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theSun | TUESDAY NOVEMBER 25 2008 17

business news

Brown borrows
big to kickstart
British economy
LONDON: Prime Minister Gordon
Brown will try to kickstart the stall-
ing British economy by spending
billions of borrowed pounds on tax
cuts in a bid to stop a recession
turning into a slump.
The package, expected to total
up to £20 billion (RM106 billion), or
more than 1% of gross domestic
product, will include extra public
spending designed to lift the
economy. – Reuters

US govt steps in
to save Citigroup
NEW YORK/ European and US stock The Fed, Treasury and
WASHINGTON: The futures rose after the US FDIC in return will shoulder
US government agreed Treasury announced most of the potential losses
to prop up troubled No. 2 plans aimed at preventing on Citigroup’s US$306 billion
bank Citigroup Inc with Citigroup going the way (RM1.101 trillion) portfolio of
more than US$300 billion of smaller rivals such as debt assets, beyond an initial
(RM1.08 trillion), the Lehman Brothers and US$29 billion (RM104.4
latest bailout in a sector Wachovia. billion) in losses which
crippled by exposure to “The move will help the the Citigroup would be
toxic mortgage debts and a markets not implode today. responsible for.
crumbling economy. It’s another one of a series “The US government is
With problems of moves where the US taking the actions necessary
spreading beyond the government and the Fed to strengthen the financial
banks, governments do whatever they can from system and protect US
around the world have preventing the financial taxpayers and the US
been stepping up their system to fall over,” said economy,” the Federal
efforts to contain the worst Rory Robertson, interest Reserve, the Treasury
financial crisis in 80 years. rate strategist at Macquarie Department and FDIC said in
Aides said US President- in Sydney. a joint statement.
elect Barack Obama was “It’s all good stuff but Citigroup, which saw its
also considering delaying the fact that the Fed has shares slump 60% last week,
a campaign promise to roll to bail out one of the wasn’t the only bank having
back tax cuts on high- biggest banks in the world to raise more funds.
income Americans, while is not exactly a vote of Asian-focused UK bank
the British government confidence.” Standard Chartered said it
was set to announce The plan calls for planned a US$2.7 billion
a stimulus package Citigroup issue US$27 (RM9.72 billion) rights issue
including temporary tax billion (RM9.72 billion) in to boost its capital reserves,
cuts. preferred shares to the US while other banks were also
Asian equity markets Treasury and the Federal reported to be likely to raise
trimmed losses, while Deposit Insurance Corp. money.
In knee-jerk reactions
to the Citigroup rescue,
Asian shares pared losses
and US stock futures gained
yesterday.
European shares were set
to gain 4-5% at the open.
But earlier gains on
global markets following the
Citigroup announcement
faded, while so-called
safe-haven assets such as the
yen held firmer, signalling
that concerns about the
broader financial sector and
the global economy are likely
to remain.
The MSCI index of
Asia-Pacific stocks excluding
Japan briefly posted a small
gain after the Citigroup
news, but was down 0.7% at
0720GMT.
That was an improvement
from early in the session,
when the index fell as much
as 1.7%. Japanese markets
were closed for a holiday.
Australian stocks reversed
earlier losses to close 0.3%.
US stock futures firmed, with
the S&P 500 December 500
futures up 0.7% and the Dow
Jones futures index up 0.05%.
Indexes elsewhere cut
losses, but remained in
negative territory, with
Hongkong, India and
Singapore all falling more
than 1%.
South Korean shares and
Chinese shares lost more
than 3%. - Reuters