Sensex down 151 points in opening trade on profit-booking

MUMBAI: The BSE benchmark Sensex fell by over 151 points in opening trade on Friday as participants booked gains recorded in the previous session amid a weakening trend on other Asian bourses.

The 30-share Sensex, which closed 158.52 points higher in the previous session, fell by 151.47 points, or 0.95 per cent, to 15,707.02 in opening trade today.

In a similar fashion, the wide-based National Stock Exchange Nifty Index shed 46.75 points, or 0.98 per cent, to 4,709.70.

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Kingfisher Airlines cannot fly heavily loss-making routes: Vijay Mallya

MUMBAI: Cash-strapped Kingfisher Airlines, which has cancelled scores of flights in recent weeks, cannot afford to fly heavily loss-making routes, its chairman said on Tuesday.
"We cannot, as a private company, fly routes that are heavily loss-making," Vijay Mallya told reporters.
Mallya said, "Kingfisher Airlines is flying in tough environment conditions."

"Kingfisher has statred reconfiguration and it (reconfiguration) will give us incremental revenue generation opportunities," he said.
Mallya also clarified that Kingfisher Airlines has not been formally asked by banks to bring in fresh equity.
The airline's chairman said they were planning to directly import jet fuel to cut costs.

"We have applied officially to the ministry of commerce for direct import of fuel, and if we import fuel directly for our own use we become an actual user, and therefore, we don't pay sales tax," Mallya said addressing a press conference here.

Mallya said the fuel costs account for over 50 percent of the operating cost, which gets increased due to the sales tax charged by various state governments.

Mallya further said the airline has managed to reduce its dues to the three state-run Oil Marketing Companies (OMCs).

"We have fully repaid IOC ( Indian Oil Corporation) and BPCL (Bharat Petroleum Corporation Limited). As far as HPCL ( Hindustan Petroleum Corporation Ltd) is concerned, from over Rs 600 crore of unsecured credit... we have given bank guarantees and our outstanding to them is now down to Rs 40 crores."
Meanwhile, Chief Executive Officer Sanjay Aggarwal told reporters that the airline expects to join the OneWorld airline alliance in the first quarter of next year.

OneWorld alliance members, which include Cathay Pacific , American Airlines and British Airways Plc, often use partners' routes and flights to shore up their own networks.
Earlier on Tuesday, Kingfisher Airlines reported a doubling of its loss in the fiscal second quarter on higher fuel prices and operating costs, amid investor worries about its future, and said its net worth has been eroded, Reuters reported.
The carrier has become one of the main casualties of high fuel costs and a fierce price war between a handful of airlines which, between them, have ordered hundreds of aircraft for delivery over the next decade in an ambitious bet on the future.

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US is fed up with China: Obama

HONOLULU: President Barack Obama served notice on Sunday that the United States was fed up with China's trade and currency practices as he turned up the heat on America's biggest economic rival.

"Enough's enough," Obama said bluntly at a closing news conference of the Asia-Pacific Economic Cooperation summit where he scored a significant breakthrough in his push to create a pan-Pacific free trade zone and promote green technologies.

Using some of his toughest language yet against China, Obama, a day after face-to-face talks with President Hu Jintao, demanded that China stop "gaming" the international system and create a level playing field for US and other foreign businesses. 

"We're going to continue to be firm that China operate by the same rules as everyone else," Obama told reporters after hosting the 21-nation APEC summit in his native Honolulu. "We don't want them taking advantage of the United States." China shot back that it refused to abide by international economic rules that it had no part in writing. "First we have to know whose rules we are talking about," Pang Sen, a deputy director-general at China's Foreign Ministry said. agencies

"If the rules are made collectively through agreement and China is a part of it, then China will abide by them. If rules are decided by one or even several countries, China does not have the obligation to abide by that."

Even as Obama issued the veiled threat of further punitive action against China, it was unclear how much of his tough rhetoric was, at least in part, political posturing aimed at economically weary US voters who will decide next November whether to give him a second term.

Obama insisted that China allow its currency to rise faster in value, saying it was being kept artificially low and was

hurting American companies and jobs. He said China, which often presents itself as a developing country, is now "grown up" and should act that way in global economic affairs.

The sharp words between the US and China contrasted with the unified front that Asia-Pacific leaders sought to present with a pledge to bolster their economies and lower trade barriers in an effort to shield against the fallout from Europe's debt crisis.

The members of APEC, which accounts for more than half of the world's economic output, said they had agreed on ways to counter "significant downside risks" to the world economy.  

That followed an appeal by Obama, seeking to reassert US leadership to counter China's growing influence around the Pacific Rim, for a commitment to expand trade opportunities as an antidote to Europe's fiscal woes.

International Monetary Fund chief Christine Lagarde, in Honolulu to consult with APEC leaders, said the euro zone upheaval risked sweeping the world economy into a "downward spiral" that all countries had a stake in resolving the crisis.

TRADE LIBERALIZATION PROMISED

APEC said in a final communique: "We recognize that further trade liberalization is essential to achieving a sustainable global recovery in the aftermath of the global recession of 2008-2009."

The communique also expressed a firm resolve "to support the strong, sustained and balanced growth of the regional and global economy" -- a clear reference to US concerns about a huge trade deficit with China's export-driven economy, fiscal problems in developed nations and the low savings rate in the United States.

In another bow to US pressure, APEC committed to reducing tariffs on environmental goods and services to 5 percent as a way to promote green technology trade, overcoming China's resistance to the idea.

Differences persist among APEC members -- a point hammered home by US-China tensions -- and the question remains how far leaders will be able to go in turning promises into action. Many, Obama included, will face resistance to opening markets further to foreign competition.

Obama's public denunciation of China's policies came as he faces pressure at home, from Republican presidential contenders as well as fellow Democrats, for a tougher line on Beijing. But US leverage is limited, not least because Beijing is America's largest foreign creditor.

Though Obama acknowledged a "slight improvement" in the value of China's yuan, he insisted it was not enough.

The United States has long complained that China keeps its currency artificially weak to give its exporters an advantage. China counters that the yuan should rise only gradually to avoid harming the economy and driving up unemployment, which would hurt global growth.

Hu was quoted by Chinanews.com in Beijing on Sunday as saying a big appreciation in the yuan against the dollar would not help US trade and unemployment problems.

The yuan inched up against the dollar. Dealers said Hu's comments in Honolulu indicated that China had no intention of letting the currency rise faster in the near term.

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Anglo American to buy Oppenheimers out of De Beers

(Reuters) - Global miner Anglo American is set to take control of De Beers, buying out South Africa's Oppenheimer family in a $5.1 billion (3.1 billion pound) deal that ends the dynasty's direct links to the diamond business after almost a century.

Anglo has long been eying a deal to increase its 45 percent stake in unlisted De Beers -- which vies with Russia's Alrosa for the title of the world's largest diamond producer -- but Friday's announcement caught the market by surprise and sent the miner's shares up almost 4 percent.

The Oppenheimers have resisted Anglo's approaches for years and held on to their 40 percent stake even through the aftermath of the 2008 crisis which left shareholders forced to inject cash into De Beers as the luxury market tumbled.

It was unclear what prompted the family to change its mind, but the Oppenheimers indicated the decision to agree to Anglo's latest overture had taken into account a number of factors, including the need to diversify their investments.

James Teeger, managing director of E. Oppenheimer & Son, the family holding company, said the decision had been "momentous" and hinged on price -- long a point of difference between Anglo and the South African family.

"After a long deliberation which took many factors into account, one of which obviously is diversification, the family decided to unanimously accept the offer," he said.

Anglo's motivation is a bigger share of De Beers in a booming market, as China and India turn to diamond jewellery even in the face of an uncertain economic outlook. A 10-year supply deal with producing country Botswana in September proved a key catalyst, prompting Chairman John Parker to again approach the Oppenheimer family.

Sources familiar with the negotiations said the talks had been "difficult" for the Oppenheimers, but the time was felt to be right.

"They are tied up in one asset and we are currently in a very volatile environment," said one of the sources. "Anglo, of course, will look to the longer term."

Nicky Oppenheimer, grandson of the dynasty's founder, is currently De Beers chairman, and will remain in place at least until the deal closes in the second half of 2012. The family also owns a direct stake of just over 2 percent in Anglo and has no plans to sell, Teeger said.

The family has yet to decide how it will redeploy the cash, but a "substantial" portion will be invested in Africa.

SPARKLING PRICE?

Anglo American Chief Executive Cynthia Carroll, who said the company had been working on the acquisition "for years," said the long-term fundamentals for the diamond industry had prompted the deal. Improved security of supply, underlined by the agreement with Botswana signed in September, were another factor.

By 2015, China, India and the Gulf could overtake the United States as top diamond consumers, opening a huge market, and one increasingly suited to corporations, instead of the families and individuals whose links once dominated the diamond trade.

"In China, only 15 years ago, there was virtually no culture of the diamond engagement rings," Carroll told reporters. "Today more than half the brides in Beijing and Shanghai receive diamond engagement rings."

De Beers posted a 55 percent jump in first-half earnings in July on the back of record sales and an unprecedented jump in prices, driven by China, India and the United States, still the world's largest consumer of diamond jewellery.

Analysts and investors said the deal was a good one for Anglo at a valuation of around 6 times 2011 EBITDA, which is in line with far smaller, listed diamond producers like Petra Diamonds. Shares in Anglo were up 0.6 percent at 23.41 pounds in late trade, outperforming a flat sector index.

"It looks like they got it at a good price," said Peter Major, analyst at Cadiz Corporate Solutions in Cape Town.

"De Beers doesn't have the control over the market it used to, but it is still the biggest player and it's got a 120-year history in the business."

Founded by British entrepreneur and adventurer Cecil Rhodes in the 19th century, De Beers controls about 40 percent of the world's rough diamond supply.

Analysts at Liberum said they estimated the cash acquisition, which will not require new financing, would be 7.5-8.0 percent EPS accretive for Anglo over the next 3 years.

"We think this deal will be taken positively. Shareholders have been clamouring in recent years for Anglo to either increase its stake in De Beers or to IPO its stake," they said.

Carroll said a listing was not currently on the cards.

She also dismissed speculation the move was linked to a decision by Chile's state-owned copper producer Codelco to exercise an option to buy 49 percent of Anglo's assets in the country's south. Codelco said last month it had secured a $6.75 billion bridging loan to buy the stake.

Anglo American said it had reached a deal with the CHL Group, which represents the Oppenheimer family interest, but added Botswana, which currently holds 15 percent of De Beers, had a pro-rata pre-emption right over the CHL shares, potentially lifting the country's ownership to 25 percent.

Botswana, the world's top diamond producing country, is currently considering its position.

Anglo has been a shareholder in De Beers for over eight decades and has been the company's largest shareholder since De Beers became a private company in 2001.

UBS and Nomura were advisers to Anglo-American on the deal.

(Additional reporting by David Dolan and Marius Bosch in Johannesburg and David Brough in London; Editing by Hans-Juergen Peters and Andrew Callus)

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Reporting by Annika Breidthardt; Editing by Susan Fenton

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(Reuters) - German Chancellor Angela Merkel said on Saturday it would take a decade before the euro zone was in a better position and there was much work left to be done to solve the bloc's sovereign debt crisis.

"(It will) certainly take a decade until we are in a better position again," Merkel said in her weekly podcast. "We have a whole chunk of work ahead of us, I've got to say."

Merkel spoke a day after the euro zone failed to secure new money at a G20 summit from potential investors such as China and Brazil for its efforts to overcome the debt crisis.

Uncertainty about efforts to tackle the crisis persisted on Saturday. Greek Prime Minister George Papandreou, who survived a confidence vote on Friday but is expected to step down, said negotiations to form a coalition government would start soon.

He called for a broad-based government to secure a bailout from the euro zone, the main weapon in Europe's battle against the spreading economic crisis.

Merkel said all of Europe had overspent for years but welcomed that all euro zone members had agreed to a debt brake like Germany's.

"Almost all European countries have spent more over the years than they earned," she said.

(Reporting by Annika Breidthardt; Editing by Susan Fenton)

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Ireland's $17 billion austerity plan to woo investors

(Reuters) - Ireland will target 12.4 billion euros (10 billion pounds) in austerity measures over the next four years, further tightening the screws on its recession-weary people as it seeks to cement its transformation from European basket case to recovery story.

Prime Minister Enda Kenny needs to drastically squeeze the budget deficit if he is to extract Ireland from a humiliating EU-IMF bailout and return to debt markets in 2013.

Some analysts, however, are sceptical Kenny can pull it off, given the global uncertainty and its impact on growth. They believe Ireland will continue to be supported by European partners when the current rescue programme runs out in 2013.

"We are doing well, we are doing our job and ticking the boxes but that is all we can do," said Brian Devine, chief economist at NCB Stockbrokers. "I think the government's growth figures are too optimistic. At the moment I can't see how Ireland can get back into the market."

A worsening growth outlook means the government will have to target austerity measures totalling 3.8 billion euros next year, higher than the 3.6 billion euros initially pledged, with nearly 60 percent of the adjustment weighted on the spending side.

"These cuts are real. One person's cut is another person's public service. we are not making light of this," Finance Minister Noonan told a news conference on Friday.

"We are asking the people to stay with us because we have a clear programme for getting the country out of the difficulty it is in."

Dublin now expects gross domestic product to expand by 1.6 percent next year, compared with its earlier forecast of 2.5 percent previously. Its revision puts it broadly in line with the latest forecast from the IMF of 1.5 percent and the median estimate from 10 economists polled by Reuters of 1.5 percent.

It sees GDP growth averaging around 2.8 percent from 2013 to 2015 compared to 3 percent previously. Ireland needs medium term growth of around 2.5 percent to ensure its debt is sustainable.

But the outlook is finely balanced. The finance ministry has warned a cut in nominal GDP growth of 1 percent in 2012-2015 could see its debt-to-GDP ratio climb to 122 percent in 2013, a level that would likely prevent a return to debt markets.

EYE-POPPING

A property crash and bank sector meltdown tipped Ireland into severe recession and left it with the worst deficit in the industrialised world, jumping to an eye-popping 32 percent of GDP in 2010 due to the cost of rescuing its banks.

As part of an 85 billion euros EU-IMF bailout, Dublin has promised to get its deficit to under 3 percent of GDP, an EU limit, by 2015. It is only midway through an eight-year cycle of austerity running through 2015.

Noonan, whose government was swept to power in March, will present his first crunch budget on December 6.

The government is adamant it will avoid Greek-style debt restructuring. But Noonan said on Friday he would see if there were other ways to cut the Irish debt burden, possibly through getting Europe's rescue fund to take an equity stake in Allied Irish Banks (ALBK.I).

When Ireland agreed its EU-IMF bailout in November 2010 it set out a 15 billion euros adjustment plan for 2011 to 2014. But the worsening global picture, exacerbated by a rapidly unravelling Greek crisis, means Noonan has to squeeze more over a longer period.

For 2013, for example, he is targeting a fiscal adjustment of 3.5 billion euros compared to 3.1 billion euros in the original bailout deal.

So far, Ireland's fiscal plans are on track and despite pushing through nearly 21 billion euros in spending cuts and tax increases, equivalent to more than 13 percent of GDP, there has been no social unrest, in contrast to Athens.

"We don't like the cutbacks but you do get used to them. We don't want to go down the Greek road. The country's long-term reputation is important," said Alan, a 44-year-old father of two.

Ireland's success in so far meeting its fiscal targets, the recapitalisation of its banks' bad debts and its political and social calm have struck a chord with investors.

Irish debt yields have dropped from the record highs hit over the summer and the country is increasingly viewed as a possible recovery story, provided the euro zone's debt crisis doesn't unhinge things.

(Reporting by Carmel Crimmins and Conor Humphries; Editing by Ron Askew)

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US dollar ends cheaper against rupee

MUMBAI: The US dollar ended cheaper against the rupee at Rs 49.18/19 per dollar but the Pound Sterling turned higher at Rs 78.62/64 per pound at the close of the Interbank Foreign Exchange market (Forex) here today.

The Following are the Interbank Forex and RBI rates: (In Rs Per Unit) Unit Interbank RBI Reference US Dollar 49.18/19 US Dollar Rs 49.2508 Pound Sterling 78.62/64 Euro Rs 67.6445 Euro 67.78/80 Japanese Yen (100) 63.01/03.

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