Facing Scrutiny, Banks Slow Pace of Foreclosures

Bollywood star Shah Rukh Khan paid a record $2.4 million to field left-handed Indian batsmen Gautam Gambhir in his Kolkata Knight Riders Indian Premier League cricket team.

Gambhir’s was the opening sale in an auction of players in the southern city of Bangalore today in which another Indian all-rounder, Yusuf Pathan, was bought by the same team for $2.1 million. Former Indian captain Saurav Ganguly and West Indies batsman Chris Gayle did not receive any bids.

The Indian Premier League Twenty20 cricket tournament is a fast-paced form of the traditional five-day sport that features four-hour matches accompanied by blaring music between bowlers’ deliveries and cheerleaders.

England batsman Kevin Pietersen and Andrew Flintoff were the previous highest paid players in the league and went for $1.55 million in 2009, according to Agence France-Presse.

Robin Uthappa, another Indian batsman, was sold in the third session of the auction for $2.1 million to Team Pune. The auction of 350 domestic and international players ends tomorrow and unsold players will be put up for sale a second time.

The contracts with players are for two years and the team managements have the option to renew them for a third year on the same terms and conditions as the initial two years, according to a statement issued by the league.

The 10 participating teams have a total of $72.3 million to spend on players, according to the statement.

Asian Stocks Rise a Fourth Week as Dollar, U.S. Reports Boost Exporters

Asian stocks rose for a fourth straight week as exporters gained on a rising dollar and U.S. economic reports that boosted confidence in the world’s largest economy.

Toyota Motor Corp., an automaker that gets more than a quarter of its revenue from North America, gained 7.3 percent in Tokyo. Nissan Motor Co., Japan’s third-biggest carmaker by sales, soared 11 percent, while Hynix Semiconductor Inc., the world’s second-largest computer-memory chipmaker, jumped 8.8 percent in Seoul. Hyundai Motor Co., South Korea’s No. 1 vehicle maker, surged 14 percent.

“There are mounting expectations about an economic recovery in the U.S.,” said Naoki Fujiwara, who helps oversee $6 billion in Tokyo at Shinkin Asset Management Co.

The MSCI Asia Pacific Index rose 0.1 percent this week. The gauge surged to its highest level in 2 1/2 years on Jan. 4 as data on U.S. manufacturing boosted optimism that a recovery in the world’s largest economy is strengthening.

The U.S. jobless rate fell to 9.4 percent in December as payrolls increased 103,000, according to a Labor Department report released yesterday in Washington after Asian markets closed. The increase in jobs was less than the median forecast of 150,000 in a Bloomberg News survey. Still, a report earlier in the week showed the average number of applications for jobless benefits over the past four weeks dropped to the lowest level since July 2008.

China, Japan

The Shanghai Composite Index climbed 1.1 percent in China, after a slowdown in manufacturing boosted speculation that inflation eased last month, reducing pressure on the government to impose further curbs to rein in rising property prices.

In Japan, the Nikkei 225 Stock Average rose 3.1 percent as a stronger dollar boosted the profit outlook for Japanese exporters. Markets in Japan, China, Australia and New Zealand were closed on Jan. 3 for a holiday.

Hong Kong’s Hang Seng Index gained 2.8 percent, and South Korea’s Kospi index rose 1.7 percent. Australia’s S&P/ASX 200 Index declined 0.9 percent.

The MSCI Asia Pacific Index rose 14 percent last year, extending a 34 percent increase in 2009, as positive global economic data and corporate profits outweighed concerns about Europe’s debt crisis and China’s steps to curb inflation. Stocks in the gauge trade at an average 14.2 times estimated earnings, compared with about 22.7 times at the start of 2010.

Dollar Rises

The dollar had its biggest weekly gain since August against the currencies of major trading partners as evidence of a U.S. economic recovery spurred demand for assets denominated in the greenback.

IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the yen, increased 2.7 percent to 81.136 at 5 p.m. yesterday in New York, from 79.028 on Dec. 31. The gauge of the greenback rose yesterday for a fifth consecutive day.

“The growth outlook has improved quite a bit,” said Jens Nordvig, a managing director of currency research at Nomura Holdings Inc. in New York. “There is a much more dollar-bullish sentiment that is starting to develop.”

A higher dollar boosts the overseas revenue of Asian exporters when converted into local currencies.

Toyota, the world’s largest automaker, jumped 7.3 percent to 3,455 yen this week in Tokyo, while Nissan soared 11 percent to 861 yen.

Hyundai Motor surged 14 percent to 198,000 won this week in Seoul after it sold 33 percent more vehicles in the U.S. last month. Hynix Semiconductor soared 8.8 percent to 26,100 won.

Hong Kong Gains

Among Chinese exporters to gain on the better outlook for the U.S. economy, Foxconn International Holdings Ltd., the world’s biggest contract maker of mobile phones, gained 6.5 percent to HK$5.78 in Hong Kong this week, while Li & Fung Ltd., the largest supplier to Wal-Mart Stores Inc., gained 3.9 percent to HK$46.85.

U.S. government data released on Jan. 6 showed the average number of applications for jobless benefits over the past four weeks dropped to 410,750, the lowest level since July 2008.

Separately, the Institute for Supply Management’s manufacturing index climbed to 57 last month from 56.6 in November. The non-factory index, which covers about 90 percent of the economy, rose to 57.1, exceeding the median forecast of economists surveyed by Bloomberg News, from 55 in November. A reading greater than 50 points to expansion.

Commodity stocks declined this week as the dollar strengthened, dragging oil and metal prices lower by curbing their attractiveness as an alternative investment.

Commodities Under Pressure

“Soft commodities may be under pressure because of too much speculation previously,” said Danny Yan, a Hong Kong-based fund manager at Haitong International Asset Management, which oversees about $400 million. “With a rebounding U.S. dollar and sufficient global supply, they may see some profit taking.”

Newcrest Mining Ltd. sank 4.5 percent to A$38.61 this week in Sydney, and BHP Billiton Ltd., the world’s biggest mining company, slid 1.4 percent to A$44.62. Rio Tinto Group, the world’s No. 3 miner, retreated 1.2 percent to A$84.48.

Cnooc Ltd., China’s largest offshore oil producer, slid 0.3 percent to HK$18.38 in Hong Kong.

Crude oil for February delivery declined about 3.3 percent this week through Thursday in New York, while the London Metal Exchange Index of six metals including copper and aluminum dropped about 0.5 percent. Gold futures for February delivery declined for the fourth straight day yesterday.

Samsung, Acer

Samsung Electronics Co., the world’s largest maker of televisions, sank 3 percent to 921,000 won this week in Seoul after saying operating income fell 13 percent from a year earlier to 3 trillion won ($2.7 billion) in the three months ended December, lower than average analyst estimates compiled by Bloomberg.

Acer Inc., the world’s second-largest computer maker by market share, tumbled 8.1 percent to NT$82.80 in Taipei after saying snowstorms in Europe hurt its revenue for last quarter.

Yahoo Japan Corp., the operator of Japan’s most-visited Internet portal, slipped 4.1 percent to 30,200 yen in Tokyo after Goldman Sachs Group Inc. rated the stock “sell” in new coverage.

India Eases Coastal Development Law, Opening Way for New Mumbai Buildings

India eased restrictions on construction along the Mumbai coastline, opening the way for the redevelopment of neglected buildings and neighborhoods.

The Coastal Regulation Zone Notification 2011, published yesterday on the Environment Ministry’s website, replaces a law introduced 20 years ago to manage coastal construction. The new rules include special provisions for Greater Mumbai to allow for work on buildings previously in “no development” zones.

“With this relaxation a lot of projects for dilapidated buildings along the coast and slum redevelopment in Mumbai will take off,” Sunil Mantri, chairman of the Maharashtra Chamber of Housing Industry, said today by telephone.

Among the new measures, the “no development” zone has been reduced so that houses for fishing communities can be built 100 meters (330 feet) from the high-tide line, compared with the previous 200-meter stipulation.

The law also includes provisions to protect a chain of coastal lagoons known as the backwaters in the southern state of Kerala, and environmentally sensitive areas of Goa.

Small Companies Pursue Big Break at Tech Conference

LAS VEGAS — The 2,700 technology companies selling their wares at the Consumer Electronics Show here come in all shapes and sizes. At one end of the spectrum are the likes of Microsoft, Samsung and Sony, with their gargantuan booths on the show floor, where they ply potential business partners and journalists with drinks, food and private meetings with executives.

At the other end is Scott Starrett.

Mr. Starrett, 39, is here with the three other employees of Cervantes Mobile, a company he started last year. It makes one product — called Jorno, a foldable keyboard for handheld devices — which does not, by the strictest definition of the word, exist.

The company is financed with capital from Mr. Starrett’s family and friends and his personal bank account. And though he seems a bit frazzled in his 10-foot-by-10-foot booth set against the northernmost wall of the Las Vegas Convention Center, he insists that he mainly feels optimistic.

His brand of cheerfulness is easy to find here. Dozens of dreamers, serial entrepreneurs, husband-and-wife teams, copycats and garage-based inventors occupy the tiniest booths in the farthest reaches of the convention hall. For them, the electronics show is an opportunity to meet with distributors and potential business partners and maybe to ride a wave of publicity generated by the show into the public eye.

Usually, it is also a costly undertaking, a calculated gamble that the thousands of dollars it costs to travel to Las Vegas and rent a booth will pay off in the form of signed deals or at least greater momentum. But in a show that sprawls over 1.6 million square feet across three exhibition halls, it is not easy to gain a foothold.

“You’re just placing bets, essentially,” said Mr. Starrett, who paid $4,800 for his booth and several thousand dollars for expenses for the trip here from Los Angeles.

It is a long shot that can pay off, said Jake Sigal, a 29-year-old entrepreneur who first attended the convention in 2008. He did not have a booth then. Instead, he talked companies that he wanted to work with into meeting with him at a Starbucks in the convention center. Most doubted he would succeed; some, he said, admired his pluck and offered him a job.

And he did persuade Pandora, the Internet music service, to allow him to build an Internet radio that plays stations from the service. He bought booth space the next year, and was able to reach a similar deal with NPR after one of its employees happened to walk by his booth.

“I guarantee that if I would have called NPR in the middle of July, they would have said no,” said Mr. Sigal, who is from Columbus, Ohio.

Livio Radio, Mr. Sigal’s company, has begun to manufacture car stereos as well. On Friday, the company announced a third partnership, with Grooveshark, another Internet music service.

The Consumer Electronics Association, the trade organization that organizes C.E.S., tries to encourage small businesses. It hosts competitions for companies with innovative products, offering free or discounted booth space to the winners. At the show itself, it hosts events to showcase small businesses and holds mentoring programs.

Aaron LeMieux, who is 36 and from Cleveland, won discounted space at this year’s show after giving a three-minute pitch for the nPower Peg, a sticklike object that harnesses kinetic energy, the type of energy created when an object is put in motion, like when a user walks around with it in a backpack. He believes that similar technology will eventually be used to power pacemakers and to capture the energy of ocean waves.

But for now, it is working with cellphones. The device creates enough energy in 15 minutes of walking to allow for a minute of talk time on a typical cellphone, Mr. Lemieux said.

He first came up with the idea when hiking the Appalachian Trail in 1996.

“I knew I had an excess of kinetic energy, yet I was stopping into town to buy batteries,” he said. “Fifteen hundred miles gave me a lot of time to think, and I figured out a way to convert kinetic energy into electric energy. It took 10 years.”

Mr. Starrett’s trip from concept to execution is shaping up to be considerably quicker. He first had the idea for a folding keyboard last year, and he decided he was far enough along to commit to coming to the convention in late spring.

Despite his best efforts, however, production could not quite keep pace with his enthusiasm. The Cervantes team arrived in Las Vegas with two model keyboards, rather than a working prototype. One was locked in the closed position; the other was fixed in the open position. Hinges, it turned out, are tricky.

Mr. Starrett acknowledged the awkwardness of peddling a foldable keyboard that cannot actually fold. But he said he took heart in knowing that every year some of the products drawing all the attention to the larger booths are not fully functional either, noting Microsoft’s false start on tablet computers last year, or the recent delays with Google TV.

“As an entrepreneur, it’s nice to know you can stumble,” he said. “I just don’t want to stumble too often.”

Bonds Fall for Third Quarter as Real Yields Trail Treasuries: India Credit

India’s bond yields are poised to rise for a third consecutive quarter as the central bank struggles to cool inflation.

The benchmark 10-year yield may climb nine basis points to 8.19 percent by the end of March, after increasing 18 basis points since Dec. 31, according to the median estimate of five primary dealers in a Bloomberg survey. Kaushik Basu, the finance ministry’s chief economic adviser, said in a Jan. 5 interview that the inflation rate is “too high,” and Masahiko Takeda, the International Monetary Fund’s India mission chief, said in a statement yesterday interest rates may need to be increased.

Finance Minister Pranab Mukherjee said last month wholesale prices will be rising at a 6.5 percent pace by the end of March, above a previous estimate of 6 percent, because of surging food and oil prices. Yields on India’s 10-year government bonds are 62 basis points above inflation, compared with 330 in the U.S. and 111 in Japan.

“Commodity prices are at significantly high levels, and we haven’t seen the complete pass-through of that in inflation,” Nirav Dalal, Mumbai-based head of debt capital markets at Yes Bank Ltd., partly owned by Rabobank Nederland NV and HSBC Holdings Plc, said in an interview on Jan. 3. “Bond yields at current levels don’t adequately capture that.”

Repurchase Rate

Food prices rose at an 18.3 percent rate in the week ended Dec. 25, the most since July, according to a commerce ministry report issued yesterday, prompting Mukherjee to say the acceleration is an “area of concern.” The data threaten progress made in curbing wholesale prices, which India uses as its barometer for inflation. Gains in wholesale prices slowed to an 11-month low of 7.48 percent in November. Food makes up about 14 percent of the benchmark index.

The Reserve Bank of India lifted the repurchase rate by 150 basis points last year to contain the surge in prices. The repurchase rate, at which lenders borrow from the central bank, may rise 25 basis points to 6.5 percent at the next review on Jan. 25, according to 11 of 16 economists in a Bloomberg survey. The rest forecast no change.

“The way inflation is, even the finance ministry people are changing their stance,” Pradeep Madhav, managing director at the Mumbai-based Securities Trading Corp. of India, said in an interview on Jan. 3. “I would think there would be a rate hike in January.” He predicted the benchmark yield will be 8.15 percent by the end of March.

Bond Underperformance

Of the other primary dealers surveyed, Axis Bank Ltd. and Royal Bank of Scotland NV concurred with Securities Trading Corp.’s assessment. Both ICICI Securities Primary Dealership Ltd. and IDBI Gilts Ltd. forecast the yield will increase to 8.25 percent.

The 10-year yield jumped 29 basis points in the third quarter of 2010 and eight basis points in the fourth quarter.

Investors would still earn an annualized return of 5.2 percent if the prediction by the primary dealers proves accurate, according to Bloomberg data. That would compare with the 5.3 percent the securities gained during the past 12 months, according to indexes compiled by HSBC Holdings Plc. Indonesian securities handed investors 24 percent, the most in the region, while Philippine notes delivered 12.5 percent.

Rupee’s Gain

India’s 10-year bond yield is the highest among Asia’s 10 biggest economies. The comparable rates are 7.66 percent in Indonesia and 3.79 percent in China. The real, or inflation- adjusted, yield in Indonesia is 71 basis points and a negative 131 in China. The difference in rates between India’s debt due in a decade and similar-maturity U.S. Treasuries was 469 basis points today, up 89 basis points from last year’s low.

India’s rupee rose 0.5 percent last quarter, the third- worst performance among Asia’s 10 most-traded currencies, as rising commodities prices aggravated food inflation. The currency declined 0.3 percent to 45.39 per dollar today.

The cost of protecting the debt of government-owned State Bank of India, which some investors perceive as a proxy for the nation, has increased 36 basis points since the start of 2010 to 154, according to CMA prices. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

Borrowing Target

The outlook for bonds beyond March will rest partly on the finance ministry’s borrowing plan, according to Dhawal Dalal, head of fixed-income investments in Mumbai at DSP Blackrock Investment Managers Pvt. The federal government’s borrowing target in the current financial year is 4.47 trillion rupees ($98.5 billion), compared with a record 4.51 trillion rupees in the previous fiscal year.

“The key question the market will have to ask is ‘what the government’s expenditure will be next fiscal year?’,” Dalal said in an interview on Dec. 3. “The borrowing program will be an important factor.”

Basu, the chief economic adviser who studied at the London School of Economics, said in his interview that policy makers will withdraw fiscal stimulus to tame inflation.

“You will see steps being taken this year, next year and maybe the year after,” Basu, 58, said in the interview ahead of next month’s budget presentation for the next financial year by Mukherjee.

The IMF’s Takeda said there is “a possibility” that further monetary tightening may be needed to contain inflation. Those comments, made in a video on the IMF’s website, came after the fund completed an annual review of India’s economy.

The Reserve Bank, which raised borrowing costs the most of any monetary authority in Asia last year, still isn’t finished with its task, according to ICICI Securities Primary Dealership.

“Inflation is still higher than the central bank’s comfort zone,” Prasanna Ananthasubramaniam, the Mumbai-based chief economist at the unit of India’s second-biggest lender, said in an interview on Jan. 5. “The central bank will still be on their toes to tackle it.”

Oil Tankers Sail to Indian West Coast From Iran Amid Gridlock Over Payment

Three crude oil tankers from Iran, OPEC’s second-biggest oil producer, sailed for India’s west coast in January while the nations discussed ways to resolve a gridlock over payments for the fuel.

The Darab, owned by National Iranian Tanker Co., was headed this week to the western Indian port of Vadinar, where state-run Indian Oil Corp., the nation’s biggest refiner, and Essar Oil Ltd. take deliveries of crude, according to ship transmissions captured by AISLIVE on Bloomberg.

The Darab, with the capacity to carry 345,000 metric tons, departed from Kharg Island, Iran’s main crude-export terminal, Bloomberg data show.

Indian refiners need to find alternative means to pay for Iranian crude after the Reserve Bank of India on Dec. 27 said companies must settle trades with the Persian Gulf state outside the Asian Clearing Union, a regional payment arrangement. This dismantled a mechanism used to complete payments for oil in euros and dollars.

Two ships, the Remi and Fair Spirit, with a combined cargo of 180,000 tons, are scheduled to reach Mangalore in western India today, according to vessel transmissions and data from Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker.

The Remi, which can transport about 105,000 tons, was chartered by state-run Mangalore Refinery & Petrochemicals Ltd. or MRPL to transport 90,000 tons from the Arabian Gulf in late December, according to data from Clarkson.

Ship Charters

MRPL, a unit of India’s biggest energy explorer Oil & Natural Gas Corp., buys about 7 million tons of crude from Iran every year, making it the South Asian nation’s biggest buyer of oil from the Persian Gulf state, Managing Director U.K. Basu said Dec. 30.

The Fair Spirit, which can carry about 100,000 tons, was chartered by MRPL to transport 90,000 tons to Mangalore from Kharg Island in early January, according to Clarkson data.

The Remi and Fair Spirit have been chartered by MRPL to also load 180,000 tons from Kharg Island and the Arabian Gulf in mid-January, the data show.

Indian Oil and state-run rival Hindustan Petroleum Corp. will get crude from Iran on credit this month, two people with direct knowledge of the matter said Jan. 4.

Crude on Credit

Iran will supply Hindustan Petroleum, India’s third-largest state refiner, with 1 million barrels on 90 days of credit, one of the people said. The refiners are exploring the possibility of paying for Iranian crude in yen, dirhams or rials, the people said.

Hindustan Petroleum rose as much as 0.9 percent to 390.90 rupees and was trading at 389.15 rupees in Mumbai at 10 a.m. local time. Indian Oil gained as much as 1.2 percent. MRPL fell 0.2 percent after climbing as much as 0.5 percent.

Oil Secretary S. Sundareshan said on Dec. 30 that India imports about 21 million tons of crude from Iran annually. The Middle East nation is India’s biggest supplier after Saudi Arabia, Oil Minister Murli Deora said in parliament April 15.

The United Nations in June stepped up punitive measures against Iran over its nuclear ambitions, applying a fourth round of sanctions. The U.S. and European Union later imposed additional restrictions. Iran says it is enriching uranium for power generation.

The U.S. has increased pressure on Iran’s banks, the country’s national security leadership and on companies that invest in Iran’s energy industry.

Iran pumped 3.7 million barrels a day in December, making it the second-largest producer in the Organization of Petroleum Exporting Countries, according to a Bloomberg survey. The other countries in the 12-member group are Algeria, Angola, Ecuador, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.

Economic fears as Indian food prices soar

Indian food prices have hit their highest level in more than a year, rising at an annual rate of 18 per cent in what economists have taken as a worrying sign that the impact of surging commodity prices is hitting the broader economy.

Food inflation in India is being driven by many of the same factors that have pushed the price of global commodities like wheat and barley to record highs. It also highlights rising fears of a global prices in the developing world, with the UN’s Food and Agricultural Organisation warning this week that global prices had surpassed levels seen during the 2007-08 crisis.

Bihari Lal, a 40-year-old fruit trader, said: “Buying fruit is a luxury for most people. They would rather spend the money on vegetables for an evening meal than for buying bananas, papayas, oranges and melons. For the poor it is unthinkable. So I am buying less fruit to sell to avoid wastage, but I am going through a bad time.”

India’s commerce and industry ministry said on Thursday that food prices rose at an annual rate of 18.32 per cent in the week to December 25.

The move capped more than a year of double-digit food price inflation for India, where millions still spend more than 50 per cent of their household income on food.

For Chhaya Singh, a 17-year-old student shopping for daily staples in Mumbai’s Colaba market, that has meant that even the cheapest and most basic meal of potato curry has become too expensive. “We have to find alternative vegetables,” she said.

For Nahi Chaudhary, a 38-year-old Mumbai housewife, the higher prices have meant buying fewer aubergines, okra and other now expensive vegetables. “The increase in price is terrible,” she said. “In fact we don’t eat out at all any more as restaurants have even increased their charges.”

Although still below the more than 20 per cent inflation levels seen in 2009, economists fear that a long-term structural shift in food consumption means prices are likely to be an ongoing concern for politicians and the Reserve Bank of India, the central bank.

According to Shubhada Rao, chief economist at Yes Bank in Mumbai, there is a “structural rigidity” in food inflation. “[This] is reinforcing fears that it will spill over to broader inflation, putting pressure on the Reserve Bank of India (RBI) to raise interest rates,” she said.

Nalini Rao, senior research analyst at Angel Commodities, said the price rises had hit a changing array of staples over the past year. “In June food inflation was driven by pulses and milk, while for December it is driven by crops such as onions [and] other vegetables such as potatoes and spices.”

The International Monetary Fund on Wednesday urged the RBI to maintain a tight monetary policy stance and keep raising interest rates in its efforts to tame inflation.

The latest sharp rise in Indian food inflation was partly due to the jump in the price of onions, a staple ingredient for India’s curries, which in recent weeks developed into a national scandal.

Manmohan Singh, the country’s prime minister was forced to step in and seek imports from Pakistan, in order to bring prices down to more reasonable levels. Onion prices suddenly doubled, after unseasonable rains in onion-growing regions damaged crops.

“It impacts us very much,” said Mina Singh, who runs a small canteen at a New Delhi arts centre, saying she is now spending Rs1,000 ($22) every two days on onions. “We can’t change the recipes – people will start complaining,” said Ms Singh. “We also serve onions as accompaniments alongside the dishes, but we can’t start charging for that – it’s like charging for water.”

Ali Mohammad, a 30-year-old onion trader in Mumbai, said: “People have to buy the same number of onions, it’s a staple, so that is why I haven’t seen any change in sales. But what I have seen is that rather than buying 1kg at a time as before, they will buy less, but more often so it is manageable.”

A Bonanza in TV Sales Fades Away

LAS VEGAS — By now, most Americans have taken the leap and tossed out their old boxy televisions in favor of sleek flat-panel displays.

Now manufacturers want to convince those people that their once-futuristic sets are already obsolete.

After a period of strong growth, sales of televisions are slowing. To counter this, TV makers are trying to persuade consumers to buy new sets by promoting new technologies. At this week’s Consumer Electronics Show, which opens Thursday, every TV maker will be crowing about things like 3-D and Internet connections — features that have not generated much excitement so far.

Unit sales of liquid-crystal and plasma displays were up 2.9 percent in 2010 from the previous year, according to figures from the market researcher DisplaySearch. That is tiny compared with the gains of more than 20 percent in each of the prior three years.

Those heady days of the last decade were the result of an unusual set of circumstances. The rise of flat-panel television technologies like plasma and LCD almost perfectly coincided with a government-mandated switchover to digital broadcasting and the availability of high-definition shows and movies — something these new televisions were all ready to display.

That sparked a mass migration of consumers from using the old cathode-ray tube television sets to the thinner and lighter plasma and liquid-crystal displays.

“Those were the golden years,” Paul Gagnon, director of North American TV research at DisplaySearch, said. “During that period, the whole pie grew. Technology inflated the size of the category.”

But now, most people who want a flat-screen TV already own one. Industry watchers and manufacturers estimate that nearly two-thirds of households in the United States have a flat-screen set.

“The laggards are stubborn,” Mr. Gagnon said. “They will not move as quickly as the rest of the market has.”

The industry’s response has been to promote 3-D and Internet capabilities. But these were also the buzzwords at last year’s show, indicating that after a period of consistent innovation and improvement — from higher resolutions to thinner displays — the TV market is maturing and stabilizing.

“In the next decade, the rate of change may not be the same,” said James Sanduski, Panasonic’s senior vice president for sales. “That said, it will still be significant.”

So far, 3-D has not prompted a rush to upgrade. John Revie, senior vice president for home entertainment at Samsung, said 3-D had been saddled with a perception that it stumbled out of the gate, even though its introduction compared favorably with other technological introductions.

“More than one million 3-D TVs were sold in 2010,” he said. “But LED, HD and Blu-ray each sold less than a million in their first year.”

That said, Mr. Revie acknowledged the perceived shortfall. “Frankly, Samsung was hoping to drive a bigger market.”

Some feel that 3-D’s appeal will remain limited. Riddhi Patel, director for television systems and retail services at iSuppli, a market researcher, said the sales pitch for 3-D was a complicated one.

“Consumers are aware of the hidden costs,” Ms. Patel said. “It’s not just the display, but now you need a 3-D Blu-ray player and 3-D media and additional glasses.”

She also questioned the payoff. “When everyone markets 3-D to you, they talk about ‘Avatar’ and the theatrical experience,” she said. “When you have a 42-inch TV or even a 50-inch TV, it’s not the same experience.”

Internet features are now common in new TV models. But recent missteps by technology companies like Google with its Google TV service, as well as the often confusing mosaic of streaming and download providers, has left the market looking a little muddled.

“Every manufacturer has their own way” of dealing with Internet video, Mr. Sanduski said. “There’s not one standard.”

One way manufacturers are trying to make these features friendlier is by using Apple’s iPhone model, allowing outside companies like Netflix to develop applications that work on their displays. On Wednesday, Panasonic and LG announced new Internet TV platforms that will open up the interfaces of their sets to outside developers.

One big issue for TV makers is price. From 2007 to 2010, the average price of an LCD TV dropped 36.3 percent, according to DisplaySearch. Plasma TV prices had an even more precipitous decline, dropping 51.6 percent in the same period.

But those price drops have slowed recently, as manufacturers have gotten a handle on what had been an oversupply of product and have started to charge more for the new features.

“It’s kind of like having the auto industry trying to raise the prices of cars by 20 percent by adding all these options to every vehicle,” Mr. Gagnon said.

In another bright spot for TV makers, consumers seem willing to upgrade their sets more frequently than they did in the tube era, when it was not uncommon for them to use the same sets for a decade or more. “People held on to their TV like an appliance,” Mr. Sanduski said.

Analysts and TV makers now assume a five-to-seven-year replacement cycle for televisions. For the manufacturers, that may feel like an awfully long time. But it is only slightly longer than the cycle for PCs, which are replaced every three to four years. “There’s a little bit of fatigue,” Mr. Sanduski said. “Many consumers are saying, ‘I just bought a TV. I’m going to wait.’ ”

Asian Stocks Rise on Optimism for U.S. Economic Recovery; Honda Advances

Asian stocks rose, with the regional benchmark index advancing for the eighth day in nine, as a stronger dollar boosted earnings prospects for exporters and reports in the U.S. signaled a broadening of the economic recovery.

Honda Motor Co., Japan’s No. 2 automaker by sales that counts the U.S. as its biggest market, gained 1.6 percent in Tokyo. Hyundai Motor Co., South Korea’s biggest carmaker, rose 1.3 percent in Seoul. Canon Inc., a Japanese camera maker that generates about 80 percent of its revenue overseas, rose 1.5 percent after the dollar surged against the yen, boosting the outlook for export earnings. Mitsui & Co., which gets about 40 percent of gross profit from commodities, advanced 2.3 percent after crude oil and copper futures increased.

“Investors are taking business confidence as being on a recovery track because economic measures are good in general,” said Mitsushige Akino, who oversees about $450 million in Tokyo at Ichiyoshi Investment Management Co. “A global pickup in business sentiment is boosting actual demand for commodities.”

The MSCI Asia Pacific Index climbed 0.5 percent to 137.88 as of 9:41 a.m. in Tokyo. Almost four stocks advanced for each that dropped on the gauge.

The index rose 14 percent last year, extending a 34 percent increase in 2009, as positive global economic data and corporate profits outweighed concerns about Europe’s debt crisis and China’s steps to curb inflation.

Japan’s Nikkei 225 Stock Average increased 1.2 percent. South Korea’s Kospi Index rose 0.1 percent and New Zealand’s NZX 50 Index gained 0.2 percent. Australia’s S&P/ASX 200 Index slipped 0.1 percent.

U.S. Services, Jobs

Futures on the Standard & Poor’s 500 Index were little changed today. The index rose 0.5 percent in New York yesterday to its highest level since September 2008.

The U.S. Institute for Supply Management said yesterday that its non-factory index, which covers about 90 percent of the economy, rose to 57.1 in December, exceeding the median forecast of economists surveyed by Bloomberg News and the fastest expansion since May 2006. A reading higher than 50 signals growth. ADP Employer Services said yesterday that U.S. companies added 297,000 jobs last month, almost triple the median economist estimate.

The dollar gained the most in three months against the yen yesterday in New York, advancing to as much as 83.38, the highest level since Dec. 23. A stronger dollar boosts the value of U.S. income at Japanese companies when revenue is repatriated.

Crude oil for February delivery increased to $90.30 a barrel in New York yesterday. Copper futures for March delivery rose 0.9 percent to close at $4.408 a pound yesterday.

Shares on MSCI Asia Pacific Index were valued at 14.1 times estimated earnings on average at yesterday’s close, compared with 13.5 times for the S&P 500 and 11.1 times for the Stoxx 600.

India Inflation Threat May Force Subbarao to Add to Rate Rises, IMF Says

India’s central bank may have to keep raising interest rates to combat persistent inflationary pressures, the International Monetary Fund’s mission chief to the country said.

“We see a pretty strong underlying inflationary pressure still in there,” Masahiko Takeda said on a video on the IMF’s website. Monetary policy “has been appropriately tightened,” though “in our view there’s a possibility that further monetary tightening action may be needed to contain the high inflation.”

The Reserve Bank of India said Dec. 30 that threats to growth have “receded” and inflation risks “have come to the fore,” signaling it may tighten monetary policy further after boosting interest rates the most in Asia in 2010. Governor Duvvuri Subbarao, who increased rates six times in 2010, held off on raising borrowing costs in a Dec. 16 policy announcement as a record 1.1 trillion rupees ($24.3 billion) of share sales last year caused a cash squeeze in the banking system.

IMF’s Takeda made the comments after completing an annual review of India’s economy, which was discussed by the IMF board on Dec. 22. In the board’s conclusions released today, the IMF said that the Indian economy is expected to grow 8.75 percent in the fiscal year ending March 31, and 8 percent the following year. The IMF staff report was not published.

The IMF board also said it sees inflation measures between 8.5 percent and 10.5 percent amid “little slack in the economy, the ongoing exit from the policy stimulus introduced during the crisis, and structural factors affecting food prices.”

Less Inflation

India’s benchmark wholesale-price inflation cooled to near a one-year low of 7.48 percent in November. The reading exceeds the Reserve Bank of India’s goal of between 4 percent and 4.5 percent.

The Washington-based IMF also warned that capital inflows may increase more than India’s capacity to absorb them as growth remains “among the fastest” in the world and yields in advanced economies stay low.

“While exchange rate flexibility would remain the first line of defense, reserve accumulation and macroprudential measures could be employed if strong inflows continue,” the institution’s board said in an e-mailed statement.

Risks to growth are mainly linked to global expansion, the IMF said. It said “elevated inflation, fiscal consolidation needs, and buoyant capital inflows” as “near-term challenges” that call for “careful calibration of macroeconomic policies and the diligent pursuit of ongoing reforms.”

Pakistan turmoil deepens after murder

The governor of Pakistan’s central Punjab province has been gunned down by one of his own security guards, deepening the country’s political crisis.

Salman Taseer, a businessman and close ally of Asif Ali Zardari, the president, was shot after he stepped out of his bullet-proof car near a market in central Islamabad on Tuesday.

Witnesses said the gunman, a trained police commando, handed himself in to police after the attack, saying he was ready to face the consequences of his actions.

Malik Mumtaz Hussain Qadri told investigators he acted because of the liberal politician’s opposition to Pakistan’s blasphemy laws. Mr Taseer had campaigned for a pardon for Asia Bibi, a Christian woman sentenced to death in November under the blasphemy laws.

Mr Taseer was a friend and colleague of Mr Zardari’s wife, Benazir Bhutto, who was herself assassinated in 2007. His death is a blow to the president and immediately raised new questions over the future of his already troubled presidency.

On Sunday, the Pakistan People’s Party, led by Mr Zardari, became a minority government after one of its key allies left the ruling coalition, citing differences over the latest petrol price increase just a day earlier.

Shortly before Mr Taseer’s death, Nawaz Sharif, the former prime minister and the main leader of the opposition Pakistan Muslim League-Nawaz called for the recent oil price increase to be reversed and gave the government a three-day deadline, suggesting he could consider alliances with other parties.

A Pakistani federal minister on Tuesday said the withdrawal of the oil price increase would increase the budget deficit, already expected to run over a limit agreed with the IMF. He said: “If we save the coalition, relations with the IMF [under a $11.3bn loan agreed in 2008] will be further in trouble”.

Analysts said Mr Taseer’s killing raised fresh questions about the infiltration of the police and security services by Islamic hardliners.

Hasan Askari Rizvi, a political commentator, said: “This incident will be a powerful reminder of the way Pakistan is so badly exposed to the threat from Islamists. The killing will have to be followed by investigations to determine how deep was the penetration of such people around the governor’s police force.”

Strained States Turning to Laws to Curb Unions

Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics.

State officials from both parties are wrestling with ways to curb the salaries and pensions of government employees, which typically make up a significant percentage of state budgets. On Wednesday, for example, New York’s new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor’s traditional clout in Albany.

But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.

For example, Republican lawmakers in Indiana, Maine, Missouri and seven other states plan to introduce legislation that would bar private sector unions from forcing workers they represent to pay dues or fees, reducing the flow of funds into union treasuries. In Ohio, the new Republican governor, following the precedent of many other states, wants to ban strikes by public school teachers.

Some new governors, most notably Scott Walker of Wisconsin, are even threatening to take away government workers’ right to form unions and bargain contracts.

“We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots,” Mr. Walker, a Republican, said in a speech. “The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers.”

Many of the proposals may never become law. But those that do are likely to reduce union influence in election campaigns, with reverberations for both parties.

In the 2010 elections, Republicans emerged with seven more governor’s mansions and won control of the legislature in 26 states, up from 14. That swing has put unions more on the defensive than they have been in decades.

But it is not only Republicans who are seeking to rein in unions. In addition to Mr. Cuomo, California’s new Democratic governor, Jerry Brown, is promising to review the benefits received by government workers in his state, which faces a more than $20 billion budget shortfall over the next 18 months.

“We will also have to look at our system of pensions and how to ensure that they are transparent and actuarially sound and fair — fair to the workers and fair to the taxpayers,” Mr. Brown said in his inaugural speech on Monday.

Many of the state officials pushing for union-related changes say they want to restore some balance, arguing that unions have become too powerful, skewing political campaigns with their large war chests and throwing state budgets off kilter with their expensive pension plans.

But labor leaders view these efforts as political retaliation by Republicans upset that unions recently spent more than $200 million to defeat Republican candidates.

“I see this as payback for the role we played in the 2010 elections,” said Gerald W. McEntee, president of the American Federation of State, County and Municipal Employees, the main union of state employees. Mr. McEntee said in October that his union was spending more than $90 million on the campaign, largely to help Democrats.

“Now there’s a bull’s-eye on our back, and they’re out to inflict pain,” he said.

In an internal memorandum, the A.F.L.-C.I.O. warned that in 16 states, Republican lawmakers would seek to starve public sector unions of money by requiring each government worker to “opt in” before that person’s dues money could be used for political activities.

“In the long run, if these measures deprive unions of resources, it will cut them off at their knees. They’ll melt away,” said Charles E. Wilson, a law professor at Ohio State University.

Of all the new governors, John Kasich, Republican of Ohio, appears to be planning the most comprehensive assault against unions. He is proposing to take away the right of 14,000 state-financed child care and home care workers to unionize. He also wants to ban strikes by teachers, much the way some states bar strikes by the police and firefighters.

“If they want to strike, they should be fired,” Mr. Kasich said in a speech. “They’ve got good jobs, they’ve got high pay, they get good benefits, a great retirement. What are they striking for?”

India eyes drug industry ownership curbs

An outcry over foreign takeovers of Indian pharmaceuticals companies has prompted the government to consider imposing limits on overseas ownership of domestic businesses in the sector.

India’s drug industry, which specialises in low-cost, high-quality production of generic drugs, has attracted the attention of big global pharmaceuticals companies and led to a spate of high-profile deals.

But the takeovers have raised concerns about whether the change in ownership will lead to higher prices, putting drugs out of reach for India’s poor.

As a result, the commerce and health ministries are considering whether the government should designate the pharmaceuticals industry a “sensitive sector”, which would require foreign companies seeking more than 49 per cent in any Indian drugmaker to first obtain government approval.

India already limits foreign ownership in many sectors but there are no restrictions on pharmaceuticals ownership.

“If multinational companies are successful in taking over, they will jack up the prices,” said one senior health ministry official. “Strict regulation is necessary.”

In 2008, Japan’s Daiichi Sankyo paid $3.6bn to take over Ranbaxy Laboratories, India’s biggest drugmaker. Sanofi-Aventis paid €550m for a controlling stake in Indian vaccine-maker Shanta Biotech in 2009; and last year, Abbott Laboratories of the US paid $3.7bn for Piramal Healthcare’s domestic drug formulation business.

It is not clear whether any takeovers have led to higher prices, but the deals have set alarm bells ringing in a country where the government spends just 0.9 per cent of gross domestic product on public health – one of the world’s lowest levels.

“Manufacturing should be controlled by us, so nobody can hold us to ransom,” said Congress party politician Jyoti Mirdha, who has been pushing for tougher regulation of acquisitions in the sector.

Any change of foreign investment rules would require the backing of the finance ministry, whose minister, Pranab Mukherjee, is believed to share foreign takeover concerns.

Treasuries Fall as Asian Stocks Extend Rally, Report to Show Factory Gain

Treasuries fell as Asian stocks extended a global rally and before data today forecast to show improvement at U.S. factories.

The yield on the benchmark 10-year security fell two basis points to 3.35 percent as of 10:25 a.m. in Tokyo according to BGCantor Market data.

Iran Oil Curbs Swelling Record Deficit May Hold Back Rupee: India Credit

The Indian central bank’s move to block dollar or euro payments for Iranian oil threatens to swell a record current-account deficit, damping investor confidence in the rupee and government debt.

The Reserve Bank of India said on Dec. 27 that trade transactions with Iran must be settled outside the Asian Clearing Union, a regional payment arrangement that had allowed companies to skirt U.S. and European limits on doing business with the Middle Eastern nation. Sourcing the fuel from elsewhere “may impact prices,” B.M. Bansal, chairman of Indian Oil Corp., the nation’s biggest refiner, said last week.

Nomura Holdings Inc. forecasts bond yields will climb and Mumbai-based Kotak Mahindra Bank Ltd. estimates the rupee is likely to fall as much as 4.8 percent this year as the Iran supply disruptions aggravate the cost of rising commodity prices on India’s finances. India’s 10-year bond yield has risen 41 basis points to 7.96 percent since July as crude-oil prices traded in New York climbed 21 percent in the second half of 2010 to $91.38 a barrel.

“In the next three to six months, the current-account deficit is going to get worse, partly accentuated by the Iranian oil-payment issue,” Robert Prior-Wandesforde, the Singapore- based head of India and Southeast Asia economics at Credit Suisse Group AG, said yesterday. “The rupee is getting more vulnerable and bond yields may rise a little.”

Rupee Forecasts

Credit Suisse predicts the shortfall in the current account, which widened to $15.8 billion in the three months ended September from $12.1 billion in the second quarter, may swell to as much as $17 billion by June. India’s foreign exchange reserves were $265.9 billion as of Dec. 24, compared with China’s $2.648 trillion as of Sept. 30.

The rupee will return 3.4 percent in 2011, compared with 5.3 percent for China’s yuan, 0.5 percent for Russia’s ruble and a negative 2.4 percent for Brazil’s real, according to economists surveyed by Bloomberg.

Elsewhere in India’s credit markets, government bonds fell, Indian Overseas Bank began an offering of bonds and IDBI Bank Ltd. Plans to use debt as soon as this week.

Yields on India’s 10-year benchmark bonds increased five basis points to 7.96 percent yesterday. The yield is 461 basis points more than similar-maturity U.S. Treasuries, up from 375 at the end of 2009, data compiled by Bloomberg show. The rate is 46 basis points more than Indonesia’s 7.5 percent, Asia’s second-highest yields.

Yield Forecasts

India’s government bonds returned 5.2 percent last year, according to indexes compiled by HSBC Holdings Plc. The notes underperformed securities in Indonesia, which returned 21.1 percent, the most in Asia. The 7.8 percent security due May 2020 will yield 8.05 percent by the end of this year, according to the median forecast of six economists in a Bloomberg survey.

“Over the next couple of weeks, bond yields may rise to as much as 8.1 percent,” Vivek Rajpal, an interest-rate strategist at Nomura in Mumbai, said in an interview yesterday. “If commodity prices rise sharply, the yield may increase to 8.2 percent.”

Indian Overseas Bank, a state-run lender, began the sale of 9.25 billion rupees ($207 million) of 15-year subordinated bonds yesterday, according to two people familiar with the matter. The so-called upper Tier 2 notes pay a coupon of 9 percent, the people said, asking not to be identified as the information is private. The bonds have an option allowing the company to buy the debt back at the end of the 10th year, the people said.

IDBI Plans Sale

IDBI Bank Ltd., the Indian state-owned lender, plans to sell 10 billion rupees of 10-year bonds as soon as tomorrow, according to two people familiar with the matter. The bonds pay a coupon of 9.04 percent, the people said, asking not to be identified as the information is private.

The United Nations stepped up punitive measures in June against Iran over its nuclear ambitions, applying a fourth round of sanctions, and the U.S. and European Union later imposed additional restrictions. Iran says it is enriching uranium for power generation.

Refiners in India have traditionally used the ACU, which settles payments in dollars and euros, to pay for oil purchases from Iran. Regulations endorsed by the EU in October required deals involving Iran and the euro to be accompanied by a certificate outlining payment details for each and every transaction, the EU said on its website.

ACU Mechanism

Under the ACU mechanism, payments for all trade deals between member countries are settled every two months, with individual transactions not accounted for separately.

“If companies are forced to buy crude at higher prices, that may fuel inflation fears,” Philippe Petit, a senior investment manager in Singapore at Pictet Asset Management SA, which manages $17 billion of emerging-market debt including Indian government and corporate bonds, said in an interview yesterday. “It all depends on how long they take to sort out the payment issue.”

India buys about 21 million metric tons from Iran every year, or about 14 percent of total crude-oil imports, Oil Secretary S. Sundareshan said on Dec. 30. The Middle Eastern nation is India’s second-biggest oil supplier, after Saudi Arabia, Oil Minister Murli Deora said in parliament on April 15.

“Buying such huge quantities of crude on the spot market isn’t feasible, and you don’t get any sweetheart deals there,” Praveen Kumar, the Singapore-based head of the South Asia oil- and-gas team at consultancy and advisory firm FACTS Global Energy, said in an interview yesterday. “They would want to resolve this as soon as possible because I don’t think they have a Plan B here.”

‘In Focus’

The rupee, which gained 4.1 percent last year, was unchanged at 44.7150 per dollar yesterday, according to data compiled by Bloomberg.

“In 2011 we are talking about a depreciation of the rupee rather than an appreciation as the wide current-account deficit will continue to be in focus,” Indranil Pan, chief economist at Kotak Mahindra Bank in Mumbai, said in an interview yesterday. He forecasts the currency, whose movements will be “extremely volatile,” could slide to as much as 47 per dollar.

The cost of protecting the debt of government-owned State Bank of India, which some investors perceive as a proxy for the nation, was 160 basis points on Dec. 31. Prices for the credit- default swaps, which pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements, climbed 42 basis points last year. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

Bonds of Indian Oil, which imports about 3 million metric tons of crude a year from Iran, fell for a third consecutive month in December. The yield on the 4.75 percent notes due January 2015 climbed 24 basis points to 3.91 percent last month, according to data compiled by Bloomberg.

Diplomats Help Push Sales of Jetliners on the Global Market

WASHINGTON — The king of Saudi Arabia wanted the United States to outfit his personal jet with the same high-tech devices as Air Force One. The president of Turkey wanted the Obama administration to let a Turkish astronaut sit in on a NASA space flight. And in Bangladesh, the prime minister pressed the State Department to re-establish landing rights at Kennedy International Airport in New York.

Each of these government leaders had one thing in common: they were trying to decide whether to buy billions of dollars’ worth of commercial jets from Boeing or its European competitor, Airbus. And United States diplomats were acting like marketing agents, offering deals to heads of state and airline executives whose decisions could be influenced by price, performance and, as with all finicky customers with plenty to spend, perks.

This is the high-stakes, international bazaar for large commercial jets, where tens of billions of dollars are on the line, along with hundreds of thousands of high-paying jobs. At its heart, it is a wrestling match fought daily by executives at two giant companies, Boeing and Airbus, in which each controls about half of the global market for such planes.

To a greater degree than previously known, diplomats are a big part of the sales force, according to hundreds of cables released by WikiLeaks, which describe politicking and cajoling at the highest levels.

It is not surprising that the United States helps American companies doing business abroad, given that each sale is worth thousands of jobs and that their foreign competitors do the same. But like the other WikiLeaks cables, these offer a remarkably detailed look at what had previously been only glimpsed — in this case, the sales war between American diplomats and their European counterparts.

The cables describe letters from presidents, state visits as bargaining chits and a number of leaders making big purchases based, at least in part, on how much the companies will dress up private planes.

The documents also suggest that demands for bribes, or at least payment to suspicious intermediaries who offer to serve as “agents,” still take place. Boeing says it is committed to avoiding any such corrupt practices.

State Department and Boeing officials, in interviews last month, acknowledged the important role the United States government plays in helping them sell commercial airplanes, despite a trade agreement signed by the United States and European leaders three decades ago intended to remove international politics from the process.

The United States economy, said Robert D. Hormats, under secretary for economic affairs at the State Department, increasingly relies upon exports to the fast-growing developing world — nations like China and India, as well as those in Latin America and the Middle East.

So pushing sales of big-ticket items like commercial jets, earth-moving equipment or power plants (or stepping in to object if an American company is not being given a fair chance to bid) is central to the Obama administration’s strategy to help the nation recover from the recession.

Boeing earns about 70 percent of its commercial plane sales from foreign buyers, and is the single biggest exporter of manufactured goods in the United States. Every $1 billion in sales — and some of these deals carry a price tag of as high as $10 billion — translates into an estimated 11,000 American jobs, according to the State Department.

The Equalizers

“That is the reality of the 21st century; governments are playing a greater role in supporting their companies, and we need to do the same thing,” Mr. Hormats, a former top executive at Goldman Sachs, said in an interview.

Said Tim Neale, a Boeing spokesman, “The way I look at it, it levels the playing field.”

But Charles A. Hamilton, a former Defense Department official who is a consultant to Airbus, said the government’s advocacy undermined arguments by Boeing and the United States that Airbus had an unfair advantage because of its subsidies from European governments.

“The bottom line is anything goes to get the business,” said Mr. Hamilton, adding that he was speaking for himself, and not for Airbus. “If they feel like they are losing, they will do just about anything to save a deal.”

Airbus executives would not discuss details of their own sales campaigns — and the WikiLeaks documents are mostly focused on American efforts. But one Airbus official, who was not authorized to speak on the record, conceded that, international agreements aside, “commercial jet sales are not totally decoupled from political relationship building.”

One example of the horse-trading involved Saudi Arabia, which in November announced a deal with Boeing to buy 12 777-300ER airliners, with options for 10 more, a transaction worth more than $3.3 billion at list prices.

That announcement was preceded by years of intense lobbying by American officials.

One pitch came from the highest levels, the cables show. In late 2006, Israel Hernandez, a senior Commerce Department official, hand-delivered a personal letter from President George W. Bush to the Jeddah office of King Abdullah, urging the king to buy as many as 43 Boeing jets to modernize Saudi Arabian Airlines and 13 jets for the Saudi royal fleet, which serves the extended royal family.

VW Extends CEO Winterkorn's Contract in Quest to Surpass Toyota

Volkswagen AG extended Chief Executive Officer Martin Winterkorn’s contract by five years, giving the executive the time to complete a merger with Porsche SE and surpass Toyota Motor Corp. as the biggest automaker.

VW’s supervisory board unanimously backed the CEO’s appointment through 2016, the Wolfsburg, Germany-based company said yesterday. Winterkorn, 63, took over as CEO on Jan. 1, 2007 and his current contract expires at the end of this year.

Under Winterkorn, Europe’s largest carmaker added Swedish truckmaker Scania AB to its portfolio and is now merging with Porsche, maker of the 911 sports car. The CEO plans to double production capacity in China with two new plants and open a factory in the U.S. this year as he seeks to beat Toyota in sales and profitability by 2018.

“He has the full support of workers,” Bernd Osterloh, the supervisory board’s deputy chief and head of VW’s works council, said in a statement. “Volkswagen is giving continuity at the top of the company so we can fully concentrate on the details of our tasks.”

VW’s preferred shares, which have replaced the common stock on Germany’s DAX Index since the Porsche deal, have more than doubled since the beginning of 2007. The stock gained 86 percent last year, the best performance in the benchmark index, which added 16 percent.

Golf, Audi A7

Sales chief Christian Klingler forecast on Dec. 10. that annual deliveries would exceed 7 million vehicles for the first time in 2010. Volkswagen is benefitting from demand for models including the VW brand Golf compact and Audi A7 coupe, as well as booming sales in China, its largest market.

Volkswagen aims to sell more than 8 million cars by 2012 and 10 million as early as 2015, three years earlier than a 2018 official target, a person with knowledge of the matter said in October.

Nine-month net income jumped fivefold to 3.78 billion euros ($5.1 billion). In November, Toyota raised its profit forecast, saying net income may total 350 billion yen ($4.3 billion) for the fiscal year ending in March.

Volkswagen plans to invest 51.6 billion euros in the automotive business over the next five years. The expansion relies on success in China, where VW is adding factories to double production to 3 million cars within four years.

Profit Margins

Winterkorn, who previously headed VW’s Audi luxury unit, took the top job from Bernd Pischetsrieder, who was ousted less than a year after receiving a contract extension.

German supervisory boards typically decide whether to keep their CEOs a year before the contract’s end. On Sept. 8, Osterloh told workers at the carmaker’s headquarters that Winterkorn would receive a contract extension.

Winterkorn aims for a pretax profit as a percentage of sales of more than 8 percent in 2018. VW’s nine-month pretax margin was 5.9 percent. Toyota City, Japan-based Toyota had a first-quarter margin of 5.4 percent.

Winterkorn has the backing of Lower Saxony, the German state with a 20 percent stake in the carmaker and the power to veto major decisions.

“We support Martin Winterkorn’s ambitious goal to make VW No. 1 in the auto market worldwide by 2018,” Prime Minister David McAllister told Bloomberg News in a June interview.

Volkswagen paid $2.5 billion for a stake in Suzuki Motor Corp. in January last year to expand in India and is taking over Porsche’s sports-car business, adding a 10th brand to VW marques that include Skoda, Seat and luxury brands Audi, Lamborghini and Bentley.

India’s exchange regulator causes alarm

Recommendations by a state-appointed panel over the regulation of stock exchanges in India are causing widespread alarm among investors and local bourses.

An 85-page report by a committee headed by Bimal Jalan, a former Reserve Bank of India governor, has proposed tough new rules restricting profits, ownership and executive payment and barring their public listing.

The report was commissioned by the Securities and Exchange Board of India, the stock market regulator, and has been put out for a public consultation that ends at the end of December.

Since the report’s release last month, some regional stock exchanges, hopeful of eventual public listings, have considerably dropped in investor appeal. Twenty one exchanges had opted for demutualisation, a decision that now may lead to uncertain outcomes if new regulation is introduced by the finance ministry.

Some critics warn that the proposals will set back the development of India’s capital markets at a time of fast paced economic growth.

JR Verma, a professor of finance at the Indian Institute of Management, called the recommendations a “backdoor nationalisation” of India’s booming equity markets.

“If these recommendations are accepted, we will extinguish the essential spark of dynamism that has given India a world class equity market,” he said.

“They would ensure that Indian exchanges never become pan-Asian institutions. Worse, Indian exchanges could even become completely unviable, if the business moves to exchanges outside India that may offer better service at more competitive prices.”

Writing in the Financial Times, Patrick Young, chairman of UK-based Derivatives Vision, a securities exchange advisory company, said the proposals were “deeply worrying” and would lead to Indian exchanges losing out to international competitors.

He said they would serve as “regulatory sabotage” that risked reversing the gains made by prominent Indian exchanges like the National Stock Exchange, the Bombay Stock Exchange and a number of smaller exchanges over the past decade.

“Allowing free and open operation and ownership of exchanges and clearing houses is a key aspect of the road map towards India being an open, international economy,” Mr Young said.

“Restricting the market infrastructure is neither a sensible way for India to develop its own economy nor is it a way to demonstrate that India is increasingly open to foreign investment.”

The growth in India’s capital markets has attracted foreign investment. Goldman Sachs, Softbank Asian Infrastructure Fund and Temasek, the Singaporean sovereign wealth fund, have invested in the NSE. Dubai Holdings, Deutsche Börse, Singapore Exchange and Argonaut, a private equity firm, have bought into the BSE.

Likewise, innovative Indian exchange technology has been in demand for other trading platforms in Africa, the Middle East and Asia.

An editorial earlier this month in the Economic Times, an Indian daily newspaper, warned that Mr Jalan threatened to take one of the most vibrant areas of the Indian economy back to a socialist era where it took years to get a telephone line and the choice of cars was restricted to outmoded Ambassadors and Fiats.

Mr Jalan, a highly respected former central banker, has argued that a cautious approach needs to be taken to Indian stock exchanges to protect the credibility of the capital markets in the fastest growing large economy after China. Market infrastructure institutions, he believes, should be considered as public utilities rather than companies seeking to maximise profits.