HONG KONG &<51; What do you do when your passengers do not fly as much as they used to?

In the United States, many airlines have responded to the drop-off in travelers by tacking on charges for meals, headphones and other things that were once part of a ticket &<51; even as they have drawn fire for letting service levels slide.

But extra niceness is the approach adopted by many carriers in the Asia-Pacific region, who have decided that the way to persuade people to fly, preferably in business or first class, is to pamper them.

Korean Airlines, for example, is spending $200 million to equip its aircraft with high-end seats and upgrade its entertainment in all cabins. On the meal front, the menu includes organic food. And this year, the carrier even introduced beef and chicken raised organically at its own ranch on Jeju Island.

The Hong Kong carrier Cathay Pacific&S217;s latest initiatives include new cabins on long-haul flights; a new first- and business-class lounge in Kuala Lumpur; and a home wine delivery service. Starting next year, passengers will be able to choose from at least 21 movies, up from 18.

The world&S217;s airline industry will lose a combined $11 billion this year and $5.6 billion next year, according to the International Air Transport Association, and carriers across Asia have not been immune from the downturn. Like their counterparts in Europe and the United States, Asian airlines have had to drop routes, shed employees and scrap aircraft orders. Some are shrinking the number of seats in first and business class, where demand has fallen sharply. Japan Airlines is even seeking a government bailout to keep going.

But the tradition of perks has remained sacrosanct in the region and is likely remain so, analysts say.

Outside of mainland China, Asian airline passengers expect top service because it is part of the region&S217;s cultural makeup and because no-frills, budget carriers are not as established here yet. For many carriers, the top end of the market makes up a huge part of revenue, and none can afford to be the first to cut corners when it comes to service levels.

&S220;Asian airlines have been very reluctant to start going down the track that the Americans have gone,&S221; said Peter Harbison, chairman of the Center for Asia Pacific Aviation, a consulting firm based in Sydney.

Alex McGowan, product manager at Cathay, said: &S220;When the financial crisis overwhelmed the industry a year ago, we took a decision that maintaining that premium service was vital to our future. So whatever cutbacks we made, we did not make any to the areas our customers value.&S221;

Singapore Airlines is installing new seats in the premium cabins on some aircraft and has improved in-flight entertainment systems. Like Cathay, it is based in one of Asia&S217;s financial hubs and was hit hard by the turmoil in the banking industry. But about 40 percent of its revenue comes from its premium classes. That may explain why it has not only maintained its annual wine budget for first class &<51; 10 million Singapore dollars, or $7 million &<51; but also has introduced new meals for first-class passengers on Chinese routes, specially created by a leading Chinese chef, Zhu Jun.

Qantas, the Australian carrier, canceled orders for several aircraft in June. But it has pressed ahead with a program devised to cut check-in times in half on domestic flights by allowing members of its frequent-flier program to check in with a membership card fitted with a special chip.

Asian airlines&S217; obsession with service shows through in the quality rankings of Skytrax, a consulting firm based in London. Five of the six airlines in Skytrax&S217;s five-star category are based in the Asia-Pacific region, as are nearly half of the 27 carriers that hold four stars Same day payday loans.

By contrast, only a few four-star carriers are North American and fewer than 10 are European. Carriers in Europe have started to move down the road of charging for extras and easing back on some services. But the practice is not nearly as entrenched in Europe as it is in the United States, where a recent survey by J.D. Power &&8; Associates showed that customer satisfaction with North American airlines has declined for the third consecutive year as airlines added fees for items like drinks, baggage and even pillows.

Such &S220;ancillary income&S221; &<51; revenue from sources other than the ticket price &<51; has become increasingly important for airlines, which have had to resort to heavy discounting to fill seats. Passenger numbers have begun to recover recently, but intense competition means ticket prices remain well below where they used to be: the International Air Transport Association&S217;s most recent statistics show that economy fares in August were 13 percent below a year earlier, and premium fares were 17 percent lower.

For no-frills carriers like Easyjet or Ryanair in Europe, fees for drinks and headphones make sense: The airlines are charging only for what the passenger wants, said Mr. Harbison of the Center for Asia Pacific Aviation.

&S220;But when you are posing as a full-service airline and are trying to show that you&S217;re not just a commodity carrier, you risk undermining your image and passenger loyalty if you start charging for add-ons, or cutting back on established services,&S221; he said.

The airlines will not say how much they are spending to keep the perks coming. And there has been at least one recent exception: Cathay Pacific announced last month that it would give all passengers, not just loyalty program members, the chance to secure extra-legroom seats &<51; for a fee of $100 on long-haul flights. But such developments are not expected to become standard among Asian carriers any time soon.

At the same time, budget airlines are a relatively recent phenomenon in Asia and have not shaken up the market with rock-bottom pricing as much as in Europe and the United States. Carriers like AirAsia, Tiger Airways and Jetstar are growing, but &S220;this is not going to change the established carriers&S217; attitude&S221; in the way it has elsewhere, Edward Plaisted, chief executive of Skytrax, said in a phone interview from London.

Asia&S217;s low-cost carriers have mostly expanded the pie, rather than intensifying the squabble over an existing market. Their fares draw in many passengers who could not afford to fly with traditional carriers.

And Asian low-fare airlines, like their full-service brethren here, often have a higher service mentality than their counterparts elsewhere. AirAsia charges for meals and drinks, for example, but its new aircraft have leather seats, conveying an aura of luxury.

Jetstar, another low-cost carrier, is testing a technology that will transmit boarding passes by text message to any mobile phone &<51; whether it is Internet-enabled or not.

All that means that flying in Asia is likely to remain more pleasant than in Europe or the United States for the foreseeable future &<51; and not necessarily at outrageously higher prices. For although the higher service levels come at a premium, that premium pool has shrunk, as carriers rush to entice travelers with lower ticket prices.

&S220;Whether they want to or not, airlines in the region cannot compromise on quality,&S221; Mr. Plaisted said. &S220;Fares have become very much more level than they were two years ago.&S221;

Airlines in Asia Resist the No-Frills Trend

AMSTERDAM (Reuters) – Shares in Dutch luxury carmaker Spyker soared on Monday after the company made a new bid for General Motors&&9;s Swedish car brand Saab.

The partly Russian owned Spyker said on Sunday it had lodged a renewed fast-track offer to buy Saab from GM just two days after last-ditch talks with GM over a rescue of the loss-making Swedish manufacturer collapsed. The offer from Spyker Cars expires at 2200 GMT (5 p.m. EST) on Monday.

Shares in Spyker Cars rose as much as 34.5 percent and were up 26.9 percent at 2.17 euros by 1051 GMT (5:51 a.m. EST) in Amsterdam as its renewed approach to Saab raised hopes the small Dutch firm may exponentially expand operations and perhaps become profitable.

"The stock&&9;s value is close to nothing but if they succeed to buy Saab, invest, and turn the company around then the shares can become valuable," said a Dutch analyst who declined to be named.

Abandoning the 60-year-old Swedish auto brand would eliminate 3,400 jobs in Sweden and hit 1,100 Saab dealers, but General Motors said on Sunday it would evaluate several new expressions of interest for Saab.

Spyker, which Russian banking tycoon Vladimir Antonov holds an almost 30 percent stake in, said on Sunday it submitted a renewed offer including an 11-point proposal addressing issues that arose during the due diligence process.

Russian state-controlled Sberbank and Canada&&9;s Magna tried to buy a stake in GM&&9;s Opel unit until GM decided to keep it last month business cards. Russia is keen to obtain Western technology to re-energize its local car industry.

"We&&9;re very confident we have put forward a proposal that can convince GM in time," Spyker Cars Chief Executive Victor Muller told Reuters in a telephone interview on Sunday.

"The jury&&9;s still out. We will see what happens next."

The new offer eliminates the need for a European Investment Bank (EIB) loan approval prior to year end, which would allow the deal to be concluded within GM&&9;s deadline of December 31.

"We can&&9;t comment on this deal as this is something between Spyker and General Motors," said Eric Geers, spokesman for Saab Automobile.

Paul Akerlund, local union leader at Saab in Trollhattan, said: "It&&9;s positive. It shows that there is a genuine interest in buying (Saab), but now the ball is in GM&&9;s court and I don&&9;t know how GM views this. That remains to be seen."

Spyker, maker of the C8 Aileron and D8 luxury sport-utility vehicle, got rescue financing in 2007 from Abu Dhabi&&9;s sovereign fund Mubadala, which holds 23 percent of the company, while Spyker Chief Executive Victor Muller owns 10 percent.

(Reporting by Gilbert Kreijger and Aaron Gray-Block in Amsterdam and Nick Vinocur in Stockholm)

Spyker shares soar as GM mulls new offer for Saab

GENEVA (Reuters) – The world&&9;s airlines are set to lose &&6;5.6 billion next year, more than previously estimated, with rising fuel costs offsetting a rebound in both passenger and air cargo, the industry group IATA said on Tuesday.

In its latest outlook, the International Air Transport Association reaffirmed its projection of a &&6;11 billion loss in 2009 -- a year its chief Giovanni Bisignani called "an Annus Horribilis" for the highly cyclical sector.

"The worst is likely behind us," Bisignani said. "For 2010, some key statistics are moving in the right direction."

IATA, whose 230 members include Cathay Pacific (0293.HK), Lufthansa (LHAG.DE), United Airlines (UAUA.O) and Emirates (EMIRA.UL), had previously said the global airline industry would lose &&6;3.8 billion next year.

Renewed consumer confidence should increase the number of people traveling by air next year back to the 2007 peak, Bisignani said. IATA also suggested air cargo volumes would rise quickly in 2010 as businesses rush to replenish their stocks.

"Cargo demand is rising faster than world trade as depleted inventories are rebuilt," it said in a statement. "Once the inventory cycle completes, growth is expected to fall back in line with world trade."

Crude oil prices should reach an average of &&6;75 per barrel in 2010, up from the &&6;61.80 average for 2009, IATA said.

"As a percentage of operating costs, fuel will be 26 percent in 2010. This is considerably lower than the 32 percent of operating costs that fuel comprised in 2008, but twice the 13 percent of operating costs that fuel represented in 2001-2002 pay day advance."

European carriers are on track to generate the largest losses of any region, &&6;2.5 billion, while Asian-Pacific carriers are due to show the most dramatic improvement with losses of &&6;700 million, according to the Geneva-based body.

North American airlines will see their losses shrink to &&6;2 billion, with Latin American carriers the only profitable regional grouping, it said.

Earlier this month IATA said that 75 major airlines reported a combined net profit of &&6;700 million in the third quarter, up from a &&6;3.4 billion loss in that period in 2008.

The darkened IATA outlook for 2010 reflects the experiences of leading carriers and airport operators who have said they are seeing signs the worst may have passed for the global economy, though recovery could come slowly.

Air France-KLM (AIRF.PA) this month said a "more dynamic" cargo sector supported signs of a slow recovery and Deutsche Lufthansa said air freight volumes were continuing to improve.

Passenger numbers at Frankfurt Airport have also risen as a result of higher demand on routes to America and Asia, the operator Fraport (FRAG.DE) said.

(Writing by Laura MacInnis; Editing by Stephanie Nebehay and Jonathan Lynn)

Airline assn raises 2010 sector loss expectations

Filed at 7:57 p.m. ET

TOKYO (AP) -- Business confidence among Japanese companies has improved for the third straight quarter, but not enough to convince them to spend, the central bank said Monday.

In the Bank of Japan's closely watched "tankan" quarterly survey of business sentiment, the main index for large manufacturers stands at minus 24. Three months ago the index stood at minus 33.

The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable. The result beats Kyodo News agency's average market forecast if minus 27.

The mood has been tempered by the yen's recent climb, which reduces the value of overseas profits for companies like Toyota Motor Corp. (NYSE:TM) and Sony Corp. (NYSE:SNE) Companies remain reluctant to restart investing in new factories, equipment or workers, the survey showed.

The yen hit a 14-year high of 84.83 against the dollar on Nov. 27. The dollar has recovered somewhat since then, trading above 89 yen Monday morning saving account payday loan.

Major manufacturers and non-manufacturers reduced their capital spending plans and now expect to cut expenditures by an average 13.8 percent this fiscal year through March 2010.

The sentiment index for big non-manufacturers inched up to minus 22 from minus 24 in September.

Sentiment among medium-sized manufacturers stood at minus 30 from minus 40, while the reading for small manufacturers was up slightly to 40 from minus 52 in September.

The Bank of Japan surveyed a total of 10,116 companies between Nov. 9 and Dec. 11, of which more than 99 percent responded.

The tankan helps the central bank guide monetary policy, though board members are not expected to change the central bank's key interest rate, now at 0.25 percent, for the time being.

Confidence Up at Japanese Manufacturers

DEERFIELD, Ill. – Drugstore chain Walgreen Co. said its November sales improved, but the results disappointed Wall Street and the company's shares fell in Wednesday trading.

At stores open at least a year, Walgreen said sales rose 3.9 percent. Analysts were expecting greater improvement of 6.1 percent, according to Thomson Reuters. Walgreen said pharmacy revenue was hurt by new launches of low-cost generic drugs, and sales of nonpharmacy items took a hit due to slowing demand for cough, cold and flu products, and further weakness in the economy.

At those stores, pharmacy revenue rose 5.7 percent, and sales of "front end" items like cosmetics and food grew 0.8 percent. Analysts expected pharmacy sales to rise 7.2 percent and front-end sales to rise 3.8 percent.

"The Thanksgiving weekend (was) notably softer" than a year ago, the company said.

In morning trading, Walgreen shares lost $1.68, or 4.3 percent, to $37.69.

Sales at stores open at least one year are considered a key indicator of retailer health because they shows results at older stores, leaving out revenue from newly opened locations payday advance online. Walgreen runs 7,147 drugstores around the U.S., including 517 that were opened in the last year. It also has about 500 worksite health centers, home care facilities, and specialty and mail-order pharmacies.

Walgreen opened 47 stores during the quarter, including seven that were relocated, and acquired two stores.

For November, the company's total revenue grew 8.7 percent to $5.36 billion from $4.93 billion a year ago. Pharmacy sales rose 9.7 percent. Front-end sales increased 6.1 percent.

For the first three months of fiscal 2010, Walgreen said its revenue grew 9.5 percent to $16.36 billion from $14.95 billion. That surpassed analyst expectations of $16.26 billion.

The company is scheduled to report its fiscal first-quarter results on Dec. 21. Analysts are looking for a profit of 48 cents per share, on average.

Walgreen key sales measure rises but misses goals

FRANKFURT (MarketWatch) -- Dubai World, the conglomerate whose debt woes are roiling global financial markets, is by its own description Dubai's "flag bearer in global investments."

Dubai, one of the seven emirates comprising the United Arab Emirates, said late Wednesday it would restructure Dubai World and announced a six-month "standstill" on repayments of the conglomerate's debt. The news sent shock waves through global markets. Read more on market reaction.

Dubai World is a sprawling holding company, wholly owned by the city-state's government, with interests in real estate, transportation, logistics and natural resources, according to its Web site.

Dubai World's Nakheel develops residential, retail, commercial and leisure real estate. It is behind projects such as "The World" that have made Dubai synonymous with grandiose and exorbitantly expensive real-estate projects.

"The World," for example, is a development of 300 islands in the shape of the world's continents, being created off the coast of Dubai. The Palm Trilogy refers to three man-made islands shaped like palms.

Fear of a debt default by Dubai sent European stocks tumbling and the pound down on fears for U.K. bank exposure. The price of gold retreated from its new record high and the dollar rebounded from recent lows, helped by talk of BOJ intervention and suspected SNB moves to halt the franc's rise.

Limitless is also a real estate developer owned by Dubai World, while Leisurecorp is a golf company whose portfolio includes the Chris Evert Tennis Centers and the Jumeirah Golf Estates no fax pay day loan.

In the transportation and logistics sector, DP World is one of the largest marine terminal operators in the world. It had 49 terminals and 12 new developments across 31 countries as of March.

Economic Zones World, a company that develops and manages real estate, is also owned by Dubai World. Its flagship company is the Jebel Ali Free Zone.

In the financial sector, Dubai World owns Istithmar, an alternative investment house. It acquired Barneys New York, the luxury specialty retailer, in 2007. Istithmar's equity investment exceeds $2.6 billion across markets ranging from North America to the Far East.

Dubai Multi Commodities Centre, a subsidiary of Dubai World, is a market place for gold, diamonds, steel, base metals, tea and other commodities.

In the maritime industry, Drydocks World is an international player in ship repair, conversion, new building and other marine-related activities.

Dubai Maritime City is the first ever purpose-built hub for maritime business and commerce. It's located on a man-made peninsula between Port Rashid and the Dubai Dry Docks in the Arabian Gulf.

Dubai Natural Resources World was created as a business unit of Dubai World in 2008. It invests in natural resources, including energy, mining and metals, and agriculture. For example, the company has a joint venture in the oil and gas sector in both Russia and Nigeria.

Dubai World's sprawling empire

The cost of unwinding Bernard L. Madoff&S217;s estate for the benefit of his victims is climbing, with a total of almost $25 million in new fee requests filed on Monday with the federal bankruptcy court in Manhattan.

If the new bills are approved and added to those approved last summer, the legal tab for the first 10 months of the liquidation will rise to almost $40 million.

All the approved bills will be paid by the Securities Investors Protection Corporation, an industry-financed agency that oversees brokerage firm bankruptcies.

&S220;Contrary to what has mistakenly been reported by the news media and on blogs,&S221; none of these expenses will be paid with money that would otherwise go to reimburse victims, the primary fee application emphasized.

Therefore, it continued, the expenses will have &S220;absolutely no impact&S221; on the amount victims ultimately receive.

The fee applications were from Irving H. Picard, the court-appointed trustee for the Madoff estate; Baker &&8; Hostetler, his lawyers; AlixPartners, the consultant handling claims; a law firm handling Mr. Madoff&S217;s personal bankruptcy; and eight foreign law firms tracking assets overseas. The consultant and law firms also applied for $400,000 in out-of-pocket expenses.

Mr. Picard also submitted his second interim report to the court on his work as trustee, a 79-page review of developments in the case since Mr us fast cash. Madoff&S217;s arrest on Dec. 11, 2008.

In that report, Mr. Picard briefed the court on the status of 14 lawsuits he has filed to recover assets taken from Madoff accounts before the fraud collapsed. He also &S220;anticipates filing extensive additional litigation based on investigation conducted by the trustee&S217;s counsel and consultants,&S221; he said.

The new fee applications will be reviewed on Dec. 17 at a hearing before Judge Burton R. Lifland, who has already approved just less than $15 million in fees and expenses in the complex case.

All of the firms submitting fee applications to the court have agreed to a 10 percent discount from their usual rates, except for a firm in Gibraltar, which has discounted its rate by 20 percent. In addition, 20 percent of the approved payments will be held back until the conclusion of the liquidation, unless the court decides otherwise.

As of Oct. 31, SIPC had spent $557.6 million on the Madoff liquidation, $94. 2 million of which was for administrative expenses. That is more than the agency spent on all the other 321 liquidations it has handled since its creation in 1970.

Rising Bill in Unwinding of Madoff’s Assets

BEIJING (Reuters) – China should keep the yuan stable, in part because that is beneficial for a global economic recovery, a Commerce Ministry spokesman said on Monday.

The yuan&&9;s exchange rate has little to do with its trade imbalance, spokesman Yao Jian told a news conference.

He added that it was unfair to urge just one country to increase the value of its currency, as other currencies fall in value.

Yao was speaking shortly after International Monetary Fund Managing Director Dominique Strauss-Kahn said a stronger yuan is part of the reforms that Beijing needs to implement to increase domestic consumption and help ease global imbalances fast cash.

(Reporting by Aileen Wang and Jason Subler; Editing by Ken Wills)

China should keep yuan stable: commerce ministry

(Reuters) – U.S. companies hurt by the global credit crisis are continuing to hold more cash, even as the economy begins to show signs of improvement, the Wall Street Journal said, citing its analysis of company filings.

In the second quarter, the 500 largest non-financial U.S. companies by total assets held about &&6;994 billion in cash and short-term investments, or 9.8 percent of their assets, according to the paper&&9;s analysis of corporate filings.

In contrast, the companies held &&6;846 billion, or 7.9 percent of assets, a year ago, the paper said.

The trend seems to have continued in the third quarter, despite an improving economy, the paper said faxless payday advance.

The 248 companies that have reported third-quarter results so far saw their cash holdings go up by a percentage point sequentially to 11.1 percent of assets, the paper said.

Companies such as Alcoa Inc (AA.N), Google Inc (GOOG.O), PepsiCo Inc (PEP.N) and Texas Instruments Inc (TXN.N) reported big third-quarter increases in cash holdings, the paper said.

(Reporting by Sakthi Prasad in Bangalore; Editing by Muralikumar Anantharaman)

U.S. companies holding more cash: report

OTTAWA &<51; When English-speaking Canadians watch the television news, most of them choose among the Canadian Broadcasting Corporation, CTV or Global Television. But the prime minister, Stephen Harper, said in a speech last week that he preferred another choice: American news.

&S220;I don&S217;t like to watch Canadian news,&S221; Mr. Harper told the Canadian Chamber of Commerce in Toronto on Wednesday, adding that he doesn&S217;t like to see himself analyzed. &S220;So my hobby is to watch politics elsewhere.&S221;

Of course, a statement like that plays into Canada&S217;s inferiority complex. While some people, including other members of the Conservative Party, suggested later that Mr. Harper might have been joking, his spokesman, Dimitri Soudas, confirmed that the prime minister avoided Canadian news broadcasts, but not all Canadian programming.

&S220;He definitely enjoys watching a good hockey game,&S221; Mr. Soudas said.

&S220;It&S217;s completely bizarre,&S221; said Bob Rae, a prominent member of Parliament for the opposition Liberal Party. &S220;Imagine if Sarkozy said: &S216;I don&S217;t watch the French news, just the BBC&S217; or Obama said he only watches Canadian news.&S221;

Peter Mansbridge, host of the CBC&S217;s flagship news program, &S220;The National,&S221; noted that a past prime minister, Pierre Elliott Trudeau, used to say he avoided Canadian media &S220;because he didn&S217;t care what they said free credit reports.&S221;

Nevertheless, Mr. Mansbridge seemed a little baffled.

&S220;It&S217;s a strange signal to send to the public at a time when Canadian networks, aside from covering this country, which U.S. networks don&S217;t, also spend considerable resources, and some of their correspondents literally risk their lives, to bring the Canadian perspective on international stories home from places that some U.S. networks ignore,&S221; Mr. Mansbridge wrote in an e-mail message.

Still, there is one regular viewer inside the official residence. Mr. Mansbridge said that Laureen Harper, the prime minister&S217;s wife, has told &S220;The National&S221; not only that she is a viewer but also that she &S220;even downloads the podcast of our regular Thursday night political panel and then often briefs her husband on what was discussed.&S221;

For News, Canada’s Leader Looks South of the Border

WASHINGTON &<51; The House Financial Services Committee voted on Thursday to create an agency to protect consumers from predatory lending, deceptive credit card terms and other abuses.

By a 39-to-29 vote, the panel moved regulatory legislation a crucial step forward on what was likely to be a long road toward final passage by the full Congress. President Obama, who has put financial regulation high on his domestic agenda, has said he wants a bill on his desk before the end of the year.

Barney Frank, the Massachusetts Democrat who heads the committee, said after the vote that he was optimistic of final passage either late this year or early in 2010. Mr. Frank said he was confident that the pillars of the legislation would remain intact.

&S220;No bill I&S217;ve ever had to share with anyone else has been everything I liked,&S221; Mr. Frank said, predicting that action in the House would create momentum in the Senate.

The House panel also approved, by voice vote, a provision to impose new regulations for credit cards by Dec. 1, instead of mid-February, after Democratic members complained that lenders had been raising interest rates in anticipation of the legislation.

Mr. Obama immediately issued a statement lauding the committee action. &S220;This bill has now passed a major hurdle, and this step sends an important signal to the American people that we will not stand by and allow big financial firms and their lobbyists to mobilize against change,&S221; the president said.

&S220;They are doing what they always do &<51; descending on Congress, using every bit of influence they have to maintain the status quo that has maximized their profits at the expense of American consumers, despite the fact that recently those same American consumers bailed them out as a consequence of the bad decisions that they made.&S221;

Later, the White House issued a statement calling passage of the bill by year&S217;s end essential. &S220;And we think a central part of regulatory reform is a consumer finance protection agency that looks out for, in all of this, normal, everyday consumers,&S221; said Robert Gibbs, the president&S217;s chief spokesman pay day advance.

Mr. Gibbs said he understood that Senators Christopher J. Dodd of Connecticut and Richard C. Shelby of Alabama, the chairman and ranking Republican, respectively, of the Senate Banking Committee, were working &S220;quickly and expeditiously to ensure financial regulatory reform is something that happens and is written into law.&S221;

The House committee vote on creating a consumer financial protection agency was mostly along party lines. Two Democrats voted against the measure (Travis Childers of Mississippi and Walt Minnick of Idaho) and one Republican voted for it (Michael N. Castle of Delaware).

The vote came a day after the committee voted to give the federal government the power to block states from regulating large national banks in some circumstances. That vote came after committee members reached a compromise on how much authority state regulators should have.

The Obama administration opposed any efforts by the federal government to pre-empt state officials from imposing more rigorous banking standards. A group of Democrats with close ties to the banking industry sought a complete federal pre-emption, which would have the effect of sharply limiting any state regulation of banks.

Under the compromise offered by two House Democrats, Melvin Watt of North Carolina and Dennis Moore of Kansas, and approved by voice vote, the Office of the Comptroller of the Currency, which regulates national banks, would be able to override the states, but only if it found that the state law &S220;significantly&S221; interfered with federal regulatory policies.

On another issue that has been hotly debated for months, the House Agriculture Committee on Wednesday approved a measure to regulate derivatives, the arcane financial instruments that have been linked to the current financial crisis. The Financial Services Committee approved a similar measure last week. (The agriculture panel has jurisdiction because many derivatives involve trading in farm commodities.)

Vote Backs a Financial Oversight Body

After reporting big profits over the last six months, Bank of America lost $1 billion in the third quarter as growing numbers of consumer loans soured and the bank paid millions of dollars to wean itself off government life support.

Bank of America posted a loss of 26 cents a share for the three months from July through September, compared with a profit of $3.2 billion in the second quarter. Wall Street analysts had been expecting a loss of 12 cents a share. The bank earned $1.18 billion or 15 cents a share in the quarter a year ago.

&S220;Obviously, credit costs remain high, and that is our major financial challenge going forward,&S221; said the bank&S217;s chief executive, Kenneth D. Lewis. &S220;However, we are heartened by early positive signs, such as the leveling of delinquencies among our credit card numbers.&S221;

The bank added $2.1 billion to its reserves to cover more credit losses as unemployment surges and households struggle to keep up on their loans, and it spent more than $400 million to extract itself from an agreement with the government that guaranteed potential losses of its brokerage Merrill Lynch.

Aside from its roster of troubled consumer credit and loan products tied to the sagging mortgage market, Bank of America is beset with problems that run from Washington to civil courtrooms to its own boardroom.

Mr. Lewis announced in late September that he would step down at the end of the year, leaving a leadership vacuum as the bank searches for a successor who can restore the bank&S217;s tarnished image and remove the government crutches holding it up.

Bank of America has accepted some $45 billion in taxpayer bailouts since the financial crisis erupted last year, and has issued in debts backed up by the government no teletrack payday loan. While rivals like Citigroup and Wells Fargo also remain on government support, stronger competitors like Goldman Sachs and JPMorgan Chase have already paid back their bailouts, freeing themselves of the scrutiny and stigma that came with taking the bailout.

A day before reporting its earnings, the bank tried to quell some of the furor over its management and bonus structure by announcing that Mr. Lewis promised to return the pay he received this year to avoid a confrontation with Kenneth R. Feinberg, the Obama administration&S217;s overseer of executive compensation..

While Merrill&S217;s brokerage business may be adding meat to Bank of America&S217;s bottom line, investigations over the $50 billion deal that folded the thundering herd into Bank of America still pose legal tangles and publicity headaches for the bank. Regulators, members of Congress and shareholder lawsuits are examining the merger and questions over bonuses paid out to Merrill executives on the eve of the deal.

Already, e-mail messages have surfaced in which one Bank of America director sums up his take on the Merrill deal by saying, &S220;Unfortunately it&S217;s screw the shareholders!!&S221; Now, Bank of America&S217;s board has voted to partially waive attorney-client privilege, perhaps setting the stage for more disclosures about the boardroom intrigue leading to the Merrill deal.

With $1 Billion Loss, Bank of America Misses Its Forecast

TOKYO (Reuters) &<51; Japan Airlines pleaded on Thursday for a government bailout, but the new transport minister withheld support on concerns that the carrier&S217;s cost-cutting plans would not go far enough.

The request by the chief executive of Japan Airlines, Haruka Nishimatsu, for a capital injection from the state came as the carrier&S217;s shares tumbled 16 percent to a record low, hit by media reports that lenders might seek to break up the company and that the company had asked for a bailout.

Japan Airlines, weighed down by $15 billion of debt and headed for its second consecutive annual loss, is being wooed by Delta Air Lines and a rival group led by American Airlines, which are offering capital in return for closer business ties.

Japan Airlines has been scrambling to put together a restructuring plan to submit to the government this month, a condition of a state guarantee on a billion-dollar loan earlier this year.

The likelihood of further state support has been thrown into doubt by a change in government in August that brought the Democratic Party to power, ending the rule of the Liberal Democratic Party, which had supported state help for the airline.

The transport minister, Seiji Maehara, met with Mr. Nishimatsu on Thursday. He reiterated that he did not want the airline to go bankrupt but said he was not ready to approve a request for the state to prop up the carrier by buying shares.

Mr. Maehara said he wanted to finish restructuring plans by the end of October payday loans for bad credit.

Japan Airlines is seeking about $2.7 billion through a mixture of equity and debt to meet its financing needs through the financial year-end in March. Bankers have said they will not lend more to the company unless there is deeper state involvement, either through loan guarantees or a capital increase.

Mr. Nishimatsu, talking to reporters after meeting Mr. Maehara, said Japan Airlines needed government help but did not give an exact amount.

&S220;Considering debt repayments planned ahead, we thought asking for the public fund injection would make the most sense,&S221; he told reporters, adding that the company was not considering a breakup. &S220;If we were a manufacturer, then that could have been a choice. But for us, an airline company, that&S217;s not an option.&S221;

Yoshihisa Miyamoto, an analyst at Okasan Securities, said investors were becoming increasingly skeptical about Japan Airlines&S217; future.

&S220;It won&S217;t be able to stay alive as it is,&S221; Mr. Miyamoto said. &S220;It&S217;s got to sharply downsize operations or sell off businesses in bits and pieces to other companies. Our image of JAL as Japan&S217;s national carrier no longer exists.&S221;

Japan Appears Reluctant as Airline Seeks a Bailout

LONDON (AFP) – European equities edged up on Wednesday, lifted by overnight gains on Wall Street and buoyant commodity prices, with investors on tenterhooks before a US Federal Reserve interest rate call.

The FTSE 100 index gained 0.29 percent to 5,157.26 points in late morning deals.

Frankfurt&&9;s DAX 30 advanced 0.17 percent to 5,719.06 points and in Paris the CAC 40 added 0.14 percent to 3,828.97 points near the half-way stage.

The DJ Euro Stoxx 50 index of top eurozone shares climbed 0.26 percent to 2,889.36 points.

London stocks pared gains after news that Bank of England policy-makers had voted unanimously earlier this month to freeze British interest rates at a record low and maintain its credit-easing policy.

Later on Wednesday, the Federal Reserve will conclude a two-day meeting and is expected to hold to its massive economic stimulus programme as it seeks to support a fragile US recovery from recession.

Analysts say that the Fed is certain to keep a near-zero interest rate along with an array of programs to keep credit flowing.

The accompanying statement could provide hints on the speed and shape of the economic recovery, and any monetary policy response in the coming months.

"All eyes (are) on the Fed rate announcement and the tone of any accompanying statement," said Arifa Sheikh-Usmani, equity trader with financial betting firm Spreadex.

"I would expect markets to trade fairly sideways until that comes out later," she added.

"We are still seeing clients buying on weakness which shows that there is still some momentum in the market, however, the rally is certainly less enthusiastic than it was a couple of weeks ago my credit score."

The Federal Open Market Committee (FOMC), headed by Fed chairman Ben Bernanke, will issue a statement at 1815 GMT.

In foreign exchange trade on Wednesday, the dollar fell to a new one-year low against the euro amid expectations that US interest rates will remain low for a considerable length of time.

The dollar has fallen sharply this week as many investors sold safe haven assets on the back of growing economic optimism, dealers said.

The European single currency jumped as high as 1.4842 dollars in Asian trade on Wednesday, before pulling back slightly.

Across the Atlantic on Tuesday, Wall Street had struck fresh 2009 highs on economic recovery optimism and company earnings prospects.

The Dow Jones Industrial Average gained 0.52 percent to 9,829.87 points.

The tech-heavy Nasdaq composite rose 0.39 percent to 2,146.30 while the broad-market Standard & Poor&&9;s 500 index added 0.66 percent to 1,071.66 points.

Meanwhile, leaders of the G20 key developed and developing countries will kick off two-day talks in the US city of Pittsburgh, Pennsylvania, on Thursday.

They are expected to discuss ways to unwind their unprecedented support to fight the global economic crisis -- although they remain cautious for fear of jeopardizing a return to growth.

The Tokyo stock market will reopen on Thursday after a series of public holidays.

European markets rise before Fed rate decision

HONG KONG (Reuters) – Asian stocks edged higher on Wednesday, with thin summer trading volumes keeping prices choppy and centered on short-term chart targets, while oil hovered near &&6;72 a barrel, capped by a surprising rise in U.S. inventories.

U.S. single-family home prices grew for a second straight month, a report showed overnight, confirming the recovery is on track.

However, having already priced in an upturn in the global economy, investors were looking for more signs that growth can be sustained once the impact of massive government stimulus spending fades.

Volatility in Chinese shares has also kept investors guessing. The Shanghai composite index is down 14 percent so far in August, on track for the biggest monthly decline since the darkest month of the financial crisis in October 2008.

The precipitous move triggered questions on whether other high flying equity markets were due for a correction. However, to what extent a decline in the Chinese market, which is largely closed to foreign investors, matters for global market trends and perceptions of risk is an open question.

Japan&&9;s Nikkei share average drifted up 0.6 percent, within reach of a 10-month high reached earlier in August.

"The (U.S. economic) data is encouraging because it points to continued economic improvement, but the Nikkei won&&9;t rise that much because investors are a bit wary about the chances of an adjustment. After all, it has risen around 50 percent since March," said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo.

Shares of index heavyweight Toyota Motor Corp (7203.T) rose 1.5 percent on a report the carmaker would cut global production capacity and post an operating profit in the 2010 financial year.

However, while news of the output cut shored up the stock, it also reinforced worries about persistent weakness in global consumer demand, which is key to a solid recovery.

The MSCI index of Asia Pacific stocks traded outside Japan rose 0.1 percent (.MIAPJ0000PUS), weighed by weakness in the technology and consumer discretionary sectors -- two of the most expensive segments of the Asian market.

Hong Kong&&9;s Hang Seng index (.HSI) was up 0.3 percent but remained susceptible to ups and downs in the Shanghai composite index (.SSEC), which was up 0.6 percent.

The Ifo survey of German business sentiment is expected to show an across the board pickup later on Wednesday, playing into the story that recoveries are taking hold around the world.

However, in a worrying development, Japan&&9;s exports slipped in July as annual drops in exports to the United States and China accelerated, in a sign that the impact of stimulus measures in major economies worldwide may be starting to wane.

"Things have stopped getting worse, but a return to trend gains in production and trade is a pipe-dream," Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong, said in a note.

U.S. oil futures for October delivery were largely unchanged on the day around &&6;72 after a 3 percent drop overnight on profit taking after the market was unable to push crude above &&6;75 a barrel.

Inventory data from the American Petroleum Institute late on Tuesday showed a big buildup in U.S. crude oil stocks last week, keeping a lid on the market.

Still, that appeared only a short-term setback. Analysts raised their 2010 median price forecast for a fifth straight month to &&6;73.39.

The yen edged up in quiet trade, lifted by Japanese exporters and short-term investors.

The U.S. dollar slipped 0.2 percent to 93.98 yen. Sterling fell 0.4 percent to 153.33 yen, and the euro was down 0.2 percent to 134.38 yen.

The Australian dollar inched up 0.1 percent to US&&6;0.8357 and this week has been less reactive to domestic Chinese stock market moves. Earlier in August, sudden drops in the Shanghai market sucked the Australian currency down with it.

(Additional reporting by Elaine Lies in Tokyo)

(Editing by Kim Coghill)

Asia stocks edge up; eyes on oil and China