01/10/2012 World Business Report

it an anti-Putin punk anthem in at a cathedral.

Now it is time for World Business Report.

Welcome to World Business Report. The headlines: After months of

talks, the board of Xstrata or is set to back the offer from Glencore

in what could be the biggest merger this year. With Spain under

pressure from the financial markets over its debt levels, we look at

how the on our hardest hit. An anti-corruption initiative which

takes effect today in China could impact the luxury goods market.

It's worth $80 billion. It could be the biggest merger this year. Today,

the board of the mining firm Xstrata is expected to finally back

a merger offer from Glencore. The two companies may both be in mining

but they operate in different areas. Xstrata extract coal, copper and

nickel from the ground, while Glencore is a commodities trading

house. The deal has been in the works for seven months, held up by

disagreement over price as well as the huge pay packages for the

management. Shareholders must still backed the deal. It will be put to

a vote in late October. I am joined by Rupert Nathan from a financial

services firm. And as we have said, Xstrata is

finally likely to recommend this deal today. It is by no means a

done deal. The rumours over the weekend have been pointing towards

the board of Xstrata recommending this. If they do make the

recommendation it will have to go to a vote at the end of the month.

What will happen in their vote? Some key shareholders are not

revealing where they are at as far as this deal is concerned, are

they? Yes, Qatar is at the centre, and they are the kingmakers in this

game. They, as well as the Norwegians are often well funds who

have come out against. Other, more vocal shareholders such as

Blackrock have expressed unhappiness with either the quantum

of what has been paid, or, alternatively, the controversial

share retention packages. If we talk about the price at this point

that, what has been the feeling about that? Why have they not been

happy with this price? It is far too low. Right from the outset.

Back in February - 2.8-one was quoted as the ratio. The bottom

line was that the CEO of Glencore felt that with 34% it would go

through. A few months ago, Qatar has been adding to its stake and

they emerged at 12%. Bear in mind, it only takes 16.5 % to scuttle the

deal. It was in jeopardy. The opposing shareholders but -- knew

that life had been breathed into the opposition. In terms of who is

running this company, it's going to be Mark gleys and -- Glesenburg....

Originally, 72 key managers were going to be kept after the merger.

This included the CEO, who was looking into a $30 million pay-out

for staining for three years. Along with the 3.054 at one revised price,

it was agreed, or rather, proposed, That the C O would step in after

six months to take over from Mick Davis -- the CEO. Now we are still

talking about $140 million, still a sticking point Mac. If this is

recommended today by Xstrata, will shareholders vote against it?

still a very close thing. We think there is much further to go. I'd be

looking to see what Qatar and the other shareholders have to say.

We are expecting this deal in 1.5 hours when the London market's good

all the information. We will tell you about it then.

The Spanish government has predicted that debt levels will

rise further next year as much as 90.5 % of the country's total

wealth. That is because of the money spent bailing out the banks.

The country is suffering from record levels of unemployment. As a

part of our series on the UN and jobless, we look at how the

shrinking public sector is hitting the young are hardest -- the young

and jobless. This has become a noisy daily

routine. Every morning, people who work in Spain's public hospitals

cut the traffic on this main road in Madrid. (CHANTING). Angry about

government cuts, they are marshalled by the police. This is

an indication of just how strongly people feel in Spain about the cuts

to public health. There is one section of society that is

particularly affected by austerity. That group is the young. Students

like this woman, who is now studying to become a doctor. When

she finally finishes, four you're - - she will do for years as a junior

doctor. She knows it will be hard with ever-diminishing resources in

the public health system. I am worried that I won't find anything

in my speciality because it is difficult to study and work for

about ten years and then going to a hospital and not find anything.

It's really, really hard. What if you don't find anything in your

speciality? I'm sure that I'm not going to stay here until someone

tells me that I have a place. I'm going somewhere else, because I

want to work as a doctor. Then there are the junior doctors of

today. This woman is a psychiatrist. She is on a temporary contract with

no guarantee of work beyond this month. When I started my speciality,

I thought I would have established work, a permanent job in public

health. Quite well paid. But I think this is a thing of the past.

Analysts say austerity is hurting the young are the most.

government wants to reduce public sectors. They need less public

workers. They have two ways to do that, they can lay off existing

people, or they cannot contract to new people. The frost at --

frustrations spilled over last week. There is likely to be more of this

to come. You can find out more about Spain's

young public sector workers and useful tips on hunting for work

where you are attack website. -- at our.

Let's go to Singapore for the latest on China's luxury goods

market. This story came to the fore last week. We had luxury good

results, they were talking about this day to day as the key for

luxury goods retailers. It is key, because it is the autumn

festival. That is when the Chinese go out and spend. It may be

hampered by this latest anti- government initiative where the

government is imposing a frugal working style rule on its employees.

This is hoped that it will prevent government employees from spending

money on lavish banquets and fancy cars and accepting gifts. Gifts are

often returned in exchange for favours, where bribery is

widespread. Analysts are say that this initiative could impact the

retail luxury market as a quarter of gift-giving has been a source of

demand for the world's leading luxury brands. To give you some

facts - Chinese consumers spent an estimated $50 billion on luxury

goods last year. They are one- quarter of a global market worth

about $197 billion. The Chinese are poised to overtake the Americans

this year as the biggest buyers of luxury goods in the world. Analysts

say 20% of the luxury goods Chinese people they are for gifts. Gifts

are often used to grease the wheels, the wheels of relationships that

help with jobs and promotions. The market some mixed, which is

good considering the news we have had out of Asia today. We have had

an influential survey out of Japan to show how manufacturers are doing

- it's very pessimistic. Chinese data is showing contraction as well