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E U R O P E Thursday October 23 2008

Lie, bore
Lucy Kellaway’s advice to bankers at hostile dinner parties Dear Lucy Page 10
Newspaper of the year

Addicted to ethanol Have politicians invested too much in an overrated fuel? World
News Page 6
World Business Newspaper

News Briefing
Greece’s leading banks sign up to rescue plan
Greece’s largest banks have agreed to the government’s €28bn ($35.9bn) rescue
plan at a meeting with the finance minister and the central bank governor, the ministry
said last night. Chief executives of National Bank, EFG Eurobank, ATEbank, Alpha
Bank, Piraeus Bank and Hellenic Postbank met with Bank of Greece governor George
Provopoulos, finance minister George Alogoskoufis and the head of the Public Debt
Management Agency late yesterday. www.ft.com/crisis

Berlin to ease spending
Germany is preparing to loosen public spending in an effort to support consumption
and selected industries as growth in Europe’s largest economy rapidly loses steam.
Page 2

US to host G20 world summit over crisis
By FT Reporters European currencies slumped against the dollar and yen yesterday
as traders bet on interest rates being slashed within weeks to offset a looming recession.
The euro was at a two-year low of $1.2849 in late London trading, down over 2 per
cent on the day. As recently as April this year, one euro was worth just under $1.60.
Against the Japanese yen, the euro fell to a four-year low and is now only three-quarters
of its value in July. Global stock markets were also upset by the prospect of a deep
recession for many countries. Germany’s Dax fell 5 per cent, and France’s CAC
40 was 4.5 per cent lower while the S&P 500 was down 4.5 per cent in mid-afternoon
trading. The falls came as the White House announced it would host a global financial
summit next month, just 11 days after the US presidential election. Following calls
from European leaders such as Gordon Brown, British prime minister, and Nicolas Sarkozy,
France’s president, the White House said it was planning a meeting of the heads
of state of the G20 group of countries in Washington on November 15. The G20 members
include some of the countries most affected by the crisis in the developed world
as well as emerging markets such as Argentina, Brazil, China, India, Indonesia, South
Korea, Mexico, Russia, Saudi Arabia, South Africa and Turkey. “The leaders will
review progress being made to address the current financial crisis, advance a common
understanding of its causes, and, in order to avoid a repetition, agree on a common
set of principles for reform of the regulatory and institutional regimes for the
world’s financial sectors,” said the White House. It was not clear if the winner
of the November 4 presidential election would attend. If either Barack Obama or John
McCain were to participate, it would be a remarkably early first appearance on the
world stage. At the weekend, Mr Sarkozy pushed the case for a summit with George
W. Bush at the US president’s Camp David retreat. The French president welcomed
the plans, pointing out that he had proposed such a summit a month ago. He said the
meeting would be one of several to “recast the international financial system through
better regulation and more effective supervision of all market operators to ensure
that the current crisis does not happen again”. Mr Brown yesterday said the agenda
was a matter for Mr Bush but the prime minister has already set out reforms he wants
to see pursued at a so-called “Bretton Woods II” conference. Report by Chris
Giles and George Parker in London, Ben Hall in Paris and James Politi and Daniel
Dombey in Washington Global Financial Crisis, Pages 2&3 Editorial Comment, Page 8
Lex, Page 12 Markets, Pages 30­32

Over the moon India’s first lunar mission

Mittal reviews $35bn plans for growth
By Peter Marsh in London ArcelorMittal is reviewing its $35bn expansion programme
in the clearest sign yet that the world’s biggest producer is preparing for weak
growth in steel demand as a result of the financial crisis. While saying that its
growth strategy “remains unchanged”, the steelmaker said the financial turbulence
was “prompting us to check the order of priority to be assigned to our different
growth projects”. The Luxembourg-based company – controlled by Lakshmi Mittal,
its chairman and chief executive – said it was unable to go into details about
how its expansion programme might be changed or whether some parts could be cut.
However, many steel observers expect the eight-year, $35bn programme, which Mr Mittal
announced last year, to be changed so spending planned for the early part of the
period is pushed back. Details of the review are likely when Mr Mittal presents ArcelorMittal’s
thirdquarter results on November 5. ArcelorMittal’s share price has fallen nearly
70 per cent since late June. In the past three months Mr Mittal, who owns 45 per
cent of the group, has seen the value of his personal shareholding fall from more
than $50bn to about $20bn. One potential switch is for a $20bn project in India,
where the company plans two new plants, to be reined in so most of the work takes
place no sooner than about 2012-2015. Many experts believe global steel demand next
year will grow by about 2 per cent, less than half the amount Mr Mittal was projecting
a few weeks ago. In recent weeks mining companies – led by Rio Tinto, with rival
BHP following suit yesterday – have said they are reviewing expansion programmes.
China softens for BHP, Page 15

Fresh global financial system to be discussed European currencies Gazprom faces squeeze
slump against dollar
Gazprom said the financial crisis would make it more difficult for the state-controlled
Russian gas company to obtain new borrowings and refinance its debt. Page 13

Georgia pledged $4.5bn
Georgia received pledges of $4.55bn (€3.55bn) in aid from governments and other
international donors to help it recover from the invasion and defeat by Russia in
August.
Page 4

‘Eurozone club’ fallout
The French government sought to head off a dispute with other European governments
after president Nicolas Sarkozy called for a club of eurozone leaders with a permanent
chairman to strengthen the bloc’s role in tackling the financial crisis.
Page 2

Czech PM survives
The Czech government survived a no-confidence vote hours after the lower house approved
the 2009 budget outline proposed by Mirek Topolanek, the prime minister, who was
weakened in recent elections. Page 4

EU rethinks mergers
Companies involved in mergers will face increased pressure to sell assets to counter
competition concerns under guidelines unveiled by Europe’s top monopolies regulator.
Page 4

Chandrayaan­1, or Moon Craft 1, lifts off from the Satish Dhawan Space Centre in
Sriharikota in southern India yesterday, marking the start of the country’s first
lunar voyage. The spacecraft’s mission is to reach the lunar

orbit and spend two years scanning the moon for evidence of water and precious metals.
India is following China and Japan, which both launched space missions last year.
www.ft.com/asia AP

Wal­Mart lays down law
US retailer Wal-Mart told its Chinese suppliers to meet strict environmental and
social standards or risk losing its business. Page 13

Hungary lifts rate

Rating agencies slated
Credit ratings agencies were aware that their conflicts of interest were giving unduly
high scores to risky assets lawmakers on Capitol Hill said. Page 3

Surge in support for Obama sees him looking at ‘big victory’
Polls report McCain up to 14 points adrift
By Edward Luce in Washington Barack Obama is heading for a landslide victory over
John McCain in 12 days’ time if his double-digit poll leads prove accurate and
are sustained, says a growing consensus of Democratic and Republican political forecasters.
No candidate with this big a lead at this late stage of a presidential election has
yet gone on to lose. Yesterday, a Reuters/Zogby poll gave Mr Obama 51.6 per cent
against 42 per cent for Mr McCain – in line with polls this week that have given
Mr Obama a lead of between 6 and 14 points. Even Republican analysts were yesterday
pessimistic about Mr McCain’s chances of turning this race around. “To have any
optimism about McCain then you have to cast some doubt on the methodology of the
pollsters,” said Vin Weber, a leading Republican forecaster. “I am not foolishly
optimistic about this. If I had to predict a result it would be an Obama victory
– possibly a big victory.” Analysts were predicting yesterday that Mr Obama could
get more than 350 electoral votes, well in excess of the 270 required to win the
White House and in line with the tallies Bill Clinton secured in 1992 and 1996. In
addition, they pointed to a surge of early voting in swing states such as Florida
and Ohio, which would help insulate Mr Obama from any tightening in the polls in
the final few days. The numbers look even worse for Mr McCain in the main battleground
states, with Mr Obama clearly ahead in Pennsylvania, New Hampshire, Colorado, Virginia,
Florida, Minnesota and Wisconsin. Of the big swing states, only Ohio, where the two
are running a close race, looks like a potential catch for Mr McCain. “Even if
those who tell pollsters they are still undecided suddenly broke two-to-one in favour
of John McCain, Obama would still win a clear victory with poll leads as high as
this,” said Mark Penn, who was Hillary Clinton’s chief strategist for her primary
campaign. “There aren’t any examples of a candidate coming back this late in
the game with a deficit this big,” said Tom Schaller, a political scientist at
the University of Maryland. “The only potential straw for McCain to clutch on to
is that this race is unprecedented in many respects and that the man in the lead
is black. “We saw in the primaries that voters can get ‘buyer’s remorse’
about Obama as the end game approaches.” Cuban doubts hit McCain, Page 5 Jurek
Martin, Page 9

US city inequality rises
Cities in the US are among the most unequal in the world, rivalling developing-country
cities such as Nairobi in their disparities between rich and poor, the United Nations
said.
Page 4

Deposit pledge rethink
Australia and New Zealand, which followed European countries and Taiwan in issuing
blanket guarantees for retail bank deposits, are paring their promises barely a week
and a half later amid fears of market distortion. Page 2

Lenders likely to link
The US government’s planned $125bn (€97bn) capital injection into nine financial
groups is to unleash more consolidation as banks scramble to use the cash on takeovers,
according to Wall Street executives. Page 13

Hungary raised its base interest rate 300 basis points to 11.5 per cent to support
its currency and help stabilise financial markets. The forint has fallen sharply
since last week when concerns arose about the country’s ability to fund its foreign
debt. Fears of contagion spread to other markets, including Poland, where the zloty
lost 2.9 per cent against the euro, and Romania, with the lei down 2.4 per cent.
Report, Page 2

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World Markets
STOCK MARKETS
Oct 22 Dow Jones Ind Nasdaq Comp S&P 500 FTSEurofirst 300 DJ Euro Sto 50 FTSE 100
8752.18 1666.79 923.31 873.90 2457.97 4040.9 2038.43 3298.18 4571.07 8674.69 14266.60
149.0 prev 9033.66 1696.68 955.05 923.93 2598.97 4229.7 2129.46 3475.40 4784.41 9306.25
15041.17 157.1 %chg -3.12 -1.76 -3.32 -5.41 -5.43 -4.46 -4.27 -5.10 -4.46 -6.79 -5.15
-5.2 Oil Brent $Dec Oil WTI $Dec Gold $ $ per Û $ per £ £ per Û ´ per $ ´ per
£ $ inde

Cover price
CURRENCIES
Oct 22 1.291 1.634 0.790 98.9 161.6 91.8 prev 1.319 1.696 0.778 101.0 171.2 90.6
1.523 Û per $ £ per $ Û per £ ´ per Û £ inde Û inde Oct 22 0.778 0.618
1.266 127.7 88.3 96.4 prev 0.760 0.589 1.286 133.2 90.4 97.2 1.958 Fed Funds Eff
Oct 22 65.18 67.28 748.05 prev 69.72 70.89 773.55 chg -4.54 -3.61 -25.50 US 3m Bills
Euro Libor 3m UK 3m Prices are latest for edition US Gov 10 yr UK Gov 10 yr Ger Gov
10 yr Jpn Gov 10 yr US Gov 30 yr Ger Gov 2 yr

INTEREST RATES
price 102.84 103.95 103.53 99.78 106.11 102.11 Oct 22 0.67 0.99 4.93 6.05 yield 3.65
4.48 3.80 1.53 4.14 2.82 prev 0.70 1.10 4.96 6.10 chg -0.06 -0.14 -0.12 -0.05 -0.07
-0.07 chg -0.03 -0.11 -0.03 -0.05


FTSE All-Share UK CAC40 Xetra Da Nikkei

SFr per Û 1.498

SFr per £ 1.897

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Lek410 €3.20 Din1.5 €3.20 Lev6.60 Kn26 €3.20/C£1.87 Kc115 Dkr26 E£17 EKr60
€3.50 €3.20 €3.20 £1.75 €3.20 Ft750 IKr380 Rup85 ILS16 €3.20 JD3.00 US$4.90
Kshs300 KWD1.50 Lats2.99 LBP7000 Litas19

Luxembourg €3.20 Macedonia €3.20 Malta €3.00 Mauritius MRu90 Morocco Dh32 Netherlands
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Portugal €3.20 Qatar QR15 Romania Ron13 Russia €5.00 S. Arabia Rls15.00 Serbia
NewD265 Slovak Rep €4.32/Sk130 Slovenia €3.20 South Africa R18 Spain €3.20
Sweden Skr27 Switzerland SFr5.20 Syria US$4.74 Tunisia Din4.75 Turkey YTL5.00 UAE
Dh15.00 Ukraine €5.00

© THE FINANCIAL TIMES LIMITED 2008 No: 36,830



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