly,” with the number of cars already topping one million.

“Problems arising from the city’s traffic are mounting. I hope residents take this into consideration when planning to buy cars.”
Gradually improving public transportation is also impacting many people’s decisions on how to get around.
“I will drive if it’s less than two hours but will opt for public transportation if it’s longer than that,” said Hu, the Shanghai product designer.

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Berliners to vote on historic airport’s closure

(AFP) - Berliners will go to the polls Sunday to vote on a last-ditch bid to save the German capital’s historic Tempelhof airport, the hub of the Berlin airlift, from closure in October.
Tempelhof’s fans have called on local pride and vibrant memories of the airport just outside the city centre in their campaign to keep the vast facility -- the largest building in western Europe -- up and running.

“Ich bin ein Berliner” -- late US president John F. Kennedy’s defiant cry in defence of the embattled city during the Cold War -- is just one slogan Tempelhof backers have adopted in pointing to the airport’s inextricable link with the city’s history.
After Berlin was split into east and west following World War II, the Allies ferried hundreds of thousands of tonnes of food, coal and other supplies, mainly into Tempelhof, in a virtually non-stop airlift when the Soviets blockaded West Berlin in 1948.

Even after the blockade was lifted, shipments continued until September of that year to build up a surplus in case of a renewed threat.
Berliners who were children at the time fondly recall sweets that floated down when “candy bomber” pilots tossed down small bundles from their cockpits with handkerchief parachutes.
“We owe it to the Americans to keep Tempelhof open,” local resident Roland Welt, 69, told AFP as he passed by the airport on foot.

“If the Berliners vote to maintain it, the government can’t stand in our way.”
The referendum is not binding, however. But Tempelhof backers hope that it will put pressure on Mayor Klaus Wowereit to reverse decade-old plans to mothball the facility.
They have lost a series of court battles and see Sunday’s vote as their last hope to gain a reprieve.
Last week, they won the support of conservative Chancellor Angela Merkel, who in a rare move threw her weight behind a citizens’ initiative for Tempelhof against the left-leaning leaders of the city-state.
The airport’s proponents cite its unique Nazi-era architecture, central location and historical legacy.
They suggest keeping it open for business commuters and have proposed building a clinic at the site for wealthy foreign patients seeking German care.

But Tempelhof only served 630,000 passengers in 2006, compared to 12 million for Tegel airport on the city’s northwestern fringe, and six million at Schoenefeld to the east.
Schoenefeld is to be expanded and modernised and become the capital’s sole airport in 2011.

Opponents point to binding agreements to close Tempelhof in favour of Schoenefeld and describe its central location as a nuisance for residents and a security risk due to low-flying planes in a heavily populated area.
They have called for the creation of a cultural centre and a park on the sprawling grounds.
Polls show a slim majority of Berliners support Tempelhof’s continued operation, particularly westerners and older voters.

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Euro retreats in Asian trade

(AFP) - The euro dropped against the dollar and the yen in Asian trade on Thursday after weak manufacturing data and comments by European financial officials, dealers said.
The euro fell to 1.5842 dollars in Tokyo morning trade from 1.5882 late on Wednesday in New York and to 164.03 yen from 164.42.
The dollar was steady at 103.52 yen after 103.51.
The euro retreated after French central bank chief Christian Noyer said Wednesday eurozone interest rates could “move in both directions.”

The single currency had risen on Tuesday after Noyer, who is also a member of the ECB governing council, said that the bank was ready to move on rates if necessary and aimed to bring inflation back below 2.0 percent next year.
Speculators had taken the remarks as a hint at a possible ECB rate hike and the euro, powered by fresh fears for the health of the US economy, on Tuesday broke through the 1.60-dollar threshold for the first-time.
Eurogroup chairman Jean-Claude Juncker voiced fresh concern about the surging euro on Wednesday, calling the volatility “excessive”.

Weak eurozone manufacturing figures also weighed on the single currency after the purchasing managers index fell to 50.8 in April, the lowest since August 2005 and close to the sub-50 level that signals a contraction.
Even so some market watchers believe an ECB interest rate hike remains likely because of elevated inflationary pressures.

“The market consensus is that the only way for interest rates to go is up because the main focus is on long term inflation worries in Europe,” said Ryohei Muramatsu, manager of Commerzbank Group Treasury Asia in Tokyo.
The greenback was supported by renewed confidence on Wall Street where stocks rebounded overnight on robust earnings news from Boeing and as two big US insurance firms announced merger plans.

But Muramatsu said the optimism could prove short-lived as jitters about the US economy and the health of its financial system persist, with banks still reluctant to lend to each another amid a global credit crunch.
“There is a negative downward spiral because higher borrowing costs will pressure corporate earnings which will then affect the overall economy,” he said.

Market players expect the US Federal Reserve to lower its benchmark rate by 25 basis points next week, which would be a smaller cut than at previous meetings where the central bank had slashed rates by 50 or 75 basis points.

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ADB lends US$ 105 million to China for infrastructure

(AFP) - The Asian Development Bank (ADB) will lend 105 million dollars to China to improve infrastructure in the northwest Xinjiang Uygur Autonomous Region, the Manila based lender said Friday.

The loan will focus on construction and rehabilation of road networks and urban services in Alashankou, a major trade and transport hub on the border with Kazakhstan, the Kanas region, a scenic tourist destination and Yining City, the ADB said in a statement.

“We aim to strengthen cross-border trade, tourism development, and economic growth in order to raise living standards while protecting the environment of the poorest and most remote parts of the country,” ADB urban development specialist Amy Leung was quoted as saying.

The ADB also said it had forged a new “country strategy partnership” with China for 2008-2010 which puts emphasis on energy effciency, environmental protection, economic growth and development regional cooperation.

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Apple posts billion-dollar profit as Macintosh sales rocket

(AFP) - Apple on Wednesday reported profits in the first three months of the year topped one billion dollars as sales of Macintosh computers climbed more than 50 percent.
The tech giant and maker of the hot-selling iPod music player and iPhone said it earned 1.05 billion dollars, or 1.16 dollars per share, on revenues of 7.51 billion dollars for the quarter as compared to 770 million dollars, or 87 cents per share, in the same quarter last year.

The results trounced analysts’ predictions that Apple’s profits for the quarter would be 94 cents per share.
“We’re delighted to report 43 percent revenue growth and the strongest March quarter revenue and earnings in Apple’s history,” said Apple chief executive Steve Jobs, Apple’s chief executive.
“With over 17 billion dollars in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters.”

Apple shipped 2.29 million Macintosh computers during the quarter, 51 percent more of the machines than it shipped during the same period in 2007. The iconic California company sole 1.703 million iPhones during the quarter.
Chief financial officer Peter Oppenheimer said Apple expects revenues of 7.2 billion dollars and profits of a dollar per share in the current quarter.
The profit outlook was weaker than analyst forecasts for earnings of 1.10 dollars a share.

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EU still eyes WTO ministerial meeting by end-May

(AFP) - The European Union said on Friday it still hoped ministers would meet at the WTO at the end of May to end years of trade liberalisation talks despite scepticism within its own ranks.
“There is a clear understanding that if we want to conclude talks by the end of the year, then we need to have a ministerial meeting by the end of May,” the EU’s ambassador to the World Trade Organisation Eckhart Guth told AFP.

“We are still working on this assumption, though nothing is guaranteed, nothing is set in stone,” he said.
The WTO’s Doha round of talks to reduce trade barriers was launched in the Qatari capital in November 2001 with the aim of reaching a deal by 2004, but has foundered ever since, principally in disputes between developed and developing countries on agricultural subsidies and industrial tariffs.

WTO Director General Pascal Lamy had initially hoped to bring ministers to Geneva over Easter to decide on “modalities” -- the key numbers for tariff cuts that would form the basis for any comprehensive deal.
But this timetable has repeatedly had to be put back as the WTO’s 151 member states prove incapable of reaching consensus despite intensive technical discussions.

In a sign of growing opposition within the bloc’s 27 member states, Germany on Thursday added its voice to criticisms by France of any proposed further cuts in subsidies to EU farmers.
“We agree with France that no agreement (at the WTO) is better than a bad agreement,” said German state secretary for agriculture Gert Lindemann.

But Guth said that there was no “Plan B” to the proposed timetable or negotiating framework.
“If one starts talking about a Plan B now, it very quickly becomes a self-fulfilling prophecy,” the EU ambassador said.
A ministerial meeting in late May is seen as the last chance, otherwise the whole process will be overshadowed by the looming US presidential elections.

In logistical terms, any delay beyond May could pose problems in terms of accommodation for ministers and their teams, as Switzerland will host the Euro 2008 football championships in June with Geneva as one of the main venues.

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A sign which reads ‘No Fuel’ is pictured at a petrol station near to the Grangemouth Oil Refinery in Grangemouth, central Scotland on April 25, 2008. Workers at the oil refinery, one of the largest in Europe, are planning strike action on April 27 and as a result the plant has been gradually slowed down production for safety reasons. AFP