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Wednesday, February 11, 2009

Asia stocks fall on U.S. bank plan disappointment

By Kevin Plumberg

HONG KONG (Reuters) - Asian stocks fell, led by financials, and the U.S. dollar rose on Wednesday on scepticism about a new plan from Washington to heal the banking industry that could cost as much as $2 trillion.

Details were in short supply about the U.S. Treasury's revamped rescue plan for financial institutions, sending disappointed investors searching for safety in assets such as gold after Wall Street dove 4 percent overnight.

A $838 billion economic stimulus bill passed the U.S. Senate but faced further congressional deal making that could stretch into next week before it becomes a law. (Read the rest of the article here.)

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Govt to borrow Rs 46K Cr to stimulate economy

By ENS Economic Bureau

With a view to raising additional resources to fund public expenditure in order to stimulate the domestic economy, the government in consultation with the RBI today decided to borrow Rs 46,000 crore in four tranches in the next month and a half.

"The calendar has already come out. The quantum and mode of borrowing has come out... we are going to manage the borrowing in such a way that there is no disruption in the market," RBI Governor D Subbarao told reporters on the sidelines of a function here to release a book on monetary policy.

The first tranche of Rs 12,000 crore would be raised between February 20 and February 27. It will be followed by a second tranche of the same amount between February 27 and March 6, the RBI said in a release. The third and fourth tranches of Rs 12,000 crore and Rs 10,000 crore respectively would be raised between March 6 and March 13 and between March 13 and March 20 respectively.

The additional funds will be utilised for the purpose of meeting the extra expenditure being incurred by the government on fighting the economic slowdown. (Read more.)

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Outlook for base metals remains weak in near-term: StanChart

By Financial Express Bureau

The price outlook for base metals is expected to remain weak in the near-term due to poor demand conditions, stated a Standard Chartered Bank report. Base metal prices have remained under downward pressure in the last few weeks, with inventories building sharply on the London Metal Exchange (LME) and demand conditions continue to worsen in most parts of the global economy.

"For the base metals complex, we maintain our view that prices are generally close to a floor (determined by operating cost levels), but we are looking for more weakness in the next few months due to poor demand conditions," said a latest monthly analysis of commodity trends released by Standard Chartered Bank.

Copper prices could head below $3,000 per tonne in the months ahead as LME inventories rise and producers struggle to realign output levels with demand. The prospects for aluminium over the next few months are pretty bleak. Demand has dropped further in the past few months and producers are reluctant to cut back. Price may average $1,420 per tonne for the first quarter in 2009, the report said. (Read more.)

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