Morning business round-up: Markets dip on economy fears


What made the business news in Asia and Europe this morning? Here's our daily business round-up:

European shares lost ground in early trading, following falls in the US and Asia, with concerns growing about the health of the global economy.

This was despite the fact that President Barack Obama signed legislation to increase the US debt ceiling and avert a financial default on Tuesday night, after Congress voted in favour of a bipartisan compromise deal.

The bill cleared its final hurdle in the Senate by 74 votes to 26, after negotiations went down to the wire. It raises the debt limit by up to $2.4tn from $14.3tn, and makes savings of at least $2.1tn over 10 years.

However, the bill failed to lift markets. London's main share index was down 1%, while indexes in Frankfurt and Paris both lost about 0.5%.

Earlier, Asian markets had lost ground, with Japan's Nikkei closing down 2.1% and Hong Kong's Hang Seng down 1.9%, while the oil price also slipped slightly to $93.30.

Meanwhile, the price of gold, seen as a safe investment in times of economic uncertainty, hit a new record high of $1,668.

Media caption,
Biz Heads

Meanwhile, Italian finance minister Giulio Tremonti has begun crisis talks with Jean-Claude Juncker, chair of the Eurogroup of finance ministers from the 17 eurozone countries.

The talks come as yields on Italian bonds have reached euro-era record levels.

Italian Prime Minister Silvio Berlusconi is due to address parliament on the economy later on Wednesday.

Staying in Europe, second-quarter profits at Societe Generale, France's second-biggest bank, have fallen as a result of its exposure to Greek sovereign debt.

SocGen's net profit for the period fell to 747m euros ($1.06bn), down almost a third from a year ago. It made a 395m euro writedown on its Greek debt holdings.

SocGen also warned that its 2012 profit target would be "difficult to achieve".

Another major bank also reported results - London-based, Asia-focused Standard Chartered Bank saw pre-tax profits for the first six months of the year were $3.6bn, up 17% from a year earlier.

Profits grew in all of the territories where Standard Chartered operates, except for its biggest market, India, where profits fell by 5%.

According to the plan, a new fund will be set up to pay damages to victims affected by the nuclear crisis. Japan's other nuclear power operators will make annual contributions to the fund.

Tepco, which reported a loss of $15bn earlier this year, may have to pay more than $100bn in compensation.

Another Japanese company, Hitachi, has said it is planning to outsource production of all its TV sets to foreign companies as part of its new business strategy.

The company said it was shifting its focus on manufacturing and developing more profitable products.

Last week, Hitachi reported a 86% plunge in first quarter net profit from a year earlier.

The measures include tax breaks for Brazilian-made products and anti-dumping measures on cheaper imports mostly from China.

The president said it was "imperative" to protect Brazilian industry and jobs from unfair competition.

On today's Business Daily podcast from the BBC World Service, the programme looks at the chances of America's credit rating being cut despite the deal to raise the debt ceiling.

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