Finance & Business World

Austria-based Erste Group Bank AG says it will make a net loss of euro700 to euro800 million ($950 million to $1.1 billion) for 2011 because of the government debt crisis and troubles in Hungary.

The bank said in a statement Monday that the writeoffs will erase what would have been an euro850 million to euro900 million profit.

Hungary has passed a law letting people with foreign currency mortgages pay them off at less than market exchange rates. Hungary writedowns amount to euro760 million, and the bank will put an additional euro600 million more capital into its subsidiary there payday loan.

Erste Group Bank also marked down holdings of bonds issued by troubled governments such as Greece, Portugal, Spain, Ireland and Italy.

The bank has 3,200 branches across Central and Eastern Europe.

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Kevin O

Greece’s finance minister has started new talks with international debt inspectors on reforms the debt-crippled country must implement to keep receiving rescue loans.

The finance ministry says the teleconference between Evangelos Venizelos and officials from the European Commission, International Monetary Fund and European Central Bank _ collectively known as the troika _ started late Tuesday.

Venizelos, who held a first call with the troika officials Monday, has to convince them that Greece’s delayed reform and cutback program is viable.

If so, the country will receive the next euro8 billion ($11 billion) installment of the bailout that has been keeping it solvent since May 2010. Otherwise, Greece’s cash reserves will run out around mid-October, forcing a chaotic bankruptcy.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

ATHENS, Greece (AP) _ Greek authorities, in a bid to prevent a potentially disastrous default, will try to convince international creditors on Tuesday that their debt-ridden country will meet the strict budget targets required to keep getting rescue loans.

Markets are fairly hopeful that Greece will receive the next euro8 billion ($10.9 billion) installment of its bailout, without which the country would go bankrupt next month, plunging Europe’s banking system into turmoil.

The talks will be held by teleconference between Finance Minister Evangelos Venizelos and officials from the European Commission, International Monetary Fund and European Central Bank, collectively known as the troika.

Though stocks were up on expectations some deal would be struck, most analysts think the country will have to restructure its debts at some point, especially if the economy remains mired in recession. Fitch Ratings said in a report Tuesday that it expected Greece to eventually default, but to do so while remaining in the eurozone.

Some experts believe the country will have to drop out of the 17-nation euro, a notion Venizelos dismissed.

“Greece’s participation in the eurozone and the euro is an irrevocable and fundamental national choice that the Greek population is making sacrifices to safeguard, in full knowledge of how priceless it is,” Venizelos told journalists, rejecting a Greek newspaper report that the government was considering a referendum on the issue.

German Chancellor Angela Merkel has likewise had to quell fears of a euro break-up, a scenario elected officials in her own government speculated about last week, roiling financial markets.

Prime Minister George Papandreou plans to meet Merkel next week during a visit to Berlin, a German government official said. The official, who spoke on condition of anonymity because the meeting hasn’t yet been announced officially, said the two would talk on the sidelines of the Federation of German Industries’ annual meeting on Sept. 27.

Since May 2010, Greece has been dependent on a euro110 billion ($150 billion) bailout from other eurozone countries and the IMF to continue servicing its debt and to pay salaries and pensions. Without the next installment, the country only has enough funds to see it through mid-October.

The funds had been expected in September, but the country’s creditors have said a decision on whether to disburse the funds will not be made until early October.

A first teleconference between Venizelos and the troika Monday night was “productive and substantive,” the Finance Ministry said.

Inspectors from the IMF, ECB and Commission suspended their quarterly review of the country’s progress earlier this month, amid talk of missed targets and delayed implementation of reforms.

The Socialist government has already taken a series of austerity measures, cutting public sector pay and pensions and hiking taxes. Unions have responded with strikes and demonstrations.

Hundreds of civil servants demonstrated peacefully in central Athens, while about 250 high school students marched in a separate protest against shortages in schoolbooks and other supplies at state-run schools. Public transport workers have called for a daylong strike Thursday, while air traffic controllers have declared a 24-hour strike Sunday and a four-hour work stoppage on Sept. 28.

Efforts so far have proved to be not enough to tackle the country’s severe debt crisis. In July, European countries agreed to extend a second bailout, worth euro109 billion, to Greece. However, the details of the second rescue package, which includes voluntary bond rollovers, have still to be worked out.

On Monday, the IMF representative in Greece, Bob Traa, said Greece needed to speed up its reforms in tax collection and reduce the size of the overmanned public sector.

Ahead of Tuesday’s teleconference, Venizelos was attending a parliamentary committee meeting, at which the director of Greece’s Statistical Authority has been summoned to testify after a member of the outgoing agency’s board claimed budget deficit figures in 2009 were miscalculated, inflating the annual figure. A judicial investigation has been launched into the claims.

“As a result of our actions in the past year, the agency has experienced a strong recovery in confidence regarding its international reputation,” Andreas Georgiou, director of the Greek Statistical Authority, said at the committee hearing.

The European Commission’s representative office in Athens issued a statement saying the EU’s statistics agency, Eurostat, had published the reviewed Greek 2009 deficit figures “without reservations” last November.

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Geir Moulson in Berlin, David McHugh in Frankfurt and Derek Gatopoulos in Athens contributed.

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Employers added no jobs in August _ an alarming setback for the economy that renewed fears of another recession and raised pressure on Washington to end the hiring standstill.

Worries flared Friday after release of the worst jobs report since September 2010. Total payrolls were unchanged, the first time since 1945 that the government reported a net job change of zero. The unemployment rate stayed at 9.1 percent.

The stock market plunged in response. The Dow Jones industrial average fell 253 points, or more than 2 percent.

Analysts say the economy cannot continue to expand unless hiring picks up. In the first six months of 2011, growth was measured at an annual rate of 0.7 percent.

Companies are mostly keeping their payrolls intact. They’re not laying off many workers, but they’re not hiring, either. Without more jobs to fuel consumer spending, economists say another recession would be inevitable. Consumer spending accounts for about 70 percent of economic growth.

Like a wobbling bicycle, “you either reaccelerate or you fall over, said James O’Sullivan, chief economist at MF Global. “Something has to give.”

Consumer and business confidence was shaken this summer by the political standoff over the federal debt limit, a downgrade of long-term U.S. debt and the financial crisis in Europe. Tumbling stock prices escalated the worries.

Even before it stalled last month, job growth had been sputtering. The economy added 166,000 jobs a month in the January-March quarter, 97,000 a month in the April-June quarter and just 43,000 a month so far in the July-September period.

“Underlying job growth needs to improve immediately in order to avoid a recession,” said HSBC economist Ryan Wang.

The dispiriting job numbers for August will heighten the pressure on the Federal Reserve, President Barack Obama and Congress to find ways to stimulate the economy.

So far, the Fed has been reluctant to launch another round of Treasury bond purchases. Its previous bond-buying programs were intended to force down long-term interest rates, encourage borrowing and boost stock prices.

On Thursday, Obama will give a televised speech to a joint session of Congress to introduce a plan for creating jobs and spurring economic growth.

Even for people who do have jobs, income growth is stalled. That will hold back their ability to spend. The only sure way to reduce the risk of recession is with more hiring, economists say.

“The importance of job growth cannot be overstated,” said Joshua Shapiro, chief U.S. economist at MFR Inc.

The economy needs to add roughly 250,000 jobs a month to rapidly bring down the unemployment rate. The rate has been above 9 percent in all but two months since May 2009. Roughly 14 million Americans are unemployed.

The weakness was underscored by revisions to the jobs data for June and July. Collectively, those figures were lowered to show 58,000 fewer jobs added than previously thought. The downward revisions were all in government jobs.

The average workweek and hourly earnings also declined in August. Cutbacks by federal, state and local governments have erased 290,000 government jobs this year, including 17,000 in August.

“There is no silver lining in this one,” said Steve Blitz, senior economist at ITG Investment Research. “It is difficult to walk away from these numbers without the conclusion that the economy is simply grinding to a halt.”

The unemployment rate for black men jumped a full percentage point in August to 18 percent. That’s the highest level for that group since March 2010. And unemployment for black people as a whole surged from 15.9 percent to 16.7 percent even as unemployment for white Americans ticked down to 8 percent from 8.1 percent.

Obama has faced doubts within his own party, including black lawmakers who say he hasn’t done enough to help chronic unemployment in black communities.

Yet Obama is unlikely to win support for any new stimulus spending from congressional Republicans, who oppose further spending and argue that the president’s economic policies have failed. They favor deeper spending cuts and less government regulation.

On Friday, Obama took a step toward winning their support. He directed the Environmental Protection Agency to abandon rules that would have tightened health-based standards for smog. Republicans and some business leaders have said the proposed rules would have cost jobs.

Kurt Karl, chief economist for the Americas at Swiss Re, said the August jobs report “implies a rising probability of recession.”

Still, he noted, employment fell for six quarters after the 2001 recession _ and the economy kept chugging along at an annual rate of 2.1 percent over that time.

The economy’s 0.7 percent growth rate in the first half of 2011 was the slowest six months of growth since the recession officially ended in June 2009.

Most economists expect growth to improve to about a 2 percent annual rate in the July-September quarter. Lower gasoline prices have provided some relief to consumers. And factories are revving up again after being interrupted by Japan’s earthquake and nuclear crisis.

Before Friday’s jobs report, the economy had been showing signs of better health. Consumer spending was strong in August. Auto sales were brisk. Manufacturing expanded. And fewer people applied for unemployment benefits.

Yet even 2 percent growth isn’t fast enough to generate many jobs. And the economy remains vulnerable to outside shocks _ a worsening European debt crisis or more political brinkmanship in Washington.

“The economy’s perforated at this point,” said Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness. “Any additional strain on it will tear it apart.”

The Obama administration has estimated that unemployment will average about 9 percent next year, when Obama will seek re-election. The rate was 7.8 percent when he took office.

The White House Office of Management and Budget projects overall growth of just 1.7 percent this year.

“The economy continues to stagger,” said Sung Won Sohn, economist at California State University Channel Islands. “It wouldn’t take much (of a) shock to tip it onto a recession.”

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European stocks fell again Thursday as concerns over the financial health of French banks reignited, and any optimism over Wall Street’s open dissipated.

The wild swings on a daily basis and across time zones highlights how febrile markets are at the moment amid concerns over the global economy and the levels of debt in both the U.S. and Europe.

France’s banks bore the brunt of the selling once again, just a day after rumors over Societe Generale’s financial health, sent investors scuttling out of the sector. Concern over Europe’s ability to tackle its debt crisis _ which now threatens to engulf large economies like Italy and Spain and is hampering growth in France _ made wider waves and shares in many European banks fell.

After an early rebound, bank shares across Europe were down, some sharply, including Societe Generale, which has followed up Wednesday’s 15 percent decline with another 8 percent drop.

As a result, France’s CAC-40 underperformed its peers, trading 2.8 percent lower at 2,920. The FTSE 100 index of leading British shares was down 0.7 percent at 4,975 while Germany’s DAX fell 1.2 percent to 5,545.

A complete turnaround in Wall Street futures has added to the unease _ Dow futures were down 1.2 percent at 10,595 while the broader S&P 500 futures fell 1.5 percent to 1,106. For much of the European session, they had been trading an equivalent rate higher.

“We are seeing the same reaction now that we have seen in recent days _ the rally has stalled with many traders unwilling to believe that this is anything more than just another dead cat bounce,” said David Jones, chief market strategist at IG Index.

Thursday’s volatility came after Wednesday’s hammering of stocks in Europe and the U.S. Any investor cheer to the news that the Federal Reserve was keeping its super-low interest rates until the middle of 2013 dissipated as they interpreted that stance to mean that the U.S. economy will not improve substantially by 2013.

Worries over Europe’s debt crisis spreading have also not been calmed by a more active role in the bond markets from the European Central Bank.

“Modest monetary easing from the Fed and ECB purchases of Italian and Spanish debt have failed calm investor fears that the global economy is heading into a renewed recession driven by the escalating eurozone sovereign debt crisis,” said Lee Hardman, an analyst at the Bank of Tokyo-Mitsubishi UFJ.

Though stock markets are swinging wildly, there’s been a measure of calm in the bond markets of Spain and Italy in the wake of the ECB’s purchase of their bonds. The yield, or interest rate, on Spanish and Italian 10-year bonds remained stable at around 5 percent. That rate is considered manageable for now and is over a percentage point lower than where they were trading a week ago.

However, analysts think that they will have to get even lower to really dampen worries that Europe’s debt crisis will ensnare the eurozone’s third and fourth largest economies.

“The reality is they will need to buy an awful lot more to get them down to sustainable levels well below 5 percent,” warned Michael Hewson, market analyst at CMC Markets.

Earlier, Asian markets were under pressure following Wednesday’s big reverse on Wall Street.

Hong Kong’s Hang Seng index fell 1 percent to 19,595.10, but China’s main index in Shanghai rose 1.3 percent to 2,703.90.

Japan’s Nikkei 225 index slipped 0.6 percent to close at 8,981.94 as a strengthening yen, clobbered Japan’s crucial export sector. Honda Motor Corp. and Nissan Motor Corp. each lost 3.5 percent.

By early afternoon London time, the dollar was 0.3 percent lower at 76.58 yen, not far above the level last week that prompted the Bank of Japan to intervene in the markets.

Meanwhile, the euro inched up 0.1 percent to $1.415.

In the oil markets, prices retreated alongside equities. The main New York fell 60 cents to $82.29 a barrel, after earlier trading above at $84.

____

Pamela Sampson in Bangkok contributed to this story.

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Ontario’s Liberal government has entrenched the legal rights of 1,800 proposed renewable energy contracts – making it impossible for a new government to cancel them.

The Liberals have changed the terms of contracts under its feed-in tariff program or FIT.

Under the old system, the Ontario Power Authority, which signs the contracts with power developers, could unilaterally terminate agreements at a relatively late stage of the approval process.

But a new directive from energy minister Brad Duguid will entrench the contracts at a much earlier stage in the pipeline.

That will protect 1,800 contracts now in the pipeline from cancellation.

Collectively, the projects represent 3,500 megawatts of generating capacity, or close to 10 per cent of the province’s current total capacity.

The issue is a crucial one, since Conservative leader Tim Hudak has vowed to cancel the FIT program if the Conservatives win the provincial election on Oct payday advance. 6.

Hudak has said the high prices paid under the FIT program are “unsustainable.”

While the Conservatives would not tear up existing contracts, projects that were only part way through the approval process were vulnerable to cancellation.

Duguid said the changes will provide assurance for renewable power developers, and their suppliers, that their projects are likely to proceed.

“There’s no question Tim Hudak’s irresponsible plan to dismantle our programs and destroy our clean energy economy is something that’s creating a great deal of instability in our economy right now,” Duguid said.

Proposed projects will still have to get environmental approval, show that they’re going to meet requirements for domestic content and submit a financing plan before they can proceed.

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June was another good month on the foreclosure front, but the horizon still looks pretty dark.

The number of homes either set for auction or repossessed by banks in metro St. Louis fell 22 percent from last June, the fifth-straight month of year-over-year decline. Foreclosures so far in 2011 are 19 percent behind last year’s pace. That’s according to new figures out today from data firm RealtyTrac.

Much of the improvement, industry-watchers say, is due at least as much to banks slowing down the foreclosure process as to any improvement in the fundamentals of the housing market online pay day loans. It now takes, on average, 318 days from the initial notice of default until a house is repossessed, RealtyTrac said, up from 277 days a year ago.

While that’s providing some short-term relief, it may also serve to prolong the broader housing slump, said James Saccacio, RealtyTrac’s chief executive officer.

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A French novelist will file a complaint on Tuesday accusing Dominique Strauss-Kahn of attempted rape, her lawyer said, raising the prospect of a new sex assault investigation starting just as the U.S. case against the former International Monetary Fund chief falters.

The announcement threw Strauss-Kahn’s legal situation in his home country into question, and injected fresh uncertainty into a national debate about whether he will be able to return to his political career and enter the 2012 presidential race.

Strauss-Kahn went on the offensive against his French accuser Tuesday evening, saying through his legal team that he planned to file his own criminal complaint of slander against her.

The sexual assault case against Strauss-Kahn in New York was badly weakened last week by prosecutors’ publicly expressing doubts about the credibility of the hotel maid who accused him of forcing her to perform oral sex.

As a result, France was consumed Monday morning by the question of whether the longtime Socialist Party politician would _ or should _ revive his dream of running against unpopular conservative President Nicolas Sarkozy.

Strauss-Kahn’s supporters suffered a new shock within hours, when the lawyer for writer and journalist Tristane Banon announced she planned to file the complaint in Paris within a day.

Banon, 31, said on a 2007 television show that she had been attacked five years earlier by a politician she had interviewed for a book. She later identified the man as Strauss-Kahn.

“It finished very violently,” she said on the television show. “I kicked him. He opened my bra. He tried to undo my jeans. It finished very badly.”

Lawyer David Koubbi said Banon had been dissuaded from filing charges by her mother, a regional councilor in Strauss-Kahn’s Socialist party. Her mother, Anne Mansouret, admitted in a French television interview in May that she had urged her daughter not to file a complaint after the incident.

Banon came forward again after Strauss-Kahn’s May 14 arrest in New York, but Koubbi said his client had no intention of pressing charges while the American prosecution was going on because the two cases should be kept separate.

Banon is now moving forward, Koubbi told The Associated Press. He denied that decision was connected to the weakening of the U.S. case.

“It is all the same to me what happens in the hours and days to come in the United States,” he said.

Strauss-Kahn’s lawyers said Monday that Strauss-Kahn “has always said that the incident described by Ms Banon since 2007 is imaginary.”

“He notes that this complaint comes quite conveniently right at the moment when there is no longer the slighest doubt about the false nature of the accusations against him in the United States,” attorneys Henri Leclerc and Frederique Baulieu said in a joint statement.

Koubbi did not respond to phone and text messages left asking about the slander accusation.

If Banon files her complaint, a prosecutor can conduct a preliminary investigation to determine if there is enough evidence to support charges against Strauss-Kahn. Preliminary charges are followed by a lengthier investigation, sometimes lasting years, to determine if the case should go to trial before a judge.

Prosecutors could decide not to pursue the case if they find evidence Strauss-Kahn engaged in forcible sexual contact that fell short of attempted rape. The statute of limitations on the charge of “sexual assault” is three years, while attempted rape charges can be filed for as many as 10 years after the alleged crime.

Strauss-Kahn had been widely seen as the leading presidential contender in the months before his arrest, leading many polls quick payday loan.

Before the announcement of the new accusation, the country was split on whether it wanted Strauss-Kahn back in public life: two polls showed an almost even division between those who thought he should return, and those who believed his political career was over.

“DSK Back?” the left-leaning daily Liberation asked on its front page Monday.

Strauss-Kahn has relinquished his passport to authorities in New York. Another court hearing would be needed for him to get it back. His next appearance is scheduled for July 18 _ five days after the deadline for candidates to register in the Socialist Party primary.

“Let’s acknowledge that if Strauss-Kahn decides to come back as a candidate on our side, no one will try to oppose him using some calendar,” Socialist Party leader Martine Aubry said before Banon’s announcement.

The Socialist Party’s spokesman appeared to disagree, an indication of the confusion and disagreement within the party about betting the opposition’s chances of defeating Sarkozy on a man seen by some as a martyr of American injustice and by others as an out-of-touch jet-setter with a history of crude behavior toward women.

“We can’t base the (political) calendar, which involves millions of French people, on the American judicial calendar,” party spokesman Benoit Hamon said Monday.

A poll released Monday found that 51 percent of French people found that Strauss-Kahn no longer had a political future, versus 42 percent who thought he did.

The telephone poll of 956 adults selected as a demographically representative sample was conducted July 1 and 2 by the Ipsos Public Affairs institute for the magazine Le Point. No margin of error was provided.

Another poll out Sunday conducted by Harris Interactive poll for the newspaper Le Parisien showed 49 percent of those surveyed saying ‘yes’ to the question “Without prejudging his innocence or guilt, do you want DSK to come back to the French political scene one day?”

At least some were won over by what they perceived as his mistreatment in the U.S.

“I had no intention of supporting him in the first round, but if he returns to French political life I will certainly vote for him,” Jean-Rene Gendre, 63, said as he went shopping in central Paris. “What happened to him I think was a terrible manipulation.”

Forty-five percent of respondents to the Harris poll said they didn’t want Strauss-Kahn back in politics and six percent didn’t answer the question. The agency asked a demographically representative group of 1,000 people 18 years old and older to fill out the July 1-2 online survey. No margin of error was provided.

Sarkozy’s conservative allies have maintained virtually complete silence on Strauss-Kahn’s arrest. But some appeared to be returning to the normal tenor of a political campaign.

Sarkozy has been assailed from the left for what some call his bling-bling image and tax policies that critics say favor the rich, in a country proud of its social welfare system and revolutionary past.

Strauss-Kahn had come under some criticism before his arrest for appearing in a friend’s Porsche and for reports he wore highly expensive tailored suits.

After his arrest, he lived under house arrest in a $50,000 (euro34,500)-a-month town house in Manhattan’s trendy TriBeCa neighborhood.

“Between his luxury tastes and other subjects, Dominique Strauss-Kahn has not offered a very positive image recently,” Sports Minister Chantal Jouanno, a Sarkozy ally, said on Europe-1 radio.

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Are you one of the lucky third? This blessed and declining group comprises the roughly 30 per cent of Canadian employees hanging on for dear life to their defined-benefit pension plans.

Among them are striking workers at Air Canada and U.S. Steel Canada in Hamilton, who want to retain DB plans in which the employer guarantees a retirement income based on years of service and earnings.

The percentage of employees covered by DB plans has plunged from 41 per cent in 1991 to barely 30 per cent today.

At the same time, the number of troubled DB plans has been rising. In 2008, at the height of the market meltdown, Statistics Canada reported that 75 per cent of workplace pensions (most of them DB plans) had unfunded liabilities, meaning their liabilities were greater than their assets. By 2009, the figure had risen to 83 per cent.

An underfunded or unfunded DB pension plan forces a company to pay out benefits to workers from other sources or spend money it doesn

Energy company El Paso says it’s planning to separate into two publicly traded businesses by the end of the year.

The Houston company’s stock jumped more than 7 percent to $20.35 in pre-market trading.

The company’s board approved plans to spin off its exploration and production business. Terms were not disclosed.

After the spinoff, El Paso Corp. will include its pipeline group, its midstream group and its general and limited partner interests in El Paso Pipeline Partners LP on line pay day loans. Doug Foshee will remain chairman and CEO.

The new publicly traded exploration and production business will be led by the unit’s president, Brent Smolik, as CEO.

The separation is subject to market, regulatory and tax approvals.

Williams Cos. and Marathon Oil Corp. underwent similar separations this year.

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