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Markets News Afternoon: Shares rise in Europe and US; Aer Lingus board to review progress on restructuring talks
By Finfacts Team
Dec 1, 2009 - 4:58:01 PM
President of the United Arab Emirates (UAE), Shaikh Khalifa bin Zayed Al Nahyan
Dubai World
The United Arab Emirates federation of 7 statelets, today sought to calm investor concerns about the Dubai emirate's debt crisis.
In a statement, Dubai's ruler said federal unity across the UAE was strong amidst speculation that oil-rich Abu Dhabi would leave its adventurous neighbour sort out the financial mess resulting from a raft of major construction projects.
The country is working on "enhancing integration between the federal and local frameworks," said Sheik Mohammed bin Rashid Al Maktoum, who is also Prime Minister of the UAE.
Shares in Dubai and Abu Dhabi fell again for a second day. The Dubai Financial Market's main index dipped 5.6% Tuesday, after falling 7.3% on Monday. Abu Dhabi shares closed 3.6% lower.
"We would like to comfort everyone that our country today is stronger and better, and that our economy and society are healthy," said UAE president and Abu Dhabi ruler Sheik Khalifa bin Zayed Al-Nahayan, ahead of National Day holiday in the UAE on Wednesday.
Dubai's government-owned project company Dubai World, which has debts of $59 billion, said an a statement Tuesday that planned restructuring would include Dubai World and certain subsidiaries, including Nakheel World and Limitless World. Excluded from the talks with lenders, are debts from Infinity World Holding, Istithmar World and Ports & Free Zone World, which includes ports and terminal operator DP World, Economic Zones World, P&O Ferries and Jebel Ali Free Zone.
Dubai debt concerns eased Tuesday, but now the issue of sovereign debt is back in investors' minds. Dr Linda Yueh from Oxford University and David Bloom from HSBC consider whether China could be facing debt defaults:
The conglomerate said all those subsidiaries are on "stable financial footing," and in a statement, Jebel Ali Free Zone said it paid a roughly $2 billion Islamic bond, or sukuk, on time Tuesday.
Aer Lingus
The board of Aer Lingus is due to meet this evening to consider progress made in talks with unions at the Labour Relations Commission on a restructuring plan for the airline.
On Monday, Aer Lingus warned that the board would today proceed with its own plans to slash almost €100m in costs, if agreement was not reached with unions overnight.
The decision to adjourn the LRC talks was taken following more than 16 hours of talks, which began Monday afternoon.
Pay cuts, unpaid leave and redundancies are on the agenda.
Pilots are reported to to be unhappy with the proposals, which would see them deliver savings of €30m, because they feel they would not be getting sufficient return recognition, given their equity stake in the company, and the role they played in fending off a takeover by Ryanair.
Assessing whether the US recovery is still on track, with Thomas Higgins, Payden & Rygel and Carl Riccadonna, Deutsche Bank:
US
The US manufacturing sector expanded in November for the fourth consecutive month but the pace of growth slowed, and the overall economy grew for the seventh consecutive month, according to America's supply executives in the latest Manufacturing ISM Report On Business.
Europe's manufacturing sector grew at a faster rate than expected in November, posting its second straight monthly rise Tuesday. Chris Williamson from Markit has analysis:
On the New York Mercantile Exchange, oil for January 2010 delivery is trading at $78.47 up $1.19 from Monday's close. In London, Brent crude for January delivery is trading at $77.24 a barrel.
Currencies
The euro is trading at $1.5111 and at £0.9088.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
