24/05/2013 World Business Report

collapsed at seven o'clock local time.

IMF buzz Christine Lagarde is back in court this Friday in a

corruption inquiry that threatens to plunge the fund into another

leadership crisis. Asian markets bounce back. Japan's

Nikkei surges after Thursday's $300 billion to sell off.

Welcome to World Business Report. In just a minute we will be looking

to see how Asian markets are doing a day after the dramatic sell-off,

but first the head of the IMF, Christine Lagarde, is back in court

later today. On Thursday she faced 13 hours of questioning by a Paris

magistrate over her role as French finance minister in a huge

arbitration payment that was made to a supporter of the foreign --

former President, Nicolas Sarkozy. Christine Lagarde says that she has

done nothing wrong. The IMF says they continued to express

confidence in her. We will find out whether she will be placed under

formal investigation, a significant move under French law. She will be

placed under trial if that happens. Voted one of the world's most

powerful women by Forbes magazine, Christine Lagarde is now fighting

to clear her name in this long run inquiry into corruption. The Cape's

-- the case dates back to 1993. Bernard Tapie asked the state's

Bank to set -- to sell his share. They made a fortune on the deal,

Bernard Tapie did not. So he sued. It bounced back and forth in the

highest courts of the land. And your 2007, when it a French

President suggested that they move the case to arbitration. The result

was a 280 million euros pay-out to Bernard Tapie, who had supported

Nicolas Sarkozy's bid for presidency. Christine Lagarde

denied that it was paid out for his political support. TRANSLATION:

there is an investigation under way. I want questions clarified. I had

every confidence in the procedure, not least because my cup conscience

is perfectly clear. The DG anticipate the procedure would

evolve, as it did. The police raid on her Paris apartment. As IMF

Chief, she could have avoided the summons, pleading diplomatic

immunity, but she has always insisted that she has nothing to

hide. On Thursday she sat through a marathon session in front of a

magistrate, for 13 hours. The former chief, Dominique Strauss-

Kahn, was forced to step down over a sex assault scandal, his

compatriot was there to restore its reputation. A number investigation

is clearly unwelcome. This is not good for the IMF and this is not

good for the European Union. Up to Dominique Strauss-Kahn's disgrace

and resignation, they put in place a very high standard contract,

which is the first to be published on the internet, and it sets out

that the managing director and not only has to keep to the highest

standards of ethics, but has to strike at all times to avoid any

appearance of impropriety. Even the fact that she is in court now is

difficult to reconcile with that contract. If she is placed under

formal investigation they do today, she could be forced to resign,

leaving the IMF in yet another leadership crisis.

Asian markets are bouncing back. Tokyo's Nikkei has been surging

after Thursday's 7% plunge. It wiped more than $300 billion off

the value of leading Japanese shares.

Let's find out how things are faring.

They were rising about 3%, but now they are suddenly Lola. Basically

extending the huge losses that we saw on Thursday. That was when it

plunged to 7.3%, the steepest one day fall in two years, and that was

on expectations that the US would ease back on monetary support. We

also saw beat monetary data. -- week. We saw some gains, investors

coming back in, potentially looking for some bargains. But again a

sell-off is happening. The falls on Thursday do seem terribly dramatic,

but the fact that shares have risen quite dramatically in the last

couple of months, in the last six months, the Nikkei is 60% higher

than it was six months ago, and that was before Japan's Prime

Minister was elected. He introduced a set of monetary and fiscal

policies that were incredibly aggressive, designed it to jolt the

country out of a 20-year' deflation cycle. And it must essentially

saying it is mainly due to investor uncertainty. -- analysts.

Let's get a bit more analysis. He is a chief market strategist. We

were hearing that speculation, reasons leading to the dramatic

fall that we saw in Asian shares. The front page of the Financial

Times nails it. There a lot -- are a lot of explanations. There was an

element of everyone waiting for an excuse to sell. We have seen

markets rise relentlessly, particularly the Nikkei. It was up

40% this year. People think that it cannot carry on much longer. We had

expansion, and some concerns about monetary policy in Japan. These

three things that seem to have scared investors. Where we have

seen markets rise strongly, when it does start to sell off, or the

selling begets more selling. Everyone starts to head for the

exit at once. What will we see going forward? All things that go

up must come down. We are seeing the Nikkei is rebounding quite

strongly. We have seen a lot of volatility. The next big test for

the markets is a week today. We have got the US unemployment data.

That will be the next Test. Maybe for the next five days, we will

have some top be nervous markets, and till we see the state of the US

economy. -- choppy. As you say, data coming out of the US. The

focus is always on it. One of the key reasons that we look dad, as a

reason for the sharp fall, was the mixed messages coming out of the

Fed. How important is the Federal Reserve Corps the stability of

world markets? -- for the stability. It is very important. There are

many people who would argue that the stock markets have been pumped

up to artificial levels because of the amount of quantitative easing

that we have seen from the central banks. This is one of the things

that has put to the markets. If the central banks decide to rein in the

amount of money they are pumping into the markets, it is like

pulling a ride out from underneath. That is why they are scared.

Investors and traders are very obsessed with which way that

central bank sentiment is going. Some of the news, small investors

in shares of Spain's nationalised lender Bankia suffered massive

losses on Thursday. The stock plunged by more than 50%. The force

came as elderly people protested outside Madrid's top market. The

market regulator says it will look closely at it uncommon higher

volume of shares traded. Senior managers are already under