60 bus drivers did not turn up for work today

SINGAPORE - 60 bus drivers did not turn up for work today and some bus services may be affected as a result.

Statement from SMRT:

This morning (27 Nov), some 60 Service Leaders (SL) did not turn up for work in the morning, some of whom have valid medical reasons.

Some bus services may have been affected this morning as a result, and we have activated other SLs to assist.

We continue to keep our communications open with the Service Leaders, and are also working with the relevant authorities to find an amicable resolution.

Asian markets rise on Greece deal

HONG KONG: Asian markets rose in early trade Tuesday after the eurozone and the IMF agreed to unlock 43.7 billion euros ($56 billion) in loans to Greece and grant significant debt relief for decades to come.

Tokyo shares rose 0.38 per cent by the break, Hong Kong was up 0.25 per cent and Sydney gained 0.68 per cent.

Seoul opened flat but Shanghai was down 0.76 per cent on concerns over the strength of recovery in the domestic economy.

The Eurogroup of currency partners penned the Greek deal at its third late-night meeting in two weeks, agreeing to release, in December, the funds after months in which Greece was starved of bailout financing.

Greece, struggling to stay afloat despite a series of unpopular austerity measures, has been waiting impatiently for an injection of international loans for several weeks to avoid defaulting on its upcoming debt repayments.

Greece's public creditors agreed to take measures to bring down the country's debt-to-GDP ratio from an estimated 144 per cent to 124 per cent within eight years, in exchange for the bailout funds.

Finance ministers, the IMF and the European Central Bank said the money would be paid in four instalments from December 13 through until the end of March.

Greek Prime Minister Antonis Samaras said the agreement represented a fresh start for his beleaguered country.

"Everything has gone well," Samaras told local media in Athens. "All Greeks have fought (for this decision) and tomorrow is a new day for every Greek person."

ECB President Mario Draghi said: "The decision will certainly reduce the uncertainty and strengthen confidence in Europe and in Greece."

US markets were feeble in the first session after a slow Thanksgiving holiday week, with the jury still out over how strong the crucial Black Friday holiday sales were for retailers.

The Dow Jones Industrial Average finished down 42.31 points (0.33 per cent) at 12,967.37.

The broad-market S&P 500 lost 2.86 (0.20 per cent) at 1,406.29, while the Nasdaq Composite rose 9.93 (0.33 per cent) to 2,976.78.

On currency markets the euro was stronger in Asian trade as investors breathed a sigh of relief over the deal for Greece.

The 17-nation currency bought $1.2980 and 106.46 yen in Tokyo morning trade after briefly topping $1.30 for the first time in about a month.

That was up from $1.2971 and 106.38 yen in New York trade late Monday, although the euro eased slightly after the Greece announcement.

The dollar was flat at 82 yen.

On oil markets, New York's main contract, West Texas Intermediate (WTI) for January delivery, bounced 30 cents to $88.04 a barrel and Brent North Sea crude, also for January, jumped 29 cents to $111.21.

Gold was at $1,749.50 at 0310 GMT compared with $1,734.47 late Monday.

Greece wins significant debt relief

BRUSSELS - Greece won big breathing space Tuesday with long-frozen eurozone loans to restart from December and a first clear admission that a chunk of the country's debt burden will need to be written off down the line.

After 13 hours of talks in Brussels, the eurozone and the International Monetary Fund agreed to unlock 43.7 billion euros (US$56 billion) in loans and grant significant debt relief going forward for decades to come.

Greece must still meet a series of agreed conditions but "the decision will certainly reduce the uncertainty and strengthen confidence in Europe and in Greece," said European Central Bank President Mario Draghi, who left the talks before a final.

Starved of bailout financing since the summer, Greek Prime Minister Antonis Samaras hailed the deal in Athens, while German Finance Minister Wolfgang Schaeuble said the package would be presented to German lawmakers by the end of the week.

"Everything has gone well," Samaras told reporters in Athens.

"All Greeks have fought (for this decision) and tomorrow is a new day for every Greek person," he added.

Finance ministers, the IMF and the ECB said the money would be paid in four instalments from December 13 through until the end of March, conditional on Greece funneling income back to creditors at source and on the implementation by Athens of tax reforms settled with creditors.

The results of the "laborious" negotiations according to IMF head Christine Lagarde are intended to see Greece's debt-to-GDP ratio fall from an estimated 144 percent to 124 percent come 2020, and "substantially below 110 per cent" of gross domestic product by 2022.

"The IMF wanted to make sure the euro partners would take the necessary actions to bring Greece's debt on a sustainable path," said Lagarde. "I can say today that it has been achieved."

There will be a mixture of techniques used to bring down Greece's debt burden.

These will begin with a buyback by Greece of old debt that has fallen in value on commercial money markets as well as national central banks across the eurozone foregoing profits on holdings of Greek debt whose worth has slumped.

Interest rates due to eurozone creditors will also be trimmed or deferred -- Ireland and Portugal can now be expected to demand parity -- while maturity dates will be pushed back by years.

The original bailout rewrite agreed for Greece in March was meant to see Greece's debt fall to 120 percent of gross domestic product by 2020.

"Greece has delivered, now it's delivery time for the Eurogroup and the IMF," said Rehn.

The IMF is pushing for a so-called "haircut" or write-down of debt by eurozone partner governments in the way banks wrote off most of the loans due to them earlier this year, but Germany has come out against this ahead of a general election next year.

Other Triple A-rated states, though, have said they would "not exclude" the possibility of a write-down of debt from 2015 onwards.

France has long been a firm backer of all efforts to keep Greece in the eurozone club, and having lost its Triple-A status, Finance Minister Pierre Moscovici said: "Let's assume our responsibilities."

Greece has been waiting since June for a loan instalment of 31.2 billion euros (US$40 billion), part of a 130-billion-euro rescue granted earlier this year.

In exchange, Athens has pledged to implement a new series of radical austerity measures to cut its annual overspending.
Merkel hostile to "haircut"

Samaras' government pushed a fresh batch of deeply unpopular cuts through parliament earlier this month.

Greece's public creditors have decided to give Greece an extra two years, until 2016, to balance the books.

Greece's private creditors have written off more than 100 billion euros in debt, and the IMF has urged the ECB to accept this solution.

But both the central bank and Germany have so far held out against making any similar move, saying it would violate EU mandates against bankrolling individual countries.

German Chancellor Angela Merkel has said she is "against this debt write-off and I want to find another solution."

Singapore inflation likely eased slightly in October

SINGAPORE - Singapore's inflation probably slowed slightly in October as the cost of housing rose at a slower pace, a Reuters poll showed, indicating rising prices will remain a challenge for policymakers even if the economy slips into a recession this quarter.

According to the median forecast of 14 economists, Singapore's consumer price index (CPI) likely rose by 4.5 per cent in October from a year ago, slightly below September's 4.7 per cent pace but well above historical levels of 2-3 per cent.

Core inflation, which excludes the cost of cars and housing as these are more influenced by government policy, probably edged down to 2.3 per cent year-on-year from September's 2.4 per cent.
Singapore has been suffering from higher-than-usual inflation over the past two years, mainly due to a spike in housing rents and car prices even as the economy slows.

A tight job market resulting from measures to make it harder for firms to hire low-cost workers from abroad also contributed to inflation by pushing up the cost of services such as healthcare and cleaning services.

Singapore's economy contracted by 5.9 per cent in the third quarter from April-June on an annualised and seasonally adjusted rate, and banks such as Citigroup said the economy could contract again this quarter amid continued poor demand for its exports, pushing the small city-state into recession.

According to the central bank, Singapore's headline inflation is likely to come in slightly above 4.5 per cent this year before slowing to 3.5 to 4.5 per cent next year, as rising rents and car prices continue to push up the cost of living.

For the first nine months of this year, inflation averaged 4.8 per cent, stronger than most Asian countries.

China, for instance, earlier this month reported October inflation of just 1.7 per cent, the slowest pace in nearly three years.

UOB cuts Keppel target price 

UOB Kay Hian cut its target price on Keppel Corp Ltd , the world's largest rigbuilder, to $12.30 from $12.80, but kept its 'buy' rating, citing lower operating margin assumptions.

By 0208 GMT, Keppel shares were up 0.1 per cent at $10.56, and have risen 13.5 per cent since the start of the year, compared with the Straits Times Index's 12.9 per cent rise.

UOB lowered its offshore and marine margin estimates for Keppel in 2013 and 2014, which resulted in a 4 per cent lower net profit forecast for next year.

However, higher infrastructure earnings will help to support earnings in 2014.

Higher operating margins seen from 2010 to mid 2012 were mainly due to lucrative contracts secured during the boom years of 2007-2008, UOB said.

"We believe Keppel stands a good chance of registering higher offshore and marine margins than Sembcorp Marine as it is building semi-submersible rigs for Brazil," which are not new to the company, the brokerage said.

Euro edges higher against dollar on Greece aid hopes

NEW YORK: The euro edged higher against the dollar in thin pre-holiday trade Wednesday as traders appeared optimistic a long-sought Greek aid deal was in reach.

The euro fetched $1.2826 at 2200 GMT, up from $1.2818 at the same time Tuesday.

Against the Japanese currency, the euro rose to 105.84 yen from 104.70 yen late Tuesday, while the dollar also climbed, to 82.51 yen from 81.67 yen.

"Despite the bumbling and fumbling of expected deadlines on Greece, the market continues to rally as if everything is on the up and up," said Neal Gilbert at GFT.

"It seems that nothing can keep the euro down at the moment as the French downgrade failed to do it earlier this week," he said, referring to Moody's removal of France's triple-A credit rating Monday.

European leaders insisted Wednesday that their imminent third attempt in as many weeks to unblock bailout funds for debt-stricken Greece will likely succeed, as Athens warned that the stability of the entire eurozone depended on it.

The eurozone is a "whisker" away from a deal to unblock the money aimed at keeping Greece from going bankrupt, French Finance Minister Pierre Moscovici said just hours after marathon talks on the aid package collapsed in Brussels.

Trading volume was weak as many traders left New York early to celebrate the Thanksgiving holiday Thursday, when all US markets are closed. Markets will reopen Friday for shortened sessions.

The dollar slipped to 0.9389 Swiss francs from 0.9398 francs late Tuesday and dipped a bit against the British pound, which bought $1.5949 compared with $1.5924 the prior day.

Bernanke steps up warning over fiscal cliff

WASHINGTON: US Federal Reserve chairman Ben Bernanke stepped up his warning Tuesday over the looming 'fiscal cliff,' saying its mandatory tax hikes and spending cuts pose a "substantial threat" to the country's economic recovery.

With government leaders locked in crunch talks on avoiding the cliff and slashing the budget deficit, Bernanke said that rising cuts to federal government spending were already holding back economic growth.

"Congress and the administration will need to protect the economy from the full brunt of the severe fiscal tightening at the beginning of next year that is built into current law -- the so-called fiscal cliff," the US central bank chief said in a speech in New York.

"The realization of all of the automatic tax increases and spending cuts that make up the fiscal cliff, absent offsetting changes, would pose a substantial threat to the recovery," he said, according to the prepared text.

"Indeed, by the reckoning of the Congressional Budget Office and that of many outside observers, a fiscal shock of that size would send the economy toppling back into recession."

Bernanke said the Fed already views growth as disappointingly slow and troubled by threats from the eurozone crisis, slow job creation and the reticence of banks to loosen lending standards -- which Bernanke said is holding back recovery in the housing sector.

The unemployment rate, currently 7.9 percent, remains "well above" what Fed officials want to see, Bernanke said, adding that the country has "some way to go before the labour market can be deemed healthy again."

But Bernanke pointed out that pressures to wind up the stimulus programs and other policy actions designed to pull the country out of recession, and stepped-up efforts to rapidly reduce the federal budget deficit, are now "restraining" gross domestic product growth.

"Indeed, under almost any plausible scenario, next year the drag from federal fiscal policy on GDP growth will outweigh the positive effects on growth from fiscal expansion at the state and local level," he said.

Bernanke's warning came as the White House and top officials from Congress are locked in talks to avert the cliff and set a long-term plan for reducing the deficit, which has topped $1 trillion a year for four years running.

The cliff comprises two challenges: a drastic spending reduction program, and the expiration of a broad range of "temporary" tax decreases.

Both are to take place on January 1, and together would suck at least $500 billion out of the economy, forcing it into recession.

Republicans and Democrats though have sharply differed on what kind of long-term spending reductions and increases in tax revenues should be put in place to replace the cliff.

Bernanke said that the deficit is "on an unsustainable path," requiring a "credible framework" to stabilize and reduce the country's debt and deficit load.

But he warned policy makers "to avoid unnecessarily adding to the headwinds that are already holding back the economic recovery."

"Preventing a sudden and severe contraction in fiscal policy early next year will support the transition of the economy back to full employment."

Asian markets up on US hopes, weak yen helps Tokyo

HONG KONG: Asian markets rose on Wednesday with traders confident the United States will avoid a fiscal cliff and Greece will get its much-needed bailout, while Tokyo was boosted by the weak yen.

The Japanese currency continued its fall against the dollar and the euro on expectations of further central bank easing, given added impetus by data showing Tokyo posted its worst October trade figures in more than 30 years.

Tokyo rose 0.96 per cent, Hong Kong added 0.66 per cent and Seoul was up 0.30 per cent but Sydney was flat. Shanghai was up 0.21 per cent.

Stocks have been buoyed this week by hopes for an agreement in Washington on avoiding the fiscal cliff of tax hikes and spending cuts scheduled to come into effect on January 1.

If they are allowed to come in they will likely tip the US into recession, a danger reiterated by Federal Reserve chief Ben Bernanke on Tuesday.

Eyes are currently on Europe, where eurozone finance chiefs are holding an emergency meeting to decide whether to give Greece the next trance of much-needed bailout cash to help it avoid a default.

"Greece has delivered (on reform)," said Jean-Claude Juncker, who presides over the Eurogroup of finance ministers from the 17 countries that use the single currency. "(There are thus) good chances of an agreement."

The expectations of fresh cash for Greece lifted the euro against the yen, while it is also holding on to recent advances on the dollar.

The euro bought $1.2810 and 104.95 yen in early Asian trade, compared with $1.2818 and 104.70 yen in New York late Tuesday.

The dollar firmed to 81.93 yen from 81.67 yen in US trade and is sitting at seven-month highs.

Dealers continued to move out of the yen after the Bank of Japan held off further monetary easing on Tuesday but signalled fresh action could be in the pipeline after saying the economy remained weak.

The currency has weakened since last week, when the man likely to become prime minister after next month's general election said he would push for unlimited loosening monetary policy by the central bank.

There was more gloom for the Japanese economy on Wednesday as finance ministry data showed October's trade deficit nearly doubled to 549 billion yen ($6.7 billion) from a year ago, coming on top of weakening factory output.

On Wall Street, the three main indexes all ended flat on weak corporate news.

However, there was support from the Commerce Department, which said home construction rose again in October following September's strong surge, a further sign of recovery in the crucial housing market.

Housing starts rose 3.6 per cent from October, surprising analysts who had expected a fall after September's jump.

Oil prices climbed, with New York's main contract, light sweet crude for delivery in January, rising 55 cents to $87.30 a barrel and Brent North Sea crude for January delivery adding 63 cents to $110.46.

Gold was at $1,727.60 at 0230 GMT compared with $1,733.45 late Tuesday.

Olam hits back after Muddy Waters attack

SINGAPORE - Singaporean commodities trader Olam said an attack on its prospects and accounting practices by Carson Block, the founder of shortseller Muddy Waters, was "baseless and unsubstantiated".

Shares in Olam, 16 per cent-owned by Singapore state investor Temasek Holdings - which would not comment on th matter, closed down 7.5 per cent in heavy volume on Tuesday.

Muddy Waters, best known for targeting North American-listed Chinese companies, questioned Olam's capital expenditure and goodwill writedowns.

"We are unable to reconcile its capex (from last year) with announced projects," Block told a conference in London on Monday. He said his investigators had looked at Olam's investments in Africa, Asia and the United States.

"They have been very active in the public debt market. There is a lot of paper to short," he said.
Olam has $4.125 billion outstanding debt, including bonds and loans, according to Thomson Reuters CreditViews. The bulk of its bonds are held by retail investors who can be quick to unload paper, making for volatile prices.

Olam's 5.75 per cent bonds due 2017 fell 5 percentage points to 91/92 cents on the dollar.
Started by the Kewalram Chanrai Group in Nigeria, Olam has grown into a diverse agricultural commodities trading company with interests ranging from cocoa and coffee to nuts and sugar.

Chief executive Sunny Verghese has led an expansion that has seen it take on larger commodity players such as Noble Group and Wilmar International.

Olam also has an industrial raw materials segment which includes cotton, rubber and wood.

"We are dismayed at the nature and lack of substance of these assertions and opinions about Olam's financial position, particularly as we were not contacted in advance by Carson Block or anyone else from Muddy Waters," Olam said.

SHORTING

Olam is the most borrowed stock among Singapore's top 30 companies, suggesting heavy demand from short sellers.

Nearly 80 per cent of Olam's shares that can be borrowed were out on loan, compared with an average of about 6 per cent for the index constituents, according to Markit Securities Finance.

Also at the conference on Monday, John Armitage, chief investment officer of London-based Egerton Capital, said he was short Olam shares, saying the stock was "a great short".

Olam said its annual financial accounts were audited by Ernst & Young, which said the statements gave "a true and fair view of the state of affairs and financial results of the group and the company".

Company officials said in a conference call it would be able to fund operations for 18 months even if it were shut out of the debt markets as a result of the allegations by Muddy Waters, and it would now consider share buybacks after its price fell.

Past reports from Muddy Waters have hit shares in several Chinese companies including Sino-Forest Corp, which filed for bankruptcy protection early this year 10 months after the shortseller said the company had exaggerated its assets.

Muddy Waters has a mixed track record, however, and the share prices of some companies in its reports have bounced back.

"Muddy Waters seems to target companies with quite complex business models and accounting structures. So, it is difficult to get a handle on what is exactly happening in the company," said David Smith, head of corporate governance at Aberdeen Asset Management Asia.

"Given the complexity of the companies that they target, it means that there is always that lingering doubt regardless of what the company says," he said.

In February 2011, Olam denied there were inaccuracies in its accounts after a CLSA analyst raised concerns about internal controls, citing multiple and sometimes significant differences between Olam's audited and unaudited statements.

Olam said CLSA analyst Swati Chopra used examples which were incorrect. Chopra left CLSA a few months after the report was published and now works at a rival.

Olam reported a 26 per cent rise in quarterly net profit last week. Out of 21 analysts tracking the stock, 15 have "buy" or "strong buy" ratings, five have "hold" recommendations, and one has a "sell" call, Thomson Reuters data showed.

Dollar creeps higher in cautious trade

NEW YORK: The dollar edged higher Friday as traders grew more cautious amid rising Middle East tensions, which added to worries about the eurozone debt crisis and the US fiscal cliff.

The euro fetched $1.2741 at 2200 GMT, down from $1.2778 late Thursday, and slipped to 103.60 yen from 103.69 yen.

The dollar strengthened against the Japanese currency, buying 81.31 yen compared with 81.16 yen a day earlier.

The euro managed to trim its losses Friday in late New York trade but continued to weaken against the dollar as concerns about the eurozone's festering debt crisis drove investors away from assets deemed riskier, such as the European currency.

And despite encouraging remarks by leaders of the US Congress, both Democratic and Republican, following discussions with President Barack Obama on averting the harsh tax hikes and spending cuts slated for January 1, "the fears over these negotiations continue to fuel risk aversion," said Charles St-Arnaud at Nomura.

"An agreement always takes longer" than politicians would like people to believe, he added.

Escalating border clashes between Israel and Palestinians in the Gaza Strip raised global uncertainty, reinforcing fears the world economy could be hurtling toward another crisis, said Joshua Mahony at Alpari UK.

The dollar firmed to 0.9452 Swiss francs from 0.9423 francs late Thursday.

The pound, meanwhile, picked up against the greenback, buying $1.5880 compared with $1.5859 a day earlier.

"The bullish sentiment surrounding the greenback may get carried into the following week as a growing number of Fed officials speak out against tying monetary policy to specific fundamental goals," said David Song at DailyFX.

Fed eyes more asset purchases in 2013

WASHINGTON: The Federal Reserve is mulling additional asset purchases next year to boost jobs amid a fragile economy, the minutes of a policy meeting released Wednesday showed.

With the current $45 billion a month "Operation Twist" asset adjustment program scheduled to end in December, the minutes suggested that the Fed was ready to go ahead with more outright bond purchases, aimed at pushing long-term interest rates lower.

"A number of participants indicated that additional asset purchases would likely be appropriate next year after the conclusion of the maturity extension program in order to achieve a substantial improvement in the labour market," the document said.

A new program would overlap with the "QE3" open-ended $40 billion a month asset purchase program announced in September.

Participants at the central bank's Federal Open Market Committee on October 23-24 discussed the impact of its longstanding near-zero interest rate policy and other measures aimed at helping the US recover from the 2008-2009 severe recession.

At the meeting, the FOMC stayed the course on monetary policy, but the meeting minutes revealed divisions, including concerns that low rates will unleash inflation and questions about the effectiveness of massive asset purchases, or quantitative easing (QE).

Participants generally agreed that in determining the appropriate size, pace, and composition of further purchases, "they would need to carefully assess the efficacy of asset purchases in fostering stronger economic activity and consider the potential risks and costs of such purchases."

Participants were meanwhile undecided on whether the Fed should set explicit targets for unemployment and inflation to better indicate when it might raise interest rates.

The Fed officials generally viewed the policy actions as having been "effective" in easing financial conditions, with lower rates supporting spending for housing, automobiles and other big-ticket goods.

Though the participants considered information on US economic activity indicated modest growth, monthly job gains remained modest.

"Many members noted that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in the labor market."

The United States added a better-than-expected 171,000 jobs in October, though the unemployment rose to 7.9 per cent, after a surprising three-point drop in September to 7.8 per cent.

Recent data has shown the labour market recovery is picking up momentum. However, the number of long-term unemployed, people without work for at least 27 weeks, rose to 5.0 million last month.

Economists say the stuttering pace of economic growth -- at an annual 2.0 per cent in the third quarter -- remains well below the rate needed to significantly bring down unemployment.

S'pore needs to restructure economy to sustain growth: Tharman

SINGAPORE: Deputy Prime Minister Tharman Shanmugaratnam said Singapore's economic growth will be weak in the short-term mainly because of the gloomy world economy.

And the challenge for Singapore, he said, is to restructure its economy to ensure sustained growth over the long-term.

Mr Tharman, who's also Finance Minister, was speaking to reporters on the sidelines of a community event in his Jurong GRC.

Many countries in the world are now bracing themselves for the possibility of a "fiscal cliff" in the US.

This means a huge economic crisis may be looming for the US - if its deeply divided Congress is not able to come to an agreement.

Congress, which is made up of the House of Representatives and Senate, will still be controlled by two parties in the new Obama administration.

The Republicans regained control of the House, while the Senate is dominated by the Democrats.

Mr Tharman pointed out that even if the US gets past this hurdle, the bigger challenge is to put its mid-term budget on a more sustainable path for the years ahead in order to restore investor confidence.

He said: "That's what's necessary to really get the economy to restart. And it requires common ground to be found on both taxes and spending on the parts of the Democrats and the Republicans.

"The experience of the first term was one of intense partisanship. Hopefully in the second term, there will be a willingness to find common ground. The initial signs are positive but it's too early to say."

The effects of sluggish growth in the US and Eurozone are likely to cascade to Singapore, even though Mr Tharman said Asia continues to do reasonably well.

"Demand will be weak, but our real challenge in Singapore is in restructuring our economy. We've got to persevere in restructuring our economy so that we can get sustained growth over the long term, over the next five to 10 years based on productivity growth. That's the big challenge. Demand will be weak in the short term but it's not a fundamental problem for us because our unemployment rate is low, and that's the bottom line of the short-term. Unemployment rate is low, jobs are available and training places are available. Our real challenge therefore is to focus on restructuring our economy so that we can move one whole level higher - productivity, skills, expertise," Mr Tharman shared.

He said this means using management methods and technology to improve efficiency and productivity so that workers can get paid more.

"They can have more satisfying jobs and we can grow our economy without growing employment year after year, especially foreign employment. So we got to find the right balance. It's something that affects every sector of the economy. And, we look at the most developed countries and we can see how it's done. They too went through that transition. In some cases not very long ago, they went through the same transition. They ramp up on labour and they have to upgrade, do with less labour, but using technology and everyone playing that part, including customers, everyone playing that part. You can move up to a higher level. That way, our workers can get good wages, get good jobs," he said.

Mr Tharman added that the government will provide every form of support to help companies, especially small and medium enterprises, to make this transition.

Asian markets hit by US 'fiscal cliff' fears

HONG KONG: Fears the US economy is facing another huge economic crisis spurred a sell-off in Asian markets Thursday as Barack Obama's re-election raised the spectre of another dangerous stand-off in Washington.

Investors fear a deeply divided Congress will not be able to reach an agreement to avoid a so-called fiscal cliff at the end of the year that many say will send the United States back into recession.

Eyes are also on Beijing, where the Communist Party has kicked off its 18th congress, which will see the beginning of a once-in-a-decade leadership change.

Tokyo stumbled 1.27 per cent by the break, Hong Kong skidded 1.24 per cent, Sydney lost 0.85 per cent, Seoul was 0.89 per cent lower and Shanghai fell 0.87 per cent.

The initial upbeat reaction Wednesday to Obama's victory over Republican Mitt Romney was replaced Thursday with trepidation as the focus turned to the fiscal cliff, a combination of deep spending cuts and huge tax hikes to take effect on January 1.

The package is a major threat to the economy after a protracted but possibly reckless compromise was agreed last year between Democrats and Republicans in order to raise the country's borrowing cap.

If it kicks in, the United States' slow recovery from the financial crisis could be reversed and the economy tip back into recession, which would in turn deal a major blow to the global economy.

And with Democrats holding the Senate while the Republicans hold the House of Representatives analysts say a compromise could be as tough to find as last August, when the row over the spending limit saw the country lose its AAA sovereign debt rating.

"Immediately after the re-election parties ended, markets returned to the daunting issue of the US 'fiscal cliff'," Nicholas Smith, Japan strategist for CLSA in Tokyo, told Dow Jones Newswires.

Wall Street, which had favoured a pro-business Romney win, tumbled on Obama's victory.

The Dow dived 2.36 per cent, the Nasdaq shed 2.48 per cent and the S&P 500 lost 2.37 per cent.

Currency markets also reacted negatively.

The dollar fell to 79.87 yen in early Asian trade, from 79.96 yen in New York late Wednesday, as investors seek out the safe Japanese unit amid times of economic uncertainty.

And the euro was also hit by traders becoming more risk-averse. The single currency, which rose against the dollar Wednesday on expectations of continued loose US monetary policy under Obama, fetched $1.2757 in Tokyo, compared with $1.2767 in New York. It had reached $1.2860 on Wednesday in Asia.

The European currency also fell to 101.87 yen, compared with and 102.09 yen.

Market sentiment was also pressured after the European Union slashed its eurozone economic forecast and European Central Bank chief Mario Draghi warned that the eurozone's woes were beginning to hurt Germany, the bloc's powerhouse.

However, Greek lawmakers did manage to pass a crucial austerity package that opens the way for it to qualify for a fresh batch of bailout cash.

In China the week-long congress is expected to see the anointment of the country's next leaders, with the focus on the composition of the Communist Party's top governing body for signs of future policy direction.

In a speech to open the event President Hu Jintao called for the country's future leadership to "speed up the creation of a new growth model and ensure that development is based on improved quality and performance".

Oil prices rose, with New York's main contract, light sweet crude for delivery in December, adding 42 cents to $84.86 a barrel and Brent North Sea crude for December delivery gaining 41 cents to $107.23.

Gold was at $1,716.60 by 0300 GMT compared with $1,729.40 Wednesday.

Dollar down, markets up in Asia after Obama win

HONG KONG: The dollar slipped in Asian trade on Wednesday, while share markets rose after President Barack Obama was re-elected in a knife-edge US presidential election.

As a hard-fought campaign came down to the wire Obama was declared winner after picking up crucial swing states, wiping away uncertainty that had pervaded markets for the past few days.

But in afternoon foreign exchange trade the greenback slipped against the euro and yen as dealers bet that under Obama the Federal Reserve would continue with the loose monetary policy that has seen it flood markets with billions of dollars.

The European single currency bought $1.2861 in Tokyo, well up from $1.2788 earlier Wednesday and $1.2814 in New York late Tuesday. The greenback was also at 80.05 yen compared with 80.34 yen in New York.

The greenback was also broadly lower against other Asia-Pacific currencies, including the Australian, Taiwan and Singapore dollars, and the Indian rupee.

A clear victory had been the overriding hope as it will now allow the government to move on fixing the austere "fiscal cliff" of tax hikes and spending cuts that sits on the horizon and could hammer the economy.

In afternoon trade Asian shares were higher.

Sydney gained 0.71 per cent, or 31.7 points, to end at 4,516.5, and in the afternoon Hong Kong rose 0.30 per cent, Seoul gained 0.33 per cent and Shanghai was up 0.16 per cent while Tokyo was flat.

"An Obama victory ensures the continuity of the US monetary policy, which is likely to be kept loose," SHK Financial strategist Daniel So told Dow Jones Newswires.

He added that a Romney win would likely see him "launch policies to incentivise fund flow back to the US, so in terms of liquidity inflow an Obama win also favours the Asian markets".

Wall Street ended with impressive gains ahead of the election results. The Dow rose 1.02 per cent, the S&P 500 climbed 0.79 per cent and the Nasdaq added 0.41 per cent.

However, regional traders were still concerned about Europe's debt woes, which were stoked on Tuesday after data showed a bigger-than-expected slump in factory orders in Germany, the eurozone's biggest economy.

Berlin said industrial orders declined 3.3 per cent in September from August after already falling 0.8 per cent the previous month.

That is much steeper than expected. Analysts polled by Dow Jones had been pencilling in a fall of 0.5 per cent.

The drop was largely due to a decline in export orders, particularly from the eurozone, where they plummeted 9.6 per cent.

Eyes are also on the upcoming 18th congress of the Chinese Communist Party that begins on Thursday and which will see the country's leaders for the next 10 years anointed.

Oil prices were lower, with New York's main contract, light sweet crude for delivery in December, down 29 cents to $88.42 a barrel and Brent North Sea crude for December delivery shedding 52 cents to $110.55.

Gold prices rose thanks to the weaker dollar, sitting at $1,710.40 by 0545 GMT compared with $1,679.75 late Monday.

Japan economy likely in recession

JAPAN - The composite index of coincident economic indicators for September dropped for the sixth straight month, indicating the national economy has likely entered a recession, according to the Cabinet Office.

The coincident CI, which reflects current economic conditions, stood at 91.2 compared with 100 for the base year of 2005, down 2.3 points from the previous month, the office said in a preliminary report released Tuesday.

In addition to declining exports stemming from a slowdown in overseas economies, some indicators, such as industrial output and shipments of durable goods, dropped due to sluggish domestic auto sales following the end of a government subsidy programme for purchases of environmentally friendly vehicles.

The Cabinet Office revised downward its basic assessment, saying the national economy has moved into a recessionary phase and is likely in the first stages of an economic slowdown.

This was the first such assessment made since May 2011, just after the Great East Japan Earthquake and tsunami.

Concerning future prospects, the Cabinet Office said it will be necessary to keep a close eye on the global economic downturn and exports.

Some market observers suspect the domestic economy entered a recessionary phase after peaking in March.

Election over, Obama to face same weak economy

WASHINGTON - Americans have given President Barack Obama the benefit of doubt that he has the best fix for the ailing US economy.

In reality, there may not be much he can do to speed up growth and employment.

Obama edged out Republican Mitt Romney in the race for the White House on Tuesday, a victory made more difficult by voter frustrations over the sluggish pace of the economy's recovery and worries about sky-high public debt.

The president's best chance to kick-start faster growth is to remove the recession threat posed by the US$600 billion (S$733 billion) in tax hikes and government spending cuts known as the "fiscal cliff,"which is already weighing on business investment decisions.

And all the better if he can do that in concert with securing a longer-term deal that puts the budget on a more sustainable path - a tall order given the still-divided nature of Washington politics.

"Obama will have to nail down some of these fiscal issues in order to get the economy moving quickly," said Mark Zandi, chief economist at Moody's Analytics in West Chester, Pennsylvania."If he is unable to do that, we're going to be stuck."

The world's largest economy has struggled to achieve anything like strong growth since climbing out of the deep 2007-09 recession.

Annual gross domestic product expanded by an average of just 2.1 per cent over the last two years.

Only about 4.5 million of the 8.7 million jobs lost during the downturn have been recouped. About 23 million Americans are either unemployed or underemployed, many of them having to settle for part-time work.

Not only is government borrowing at an unsustainably high rate, with a debt now towering over $16 trillion, but the recession left lasting scars on the labour market that is likely to keep unemployment elevated for years to come.

What's more, growth is slowing overseas, crimping US exports.

POLITICAL GRIDLOCK REMAINS 

While Obama's Democrats retained control of the Senate, Republicans kept their grip on the House of Representatives, maintaining Washington's political gridlock.

During his first term, Obama was unable to bridge the divide between the two parties over how to trim the budget deficit and there is little to suggest it will be easier this time around.

He has called for slashing the deficit by more than US$4 trillion over a 10-year period through raising taxes for wealthy Americans and cutting defence spending, two steps that are unpopular with Republicans.

"Dealing with partisanship and gridlock in Congress will remain a major challenge, today's election result certainly does not make the situation any easier," said Harm Bandholz, chief US economist UniCredit Research in New York.

Full implementation of Obama's deficit-cutting plan would dent growth in 2013, and some economists expect he would offer some form of tax relief for households to soften the blow.

LEGACY OF A CRISIS 

Even if Obama manages to strike a deficit deal with Congress, it would likely add only a few tenths of a percentage point to economic growth given that it would not address the main problem holding the recovery back: the massive loss of wealth during the recession.

Median family net worth dropped 38 per cent between 2007 and 2010 as housing prices plummeted, the biggest decline for any period on record, and almost 11 million Americans are estimated to owe more on their mortgages than their homes are worth.

In addition, many of the jobs lost during the recession, particularly in construction and other housing-related areas like finance, may never come back. That could leave much of the US workforce lacking the skills employers need.

"The job situation is going to be problematic because my reading is the unemployment we suffer is to some large degree structural," said Adolfo Laurenti, deputy chief economist at Mesirow Financial in Chicago. "Even a strong economy will have a hard time reducing the employment rate to below 7 per cent."

The jobless rate stood at 7.9 per cent in October.

The economy is also being buffeted by the debt crisis in Europe and cooling demand in China, which has undermined demand for US businesses. Exports had accounted for about a third of growth since the recession ended.

"We are in a globalised economy with no healthy global engine for economic growth. That's a problem that cannot be easily fixed by Obama," said Laurenti.

Obama wins re-election, makes history again 
 
WASHINGTON - US President Barack Obama swept to re-election Tuesday, creating history again by defying the undertow of a slow economic recovery and high unemployment to beat Republican foe Mitt Romney.

Obama became only the second Democrat to win a second four-year White House term since World War II, when television networks projected he would win the bellwether state of Ohio where he had staged a pitched battle with Romney.

"This happened because of you. Thank you," Obama tweeted to his 22 million followers on Twitter as a flurry of states, including Iowa, which nurtured his unlikely White House dreams suddenly tipped into his column.

With a clutch of swing states, including Florida and Virginia still to be declared, Obama already had 275 electoral votes, more than the 270 needed for the White House and looked set for a comfortable victory.

There was a sudden explosion of jubilation at Obama's Chicago victory party as the first African American president, who was elected on a wave of hope and euphoria four years ago, booked another four years in the White House.

Romney's aides had predicted that a late Romney wave would sweep Obama from office after a single term haunted by a sluggish recovery from the worst economic crisis since the 1930s Great Depression and high unemployment.

But a huge cheer rang out at Obama headquarters when television networks projected Obama would retain Pennsylvania and its 20 electoral votes, and the party grew wilder as they called Wisconsin and Michigan.

The mood at Romney headquarters in Boston however had grown subdued throughout the evening as partisans stared at their smart phones.

Disappointed Republicans were seen leaving what had been billed as a celebration of Romney's expected triumph in central Washington.

Defeats in New Hampshire, where Romney has a summer home and Wisconsin, the home of Republican vice presidential nominee Paul Ryan were especially sickening for Republicans.

Early signs were that the election, while a building triumph for Obama would do little to ease the deep polarisation afflicting US politics, as Republicans racked up huge margins in safe states, though struggled in battlegrounds.

Exit polls appeared to vindicate the vision of the race offered by Obama's campaign, when top aides predicted that Obama's armies of African American, Latinos and young voters would come out in droves.

Polls also showed that though only 39 per cent of people believed that the economy was improving, around half of Americans blamed President George W. Bush for the tenuous situation, and not Obama.

The president, who made history by becoming America's first black president after a euphoric victory, carved a new precedent on Tuesday by defying the portents of a hurting economy to win a second term.

He awaited his fate in his hometown of Chicago, while Romney, a multi-millionaire former investment manager and Massachusetts governor was laying low in a hotel in Boston awaiting results.

As expected, television networks projected that Republicans would win the House of Representatives.

Democrats clung onto the Senate, and retained a seat in Missouri, where Senator Claire McCaskill fended off a challenge by Representative Todd Akin, whose remarks about rape and abortion sparked national outrage.

Both presidential candidates had earlier marked time while voters dictated their fates.

Romney appeared caught up in the emotion of seeing his name on the ballot for President of the United States and also saw an omen in a huge crowd that showed up at a multi-story parking lot to see his plane land at Pittsburgh airport.

"Intellectually I felt that we're going to win this and I've felt that for some time," Romney told reporters on his plane.

"But emotionally, just getting off the plane and seeing those people standing there... I not only think we're going to win intellectually but I feel it as well."

While Romney penned his victory speech, Obama took part in his election day tradition of playing a game of pick-up basketball with friends, including Chicago Bulls legend Scottie Pippen, after visiting a campaign office near his Chicago home.

The president, who like a third of Americans voted before election day, congratulated Romney on "a spirited campaign" despite their frequently hot tempered exchanges.

"I know that his supporters are just as engaged and just as enthusiastic and working just as hard today. We feel confident we've got the votes to win, that it's going to depend ultimately on whether those votes turn out," he said.

"I think anybody who's running for office would be lying if they say that there's not some butterflies before the polls come in because anything can happen," the president added later in a radio interview.

CBS News, quoting early exit polls, said 39 per cent of people approached after they had voted said the economy, the key issue, was improving, while 31 per cent said it was worse and 28 saw it as staying the same.

Voters were also choosing a third of the Democratic-led Senate and the entire Republican-run House of Representatives. But, with neither chamber expected to change hands, the current political gridlock will likely continue.

The US presidential election is not directly decided by the popular vote, but requires candidates to pile up a majority - 270 - of 538 electoral votes awarded state-by-state on the basis of population.
A candidate can therefore win the nationwide popular vote and still be deprived of the presidency by falling short in the Electoral College.

The election went ahead in New Jersey with thousands of people without power, and large areas devastated by superstorm Sandy which roared ashore last week killing more than 100 people.

Adora Agim, an immigrant from Nigeria, said the chaos shouldn't stop voting. "I have lived in a Third World country where your vote does not matter.

It's nice to be somewhere where it matters," she said, in Hoboken, New Jersey. The central message of Obama's campaign has been that he saved America from a second Great Depression after the economy was on the brink of collapse when he took over from Republican president George W. Bush in 2009.

He claims credit for ending the war in Iraq, saving the US auto industry, killing Osama bin Laden, offering almost every American health insurance, and passing the most sweeping Wall Street reform in decades.

Romney sought to mine frustration with the slow pace of the economic recovery and argued that the president was out of ideas and has no clue how to create jobs, with unemployment at 7.9 per cent and millions out of work.

Rape row Republican loses Senate race in Missouri: Networks 
 
WASHINGTON - Barack Obama's Democrats were on a path Tuesday to retain control of the Senate, holding on to a key seat in Missouri where the losing Republican candidate triggered a firestorm with comments about "legitimate rape."

Democratic Senator Claire McCaskill managed to fend off a challenge by Representative Todd Akin, whose remarks about rape and abortion sparked national outrage and prompted calls from his fellow Republicans to withdraw from the race.

Obama wins key state of New Hampshire: Networks 
 
WASHINGTON - President Barack Obama defeated Republican challenger Mitt Romney in the crucial battleground of New Hampshire, US television networks projected on Tuesday.

The triumph for Obama could help pave his way to re-election and spelled worrisome news for Romney's bid for the White House, as his campaign had pushed hard to prevail in the northeastern state that carries four electoral votes.

Democrats pick up Senate seat in Massachusetts: Networks 
 
WASHINGTON - The Democrats picked up a Senate seat Tuesday in Massachusetts, US media reported, in another discouraging sign for their Republican rivals trying to regain the majority in the upper chamber.

Elizabeth Warren, a Harvard professor and liberal firebrand who led the creation of a consumer protection bureau, defeated Senator Scott Brown, US television networks projected.

The seat was held for years by a lion of the Democratic party, the late Ted Kennedy.

Obama wins battleground Wisconsin: Networks 
 
WASHINGTON - President Barack Obama on Tuesday won the battleground state of Wisconsin, depriving Mitt Romney of a key target that could help him win the White House, US television networks projected.

Wisconsin has not voted for a Republican president since Ronald Reagan in 1984, but Romney picked Representative Paul Ryan from the Midwestern state as his running mate and both candidates campaigned heavily there.

With losses in Wisconsin and Romney's Massachusetts, the ticket becomes the first since George McGovern and Sargent Shriver in 1972 in which both the presidential and vice presidential candidates lost their home states.

WASHINGTON - Republican White House hopeful Mitt Romney picked up his first wins in two safe states on Tuesday while President Barack Obama won Vermont as expected, US television networks reported.

Romney won in Indiana and Kentucky, two states traditionally in the Republican column, and Obama prevailed in left-leaning Vermont, according to projections from US networks as polls closed in six states.

Polls also closed in Georgia, South Carolina and Virginia, although officials allowed polling to continue where there were long lines.

Networks said Virginia – which Obama won when he was first elected in 2008 and which would be vital in almost any Romney victory strategy – was too close to call, based on early exit polls and a small number of reported results.

The final opinion polls published before polling began showed the two candidates in a dead heat nationwide, but gave Obama a slight advantage in the handful of swing states like Virginia that will decide the race.

Each state has a quota of electoral college votes based on its population, and the eventual victor will be the candidate who tallies the most.

Polling was due to end in Ohio, the most important of the swing states, at 7:30 pm (0030 GMT), but reliable results were not expected for hours.

Ex-finance minister Dr Richard Hu to retire from GIC Board

SINGAPORE: The Government of Singapore Investment Corporation (GIC) said former Finance Minister Dr Richard Hu will retire from the GIC board with effect from 30 November.

In a statement, GIC said three new directors will be appointed to its board. They are former Singapore Exchange CEO Hsieh Fu Hua, banking veteran Loh Boon Chye and Executive Chairman of PricewaterhouseCoopers (PwC) Singapore Gautam Banerjee.

Mr Hsieh is also an advisor to PrimePartners Group and a director of United Overseas Bank, while Mr Loh will join Bank of America Merrill Lynch as Deputy President Asia Pacific in December.

The appointments of Mr Hsieh and Mr Loh took effect on Thursday, while Mr Banerjee will join the Board on 1 January 2013.

In a letter of appreciation, Prime Minister Lee Hsien Loong who's also Chairman of GIC paid tribute to Dr Hu's 31 years of service to GIC.

Appointed to the GIC Board in 1981, Dr Hu was then Chairman and Chief Executive of the Shell Group and the first private sector person to be appointed to the GIC board.

Mr Lee said Dr Hu's record will be "an exemplar for others from the private sector."

Dr Hu had served as GIC's managing director from 1983 to 1984. He was also Singapore's Finance Minister from 1985 to 2001.

Mr Lee said Dr Hu had played a key role on the GIC Board and fostered healthy dialogue between the board and the management team.

"This enabled GIC to weather successive external financial crises and take advantage of many investment opportunities over the years, " he added.

As Chairman of GIC Real Estate from 1999 to 2009, Dr Hu also oversaw the growth of the entity from mainly an investor in US office properties to one of the world's most globally diversified real estate investors.

Heineken gets revenue boost on sales outside W Europe

BRUSSELS - Heineken NV, the world's third-largest brewer, reported a stronger than expected increase in third-quarter revenue on Wednesday as it sold more beer in all regions except western Europe and profited from price hikes.

Heineken, fresh from its battle to take full control of Tiger beer maker Asia Pacific Breweries (APB), said revenue rose 4 per cent to 4.97 billion euros ($6.44 billion). The average forecast in a Reuters poll of nine analysts was 4.93 billion.

The maker of Heineken itself, Amstel and Strongbow cider maintained its forecast that 2012 net profit would be similar to that of last year on a like-for-like basis, with subdued demand in Europe and growth elsewhere and higher packaging costs.

Europe's largest brewer, whose Heineken brand is the continent's number beer, said the challenging economy and consumer caution led to declining sales in Britain, the Netherlands, Portugal and Spain.
However, beer sales rose in France and Italy.

Just under half of the Dutch brewer's revenue last year came from western Europe, boosted by its 2008 carve-up with Carlsberg of British brewer Scottish & Newcastle.

However, since then it has been gradually increasing its exposure to developing countries, including the 2010 purchase of the brewing assets of Mexico's FEMSA and its move this year to take full control of APB.

Heineken said group beer volume rose by 4.4 per cent in the Americas, with stronger sales in Brazil, Mexico and the United States of brands including Dos Equis, Tecate and Kaiser.

In the Asia-Pacific region, group volumes were up 4.8 per cent, with heavier drinking in Indonesia, Singapore, Thailand and Vietnam and a high single-digit percentage expansion in India, where it has a joint venture with United Breweries, the maker of Kingfisher lager.

SABMiller, with some 70 per cent of earnings in emerging markets, notably Africa and Latin America, last week reported a 4 per cent rise in first-half beer volumes.

World number one Anheuser-Busch InBev reports third-quarter earnings on Oct 31 and fourth-ranked brewer Carlsberg on Nov 7.

Enjoy tax benefits with SRS

Many Singaporeans use their savings to buy property as an insurance for retirement. Another attractive way to make sure you have something solid to fall on when you retire is investing in the Supplementary Retirement Scheme.

Introduced in 2001, the scheme takes care of contributors' needs beyond housing and basic medical needs.

You have to open an SRS account first with DBS or the other two local banks.

For more information about SRS, click here.

For investment options and further details, contact me here.

SRS contributions may be used to purchase various investment instruments such as listed shares, unit trusts, bonds, fixed deposits or insurance policies. It offers remarkably good tax benefits as investment returns are accumulated tax-free. Contributions to SRS are eligible for tax relief. Tax is deferred till the age of 62 and beyond and only 50 per cent of withdrawals are taxable on retirement.

Moreover, you are allowed to spread out your withdrawals over a period of time.

With lower or nominal income at retirement, you may end up paying little or no income tax. But there is a 5 per cent penalty imposed for early withdrawals.

There is no age ceiling for contributions to the SRS. You can contribute to the scheme up to any age, until the point where you make the first withdrawal, at the statutory retirement age or on medical grounds.

As it is essentially a tax deferral scheme and not a tax shelter for the asset rich, caps are set on the amounts of contributions per year. This is 15 per cent for locals annually and 35 per cent per year for foreigners in view of the fact that they do not enjoy tax relief on their CPF contributions.

Employers can contribute to their employees' SRS accounts, given the account-holders' current contribution limits - in absolute terms - of $12,750 per year for Singaporeans and PRs and $29,750 for foreigners for each employee. They can claim full tax deduction for their contributions. SRS members will be taxed on the contributions that their employers make to their SRS accounts. But they can enjoy a tax relief of up to the applicable contribution limit per YA for the SRS contributions which they or their employers make.

SRS is a voluntary scheme which gives you another good and sensible option to cope with inflation and do something about what would otherwise be an inactive pool of retirement money. It is a bonus to look forward to upon retirement.

And because it is, after all, a voluntary post-retirement benefit, it is not protected from creditors. Neither can it be used as legal collateral.

SRS also compensates for inflation as monies in the SRS account can be invested to gain potentially higher returns.

China manufacturing contraction eases: HSBC

BEIJING: China's manufacturing activity contracted in October but at a slower pace than in previous months, HSBC said Wednesday, a sign the slowdown in the world's number two economy is bottoming out.

The preliminary purchasing mangers' index (PMI) released by the British banking giant hit 49.1 this month, the highest level in three months and up from 47.9 in September.

A reading above 50 indicates growth in the key sector, while one below signals contraction.

While the figure marks the 12th straight month of contraction, it is also the second consecutive month of improvement and adds to recent indications that China's economy is on the mend after a slowdown that began early last year.

The index, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of the economy.

China's official PMI figure was 49.8 for September, a second straight contraction. October's official figures are expected on November 1, the same day HSBC will release its final result.

HSBC economists Sun Junwei and Qu Hongbin said in a report that October's reading came as total new orders picked up to a six-month high, while new export orders had their best showing in five months.

They also noted that the PMI result "reflected the filtering through of earlier easing measures" introduced by policymakers this year to boost growth.

Those include two interest rate cuts in quick succession as well as the loosening of restrictions on how much money banks must keep on hand in an effort to boost lending.

China last week said the economy grew 7.4 per cent in the three months through September, slowing for the seventh straight three-month period and its worst performance since the first quarter of 2009.

Improvements in September for exports, industrial production and retail sales spurred optimism that the worst may be over for the Asian giant, although Sun and Qu warned that problems in overseas economies and China's job market continued to weigh.

"Growth has likely bottomed out and is headed for a gradual recovery into 4Q (the fourth quarter)," they said, referring to the current final quarter of this year until December.

"With inflation still under control and downside risks to growth lingering, China should continue with its current easing efforts to secure a firmer growth recovery," they wrote.

China's consumer price index slowed in September, rising 1.9 percent year-on-year, slightly down from the 2.0 percent recorded in August.

Inflation plagued China's economy in much of 2010 and 2011, with CPI peaking in July last year at 6.5 percent.

China is preparing for a once-a-decade leadership change at a Communist Party meeting that starts November 8.

Fed Reserve expected to keep policy on hold

WASHINGTON: Despite signs of revival in the housing sector and a lower jobless rate, a cautious US Federal Reserve is expected to keep its stimulus programmes in place at its policy meeting this week.

Six weeks after breaking out a new bond-buying programme labelled QE3 to shore up the economy, analysts see little reason to expect the Fed's policy board, the Federal Open Market Committee, to reverse direction in its session on Tuesday and Wednesday.

The signs of recovery remain too feeble, and the overhanging risks too many - the US election on November 6 and the "fiscal cliff" crunch, the eurozone crisis and China's slowdown - to justify a policy change.

"The recent upturn in economic activity is not enough to force the Fed's hand to change now. It is far too soon for the Fed to react and will more likely reaffirm their commitment to QE3," said Chris Low at FTN Financial.

"After all, the economy is still adding fewer than 150,000 jobs a month, not enough to cover demographic changes or meet (Fed chairman Ben) Bernanke's goals," Low said.

At their last meeting, the Fed launched QE3 - a "quantitative easing" operation of buying in $40 billion worth of bonds monthly to press long-term interest rates lower - with the express aim of sparking companies to invest and hire.

Bernanke's concern over the slow pace of job creation has mounted over the past year and by the September 12-13 FOMC meeting, most of the members of the policy board had gotten in line behind him.

Likewise, his view that inflation is not a threat that requires more caution about stimulus has also been endorsed by the committee members.

That has not likely changed in the weeks since then, despite a surprise 0.3 percentage point fall in the national unemployment rate in September, to 7.8 percent - the lowest level since January 2009.

While the baseline number looked good, other figures - the overall number of unemployed, and those who dropped out of the workforce - indicated that the US economy's jobs machine remains week.

Since then other data has been mixed: consumer spending seems stronger and consumer sentiment is higher, but industrial production has weakened and exports are down.

The Fed's Beige Book survey of regional economies released October 10 recognised only a modest pickup in activity since August.

But that could be enough to change the tenor of the Fed's discussions, from one of mulling how to deal with a deteriorating economy to one of how to anticipate a potential breakout.

The Fed still has to assess the two targets of its interest rate policy: its mandates of managing inflation and keeping unemployment down.

Compared to last year, says Narayana Kocherlakota, head of the Fed's Minneapolis branch, the worry about inflation among FOMC members has mostly disappeared, despite its key interest rate still being held at next to zero.

"The terms 'hawkish' and 'dovish' presume that the committee faces a tension between its two mandates," he said in an October 10 speech.

"But the committee does not see any tension between its two mandates now. And its long-run unemployment forecasts suggest that it does not anticipate any tension between the two mandates until the unemployment rate is considerably lower."

Indeed, in the September meeting, Bernanke made clear that the low rate policy will remain in place until there is a substantial improvement in the country's employment situation.

The FOMC is expected then to talk more about how it will signal its views and intentions - whether, for instance, to set a specific goal for the unemployment rate, at which it might increase interest rates.

Nomura analysts said they expect FOMC participants "to spend considerable time in furthering the discussion around how to communicate the Fed's intention and craft a consensus forecast," as well as what they will do when a previous stimulus programme dubbed Operation Twist ends.