Headlines

Russia has won $25 billion in loans from China in return for agreeing to supply oil from new fields in eastern Siberia for the next 20 years as Moscow seeks funds to see its oil industry through the financial crisis, the Financial Times reported. Transneft, Russia’s oil pipeline monopoly, said on Tuesday China had agreed to lend it $10 billion (€8 billion, £7 billion) and Rosneft, Russia’s state-controlled oil giant, $15 billion in return for 20 years’ worth of oil supplies.

Bank analysts predict that Ukraine is heading for a historic default on its national debt, in a scenario that could complicate EU-Ukraine relations and have an impact on the recent Russia-Ukraine gas transit deal, BusinessWeek reported. "The market is pricing in a probability of sovereign default of almost 90 percent," Commerzbank analyst Ulrich Leuchtmann told EUobserver on Monday. "It could happen in the next couple of quarters." Ukrainian industrial production has plunged 26 percent compared to last year.

Japan's economy contracted at its fastest pace in nearly 35 years in the final quarter of 2008--and is likely to underperform other major nations early this year as demand for its goods collapses, The Wall Street Journal reported. Japan's gross domestic product shrank by 3.3%, or an annualized pace of 12.7% during the quarter, the government said Monday, a steeper decline than contractions of 3.8% reported for the U.S. and 5.9% in the euro zone for the period.

With Lloyds Banking Group PLC and the U.K. government seeking to calm fears that the bank will be nationalized, they face a problem that Lloyds can't control: the souring U.K. economy. Lloyds' shares fell 8.1% Monday after falling 32% Friday, the day it disclosed that it expects to post a £10 billion ($14.4 billion) pretax loss for 2008, The Wall Street Journal reported. The losses stem from souring loans related to Lloyds' recent acquisition of U.K. mortgage lender HBOS PLC.

The French government may acquire about 20 percent of the combined Groupe Banque Populaire and Groupe Caisse d’Epargne, the customer-owned banks in talks to merge, said three people with knowledge of the situation. A state capital injection would help shore up Natixis SA, the unprofitable investment bank controlled by Caisse d’Epargne and Banque Populaire, said the people, who declined to be identified because the talks are confidential. Discussions on the matter are continuing and plans could change, the people said.

Australia’s ailing car industry has taken another blow, with Albury manufacturer Drivetrain International Systems falling into receivership with debts of $30 million to $40 million, SmartCompany.com.au reported. Production has been suspended for a week, with the company’s 400 workers stood down. Receivers and manager Stephen Longley from PricewaterhouseCooopers will assess the company’s financial position and attempt to sell the business as a going concern. Production is expected to resume next week in a reduced form.

Nortel Networks is taking heat from two suppliers who say its bankruptcy being overseen by a U.S. court doesn't consider how their own businesses could be affected, The Canadian Press reported. JDS Uniphase Corp. says the process proposed by the telecom equipment maker when it sought protection from its creditors last month will take too long and contains no protections for Nortel's suppliers. JDS Uniphase also addressed concerns that it's being left out in the dark by Nortel because the technology giant doesn't plan to share information on the bankruptcy process.

Fears are growing that Ireland could default on its national debt after the cost to insure against possible losses on loans to the country rose to record highs at the end of last week, The Guardian reported. Credit ratings agency Moody's recently followed rival Standard & Poor's in warning it might downgrade Irish debt, amid fears that one of Europe's former success stories is falling into a deepening recession.

South Africans leasing property are feeling the pinch of the credit crunch as overspending puts strain on their ability to pay rent, The Times reported. According to the latest report by the Tenant Profiling Network the credit bureau released yesterday, 12 percent of tenants are unable to make their payments, while 46 percent made late or partial payments. The report showed a rapid slide in rental payments last year. During the first quarter, 70 percent of tenants paid the rent diligently, but by the end of the year only 54 percent could pay on time.

Pakistan will seek an additional $4.5 billion loan from the International Monetary Fund in April to accelerate the pace of economic growth and shore-up foreign exchange reserves, Shaukat Tarin, the economic advisor to country's prime minister, said. The South Asian nation, which was on the brink of an economic collapse after the balance-of-payments deficit widened to a record level, received $3.1 billion from the IMF in November as the first tranche of its planned $7.6 billion rescue package, The Wall Street Journal reported.