10/11/2011 World Business Report

-- a number of. Now for the latest A warm welcome, you are with World

Business Report. These are the headlines: Italy will try to raise

EUR5 billion today in the face of evaporating investor confidence in

the country. Contagion fears, age and stocks are down sharply because

of travels in Italy. -- Asian stocks. And life after the bail-out.

Strikes, austerity in Portugal as it tries to cling to European

Good to have you with us. Later today Italy will try to auction

EUR5 billion worth of government bonds in the face of fast

evaporating investor confidence. Wednesday's deep falls on global

stock markets and the worst day for the euro in more than a year is

testament to the level of fear now about the eurozone debt crisis. The

trigger... another surge in the borrowing costs faced by Italy with

over two trillion dollars of debt, it is seen by many as too big to

fail but too big to bail out. In a moment we will have the latest on

the Asian markets where the sell- off is continuing. But first, this

from Nigel Cassidy. It is coming to the crunch. Italy's

been paying more to borrow than Ireland, Greece and Portugal before

they were bailed out. If it turns out the commercial buyers don't

want Italy's paper, Silvio Berlusconi will be forced to seek

aid from the International Monetary Fund and the EU. Something he has

set himself against. Italy's lenders push up loans because they

don't believe the European Central Bank is backing the country by

buying another of its bombs. There is little faith in Italy's ability

to deliver on promised austerity measures. This City of London firm

analyses risks and they think there is a 65% tranche of both Italy and

Greece defaulting by the end of November -- 65% chance. They say

euros a leaders are much more likely to be cut by the crisis --

eurozone leaders. Italy needs to be able to demonstrate to those

creditors that the money they are given will be refunded. There are

clear doubts, that is why we have so many problems. If Italy cannot

sell those debts, we suspect, the probability we have put on it is

65% that markets will say, "We're not happy to hold onto Italian

paper any more". Italy may be able to sell its sponsors today at a

cut-price. But how will they roll over its longer-dated bonds in

early 2012 and raise the billions it needs to stay afloat.

Now in Singapore, how are the market's trading? Rico, not

surprisingly it has been a tough session. Indeed. It hasn't been a

good day for Asian investors. All markets are in the red. The Nikkei

is down 3% as well as Australia. Hang Seng is down about 4.5%, while

South Korea's market is giving back about 4%. Asian investors are very

concerned about what's happening in Italy, which is of course a much

bigger economy than Greece, which has been at the centre of this

crisis in Europe. Analysts say market volatility will be here to

stay. Markets have been very volatile over the last few weeks.

Also Asian investors have been divesting other economic data,

weaker than expected machinery orders from Japan is a problem --

by jesting. China's trade figures are confirming exports from there

have been slowing though that -- so that is a problem. Chris Dean

Lagarde, head of the IMF, is still in China. -- Christine Lagarde. She

is trying to get support for the beleaguered eurozone economies. She

is holding a press conference in an hour, any big announcements?

don't know. Everyone in Europe is hoping she will come out and say

China has agreed to save Europe from this debt crisis. However

China has been quite reluctant to say what they are going to do. But

from the Chief of the IMF, the statements have been pessimistic.

Saying that the world economy could be heading towards a lost decade.

She said that Asia is not immune to what's happening in Europe. She is

heading to Japan, who have been buying a lot of Bonn's from Europe,

where she will be seeking more support. Thank you for joining us.

From fears about Italy now to the struggles of a country that's

already been bailed out. Portugal's parliament is set to debate a

budget for next year later which is seen by many as the severest

austerity package in its history. It is trying to renegotiate the

terms of its 17 billion dollar bail-out. On Wednesday, the head of

the euro group of finance ministers, he was in Lisbon and he tried to

reassure the Portuguese that Brussels is behind them.

Portuguese should not have the impression that they are totally

isolated in Europe and they will be left alone. There is no euro

without them. There will never be a euro without Portugal. Let's speak

to Allison Roberts, who is in Lisburn. Allison, he's doing his

best to reassure the Portuguese, did it work? The comments were seen

as helpful here. However the Portuguese are under no illusions

as to the degree of austerity they are facing. It was significant that

yesterday both the Prime Minister and John Pierre said there was no

attempt or no need on the part of Portugal to renegotiate the deal in

terms of getting more money. That is rolling back a bit from

government comments earlier saying they were looking to readjust and

now they're saying there are just technical details as a team of

senior officials from the European Central Bank and International

Monetary Fund are in Lisbon now, they are here for a couple of weeks,

and they are going over all the details of the programme. Apart

from anything else, they have to decide whether to hand over the

next part of the bail-out, which has already been agreed. What about

the next budget for next year which they will begin to debate in

parliament today. What is in it? The cuts are deeper than what was

agreed by the international lenders. In part because Portugal wants to

show that it is demarcating itself from Greece. It does not that

everybody here is talking about. The most controversial measure has

been the removal of holiday and Christmas pay for most public

sector employees and many state pensioners. That is a one-seventh

cut in annual income. That is deeper than many people expected.

Many tax rises and other spending cuts that will affect everybody

here. Briefly, it will be very difficult to implement?

government has a majority in parliament but there is resistance.

There will be a demonstration outside the parliament building

during the debate and there will be a general strike later this month.

Implementation will be very difficult indeed. Thank you for

joining us. China's feeling the effects of a weakening global

economy according to their latest figures. Export growth was the

weakest in eight months in October and close to the levels seen in

2009 when exports actually shrank. Exports surged suggesting that the

country's attempts to rebalance the economy towards domestic demand are

working. The Bank of England will wrap up its monthly meeting later

and it is widely expected to leave interest rates at 0.5%. Last month

the bank expanded its �200 billion programme of quantitative easing,

many economists think that the banks will have to pump more money

into the UK economy soon. In a few hours James Murdoch will answer

questions on phone hacking for a second time in front of Parliament.

It will be the first time he will be questioned about widespread

surveillance of public figures by the News of the World. In Asia, as

was said, a very tricky session. The news about Chinese exports been

lower did not help either. Also Japanese manufacturing orders are

lower as well. Or factory orders I should say. The Japanese production

line is slowing as well because of the impact of what is happening in