20/07/2012 World Business Report

Those are the latest headlines from BBC World News.

Now for the latest financial news in World Business Report.

Welcome to the program. A chance to look at all the latest in the world

of business and money. These are the headlines. Clashes at late

night protests in Spain as anger mounts against planned austerity

measures. And looking for a safe-haven. Why

some investors are paying eurozone governments to hold their cash.

And a bid for the makers of Tiger beer it may prove to be a bidding

war. First, let's talk to eurozone.

The terms and conditions of Spain's banking bailout are to be finalised

by eurozone finance ministers today. But while they are being thrashed

out, there are still fears that the country as a whole will need

financial aid. Borrowing costs surged above the dangerous level of

7% again. Last night, the biggest demonstrations so far against the

latest planned austerity cuts. Thousands took to the streets in

more than 80 cities. The protests lasted into the night and ended

with clashes between police and some of those protesting. More from

Madrid. Once again, thousands on the

streets. This is one of the main squares. Full of people. Probably

tens of thousands. It stretches right down the avenue. This latest

action against the latest austerity measures, the sales tax was going

up and public sector pay would be cut. The government hopes austerity

measures are part of that agreement with the eurozone over rescuing

Spanish banks would alleviate the pressure on markets. But, again,

the borrowing rates have gone above the benchmark 7% rate of interest.

Many people here seem to be organising themselves as they are

unhappy about the latest austerity measures. But the government

insists this is a way out for Spain. It needs to reduce spending and

balance its budget for Spain to get out of the crisis.

For more, I'm joined by Tom Rogers, Senior Economic Adviser to the

Ernst & Young. I want to talk about Madrid and what they are trying to

do. Certainly how they will get their books back in order. The

bail-out was given the green light by German Members of Parliament

yesterday. What is it about the bank bail-out that they have to

thrash out? One of the things we make it more clarity on today is

exactly how much money Spain will need to inject into its banking

sector. We know it was agreed that up to 100 billion euros would be

made available, which is just an estimate of how much would be

required in practice. Some people estimate about 65 billion euros or

so. We may therefore get more details on that and more on the

interest rate. We may get why the details potentially about the

eurozone banking union that was agreed in principle. So, how powers

may shift from National bags to the European Central Bank. What's to

discuss. -- national banks. Spain will get a bail-out and we know the

Government is doing all it can to get its books batting order. But

here is the problem - the markets and investors are not convinced.

Spain went back to the market to borrow money yesterday and

investors forced Madrid to pay high interest rates. They are not

convinced? There are two issues. 1, the circularity between the banking

sector and problems, struggling with bad debt. And the government

would alter that Lee has to backstop the painting sector. But

the government is also struggling. -- have to backstop the banking

sector. Also, there is the political problems the government

is having. But given all of what you have just said, at the end of

the day, certain markets and investors are not sure if Spain

itself is going to eventually need a bail-out for just its banks.

Exactly. The government is aiming to get its deficit down to 3% GDP

by 2014. It is currently about 8%. There will be many difficult

measures that need to be taken to get there. Thank you. We appreciate

your time. Moving on.

Lending money to the government has traditionally been seen as a low

risk investment and normally an investor gets paid a return for

parting with his cash. But now, as the eurozone crisis deepens, there

has been a curious development. In some parts of the region, like

Germany and Belgium, investors are actually paying the government to

lend them money. In other words, interest rates have turned negative.

Jeremy Howell explains how the topsy-turvy world of debt has

emerged. It is a stark sign of the chasm

that has opened between Europe's volatile periphery and its core.

The markets are demanding interest at 5% or more after a two-year bond.

But they are so keen on holding the German bonds, but the interest rate

for them has been negative for the past week and a half. Finish, Dutch,

Austrian and French bonds are trading at rates below zero.

Investors here in the collapse of the euro are ensuing financial

chaos see them as safe a -- and ensuing financial chaos see them as

safe havens. With this period of financial uncertainty, uncertainty

in the European banking area, it is important for people to feel that

there are these areas of safe havens for the money is protected.

There may be another reason why the financial markets are keen to hold

bonds, even when the return is negative. Euros have collapsed and

the countries of Europe have gone back to the old currencies. -- if

euros collapse. Then bonds would increase in value as those

currencies strengthen. Given the likely strength of the Deutsche

Bank if that would happen, you can see a substantial increase in the

currency. It is far from clear that the bombs would be leader nominated.

They may stay in the euro. -- banks. Analysts say bonds continued to

trade at rates below zero. That is until eurozone politicians for a

banking union and a fiscal court to restore confidence in the future of

the euro. A tussle for control of the company

that brews Tiger beer, Heineken, has offered $4.1 billion to buy

full control of Asia Pacific breweries, just days after a Thai

billionaire and his family bought a stake.

Great to see you. What is going on? It seems like everybody want a bit

of Tiger. That is right. It does seem like

everybody wants a refreshing pint or a bit more than that. Heineken

has made a bid to buy stakes. It already owns shares but wants to

buy a whole of the Singapore listed company. The bid comes just days

after Thailand's biggest brewer offered to buy shares in it, as

well as a Asia Pacific Brewery switch actually bruise the beer.

This may be something of a pre- emptive move by Heineken to protect

its interest in the region. It also wants to continue with its

expansion plans and this comes as beer companies tussle for control

of Asia's fast-growing market. According to Heineken's chief

executive, he said that the nature of the company's partnership had

changed due to the structure of the company and the shareholding. He

said he is looking forward to the next chapter of its Asian business.

Heineken says it will offer about 50 Singapore dollars per share

within the current ownership of this company. It is fairly complex.

We will wait to see how it pans out. Two. -- thank you.

A -- in other news, the worst drought in the US for 50 years is

raising fears of a food crisis. The price of corn and soy beans hit new

records on Thursday as supplies continue to be hit by the

blistering heat. There is little or no rain forecast until at least the

end of this month. The US is the world's biggest producer of corn

and a major supplier of wheat and soy beans.

Google has posted a jump in sales and profit. It rose 11% to $8

billion. Shares rose after investors were encouraged by the

amount of money it was making from customers clicking on adverts,

which of course Google charges a fee.

fee. This is what the Asian markets are

doing. The mixed bag. Despite the gains we saw overnight on Wall

Street, on the back of some upbeat corporate earnings. The Tate in