Eurozone ministers approve 8bn euro Greek bailout aid

The French and German finance ministers greeted each other but their countries remain divided

Eurozone finance ministers have approved the next tranche of Greek bailout loans, potentially saving the country from a disastrous default.

The 8bn-euro ($11bn; £7bn) loan must still be signed off by the International Monetary Fund.

Once this is done, Athens should get the funds in mid-November, officials said on Friday.

Ministers, who have begun several days of talks, also said they were working on a second rescue package for Greece.

The new plan for the debt-ridden country would include fresh aid money and contributions from the private sector.

However, no further details on the new package were disclosed.

The finance ministers are meeting in Brussels for negotiations aimed at resolving the eurozone's debt crisis and bolstering the region's banking sector.

On Saturday, ministers from all 27 EU countries will join the talks. EU leaders will also gather on Sunday, and have announced plans for an extra meeting on Wednesday.

But there have been widespread reports of deep divisions between France and Germany.

In particular, the two need to agree on how to increase the firepower of the eurozone's bailout fund, the European Financial Stability Facility (EFSF), from its current 440bn euros ($595bn; £383bn).

France has proposed turning the EFSF into a bank so that it could borrow from the European Central Bank (ECB), but Germany has refused to sanction such a move, arguing it would compromise the ECB's impartiality.

German Finance Minister Wolfgang Schaeuble reiterated this position as he arrived at the Brussels meeting.

"We have all taken note that it is clear, first, that we will stick to the agreed guarantees and that we will stick to the situation as it is in the treaty that the central bank is not available for state financing," he said.

The German government has also promised its taxpayers that its contribution will not go above 211bn euros so is looking for a way to increase the size of the fund without increasing the liabilities of German taxpayers.

Despite no apparent movement on the deadlock, markets were trading higher, with the leading indexes in London, Frankfurt and Berlin all up between 1.5% and 2.7%, while US markets also rose at the start.

'Collective action'

The finance ministers from the 17 countries that use the euro, known as the eurogroup, were hoping to thrash out differences on Friday ahead of the arrival of Europe's leaders on Saturday.

Jean-Claude Juncker, the chairman of the eurogroup and the prime minister of Luxembourg, said the delay to a deal portrayed a "disastrous" image of the eurozone to the rest of the world, adding that it was not necessarily just France and Germany that had differences of opinion.

A spokesperson for UK Prime Minister David Cameron said he had held a video conference with US President Barack Obama, German Chancellor Angela Merkel and French President Nicolas Sarkozy earlier on Friday.

"They all agreed on the urgent need for the eurozone to agree a comprehensive and sustainable solution to the eurozone financial crisis and Chancellor Merkel and President Sarkozy outlined the approach that was under discussion.

"They agreed to continue to consult closely ahead of the G20 summit in Cannes [in November] on collective international action to support global economic growth."

A deal on the euro had been expected to be signed on Sunday, but France and Germany said they would not be able to reach an agreement by then and announced that leaders would meet again on Wednesday.

Sunday's summit had already been delayed from 17-18 October because more time was needed to finalise a plan.

BBC business editor Robert Peston said he expects a deal to be announced to recapitalise Europe's banks on Saturday.

Greek losses

A second hurdle in the way of any rescue plan is that negotiations have not yet begun properly with private sector lenders to Greece on a further reduction of what the Greek government will repay them.

Banks have already agreed to take a 21% loss, or "haircut", on their loans to Greece but there is growing pressure for them to accept higher losses.

President Sarkozy has called for talks with the private sector.

Previous disagreements between France and Germany about the bailout plans have centred on how much the private sector would have to contribute to any package.

Germany has been leading the push for the private sector to take steeper losses, but France and the ECB fear that this would destabilise the banking sector and worsen market turmoil.

Meanwhile, the head of Germany's second biggest bank has said that Greece should declare itself insolvent and restructure its debt in order to restore calm to the markets.

"It has to become clear that states have only two options," Commerzbank chief executive Martin Blessing told the daily Bild.

"Either they service their debt as agreed or they declare insolvency with all the tough consequences. It is not enough to just take writedowns on bank balance sheets."

Greek MPs pass austerity measures

There were chaotic scenes as violence flared on the streets of Athens

The Greek parliament has given its final approval to the latest package of austerity measures.

All but one of the deputies from the ruling Pasok party voted in favour of the law.

The approval comes despite two days of violent protests against its provisions, which include cutting public sector wages and raising taxes.

One man has died as battles erupted at a large rally outside the Greek parliament in Athens.

The dead man was identified by Greek media as a middle-aged trade unionist.

"The demonstrator died of a heart attack," Deputy Citizens Protection Minister Manolis Othonas told Reuters. "He was not hurt in the incidents."
The country is in the grip of a 48-hour general strike in protest at the cuts.

As protesters gathered for a second day the BBC's Gavin Hewitt said "you shouldn't underestimate the sense of rage and frustration

The government's bill is needed to secure EU and IMF bailout loans.

The member of the ruling socialist party who voted against it, Louka Katseli, has been expelled from the party by Prime Minister George Papandreou.

Civil servants, shopkeepers, dock workers, taxi drivers, doctors, lawyers, teachers, construction workers and others were all due to take part in the strike, which began on Wednesday.

An estimated 50,000 protesters gathered on Syntagma Square, in front of parliament, on Thursday.

The bill includes plans for further cuts to pensions and salaries and temporary lay-offs of 30,000 public sector workers.
With Greece unable to borrow on international bond markets to finance its debt, the EU and IMF have stepped in with two bailout packages.

Finance Minister Evangelos Venizelos described the choice as between a "difficult situation and a catastrophe".

"We have to explain to all these indignant people who see their lives changing that what the country is experiencing is not the worst stage of the crisis," he said.

"It is an anguished and necessary effort to avoid the ultimate, deepest and harshest level of the crisis."

There are fears that if the Greek government defaults on its debts, it will set off a chain reaction that could engulf banks and other highly indebted eurozone nations.
But the government is struggling to convince lenders that it is cutting effectively enough. Greece says it needs the next 8bn euros ($11bn; £7bn) of the first bailout agreed to last year or it will soon be unable to pay its bills.

The details of the second rescue plan have yet to be finalised. Banks have agreed to take a 21% loss, or "haircut", on their loans to Greece but there is growing pressure for them to accept higher losses.

European leaders and global finance chiefs are trying to work out a broader plan to tackle the eurozone's debt crisis ahead of a weekend summit in Brussels.

But they have now had to concede that they will not reach agreement on Sunday and have called another summit for next week to approve a deal.

Eta statement: "Eta has decided on the definitive cessation of its armed activity"

The French and German leaders spoke on the phone on Thursday

EU leaders are to hold another summit by Wednesday, because they will not be able to agree a rescue plan for the euro on Sunday.

French President Nicolas Sarkozy and German Chancellor Angela Merkel said a crisis strategy would be discussed on Sunday and adopted at the next meeting.

EU leaders need to agree a second bailout for Greece, how to recapitalise banks and a stronger bailout fund.

President Sarkozy also called for talks with the private sector.

The private sector talks would be "to find an agreement allowing to strengthen the sustainability" of Greek debt.

Previous disagreements between France and Germany about the bailout plans have centred on how much the private sector would have to contribute to any package.

A spokesman for Chancellor Merkel said the leaders agreed that a "comprehensive, ambitious" answer to the crisis was needed.

The spokesman also said that the advantage of the additional summit would be that it would give the German parliament time to approve any changes to the bailout fund.
Chancellor Merkel had been due to address the Bundestag on Friday, but that has now been postponed.

President Sarkozy and Chancellor Merkel have also said they plan to meet on Saturday in the hope of making progress, ahead of the heads of government meeting on Sunday in Brussels.

Sunday's summit had already been delayed from 17-18 October because more time was needed to finalise a plan.

The French and German leaders spoke on the phone on Thursday.

"We have made enormous progress but not enough to take final decisions on Friday," Chancellor Merkel's spokesman said.

"In certain areas, we have reached agreement, in others, we are on the right track."

European shares fell on Thursday amid concern about whether enough progress would be made at the weekend summit.

Russia signs free-trade deal with former Soviet states

Mr Putin said the agreement would make the eight economies more competitive

Russia has signed a free-trade deal with seven other former Soviet republics that will scrap export and import tariffs on a number of goods.

The agreement was announced following talks in St Petersburg. The other signature countries are Ukraine, Belarus, Kazakhstan, Armenia, Kyrgyzstan, Moldova and Tajikistan.

No details have yet been revealed about what goods will be included.

Uzbekistan, Azerbaijan and Turkmenistan may join by the end of the year.

The free trade agreement now needs to be ratified by the parliaments of the eight countries who have so far signed up, before becoming effective in 2012.

Russian Prime Minister Vladimir Putin said the move would make their collective economies "more competitive".

Analysts said Ukraine's inclusion was significant, as the country had previously sought closer trade ties with the European Union.

However, Ukraine's current government of President Viktor Yanukovych is seen as being more pro-Russian than its predecessor.

Last week, Ukraine's former prime minister Yulia Tymoshenko was jailed for seven years for acting beyond her powers over a 2009 gas deal.

The European Union said the trial was politically motivated, but this was denied by Kiev.

Google profits and revenue surge in the third quarter

Google boss Larry Page said the company had "a great quarter"

Internet giant Google has reported a large rise in profits in the three months to September.

The search engine said net income in the third quarter surged 26% to $2.73bn (£1.74bn), up from $2.17bn in the same period last year.

Earlier this year, Google launched Google+, a social network to take on Facebook.

"People are flocking into Google+ at an incredible rate," said Google head Larry Page.

The profits were well ahead of market expectations, and shares in the company rose 6% in trading after the market closed.

"The real interesting thing here is the expenses weren't as high as the Street was anticipating," said UBS analyst Brian Pitz. "This is the fourth quarter in a row the company has accelerated their revenue on top line."

Revenue rose 33% to $9.72bn - just shy of having a quarterly turnover of $10bn.

Mr Page, a co-founder of the company, replaced Eric Schmidt as CEO in April.

"We had a great quarter," he said. "Google+ is now open to everyone and we just passed the 40 million-user mark."

Facebook, around since 2004, has around 800 million users.

As well as generating money through advertising based on search, Google also makes the popular Android mobile phone operating system.

S&P downgrades Spain on weak growth outlook

The euro fell in Asia trade after the Standard & Poor's announcement

Standard & Poor's has cut Spain's long-term credit rating by one notch, from AA to AA-, because of weak growth and high levels of private-sector debt.

The ratings agency added that the country's high unemployment would remain a drag on the economy.

Last week the Fitch agency cut Spain's rating, a process that can raise a country's borrowing costs.

On Thursday, Fitch downgraded the creditworthiness of UK banks Lloyds and RBS, and also Switzerland's UBS.

Late on Thursday, S&P followed Fitch by cutting Spain's rating by one notch.

S&P said in a statement: "Despite signs of resilience in economic performance during 2011, we see heightened risks to Spain's growth prospects due to high unemployment, tighter financial conditions, the still high level of private sector debt, and the likely economic slowdown in Spain's main trading partners."

It noted the "incomplete state" of labour market reform, and added: "The financial profile of the Spanish banking system will, in our opinion, weaken further."

S&P also warned of a further ratings cut if Spain's economy worsens.

'On watch'
The euro drifted lower in Asian trade after S&P's move, though the currency was still on track for its biggest weekly rally since January.

The euro traded at $1.3741, having lost about a third of cent.

Earlier, Fitch cut credit ratings or signalled possible downgrades for several major European banks.

It downgraded UBS, Lloyd's Banking Group, and Royal Bank of Scotland.

It also placed on watch for possible downgrade Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, and Societe Generale.

Last week Fitch fuelled concerns about the eurozone's debt crisis when it downgraded Spain and Italy, citing the "intensification" of the bloc's economic and financial problems.

Slowdown in the German economy is predicted

The forecasters are worried that economic problems elsewhere in Europe will hit German exports

Eight leading European economic institutes have forecast a steep slowdown for Germany's economy.

The eight think-tanks make a twice-yearly aggregate forecast of German growth.

Six months ago they predicted 2% growth for next year, but they have now cut that to 0.8%, blaming the debt crisis in the eurozone.

Slow growth in Germany makes it much harder for the rest of Europe to avoid a return to recession.

The German economy grew 3.6% last year.

"The debt crisis in Europe is threatening to become a banking crisis, which is increasingly weighing on the German economy too," the institutes said in a statement.

The forecasts come from six German think-tanks: IWH, Kiel Economics, Ifo, IfW, RWI and ZEW as well as Zurich's KOF and Vienna's IHS.

They attribute the deterioration in their forecasts to a "clear rise in uncertainty", which will "dampen domestic demand".

They are also concerned that economic problems among Germany's trading partners will hit its exports.

Strong exports have allowed Germany to fare better than its European partners in the downturn so far.

Eurozone bailout fund faces key Slovakian vote

Slovakian Prime Minister Iveta Radicova has so far been unable to get her coalition partners to agree a deal

Slovakia faces a key vote later on measures to bolster the powers of the eurozone bailout fund, seen as vital in combating the bloc's debt crisis.

With one coalition party vowing to abstain, the goverment looks set to lose the vote, but may keep trying.

After Malta approved the plans late on Monday, Slovakia is now the last of the eurozone's 17 member states to vote.

Slovakia's prime minister says she will tie the vote to a confidence vote - putting her government at risk.

"I have to say that the coalition partners have failed to reach an agreement," Prime Minister Iveta Radicova said.

The country's future in Europe was at stake, she said.

"It's unacceptable for a prime minister to allow the isolation of Slovakia."

While three of the four parties in the government coalition back the expansion, a fourth, the liberal Freedom and Solidarity (SaS), is holding out.
The SaS has balked at Slovakia - one of the poorest countries in the eurozone - being asked to guarantee 7.7bn euros of the 440bn EFSF.

It demanded a binding agreement that Slovakia would refuse to take part in the European Stabilisation Mechanism - which is meant to replace the EFSF in 2013 - and a veto over future bailout disbursements from the EFSF.

When the government failed to bow to its demands, it said it would abstain from the vote.

That means the vote is likely to be lost, as the socialist opposition has also said it will abstain.

However, parliament can call for a repeat vote. The opposition has indicated it would then back the measures - though it may make its own stringent demands, including new elections.

'Not enough'
To expand the powers of the bailout fund - the European Financial Stability Facility - all member states must agree on the measures proposed in July.

These include expanding the size of the fund to an effective lending capacity of 440bn euros ($600bn; £383bn).

They also include giving it the power to buy eurozone government debt and offer credit lines to member states and to banks.

The irony is that these plans, agreed in July, are now seen as inadequate, says the BBC's Matthew Price in Brussels.

Market analysts suggest the fund needs to be nearer 2 trillion euros to be effective.

Other plans agreed in July, to make private investors take a hit on any default by Greece on its debts, are also now seen as insufficient. Reports suggest leaders are contemplating a 50% cut rather than the 21% cut originally proposed.

Fresh measures
French President Nicolas Sarkozy and German Chancellor Angela Merkel pledged on Sunday to do what it takes to protect European banks from the debt crisis.

The leaders said they were close to a detailed package to ease the crisis and would give further details within weeks.

The pledge helped boost stock markets on Monday, with Wall Street's Dow Jones index rising 3%, albeit on low volumes.

The markets are now expecting more comprehensive measures designed to tackle the crisis once and for all to be announced at a G20 meeting in Cannes at the beginning of November.

Greece payout likely to go ahead

The Greek austerity measures are hugely unpopular and have led to a wave of strikes and protests

International financial inspectors say they have reached agreement with Greece on reforms to put the nation's troubled economy back on track.

"Economic and financial policies" have been agreed between Greece and the troika of bodies which has been mulling if Athens will get any new loans.

The EU, IMF and European Central Bank say Greece is now likely to get 8bn euros ($11bn; £7bn) more bailout cash.
It came as they said Greece's fiscal target for 2011 was not achievable.

"Once the Eurogroup and the IMF's executive board have approved the conclusions of the fifth review, the next tranche of 8bn euros will become available, most likely, in early November," a statement said.

Some 5.8bn euros would come from the euro area member states, and another 2.2bn from the International Monetary Fund.

"The success of the programme continues to depend on mobilising adequate financing from private sector involvement (PSI) and the official sector, " the troika statement continued.

"Ongoing discussions on PSI together with assurances provided by European leaders at their 21 July summit suggest that the programme remains fully financed," it said.

The statement said that, "the fiscal target for 2011 is no longer within reach, partly because of a further drop in GDP, but also because of slippages in the implementation of some of the agreed measures".
However, it added that that 2012's deficit target of 14.9bn euros should be met if there was a "determined implementation" of the government's austerity plan.

Workplace reforms
The inspectors said they believed Athens was committed to its privatisation plan. Ministers hope to raise 35bn euros by the end of 2014.

The troika said the key to achieving that goal was to ensure that the privatisation fund, which supervises the sell-offs, remains independent.

The auditors also praised a decision to end sector-wide collective labour agreements as "a major step forward".

The government wants pay and terms to be negotiated at a company-level rather than across whole industries, as they have been previously. The move should make it easier for managers to sack employees.

Unions oppose the reform. However the inspectors say it will boost growth and prevent unemployment from becoming entrenched.

The news provoked a mixed reaction.

"It doesn't contain any surprises," said Michael Massourakis, chief economist at Athens-based Alpha Bank.

"Most of these things are known. But of course it is encouraging that the troika have concluded that there is reasonable hope that the agreement will get back on track."

Constantine Michalos, president of the Athens Chamber of Commerce and Industry, was more critical.

"We do welcome the fact that the troika is now coming forward with the proposal to advance the sixth tranche of aid in early November," he said.

"However, the mixture of economic policy which is currently being applied to the Greek economy is completely in the wrong direction. It will lead to a further, and even deeper, recession in 2012"

Microsoft Skype deal gets green light in Europe

Skype had previously planned a share flotation

Microsoft's takeover of internet phone service Skype has been approved by European authorities.

The $8.5bn (£5.4bn) deal would not "significantly impede effective competition across the single European market", the European Commission said.

There were "numerous players, including Google" in "this growing market", it added.

Luxembourg-based Skype has more than 650 million global users and is Microsoft's largest single acquisition.

The deal was first announced in May this year.

Internet auction house eBay bought Skype, which was founded in 2003, for $2.6bn in 2006, before selling 70% of it in 2009 for $2bn.

This majority stake was bought by a group of investors led by private equity firms Silver Lake and Andreessen Horowit.

Under the terms of the deal, Skype will now become a new division within Microsoft. Skype chief executive Tony Bates will continue to lead the business, reporting directly to Microsoft boss Steve Ballmer.

Calls to other Skype users are free, while the company charges for those made to both traditional landline phones and mobiles.

US economy adds more jobs than forecast in September

President Barack Obama is struggling to get a massive jobs package through Congress

The US economy added 103,000 jobs in September, ahead of many economists' expectations.

But the jobless rate was stuck at 9.1%, according to latest data from the Department of Labor.

Although the figures were boosted by the return to work of striking workers, the department also revised upwards employment data from August and July.

Last month, President Barack Obama unveiled a $450bn (£282bn) package of spending plans aimed at creating jobs.

The White House said that despite the new jobs, the unemployment rate remained "unacceptably high".

"Clearly, we need faster economic growth to put Americans back to work. Today's report underscores the president's call for Congress to pass the American Jobs Act to put more money in the pockets of working and middle class families," it said in its regular blog.

The private sector accounted for all the job gains, and the figures were boosted by the return of 45,000 Verizon telecoms workers who had been on strike in August.
Excluding those workers, the number of jobs created was still at a higher-than-predicted 58,000.

The aggregate weekly hours being worked also rose, the Labor Department said.

While the jobs report was better than feared, Tom Porcelli, chief US economist at RBC Capital Markets, said it did not suggest the economy was gaining momentum

"It moves you away from the ledge," he said.

The report gave a lift to Wall Street, with the three main share indexes rising in early trading. The main Dow Jones index gained 86 points, or 0.8%, to 11,209.

Improved picture
The US government shed 34,000 jobs in September, and there were large redundancies in local government of teachers and other school employees.

Job gains were seen in construction, retail, temporary help services and health care. There was a fall in the number of jobs in manufacturing for the second straight month.

Previously, data for August had showed the economy added no new jobs, underlying fears that the US was heading back towards recession.

But the revised August figures show a gain of 57,000 jobs. July was revised up to a gain of 127,000 jobs, from 85,000.

Mr Obama's jobs programme proposes funding huge construction projects, schools and services, while giving tax cuts to workers and small businesses to boost recruitment.

However, with Republicans having rejected a proposed tax rise on wealthier people to pay for it, Mr Obama is fighting to get the package through Congress.

UK financial firms downgraded by Moody's rating agency

Shares in Royal Bank of Scotland have opened down following the downgrade

Moody's has downgraded the credit rating of 12 UK financial firms including Lloyds TSB, RBS, Nationwide and Santander UK.

Moody's said it now believed the UK government was less likely to support some firms if they got into trouble.

However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system".

Moody's also downgraded nine Portuguese banks, blaming financial weakness.

Shares in RBS and Lloyds fell sharply at the start of trading, but then recovered. By early morning RBS shares were down 0.25% while Lloyds was 1% lower.

Reassessment
In a statement, Moody's said: "Moody's Investors Service has today downgraded the senior debt and deposit ratings of 12 UK financial institutions and confirmed the ratings of one institution.
"The downgrades have been caused by Moody's reassessment of the support environment in the UK which has resulted in the removal of systemic support for seven smaller institutions and the reduction of systemic support... for five larger, more systemically important financial institutions."

The downgrades include a two-notch cut for government-controlled RBS, and a one-notch cut for Lloyds TSB, a division of part-nationalised Lloyds Banking Group.

Spanish bank Santander had its UK business downgraded by one notch, while Nationwide Building Society suffered a two-notch reduction.

RBS said it was "disappointed" that Moody's announcement did not reflect the "significant progress" the bank had made to restructure it finances.

"We do, however, see the removal of implicit government support for the UK banking sector as being a necessary and important step forward as the sector returns to standalone strength," RBS said in a statement.

Lloyds said that it believed Moody's was reflecting what was already understood in the market, and that it would "have minimal impact on our funding costs".

Nationwide said that Moody's announcement was part of an industry-wide review, and "not a reflection of Nationwide's business model".

The building society said in a statement: "Nationwide remains one of the strongest and best capitalised financial organisations in the UK".

Government steps
The Chancellor, George Osborne, said one reason for the downgrades was that the government was seen to be "trying to deal with the too-big-to-fail problem".

He told the BBC: "One of the reasons they're doing this is because they think the British government is actually moving in the direction of trying to get away from guaranteeing all the largest banks in Britain.

"People ask me how are you going to avoid Britain and the British taxpayer bailing out banks in the future? This government is taking steps to do that.

"Therefore credit rating agencies and others will say, well actually these banks have got to show they can pay their way in the world."

Mr Osborne said he was confident that British banks were well-capitalised. "They are not experiencing the kinds of problems that some of the banks in the eurozone are experiencing at the moment."

Over-reaction?
Moody's split the downgrades into three categories.

Banks with a "high likelihood of support" are RBS and Lloyds.

Banks or building societies with a "moderate or high likelihood of support" are Nationwide, Santander UK, Co-operative Bank, and Clydesdale Bank. Clydesdale's rating was reaffirmed, not cut.

Institutions with a "low or no likelihood of support" included the following building societies: the Newcastle, Norwich & Peterborough, Nottingham, Principality, Skipton, West Bromwich and Yorkshire.

Analysts warned against over-reacting to the downgrades.

Max King, a portfolio manager at Investec Asset Management, said: "People are getting a little paranoid about the UK banking sector.

"It doesn't have the same exposure to sovereign default and devaluation risk as the rest of Europe. It does have exposure to Ireland, but that is a eurozone country which appears to be doing best in the crisis," he said.
And Ralph Silva, banking analyst at SRN, said the downgrades were "an over-reaction", but he added that the government will probably have to provide further support for RBS by the end of the year.

Portugal move
Moody's also cut its rating on nine Portuguese banks.

"The key driver for the downgrades of most banks' debt and deposit ratings is Moody's assessment of the deterioration of their unsupported financial strength," said the ratings agency.

Moody's said it expected a further deterioration of the banks' domestic asset quality due to a weak economic growth outlook and government austerity measures, and liquidity strains due to a lack of access to wholesale funding.

The firm said if recapitalisation and deleveraging plans for the banks were successful they would help to restore confidence in them.

"However, Moody's believes that these plans face significant implementation risks," it said.

Samsung forecasts dip in profits amid falling TV demand

Falling demand and prices of flat-screen TVs have hurt profits at various electronics makers
Samsung Electronics has forecast a dip in profits for the third quarter amid falling demand for flat-screen TVs and computer chips.

Samsung said it expected an operating profit of 4.2tn won ($3.5bn; £2.3bn) a 14% dip from a year earlier.

However, compared to the previous quarter, the projected profit is up 12%.

Analysts said Samsung's handset business had helped offset the falls elsewhere.

"Its telecommunications business is seen very positive as shipments of smartphones and other high-end handsets expanded," said Park Jong-Min of ING Investment Management.

Advantage Samsung?
Analysts said they expected Samsung's handset business to keep growing robustly, not least due to the Apple's decision to upgrade its existing model of iPhone4 with new features and technology, rather than launch a new version.

Apple had been expected to launch an iPhone5 at a media event held earlier this week.

"Given Apple's relatively unchanged new iPhone, Samsung will have the opportunity to eat into Apple's market share with its hardware build-up and growing software power until next year," said Jang In-Beom of Bookook Securities.

Samsung has also been growing its presence in the tablet PC market.

Last month the Korean electronics manufacturer announced that sales of the Samsung GALAXY S II had crossed the 10 million mark, doubling from five million in just eight weeks.

'Major risk'
Despite the optimism about the growth potential of its handset business, analysts said that external factors remain a big threat to the company in the short to medium-term.

There have been concerns that a slowdown in the US coupled with the ongoing debt crisis in Europe may hurt global growth and dent consumer demand.

"The macroeconomic situation will remain a major risk for Samsung in the fourth quarter," said Ahn Seong-Ho of Hanwha Securities.

At the same time, there are fears that volatility in the currency markets may also have a bearing on its earnings.

The Korean won has fallen as much as 10% against the US dollar since the start of July.

A weaker won makes Korean goods cheaper for foreign buyers.

"The weakening won may have inflated third-quarter profits," said Kim Young-Chan of Shinhan Investment Corp.

However, Mr Kim added the exchange rate remained a threat to Samsung as any recovery in the won would have a counter effect.

Italy credit rating slashed by Moody's from Aa2 to A2

The Italian Prime Minister said he had been expecting the announcement from Moody's

The Italian government's credit rating has been slashed by Moody's from Aa2 to A2 with a negative outlook.

The ratings agency blamed a "material increase in long-term funding risks for the euro area", due to lost confidence in eurozone government debts.

Despite Rome's low current borrowing needs, and low private-sector debt levels in Italy, Moody's said market sentiment had turned against the euro.

Prime Minister Silvio Berlusconi said the decision was expected.

"The Italian government is working with the maximum commitment to achieve its budget objectives," said Mr Berlusconi.

He said that a plan to balance the government's budget by 2013 had been approved by the European Commission.

Sell-off

The initial market reaction to the downgrade was muted.

The news broke half an hour after the close of trading on the New York Stock Exchange.

But after-hours trading in stock market futures suggested that at least one percentage point of a late 4% market rally may have been wiped off.

The euro meanwhile immediately dropped 0.5% against the dollar on the news.
Analysts say the downgrade is likely to be followed by similar cuts in the credit rating of Italy's banks, which would put severe pressure on their ability to borrow.

"This downgrade will make it even harder for Italy to borrow," says BBC business editor Robert Peston. "However, that is not the worst of it.

"If Italy is looking like a more risky place to lend, its banks... will find it harder and more expensive to borrow. The [eurozone] banking crisis will be exacerbated."

Slow response
The rationale for Moody's downgrade will also be worrying for other eurozone governments, such as Spain, whose borrowing costs have also risen like Italy's as markets have lost confidence in their creditworthiness.

Moody's also raised warnings about Italy's growth outlook, citing structural economic problems in Italy, as well as the global economic slowdown.

Another problem noted by the rating agency was what it called political and economic "implementation risks".

"The question is, if [eurozone governments] will move fast enough... to really put in place a credible solution," says Robert Peston.
An expansion of the eurozone's bailout fund already approved by the euro's 17 governments in July - which is now seen by markets as inadequate - has still yet to be ratified by all the national parliaments.

The slow political response to the emerging crisis, necessitated by the European Union's institutional set-up, has been criticised by many commentators, including European Commission President Jose Manuel Barroso.

In hock
However the key issue for Moody's was the change in the market's attitude towards eurozone government debts.

The Italian government has for several years earned more in tax revenues than it spends. However, the government also has a large outstanding debt - equivalent to nearly 120% of GDP.

The government relies heavily on the markets' willingness to relend these debts as they come due, and to lend it the cost of meeting its interest payments.

Moody's said that Italy could be further downgraded to "substantially lower rating levels" if a further deterioration in investor sentiment made it even harder for the country to raise cash from the markets.

Italy's cost of borrowing rose sharply over the summer on market fears that a slowdown in Italian growth could make existing debts unsustainable.

That prompted the European Central Bank to intervene by buying up Italy's debts - a controversial policy in Germany. But despite the ECB's action, Italian borrowing costs have begun to creep up again in recent weeks.

Premier League games can be shown on foreign decoders

Karen Murphy: "I'm glad I took it on even though it's taken up quite a chunk of my life"

A pub landlady has won the latest stage of her fight to air Premier League games using a foreign TV decoder.

Karen Murphy had to pay nearly £8,000 in fines and costs for using a cheaper Greek decoder in her Portsmouth pub to bypass controls over match screening.

But she took her case to the European Court of Justice.

The ECJ now says national laws which prohibit the import, sale or use of foreign decoder cards are contrary to the freedom to provide services.

The decision could trigger a major shake-up for the Premier League and its current exclusive agreements with Sky Sports and ESPN, and pave the way to cheaper viewing of foreign broadcasts for fans of top-flight English games.

However, whereas this opens up opportunities for individuals to watch overseas broadcasts at home, it remains unclear whether in future games can be shown in pubs using foreign decoders and broadcasts, as the ruling also threw up a number of copyright issues.

'Relief'
The ECJ said national legislation, which banned the use of overseas decoders, could not "be justified either in light of the objective of protecting intellectual property rights or by the objective of encouraging the public to attend football stadiums".

"I'm relieved, very relieved," Mrs Murphy told BBC Radio 5 live.

"It has been a rollercoaster, highs and lows, nerves... It has been a strange time and I am glad it is coming to an end."
She added: "I feel I have taken on the Premier League and Sky."

Karen Murphy used the Greek firm Nova to show Premier League games

Mrs Murphy said she no longer had a decoder box in her Red, White and Blue pub and would wait for the "stamp of approval" from the High Court before reinstating it.

The ECJ findings will now go to the High Court in London, which had sent the matter to the ECJ for guidance, for a final ruling.

However, it is unusual for a member state High Court to pass a different judgement from one provided by the ECJ.

'Contingency plans'
"In practical terms, the Premier League will now have to decide how it wishes to re-tender its rights," said sports media lawyer Daniel Geey of Field Fisher Waterhouse solicitors.

"There can be little doubt it will have contingency plans ready to go and has various options available.

"Be it a pan-EU tender, selling in only certain EU member states or devising a plan to start its own channel, they will be deciding how best to maximise the value of their product to ensure any revenue shortfall is minimised."

The judges said the Premier League could not claim copyright over Premier League matches as they could not considered to be an author's own "intellectual creation" and, therefore, to be "works" for the purposes of EU copyright law.

Copyright issues
However, the ECJ did add that while live matches were not protected by copyright, any surrounding media, such as any opening video sequence, the Premier League anthem, pre-recorded films showing highlights of recent Premier League matches and various graphics, were "works" protected by copyright.

To use any of these extra parts associated of a broadcast, a pub would need the permission of the Premier League.
It remains to be seen whether pubs could broadcast match action without using any of these Premier League "extras", such as just broadcasting from kick-off only and therefore avoid breaching the league's copyright.

By ensuring that its branding was on screen all the time, or including in-match graphics, the league may be able to claim pubs were in breach of this ECJ ruling on copyright.

"It's not a decision that the Premier League or its clubs wanted," Wolves chief executive Jez Moxey told BBC Radio WM after the ECJ ruling was made.

"The Premier League have been aware of the situation and the possibility of the judgement going against them for some time now and have been assessing how it will sell TV rights going forward.

"Football has shown itself to be a resilient business."

He said the Premier's League's financial model had been challenged by the ECJ ruling, and any future sales would need to take the court's decision into account.

The way games featuring PL teams such as Wolves and Newcastle are broadcast could be set to change

'Confused picture'
"On the face of it, it looks like a blow for the Premier League and... broadcasters Sky and ESPN," said BBC sport editor David Bond.

But he said the Premier League had faced many regulatory challenges in the past and would find ways to get round the new situation.

"The League insists the ruling is not clear cut, pointing to a part of the judgment which appears to offer them copyright protection and requiring pubs to seek their permission if they wish to use foreign decoders," added our correspondent.

"It is a confused picture and it is now up to the High Court to try and interpret the judgment. Whatever happens the league is confident it is not about to suffer a major loss in TV income."

Sky has pumped billions into top flight English football since the league was founded in 1992, with the money given to clubs allowing them to buy some of the top names in the world.

The Premier League's television income from mainland Europe is about £130m, less than 10% of their total £1.4bn overseas rights deal.

'Inflated prices'
However, the court decision could have a significant repercussions for other rights holders outside of sport, with life potentially getting more difficult for the film industry, which also sells its product on an country-by-country basis.

Smithfield Partners is a law firm which represents David Richardson of QC Leisure (a digital box supplier), and SR Leisure Limited (a publican), all of whom were defendants to a civil action brought by the Premier League.

"We consider this ruling to be a significant step in creating fair competition across the internal market, reducing artificially inflated prices which vary across member states," said the firm's Martin Ochs.

"It also provides some clarity in relation to the rights of businesses within the EU to broadcast live football. In fact this decision is likely to have far reaching implications beyond that of football."

Satellite signals
The legal battle kicked off six years ago, when Ms Murphy was taken to court for using the Nova firm to show matches at the Red, White and Blue pub.

Using the Greek service, she had paid £118 a month, rather than £480 a month with the official broadcaster.

Licensed broadcasters encrypt satellite signals, with subscribers needing a decoder card to access them.

Mrs Murphy took advantage of an offer to UK pubs to use imported cards.

In February, an ECJ advocate general said this was in line with the aims of the EU single market - a border-free zone for goods and services.

The Premier League has already taken action against two suppliers of foreign satellite equipment and a group of pub landlords who used imported decoding equipment to show English Premier League games and avoided the commercial premises subscription fees for Sky.

Japan's big manufacturers expect conditions to improve

Japanese carmakers have seen their production levels return to pre-quake levels

Japan's big manufacturers expect conditions to improve in the next three months, according to the Bank of Japan's Tankan survey.

The business sentiment index stood at plus two for September, up from minus nine in June, the survey showed.

Confidence was badly damaged by the March 11 earthquake, but factory output is now increasing as supply chains are restored and infrastructure rebuilt.

The survey is keenly watched and influences Japan's monetary policy.

"Manufacturers are planning a sizeable output expansion in the next few months, so we expect conditions to improve even further," Takuji Okubo of Societe Generale told the BBC.

External risks
However, despite the optimism, big firms in Japan revised down their plans for capital expenditure.

According to the survey, large businesses plan to increase capital expenditure for the current financial year by 3%, down from an earlier projection of 4.2%.
Analysts said that while things have started to improve in Japan, external factors continue to dampen spirits.

There have been concerns that the ongoing debt crisis in Europe may hurt growth in the region. At the same time, economic problems in the US have raised fears of the world's biggest economy slipping into a recession.

"The biggest concerns are external, not internal, such as the impact of Europe's debt problems on global growth," said Yutaka Shikari of Mitsubhishi UFJ Morgan Stanley Securities.

There are fears that if growth in these regions slows, it would have an impact on consumer spending and hurt demand for Japanese exports.

Analysts said that until a long-term sustainable solution was found to these issues, they are likely to impact the expansion plans of Japanese companies.

"The uncertainty over what is going to happen over the next few months seems to be hurting sentiment," Societe Generale's Mr Okubo added.

Yen factor
The uncertainty surrounding the global economic outlook has also has a big impact on the Japanese currency. Investors have been flocking to the yen, considered as a safe-haven asset in times of economic turmoil.

That has seen the Japanese currency strengthen by as much as 8% against the US dollar in the past 12 months.

It does not bode well for the Japan's export-dependent manufacturers. A strong yen not only makes their goods more expensive but also hurts profits of companies when they repatriate their foreign earnings back home.

"If you look carefully, you can see the heavy burden of a higher yen, and their profits are under pressure," said Hideo Kumano of Daiichi Life Research Institute.

According to the Tankan survey, large manufacturers said they based their business plans on the yen averaging 81.15 against the US dollar for the current financial year. It was trading close to 77 yen against the US dollar in Asia trade on Monday.

The Japanese authorities have already intervened in the currency markets this year. Last week, the Finance Ministry said it was ready to act again and could spend another 15tn yen ($196bn; £125bn) to stabilise the currency.

Philippine immigrant maid wins landmark Hong Kong case

Evangeline Banao Vallejos' lawyer, Mark Daly: "It's a good win for the rule of law"

Hong Kong's High Court has ruled that a domestic helper from the Philippines should be allowed to apply for permanent residency in the city.

The case was brought by Evangeline Banao Vallejos, who has lived in Hong Kong since 1986.

The ruling follows a landmark judicial review and could lead to more than 100,000 other foreign maids winning rights to residency.

The government has said that it will appeal against the ruling.

The case has sparked widespread debate on equal treatment for foreign maids.

Mark Daly, the lawyer acting on behalf of Ms Vallejos, said that she was very pleased by the ruling.

"When we told her she said 'thank God'," he said, adding that it was a normal working day for her.

"It's a good day for the rule of law," he added.

Hong Kong's Secretary for Security, Ambrose Lee, said that the government would not process or approve right-of-abode applications for domestic workers while it appealed against the ruling.

"The government respects but is disappointed with the ruling," he said.

Public resources

Some critics have said granting residency to domestic helpers would strain the provision of health care, education and public housing.

While other foreign nationals can obtain residency after working in Hong Kong for seven years, immigration rules exclude domestic helpers from seeking permanent residency.

Human rights lawyers and many domestic helpers argue that this is discriminatory.

Permanent residency means that a person can remain in Hong Kong indefinitely, vote and stand in elections.

But some politicians and commentators warned that allowing foreign domestic helpers to have permanent residency would allow them to bring their children and other relatives to the city, who would require education and housing.

Equal treatment

Norman Carnay, programme officer at the Mission for Migrant Workers said that he welcomed the decision.
"We hope it will pave the way for Hong Kong to open its doors to equal treatment for migrant workers," he said.

But he added that right of abode was not necessarily a priority for many domestic helpers.

"From surveys of our community, the more pressing concerns are wages and working conditions," he said.

There are around 300,000 foreign domestic helpers in Hong Kong, mainly from Indonesia and the Philippines. It is thought that around 120,000 have lived here for more than seven years.

They are required to live with their employers and cannot accept other jobs.

Without the right to permanent residency, if a maid is dismissed by her employer, she must find another job as a domestic helper or leave Hong Kong within two weeks.

Hong Kong's domestic workers have a guaranteed minimum wage of 3,740 Hong Kong dollars ($480; £308) a month and day off each week, meaning their working conditions are better than other countries in Asia with large numbers of domestic helpers, such as Singapore.
The case has divided opinion in Hong Kong

Greece prime minister makes plea for German support

Greek Prime Minister George Papandreou has delivered an impassioned plea to German business leaders to help his country out of its current debt crisis.

Mr Papandreou said German funding would not be an investment in past failures, but in future successes.

He also hailed Greece's "superhuman" efforts to cut its debt levels.

The prime minister is in Germany for talks with German Chancellor Angela Merkel to discuss his country's progress in cutting its budget deficit.

Mr Papandreou said the current debt crisis provided a "unique opportunity to launch important reforms that Greece badly needs to become competitive again".

Drawing parallels with the reunification of Germany, he talked of the "rebirth of a nation".

"Your contribution can be crucial," he told the assembled businessmen and women.

Mr Papandreou said that in 2010 Greece had overseen the "largest fiscal consolidation in a single year [of any eurozone member]" in reducing its budget deficit by five percentage points.
By 2012, he said, the country would see a budget surplus.

The public sector in Greece had been a "major obstacle to growth, but very soon that won't be the case... we will fight our way back to growth and prosperity", he added.

Mrs Merkel responded by saying that "we respect what Greece has done in terms of structural changes. We all wish to strengthen Greece".

Mr Papandreou's visit to Germany comes as policymakers decide whether to release the latest tranche of Greek bailout funds.

The European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) are due in Athens this week to review Greece's progress in cutting its debt levels.

Together, they will decide on whether to release the latest tranche of bailout funds the Greek government needs to pay its bills.

Ahead of the visit, Greek Finance Minister Evangelos Venizelos said that his country would receive the funds next month.

More importantly, Mr Papandreou has an eye on a key vote in Germany later this week on whether to expand the powers of the eurozone bailout fund. There is a good deal of opposition in Germany to what many people there see as underwriting the entire bloc.

'Wrong idea'
Mrs Merkel, speaking to the same business leaders, said further stimulus packages were not the answer to the current debt crisis.
"We need to combine economic growth with solid public finances," the chancellor said.

"The idea that you need to boost growth by taking on ever greater debt is the wrong idea. I am deeply convinced of that."

She also dismissed the idea of issuing bonds backed by all 17 members of the eurozone - so-called eurobonds - because their adoption would result in what she called a union of debt.

European leaders are trying to agree a comprehensive package to solve the eurozone debt crisis once and for all.

However, divisions remain between member states on how best to do so.

G20 leaders met over the weekend to discuss the best way forward, but EU officials stressed that no grand plan of action had been agreed.

A number of ideas were reportedly discussed, including a 50% write-down of Greece's government debts.

Other proposals included strengthening big European banks that could be hit by any defaults on national debt obligations, and boosting the size of the eurozone bailout fund.

However, late on Monday German Finance Minister Wolfgang Schaeuble cast doubt on plans to bolster the European Financial Stability Facility (EFSF).

"We are giving it the tools so it can work if necessary," he said.

"Then we will use it effectively, but we do not have the intention of boosting its volume."

On Thursday, Germany will vote on whether to approve proposals set out in July to extend the powers of the EFSF that would allow it to buy the bonds of highly-indebted countries, and to make credit available to both governments and under-capitalised banks.

'Brutal selling'
Despite Mr Schaeuble's comments, European and Asian shares rallied strongly on hopes that leaders were finally poised to act decisively.

Germany's Dax and France's Cac 40 indexes were up about 4% in early afternoon trading, while the UK's FTSE 100 was 3% higher.

Japan's Nikkei index closed up 2.8%, Hong Kong's Hang Seng rose 4.2% and South Korea's Kospi climbed 5%.

However, analysts warned the gains could be short lived.

"We've experienced these types of temporary rebounds many times before, with markets coming up for air after days of brutal selling," said Kazuhiro Takahashi at Daiwa Securities.

"Again, this will likely be a short break before we see more evidence of progress in the Greek debt crisis," he said.

Markets have been extremely volatile in recent weeks as investors worry that the debt crisis may spiral out of control. They have been critical of policymakers' inability to take decisive action thus far.

On Monday, President Barack Obama also warned of the far-reaching impact of the crisis.

"[Europe] never fully dealt with all the challenges that their banking system faced... So they're now going through a financial crisis that is scaring the world," he said.

"It's now being compounded by what's happening in Greece."

Kodak shares drop by 25% after cash call raises concern

Kodak is one of the best-known and most iconic brands in photography

Eastman Kodak shares fell 25% on Monday after the company announced plans to borrow $160m (£103m) for "general corporate purposes".

Analysts said they wanted more details about how the cash would be used and the company's cash-flow situation.

Kodak, synonymous with film photography for more than one hundred years, has struggled to adapt to the digital age and has not made a profit since 2007.

Shares in Kodak have fallen by 66% so far this year.

In 1997 Kodak's shares traded at $90. On Monday, they closed 64 cents lower at $1.74.

The company has spent millions of dollars investing in its business, and there is concern amongst investors that Kodak needs the new money to help run its operations.

Kodak will get the $160m by accessing a credit line that gives it the right to borrow as much as $400m.

Survival strategy
Kodak looked to play down the fears over its cash flow, pointing to the fact that it had $957 in cash on its books at the end of June.

According to the Reuters news agency, Kodak spokesman Christopher Veronda declined to say how much cash the company currently had.

However, he added that "we certainly have not consumed $957 million in cash since June 30".

Chris Green, a technology analyst with the Davies Murphy Group, said Kodak was in danger of becoming obsolete in the digital age.

"Unless they can keep pace they won't survive," Chris Green told the BBC.

In an effort to diversify, Kodak has been trying to make a name for itself in the digital printing market but the competition has been tough against more established names including Canon and Hewlett-Packard.

One possible lifeline for Kodak is the sale of some of its patents.

"They have a fantastic base of patents particularly with regard to digital photography," says Chris Green. "Going forward this could be their future as a patent house."

Kodak announced the sale of 10% of its patent portfolio back in July.

Greek finance minister: 'Whatever it takes'

Greek finance minister Evangelos Venizelos said Sunday that his country "wants to make it and will make it."

WASHINGTON D.C. (CNNMoney) -- Speaking in Washington at an international banking conference, Evangelos Venizelos said Sunday that his country will do "whatever it takes" to meet its financial obligations.
"Greece wants to make it and will make it," Venizelos told members of the Institute of International Finance. "We are ready to take the necessary initiatives, at any political cost."

But the cost is "very expensive," he added, saying that Greece should not be a "scapegoat" for the broader sovereign debt problems in Europe.
Greece has been struggling to dig itself out a deep hole for well over a year, with limited success. The government in Athens came to the brink of default last year, and again in July, before being rescued by other European nations and the International Monetary Fund.
While then nation's debt load is nearly twice the size of its economic output, Venizelos said Greece makes up a tiny fraction of the overall debt burden of the overall euro-zone.

Geithner sounds alarm on Europe
"Greece is not the euro area's central problem," he said.
Venizelos pointed to the painful reforms Greece has undertaken to cut government expenses and raise taxes, including a series of public sector layoffs and pension reductions announced last week.
"We, more than anyone else, believe that these changes are absolutely necessary for our nation's future," he said.
The unpopular belt-tightening has put Greece on track to achieve a primary budget surplus by the second half of 2012, according to Venizelos.
But he warned that such austere measures have taken a toll on the Greek economy, which has been in recession for three years.
While the government in Athens remains committed to reforms, Venizelos argued that the nation's "sacrifices" should be matched by support from other euro area nations.
Greece has been in intense negotiations over the last few weeks with representatives from the IMF, European Commission and European Central Bank. The talks have centered on certain fiscal targets Greece needs to achieve in order to obtain the next installment of last year's 110 billion euro bailout package.
Investors around the world have been rattled by the possibility that Greece could default if it does not receive the 8 billion euro installment. The larger fear is that a default by Greece could drag down other euro area nations and cause a banking crisis.
Venizelos stressed the need to send a "safe and stable message" to investors in order to break the vicious cycle of "noise and rumors" about a Greek default.

Euro crisis: three perspectives
"We must convince the market that the euro area can protect itself and its members," he said.
Meanwhile, finance officials from around the world were wrapping up a weekend summit across town at the headquarters of the IMF and World Bank.

The euro area crisis was the main topic of conversation, but the meeting failed to produce the concrete actions that many outside observers had been hoping for.

European leaders pledged to implement a series of reforms announced in July, including a proposed overhaul of the European Financial Stability Facility. The goal is to empower the fund to buy sovereign debt directly from investors and provide lines of credit to shore up weak banks.

The talks also covered ways to enhance the effectiveness of the 440 billion euro stability fund, which many analysts say is too small.

But the proposed overhaul of the stability fund, along with a second 109 billion euro bailout for Greece, must be approved by the individual governments of all 17 euro area nations.
EU officials have said they plan to implement the reforms by mid October. But many analysts say that is far from certain