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$14B US auto bailout dies in Senate
(Agencies)
Updated: 2008-12-12 13:48 OUT OF GAS Tokyo's Nikkei average and stocks elsewhere in Asia fell 5 percent and more after the bailout package ran out of gas. The region's auto stocks went into freefall, with Toyota Motor Corp, Nissan Motor Co and others extending earlier falls to more than 10 percent US stock futures were also down and European shares were set to follow. The dollar was pushed below the sensitive 90 yen level, its weakest in 13 years. The yen often gains as a relative currency safe haven in times of risk aversion. US government debt, another haven for fretful investors, also rose. US crude oil prices, which earlier slipped for the first time in three days, almost doubled their losses after the bailout collapse. "Everybody is a bit jittery. When you get news like this, there will be flight to safety, which is from emerging Asia to the dollar and yen," said Alvin Liew, Southeast Asia economist at Standard Chartered Bank in Singapore. Reid had hoped that an agreement could be reached on a recalibrated rescue package, but General Motors, Chrysler and Ford limped back to Detroit empty-handed. The compromise plan would have granted them loans under stricter conditions than those favoured by Democrats and Bush's White House. The failure of any one of the three would echo not only through the global supply chain but in financial markets as well. Senator Christopher Dodd, a Connecticut Democrat, said the main issue of disagreement was a deadline for Detroit autoworkers' pay to reach parity with foreign manufacturers. Stimulus In Brussels, a European Union summit will commit to an economic stimulus package worth about 1.5 percent of total EU output, according to a final draft text obtained by Reuters before the start of a second day talks among bloc members. Yomiuri did not cite any sources in its report of the stimulus package for Japan's recession-hit economy. Although details were sketchy, not all of the $437 billion -- about 10 percent of GDP -- was earmarked for spending. Part of the money would be used to expand the amount of public funds set aside to pre-emptively recapitalise financial institutions to 12 trillion yen (US$131 billion) from 2 trillion yen, the paper said. South Korea's currency swap deals come before leaders from South Korea, Japan and China meet in Japan on Saturday. The deals are meant to help South Korea cope with a credit crunch and a sharply slowing economy. With currency reserves at their lowest levels in almost four years, South Korea has already been dipping into a $30 billion swap line with the US Federal Reserve and has smaller swap deals with some Southeast Asian central banks. |
