24/09/2012

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:00:05. > :00:15.Working Chinese factories face a slowdown after a dispute over

:00:15. > :00:16.

:00:16. > :00:24.clerical processes hold Japanese business on the mainland.

:00:24. > :00:26.-- halt. During the weekend, German

:00:27. > :00:29.chancellor Angela Merkel and the French President clashed on the

:00:29. > :00:35.timing of the introduction of oversight of the banking sector in

:00:35. > :00:40.Europe. The leaders were meeting in Germany to celebrate the nation's

:00:40. > :00:44.reconciliation after the Second World War. Francois Hollande called

:00:44. > :00:51.for the banking oversight to be implemented as soon as possible,

:00:51. > :00:59.whereas Angela Merkel says the process needs to be thorough, as

:00:59. > :01:07.she balances Europe, who would like to forge ahead, and Germany, who

:01:07. > :01:11.would like to... The French finance minister on

:01:11. > :01:14.Sunday said he is in favour of giving Greece more time as long as

:01:14. > :01:18.they are sincere on austerity measures.

:01:18. > :01:21.We also have Mario Monte holding a conference on structural reform in

:01:21. > :01:31.Italy. This brings together government ministers, experts and

:01:31. > :01:33.

:01:34. > :01:40.academics to discuss ways to boost competitiveness, growth and jobs.

:01:40. > :01:44.If we start with France and Germany to begin with - the two together

:01:44. > :01:47.for other reasons than the eurozone debt crisis. The media read between

:01:47. > :01:54.the lines and saw more dissension between the two and little

:01:54. > :01:59.agreement. That seems to be the conclusion this morning. There is

:01:59. > :02:05.still a prospect of a compromise. Both countries have an interest in

:02:05. > :02:09.making it possible that banks can receive direct support from the E S

:02:09. > :02:13.M. I think it is just a question of how far that can go. There is a

:02:13. > :02:18.hidden agenda - the German banks have a significant reserve fund

:02:18. > :02:22.already paid in. There is the fear that these reserve funds, which are

:02:22. > :02:27.there to protect German interests, may be used to bailout Spanish

:02:27. > :02:32.banks. I think the fear with the debt crisis is always that the

:02:32. > :02:37.politics gets in the way. It causes unnecessary delays and that causes

:02:37. > :02:42.more pain for Spain and Italy. The interest rate on their debt goes up

:02:42. > :02:46.and up while politicians procrastinate. That's correct, but

:02:46. > :02:51.there are two areas of political endeavour - one is the formation of

:02:51. > :02:54.solidarity mechanisms. The E S M is one of those. On the other hand,

:02:54. > :02:58.the countries themselves which are in trouble have to make efforts

:02:58. > :03:06.themselves as well. There hasn't been that much progress, even

:03:06. > :03:11.though the pain has been felt. This is not necessarily because of

:03:11. > :03:13.austerity, it is more because some areas have imploded. Is it

:03:13. > :03:16.important that the French Prime Minister has said that he feels

:03:16. > :03:22.that Greece should be given more time to implement austerity

:03:22. > :03:25.measures? That puts France against Germany again. Germany has also

:03:25. > :03:29.indicated that it is not totally against more time, but it is

:03:29. > :03:34.against more money. In a way, you can't have one without the other.

:03:34. > :03:39.More time probably means more money. The latest news from the troika,

:03:39. > :03:42.which has been in Athens to investigate the state of progress,

:03:42. > :03:47.they say Greece needs possibly twice as much extra money on top of

:03:47. > :03:50.what it has received, in order to plug the gap. Wartime means more

:03:50. > :03:55.money, but the German government doesn't want to go back to its

:03:55. > :04:01.parliament to get more approval for a third bailout package -- more

:04:01. > :04:09.time. And in Italy today a big conference to try to work out how

:04:09. > :04:19.to afford that expending Italy's debt burden. -- how to move forward

:04:19. > :04:20.

:04:20. > :04:27.without expanding. Mario Monty has left it open - what he wants to

:04:27. > :04:31.pursue. He hasn't had much fun so far. We shouldn't forget that

:04:31. > :04:38.Italy's deficit is much less than that of other countries, including

:04:38. > :04:43.the UK. In a way, he can at least say that they can move forward.

:04:43. > :04:47.Thank you very much. Let's take a look at Europe's

:04:47. > :04:51.luxury goods sector. It has been on tenterhooks ever since Burberry

:04:51. > :04:55.issued a warning to shareholders earlier this month, saying that

:04:55. > :04:59.sales in China have slumped. It is the new rich of China who has kept

:04:59. > :05:04.the sector a float. The fear is that even they have now started to

:05:04. > :05:07.watch their spending. Today, Prada will release its second quarter

:05:07. > :05:11.earnings and investors will scrutinise the figures to see

:05:11. > :05:15.whether Chinese slowdown has been done.

:05:16. > :05:24.In the past week, the stars of Italy's fashion industry have had a

:05:24. > :05:31.chance to dazzle the world. Trying to get the at -- tempt consumers

:05:31. > :05:35.with thousands of new designs. There is a race for luxury items

:05:35. > :05:41.amongst the new rich of China. Prada has been one of the winners.

:05:41. > :05:44.Last yet it said its sales in China had risen by 40% over the year. But

:05:44. > :05:54.on 10th September, British Red Bairbre warned that its sales in

:05:54. > :05:55.

:05:55. > :05:59.China were stalling. -- of British company Burberry. Other luxury

:05:59. > :06:05.goods also fell by about 5%. That is a sign of investor doubt about

:06:05. > :06:08.the luxury sector as a whole. a big company warns about

:06:08. > :06:11.profitability and sales, the fear is that the whole sector is

:06:11. > :06:15.unravelling. The emerging markets have been been drivers for these

:06:15. > :06:18.businesses over the last couple of years as the new wealthy find these

:06:18. > :06:22.brands very aspirational. There are fears that economic will growth is

:06:22. > :06:27.slowing there, so the growth for these companies will come to a stop

:06:27. > :06:31.as well. Burberry's poor results may not mean bad news for others.

:06:31. > :06:37.Burberry is different to other brands because it has only recently

:06:37. > :06:41.climbed into this category. Before it was seen somewhere at the high

:06:41. > :06:44.end of the popular retail market. It is now no surprise that it is

:06:44. > :06:49.the first to fall out of favour with Chinese luxury buyers.

:06:49. > :06:55.Established luxury brands like Prada will keep their love for

:06:55. > :07:00.longer. You might argue that Prada will stay for longer and that

:07:00. > :07:05.people will increasingly say - if you want through Western luxury

:07:05. > :07:10.there are only a few brands that really matter, and Prada is one of

:07:10. > :07:14.them. Prada has opened no less than 25 stores in China. Whether or not

:07:14. > :07:20.the Chinese economy is slowing, it must continue making big sales

:07:20. > :07:23.there for that investment to pay off.

:07:23. > :07:27.Toyota has resumed operations in China after protests over

:07:27. > :07:37.territorial disputes caused disruption for Japanese businesses

:07:37. > :07:40.

:07:40. > :07:44.in China. Toyota is back on track?

:07:44. > :07:49.Yes, but the president of the car giant has said that Japanese auto

:07:49. > :07:54.sales in China will be damaged next month as a result of these ongoing

:07:54. > :08:00.tensions between the Japanese and the Chinese. Last week car

:08:00. > :08:05.companies from Japan were attacked and some production was stopped.

:08:05. > :08:09.And eastern city in China is where Japan's largest carmakers all

:08:09. > :08:15.reported attacks on dealerships. They suspended production at

:08:15. > :08:21.manufacturing facilities. Honda has resumed production. Other Japanese

:08:21. > :08:31.businesses have started resuming operations as well. This includes

:08:31. > :08:33.

:08:33. > :08:40.Sony.... Chinese sales from last week are expected to be about 20%

:08:40. > :08:44.less for many Japanese retailers. Let's show you the market quickly.

:08:44. > :08:49.We have losses across the board in Asia. That is partly to do with the

:08:49. > :08:56.discord coming out of the meeting between Angela Merkel and Francois

:08:56. > :09:00.Hollande. This has caused the euro to fall a little bit. There is also