Finance news

Declining first-time buyer demand and stronger immigration has seen apartment vacancy rates in the Toronto market drop sharply.

Vacancy rates were at 1.6 per cent in April compared with 2.7 per cent a year earlier, according to the Canada Mortgage and Housing Corporation in a report released Thursday.

A 1.6 per cent vacancy rate means that only 16 of every 1000 apartments remain vacant.

Automaker Daimler AG says May was the best month ever for unit sales of its Mercedes-Benz brand.

The company said Monday it delivered 108,766 Mercedes vehicles during the month, helped by strong sales increases in emerging markets such as Brazil, Russia, India and China.

That was 7.3 percent more than in May of last year.

Germany’s automakers recorded strong profits in the first quarter thanks largely to increasing sales outside Europe.

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Prime Minister George Papandreou is meeting opposition party leaders in an effort to seek consensus on extra austerity measures being taken to deal with Greece’s crippling debt crisis.

Papandreou met Tuesday morning with conservative party leader Antonis Samaras, and was to meet with another four party leaders later in the day. The head of the Communist party, which is influential with trade unions, has refused to meet.

The talks come amid increasing pressure from the European Union, which has called for cross-party support in Greece for a midterm austerity program, arguing that political bickering could derail the struggling country’s fiscal efforts.

Greece is currently dependent on a euro110 billion ($154 billion) bailout from the EU and International Monetary Fund.

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India’s inflation accelerated more than economists estimated in March as the cost of fuel and manufactured goods rose, putting pressure on policy makers to raise interest rates in Asia’s third-largest economy.

The benchmark wholesale-price index rose 8.98 percent from a year earlier after an 8.31 percent gain in February, the commerce ministry said in a statement in New Delhi today. That exceeded all 28 estimates in a Bloomberg News survey, where the median forecast was for an 8.36 percent increase.

Expansion in India’s $1.3 trillion economy has boosted consumer demand and spurred manufacturing, car sales and credit growth, stoking price risks and prompting the central bank to raise rates eight times since early 2010. Inflation in the first quarter has exceeded the Reserve Bank of India’s forecast that price increases would be 8 percent by the end of March this year.

“Inflation is going to remain uncomfortably high this year,” said Leif Eskesen, Singapore-based chief economist at HSBC Holdings Plc. “The RBI needs to raise rates more aggressively and we are looking at three more rate increases this year.”

The Bombay Stock Exchange’s Sensitive Index extended declines after the inflation report, falling 1.4 percent at 11:52 a.m. in Mumbai. The yield on the 8.08 percent bond due in August 2022 was at 8.25 percent, compared with 8.21 percent before the data was published.

Rate Increase

Rising oil and commodity costs and sustained economic growth are escalating pressure on Asian central banks to boost borrowing costs. China on April 5 raised rates for the fourth time since mid-October. Vietnam, Taiwan, South Korea and Thailand also increased borrowing costs this year to curb inflation, and Singapore said yesterday it would allow further currency gains.

China’s economy grew a more-than-estimated 9.7 percent in the first quarter and inflation accelerated in March to the fastest pace since 2008, with consumer prices rising 5.4 percent from a year earlier, a report showed today.

Reserve Bank Governor Duvvuri Subbarao on March 17 increased the repurchase rate by a quarter point to 6.75 percent after raising the inflation forecast for the second time since late January, when he estimated it at 7 percent by March end. The central bank’s next monetary policy announcement is scheduled for May 3.

Food Inflation

“In the absence of a strong supply response, increasing demand will inevitably lead to higher prices,” Reserve Bank Deputy Governor Subir Gokarn said April 5. He said a “monetary response is warranted” should demand exceed supply and stoke inflation.

Manufactured-products inflation was 6.21 percent in March, compared with 4.94 percent in February, today’s report showed. Fuel and power prices rose 12.92 percent, compared with 11.49 percent the previous month. India relies on imports to meet three-quarters of its annual energy needs.

Food prices rose 8.28 percent in the week to April 2, compared with 9.18 percent in the previous week, the commerce ministry said in a separate report today.

India’s economy may expand as much as 9.25 percent in the year ending March 31, 2012, the finance ministry said in February.

Production Growth

Still, India’s industrial production growth unexpectedly slowed to 3.6 percent in February, a report showed this week.

“Even as industrial production continues to be volatile, other indicators, such as the latest purchasing managers’ index, direct and indirect tax collections, merchandise exports and bank credit, suggest that the growth momentum persists,” the central bank said in the March 17 statement.

India’s industrial output has fluctuated since May, when it registered a 12.2 percent expansion. The growth eased to 7.2 percent in June, rebounded to 15.1 percent in July, slid to 4.9 percent in September and then recovered in October, according to government data.

Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker, plans to boost capacity by 21 percent in the current financial year as part of investment plans totaling as much as 40 billion rupees ($900 million), Chief Financial Officer Ajay Seth said in an interview on April 6. The company’s sales climbed to a record in March.

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Billionaire investor Carl Icahn, Dish Network and a group of debtholders are the three remaining bidders for movie-rental chain Blockbuster in an auction Tuesday at U.S. Bankruptcy Court in New York.

The bankruptcy auction will decide the fate of the Dallas movie-rental chain. The auction process was still going on as of 4:30 p.m. ET. At that time, Icahn’s bid of $310.6 million was on top.

Another bidder, SK Telecom, has dropped out. An expected joint bid by two liquidation firms, Gordon Brothers Group and Hilco Merchant Resources, did not materialize.

Though the bidding took place in open court, the process was hardly action-packed. Lawyers, bidders and others took extended breaks over the day to revise their bids and negotiate. Icahn himself made an appearance in court at midday.

The successful buyer or buyers could continue to operate the chain in full or part or liquidate the company, pressing “stop” on the stores that brought movie night to millions of families payday lenders.

When Blockbuster, based in Dallas, filed for bankruptcy protection, it was down to 3,000 stores, less than a third of the peak of 9,100 in 2004. There are about 2,400 currently open with plans to close about 700 more by mid-April.

Icahn was part of the group of debtholders that provided Blockbuster financing to operate while in bankruptcy in September. Everyone in that group except for Icahn, is part of the bidding group of debtholders led by Monarch, called Cobalt Video Holdco LLC.

Blockbuster used to dominate the U.S. movie rental business. But it lost money for years as that business declined because customers shifted to Netflix Inc., video on demand and DVD rental kiosks.

The auction is expected to be complete before a sale approval hearing scheduled for Thursday.

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Liberal leader Michael Ignatieff, seeking to make up ground in polls, opened week two of Canada’s election campaign asking voters to choose between more social spending and Conservative Prime Minister Stephen Harper’s tax breaks for businesses.

Ignatieff proposed programs worth C$8.2 billion ($8.5 billion) over two years yesterday, to be paid for by reversing corporate tax cuts implemented by Harper, capping tax deductions for stock options and ending subsidies for energy companies.

The Liberal platform “belongs to everyone because it’s about your family,” Ignatieff, 63, said yesterday in Ottawa. “We can strengthen families, without raising their taxes, if we stop corporate giveaways.” The 94-page document repeated commitments to create early child education spaces, boost benefits for people caring for sick or elderly relatives and establish grants for postsecondary education. Another C$700 million a year would go to seniors living in poverty.

Ignatieff trails Harper by about 10 percentage points in the most recent polls, and his emphasis on social programs is an attempt to win more of the anti-Conservative vote from the other opposition parties and close that gap ahead of the May 2 elections, said Michael Behiels, a history professor at the University of Ottawa.

“When you are seeking power you go on the offense,” Behiels said in a telephone interview.

The New Democratic Party, which also is calling for higher corporate income taxes and more social spending, had 36 seats in the 308-member House of Commons before elections were called. The Liberals held 77 seats, the Conservatives 143 and the Bloc Quebecois 47.

Majority Unclear

Polls suggest the Conservatives would win the most seats in the election, although it isn’t clear if they would win a majority.

The Conservatives were supported by 40.7 percent of decided voters, followed by 29.4 percent who supported the Liberals, according to a CTV/Globe/Nanos election survey published yesterday and taken March 31-April 2. The telephone survey of 1,200 people has a margin of error of plus or minus 2.8 percent.

Ignatieff’s strategy has been to attack Harper for wasting money on new fighter jets and prisons, and neglecting education and health care. The Liberal leader, a former professor at Harvard University in Cambridge, Massachusetts, is also seeking to portray himself as more open and democratic than Harper, aiming to take advantage of a parliamentary finding last month that held the governing Conservatives in “contempt” of the House of Commons for withholding information.

Ignatieff has challenged Harper to a one-on-one debate, on top of the traditional multiparty debates held during Canadian election campaigns. He has also spoken at town hall meetings and done interviews with national media.

Bubble Tour

Ignatieff, who last week regularly took public walks and entered shops to shake hands, has accused Harper of running a tour in a bubble because the Conservative leader limits his press conferences to five questions and relies primarily on scripted campaign events direct payday lenders. At one event in Halifax, Nova Scotia, Harper kept reporters behind a fence about 40 feet away from the podium.

The Conservatives looked at pre-election polls showing they had a lead and “decided to go into a bubble campaign where they take no risks whatsoever, none,” Behiels said.

Harper has said his preference was to have only one debate with Ignatieff alone, without the other leaders, a proposal he says the Liberals rejected. When asked at a press conference last week why his campaign was limiting questions, Harper asked reporters if they had any additional questions to ask.

Corporate Taxes

The central component of the Liberals’ economic platform is to boost revenue by returning the corporate income tax rate back to 18 percent. The country’s corporate tax rate was lowered on Jan. 1 to 16.5 percent from 18 percent, and will fall to 15 percent in 2012 under Canadian law.

Ignatieff’s platform also says the Liberals will shrink Canada’s deficit to 1 percent of gross domestic product within two years if elected.

The Conservatives also continue to draw distinctions between the two leading parties, saying the increase in taxes threaten to drive the economy back into recession.

“They want loads of new spending and they are prepared to finance that through tax increases,” Harper said at a press conference in Ottawa yesterday where he promised to extend tax breaks that promote fitness. “That’s a very different position than our party.”

Won’t Shake Confidence

The Canadian dollar has appreciated 1.2 percent against its U.S. counterpart since the election was called, and the 30-year government bond yield has increased to 3.77 percent from 3.70 percent. The election probably won’t shake “market confidence” Toronto-based Canadian Imperial Bank of Commerce economists Avery Shenfeld and Warren Lovely wrote in a March 31 report.

Harper spent the first week of the campaign announcing measures likely to be popular with families and regions reliant on manufacturing, aiming to bolster his party’s support in suburban ridings around Toronto the conservatives need to gain to win a majority. Those include a pledge to let families with children under 18 split up to C$50,000 of their income for tax purposes, and plans to reintroduce measures in Finance Minister Jim Flaherty’s budget that provide tax breaks for manufacturers and small business owners.

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Soldiers and riot police in Bahrain overran a protesters’ camp, imposed a 12-hour curfew and choked off movement nationwide Wednesday. Witnesses described helicopters firing on homes in a hunt for Shiites and attacking doctors treating the wounded, while the government called the demonstrators “outlaws” for demanding an end to the monarchy.

The nation that once led the Middle East in entrepreneurial openness went into lockdown, its government propped up by troops from Sunni Gulf neighbors fearful for their own rule and the spread of Shiite Iran’s influence.

The unrest that began last month increasingly looks like a sectarian showdown. The country’s Sunni leaders are desperate to hold power, and majority Shiites want more rights and an end to the monarchy.

Wednesday’s assault began in Pearl Square, the center of the uprising inspired by Arab revolts in Egypt and Tunisia. But the violence that left at least five people dead on Wednesday did not stop in the capital.

Doctors at the country’s main hospital said their facility was taken over by security forces, blocking physicians from either leaving or treating the wounded on site.

“There are many people injured, but we can’t bring them to the hospital because of the travel restrictions, and doctors can’t come to us,” said Ali Marsouk, a resident of the Shiite village of Sitra, who said helicopters fired on homes in a three-hour attack.

Rania Ali, another resident, said police were charging after Shiites as they sought shelter.

“I saw them chasing Shiites like they were hunting,” said Ali, a Sunni whose husband is Shiite.

The Salmaniya hospital complex has become a political hotspot. The mostly Shiite personnel are seen by authorities as possible protest sympathizers. The staff claim they must treat all who need care.

There have been moments of open anger. As overwhelmed teams treated the injured from Tuesday’s clashes, many broke out in calls to topple the monarchy.

“We are under siege,” said Nihad el-Shirawi, an intensive care doctor who said she had been working for 48 hours. “We cannot leave, and those on-call cannot come in.”

Officials in the hospital said they took in 107 injured from Wednesday’s violence. Nine were in critical condition, officials in the hospital said on condition of anonymity because they were not authorized to speak to reporters.

The Salmaniya hospital also treated 322 people injured in clashes across the kingdom on Tuesday, the official said.

The king’s announcement of a three-month emergency rule and the crackdown on Pearl Square sent a message that authorities will strike back in the strategic island nation, which hosts the U.S. Navy’s 5th Fleet.

President Barack Obama called King Abdullah of Saudi Arabia and King Hamad bin Isa Al Khalifa of Bahrain to express deep concern over the violence. White House spokesman Jay Carney said Obama stressed the need for “maximum restraint.”

Security forces barred journalists and others from moving freely. A 4 p.m to 4 a.m. curfew was imposed in most of the country.

U.S. Secretary of State Hillary Rodham Clinton said the introduction of Gulf forces was “the wrong track.”

“There is no security answer to this, and the sooner they get back to the negotiating table and start trying to answer the legitimate needs of the people, the sooner there can be a resolution that will be in the best interests of everyone,” she told CBS News.

Witnesses said at least two protesters were killed when the square was stormed. Officials at Ibn Nafees Hospital said a third protester died later. The witnesses spoke on condition of anonymity because of fear of reprisals.

A government statement said the only deaths during the raid were two policemen who were “repeatedly run over by three vehicles containing protesters.”

The government did not say whether the offensive included soldiers from other Gulf nations _ a Saudi-led force that has grown to nearly 1,000.

State TV showed military vehicles flying Bahrain’s red-and-white flag as security officials moved through the wreckage of the encampment, set up at the base of a monument to the country’s history as a pearl diving center.

During the attack, protesters fled into side streets and security forces blocked main roads into Manama. Mobile phones were apparently jammed during the height of the attack and Internet service remained at a crawl.

Hamid Zuher, a 32-year-old protester who slept at the square, said riot police first moved in on foot.

“They fired tear gas and then opened fire,” Zuher said. “We lifted our arms and started saying ‘Peaceful, Peaceful.’ Then we had to run away.”

The government said security forces came under attack from about 250 “saboteurs” hurling gasoline bombs and responded with tear gas. It denied live ammunition was used.

In Shiite villages, people went to mosques and held protest prayers. Others lit fires in anger. Clashes were reported in other mostly Shiite areas, where traffic was controlled by military forces in an apparent attempt to prevent gatherings or a surge of people toward the capital.

The government offers hints of a growing propaganda campaign. A statement said forces conducted an operation to “cleanse” Pearl Square and later state TV called the demonstrators “saboteurs” and “outlaws.”

A senior opposition leader, Abdul Jalil Khalil, believes the messages seek to bring sectarian civil war.

“And what do they think, that spreading this hate will break our will?” Khalil said. “Until now, we were defiant at Pearl Square. Now we are defiant in every village and town.”

Bahrain’s sectarian clash is increasingly viewed as an extension of the region’s rivalries between the Gulf Arab leaders and Iran. Washington, too, is being pulled deeply into the Bahrain’s conflict because of its naval base _ the Pentagon’s main Gulf counterweight to Iran.

Iranian President Mahmoud Ahmadinejad on Wednesday denounced the crackdown and the presence of the Saudi-led force.

“How is it possible to stop waves of humanity with military force?” Ahmadinejad said.

Before the rise of Dubai and Qatar’s capital Doha, the business center of the Gulf was in Bahrain. The tiny nation successfully marketed itself in the 1990s as a Western-friendly outpost for banking and financial services as a way to offset its relatively meager oil revenue. Its skyline _ now dwarfed by Dubai _ was once a symbol of the Gulf’s emergence on the world stage.

The unrest has already given a stinging blow: the cancellation of the Formula 1 season-opening Bahrain Grand Prix this month. The race is a major tourism draw and the highlight of Bahrain’s international calendar.

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Companies added more workers in February than in any month in almost a year _ a turning point for the economy that finally pushed the unemployment rate below 9 percent. Economists say the stronger hiring should endure all year.

The 222,000 jobs the private sector created more than offset layoffs by financially squeezed state and local governments. They slashed 30,000 jobs, the most since November.

The unemployment rate sank to 8.9 percent, the lowest since April 2009. The rate has now fallen almost a full percentage point in just three months _ the sharpest drop in a generation.

Hiring last month was broad _ factories, trucking companies, health care providers, construction firms, hotels and restaurants all added jobs.

“Bottom line: The labor market is turning the corner,” said Michael Darda, chief economist at MKM Partners, an economic research firm.

The figures suggest the economy has entered a healthier phase typical of what economists call a virtuous cycle: Americans are spending more, which raises corporate profits, which leads to hiring and more spending and growth.

At UPS, for example, revenue and profits have both risen because of the growing economy. The company has nearly 250 job openings for salaried positions, up from 100 this time last year, and is hiring hourly workers at 150 locations.

Normally, the company just rehires its temporary employees from the holidays if it needs them. But this year, “we’ve already hired a lot of those folks back, and we still have more needs,” said Matt Lavery, UPS’ head of recruiting.

During the recession, the cycle was more vicious than virtuous: Waves of layoffs suppressed consumer spending, which lowered corporate profits and triggered more job cuts.

On Wall Street, another spike in oil prices rattled investors and overshadowed the good news on hiring. The Dow Jones industrial average fell more than 150 points, one day after posting its biggest gain of 2011.

Other forces are still working against the economic recovery. State and local governments are expected to keep shedding jobs, and inflation and higher gas prices resulting from the Middle East unrest are threats.

Still, economists now think private companies will feel comfortable enough to add 200,000 jobs a month through the rest of this year. That would be an improvement from the average of 150,000 jobs created over the past three months.

It takes about 125,000 new jobs a month just to keep up with population growth and hold the unemployment rate stable. It could take up to 300,000 to reduce the unemployment rate significantly, economists say.

Stronger job growth should put the economy on track to grow at a roughly 4 percent annual rate in the first three months of this year, economists said. That would be stronger than the 2.8 percent pace in the final three months of 2010.

Job creation has been the missing ingredient in the economic recovery. Manufacturers have created 190,000 jobs in the past year, the most since 1998. The economy’s service sector, which employs most of the work force, is expanding at the fastest pace in more than five years. Shoppers are spending more. U.S. exporters are selling more abroad. Stock prices have surged.

“The last piston in the economic engine has begun to fire, pointing to sustained economic growth,” said economist Sung Won Sohn at California State University.

That said, 8.9 percent unemployment is high by historical standards. Economists predict it will take four or five years for it to drop to something more normal, near 6 percent. And as more people start looking for jobs later this year, the rate could rise. Government surveys of households don’t count people without jobs as unemployed unless they say they’re looking for one.

But for the moment, the jobs picture looks brighter than most people would have anticipated three months ago. The issue will be a key factor in President Barack Obama’s expected re-election bid next year.

“Our economy’s now added 1.5 million private-sector jobs over the last year, and that’s progress,” the president said at a stop in Miami where he talked about competitiveness in the global economy. “But we need to keep building on that momentum.”

The report would have been even brighter if state and local governments had added jobs, as they normally do in economic recoveries, instead of cutting them. Historically, states and cities contribute 10 to 15 percent of the jobs created during recoveries.

Factoring in the government layoffs, the economy added 192,000 jobs last month. January’s job gains were revised upward, to 63,000. Some of February’s increase was due to people returning to payrolls after dropping off because of severe weather earlier this winter.

Still, the job gains were widespread. Factories added 33,000, the fourth month in a row of gains. Education and health care added 40,000, professional and business services such as engineering, architecture and computer design added 47,000, leisure and hospitality 21,000, and transportation and warehousing 22,000.

Federal Reserve Chairman Ben Bernanke told Congress this week that the Fed would start pulling back the money it pumped into the economy once the recovery firmly takes hold. The Fed could also raise interest rates from their record lows, though most economists think that won’t happen for at least another year.

The number of unemployed people in the United States dipped to 13.7 million, still nearly double the number before the recession began in December 2007. Including part-time workers who would rather be working full time, plus people who have given up looking altogether, roughly 25 million are “underemployed.” That’s 15.9 percent of the work force, the smallest share in almost two years.

The number of “long-term” unemployed, or people out of work six months or more, sank by 217,000 to just under 6 million.

Workers’ paychecks were mostly flat in February. Average hourly earnings rose to $22.87, up 1 cent from January. Workers have little bargaining power to demand big pay raises because the job market is still healing slowly.

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AP Economics Writers Christopher S. Rugaber and Paul Wiseman in Washington contributed to this report.

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The European Union has agreed sanctions against Libyan strongman Moammar Gadhafi, including an arms embargo, asset freeze and visa ban.

Monday’s decision was made by the EU ambassadors meeting to assess the rapidly deteriorating situation in the north African nation, said Hungarian Energy Minister Tamas Fellegi.

The EU “imposed an arms embargo on Libya and sanctions on those responsible for the violent crackdown on the civilian population,” Fellegi said. The asset freeze and visa ban was targeted against Gadhafi and some two dozen of his closest family and government associates free credit report and score.

The move came after days of increasing protest against the hundreds of deaths caused by Gadhafi military resistance against the popular uprising in his country.

The measures are aimed at reinforcing Saturday’s U.N. Security Council measures. The EU also includes measures to ban sale of any equipment that might be used for repression by Gadhafi.

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Chinese officials say Volvo Car Corp. plans a manufacturing base in the western Chinese city of Chengdu as it aims for expansion in the world’s biggest auto market following its buyout by independent automaker Geely.

An official with the city’s Automotive Industry Investment Bureau confirmed a report Tuesday that the Swedish carmaker has chosen Chengdu as a manufacturing base, but would not give further details.

The Volvo factory reportedly will be focused on making compact and economy cars on a large scale. Shanghai and the northern city of Daqing also had been vying for new Volvo factories following the acquisition last year by Geely.

Volvo plans a news conference to announce its strategy in China later this week in Beijing, the Chengdu Overseas Media Service, a local, nongovernmental media group, reported, citing officials from the city’s trade development zone.

Ning Shuyong, a Geely spokesman, would not confirm the report but said a decision was pending.

Chengdu, capital of populous Sichuan province, is among many Chinese cities aspiring to become major automobile manufacturing hubs and is one of the country’s biggest inland markets. While overall sales of autos are forecast to slow slightly from their torrid growth in recent years, sales in the provinces are surging as increasingly affluent families buy their first cars or trade up.

Chinese media reports say the factory in Chengdu is already under construction and is due to begin production by 2013, with an initial capacity of 125,000.

Privately-owned Geely Holding Group agreed in March 2010 to buy Volvo Car from Ford Motor Co. for $1.8 billion, the biggest acquisition by a major Chinese automaker so far.

The buyout gave small but ambitious Geely access to a prestigious brand and top-tier technology and enabled Ford to unload the loss-making automaker to raise cash and focus on its core Ford and Lincoln brands.

Industry analysts have expressed doubts over 13-year-old Geely’s ability to make a success of Volvo, an older, perennially money-losing manufacturer on another continent. Geely, based in the eastern city of Hangzhou, has built a business selling cars, motorcycles and scooters with little government support.

Volvo recently set up a new China headquarters in Shanghai.

Geely has said it plans to keep its production arrangements in Europe and contracts for assembling 15,000 cars a year by a Ford joint venture, Changan Ford Mazda Automobile Co., in Chongqing. The longest of those contracts runs until 2018.

The Swedish automaker sold 22,400 vehicles in China in 2009, up 80 percent from the year before, but has trailed behind rivals like BMW and Audi.

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