Headlines

Mortgage lenders have warned that an imminent crackdown by the FSA on lending practices could keep the market in the “doldrums” for the foreseeable future and even jeopardise the economic recovery, the Financial Times reported. Under proposals from the City watchdog, lenders will have to do more to ensure borrowers can afford their mortgages. That could mean a curtailing of interest-only products, self-certified mortgages and products of longer than 25 years. Lord Turner, chairman of the FSA, recently claimed the changes would only marginally affect most would-be borrowers.

The French government thinks it knows the solution to its slow growth and loss of industry: Be more German, The Wall Street Journal reported. "I admire the German model," French President Nicolas Sarkozy said recently. "We need to learn from some aspects." The government is now carrying out a detailed comparison of its tax system with that of Germany, which has lower corporate and payroll taxes than France. Germany traditionally has grown more from investment and exports, which are now booming thanks to demand from China, and it generally has run lower budget deficits than France.

Growth in Chinese manufacturing activity slowed this month for the first time since July, an industry survey showed, but the reading remained relatively strong and analysts predicted further inflation-fighting measures from the government like interest-rate increases and currency appreciation, the Wall Street Journal reported today. The HSBC China Manufacturing Purchasing Managers Index, a monthly gauge based on a survey of executives, also showed that prices for factory inputs rose in December at their slowest rate in three months.

Indonesia said that it will tighten rules on banks’ foreign-exchange holdings and overseas borrowing to cope with capital inflows that have pushed up inflation and strengthened the rupiah this year, Bloomberg News reported today. Bank Indonesia will also reintroduce a 30 percent cap on lenders’ short-term overseas borrowing to minimize the risk of sudden capital outflows, it said yesterday. Banks must set aside 5 percent of their total foreign-exchange holdings as reserves as of March 2011, from 1 percent currently, Deputy Governor Budi Mulya said yesterday.

Blackstone Group LP has jumped into the bidding war for Australian shopping-center owner Centro Properties Group, intensifying what is likely to be one of the largest property takeover battles of 2011, Dow Jones Daily Bankruptcy Review reported today. Blackstone, among the world's largest buyout firms, with $100 billion under management, made a preliminary offer known as an "indicative bid" by the Dec. 17 deadline set by Centro.

Canada is poised to cut its corporate-tax rate to 16.5 percent on Jan. 1, part of a decade-long campaign that some experts say is making the country one of the most cost-effective places to do business, the Wall Street Journal reported today. Canada's government says that the cuts and other business-attracting measures should bring more investment to the country.

One of Italy's biggest unions yesterday announced a strike next month to protest against an agreement reached between Fiat SpA and rival unions to build Alfa Romeo and Jeep vehicles at a key plant, Dow Jones Daily Bankruptcy Review reported today. The metalworkers' union, Fiom, took part in the talks last week but refused to sign the agreement on the terms of the future labor contract for the plant because it rejected some of these terms demanded by Fiat.

Austrian technology and engineering group A-TEC struck a deal with creditors yesterday to repay 47 percent of its debts and agreed to find an outside investor by June 30 as a way to avoid bankruptcy, Reuters reported yesterday. The insolvent industrial conglomerate with more than 11,000 employees was under pressure to find a solution with creditors by a Jan. 20 deadline. Georg Kantner of the Austrian creditor's association KSV said that the deal had bought time to find an investor and provided a realistic chance for a turnaround.

China’s commerce ministry announced a steep reduction in export quotas yesterday for rare earth metals in the first months of next year, a move that threatens to cause further difficulties for manufacturers already struggling with short supplies and soaring prices, the New York Times reported today. China mines more than 95 percent of the global supply of the metals, which are essential for smartphones, electric cars, many computer components and a range of military hardware.

Creditors of A-Tec Industries AG, the insolvent Austrian engineering group, would welcome majority shareholder and Chief Executive Mirko Kovats stepping down, Austrian state broadcaster ORF quoted the spokesman of A-Tec’s creditor committee as saying, Bloomberg News reported today. Kovats’ resignation as CEO “would be beneficial for building trust and it would be very, very acceptable for creditors,” Hans-Georg Kantner of credit protection association KSV Kreditschutzverband von 1870 told ORF radio in an interview.