21/12/2011 World Business Report

Japanese prosecutors raided the headquarters of Olympus and the

It is decision day in a dispute that is provoking transatlantic

tensions. Brussels wants all airlines in Europe to pay for their

carbon emissions. Europe's highest court is to deliberate in the next

few hours. Airlines responsible for 3% of the

carbon put in the atmosphere. -- are responsible. This is the first

government body to take action to try to reduce this. From 2012, in

the airline taking off or landing in the US base will have to buy

Credit to compensate for the carbon. -- US airspace.

The EU look hard for the carbon omitted throughout the whole of the

journey, not just in European airspace.

The consortium of US airlines has argued to the European Court of

Justice that this is a breach of US territorial sovereignty. But they

are backed by powerful politicians. A lot of the Europeans want to do

it in their ace -- their airspace and that is their business and we

should comply with that. But outside, it violates some other

basic international agreements. the court rules in favour of the

scheme, the US has another weapon. A bid that is going through

Congress that would ban US airlines from participating in the European

Skene. East Asian countries are joining in opposing this. The fact

that a number of countries are opposing this scheme could mean

some sanctions or threats of not allowing EU airlines to fly in

their territory. This dispute could conceivably reach the stage where

states stop European airlines from flying into their airspace or stop

their airlines from flying into Europe. This would be a very

expensive move all round. So expect some of intense negotiations at the

beginning of 2012 as States and airlines negotiate with the

European Union to water down the Skene.

-- scheme. The new Italian Prime Minister has been sworn in.

But he may have a less benign welcome from the public as he wants

to slash the country's deficit by 16,500 euros. That is just the

start. Can he get his austerity measures through? We are joined by

a professor at the School of Economics in the bar. Thank you for

talking to us. From what you have heard of these reforms, what you

make of them so far? They are going in the right direction in that they

have pointed out the main issues that Spain has to tackle. And the

two main issues - the labour market reform and restructuring the

financial sector. So it is clear up their attitude is correct. Now, how

will that the cows come about? That will be key. And the markets seem

to be giving him a thumbs-up. how will that come about. Will it

be difficult for him to get support from the public? It is clear that

the government has absolute majority. That is one advantage

this government has. On the other hand, the public has given strong

mandate to this government. They want them to do what they have to

do. It may cause them trouble but I do not believe the public will

support such bold measures. Thank you. Apologies as we are short on

time. Investigators in Tokyo have raided

the headquarters of the camera company Olympus. Rico Hizon is

covering the story. Dramatic events today.

Absolutely. No let up in probing one of Japan's biggest corporate

scandals. Japanese prosecutors are raiding the Olympus Maine Office,

its subsidiaries and the homes of executives. The residents of one of

the former President's -- presidents was searched today. We

still do not know what they found all what they took from the

premises. They are investigating the firm which has admitted to

hiding huge investment losses by questionable deals over the past 20

years. The whistle-blower on the scandal was fired in October. He is

trying to get his job back but faces a long battle to get his

current position with the management team. Olympus shares

were down in Tokyo by 1.5% at the big day trading break. There were

as a 16% surge the day before. Grim figures coming out about the

Japanese economy today? Absolutely. We have the eurozone

debt crisis, the floods in Thailand, the slowing down emerging economies,

they are blamed for the poor Japanese export data in the months

of November. Outbound shipments fell 4.5%. That was due to weak

demand for digital cameras. Amid this green backdrop, the Bank of

Japan kept interest rates unchanged and offered a bleaker view on the

economy. This is due to the mounting evidence of paint

inflicted by Europe's debt crisis. It is thought there will be a big

uptake from eurozone banks when the European Central Bank offers a --

three-year loans at cheap rates later today. Estimates range from

150 billion euros to 600 billion euros. The ECB is trying to ensure

banks have access to cash so they can keep lending to companies and

households. The sportswear maker Nike saw its

second quarter helped by strong demand for its branded products. It

earned $469 million, up from $459 million for the same quarter one

year ago. Business was especially brisk in developing markets and

particularly in China. Looking at the market. You will

remember on Monday how far the South Korean market fell on the

South Korean market fell on the news of the death of Kim Jong Il.

It then recovered a little bit on Tuesday. In fact, it is moving

quite nicely ahead now. Just under 3%. It has more than recovered from

those drops. The Nikkei is up by 1% at this stage. A lot of that has

been driven by events in the US. We saw a big rise from the Dow Jones

on Tuesday, up by nearly 3%. That was the best trading day in the

month so far. Helped by some very strong housing data. And the news

that Spain's debt auction was better than people expected. This

is where the European markets will be starting their trading session