Headlines

The dollar strengthened on Tuesday after a media report questioning the health of the German banking system prompted traders to cash in on the euro's recent rally that culminated in a five-month high last week, Reuters reported. The report in Britain's Daily Telegraph was prominent among reasons given for the euro's slide of almost one percent to below $1.39, another being the relatively disappointing euro zone economic data in recent days.

Troubled Mexican retailer Comercial Mexicana faces a crucial day on Friday, when a deadline to reach a debt restructuring agreement expires--and some analysts even doubt a deal will be reached, Reuters reported. The supermarket operator, known as Comerci, defaulted on its debt in October after massive derivative losses ballooned its liabilities to more than $2 billion. It has been trying ever since to find a way to sort out the situation, while avoiding having to sell core assets or give creditors a stake in the company.

The debt-laden 56.6 per cent shareholder of the Ten television network, Canadian group CanWest Global Communications, has finally secured new financing to give it breathing space to focus on a full restructuring of its debt, The Australian reported. The new financing may enable CanWest to hold on to its Australian operations, but insiders said CanWest would struggle to institute such a rescue deal and avoid filing for protection from creditors.

Credit-ratings firm Fitch Ratings says China's banks are showing early signs of asset-quality deterioration amid a torrent of lending to help fund government stimulus projects, The Wall Street Journal reported. New loans totaling 5.17 trillion yuan, or $757.5 billion, in the first four months of this year have already exceeded the 4.91 trillion yuan in loans made in all of 2008. Amid the credit surge, government officials have warned of rising risks.

Utility investor Infratil is philosophical about its failed investment in oil exploration company Austral Pacific Energy, now in receivership, The National Business Review reported. Infratil executive Tim Brown says the company has written off a total of $12.1 million on the investment since buying its initial 11% stake in 2005. “The best we can say of that unfortunate investment is that we didn't support their last few capital raisings, so while a bad outcome it could have been worse,” Mr Brown said.

In a sign of how the financial crisis is reordering business, German auto-parts maker Schaeffler Group has begun discussing a sale to Continental AG--just 10 months after Schaeffler launched an $18 billion hostile bid to buy the German tiremaker. Schaeffler's reversal of fortune--the latest twist in a takeover saga that, on paper, has virtually wiped out the founding German family's $9 billion net worth--comes just two weeks after another audacious bid in the German auto industry boomeranged.

Taiwan's economy contracted by a record 10.24% in the first quarter from a year earlier as Western consumers refrained from buying the island's exports, prompting the government to revise down its growth forecast for 2009, The Wall Street Journal reported. The first-quarter decline in gross domestic product--the third consecutive quarterly retreat for the export-oriented economy--exceeded the 9.05% fall expected and followed the island's revised 8.61% contraction in the fourth quarter of 2008. Taiwan, home to technology-goods producers like Acer Inc.

Britain yesterday became the first big economy to be warned in the financial crisis that it might lose its top-notch credit rating, in a move that raised fears of possible downgrades for other large industrialised nations, the Financial Times reported. S&P based its warning on a forecast that net government debt risked approaching 100 per cent of national income and staying at that level. "A government debt burden of that level, if sustained, would in Standard & Poor's view be incompatible with a AAA rating," the agency said.

Standard and Poor's grim warning on the British economy is as much an indictment of the political landscape in London as the perilous state of the public finances, according to newspapers, Agence France-Presse reported. An editorial in the Financial Times described the verdict as "dramatic", but said the signs had all been there for some time. The business daily said the biggest risk hanging over recession-hit Britain was political, warning there was a "credibility hiatus" caused by the anticipation of an election, which must be held by June 2010.

Sony, which has 2,500 suppliers of components and materials, is to cut the number by half in a “life-changing” effort to streamline its cumbersome procurement network and cut costs by about 500 billion yen (£3.3 billion), the Times Online reported. The move by the entertainment and electronics group marks another shift in the Japanese business environment which, over the past six months, has undergone more radical changes than at any other time in the past 20 years.