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Job cuts cast pall on outlook, but markets look ahead
2008-12-08
WASHINGTON (AFP) - More job cuts and a bankruptcy filing by one of America's biggest newspaper publishers have cast a pall on the global economic outlook, but stock markets looked past the grim news and rallied. Dow Chemical announced it would cut about 5,000 full-time jobs, close 20 facilities and divest non-strategic businesses in an aggressive move to cope with dire economic times. The US chemical giant also will suspend operations in 180 plants and significantly reduce its contractor workforce worldwide by 6,000 as it joins other American companies in axing staff amid a deepening recession. Chairman and chief executive Andrew Liveris said, "We are accelerating the implementation of these measures as the current world economy has deteriorated sharply, and we must adjust ourselves to the severity of this downturn." The news came after Friday's shock report that 533,000 US jobs were lost in November alone as companies retrenched in the face of tight credit and a weak outlook. US industrial conglomerate 3M said it was cutting nearly 1,800 jobs in the fourth quarter as it struggles with the global financial crisis. The cuts have been "mainly in the developed economies of the US, Western Europe and Japan," the St. Paul, Minnesota-based company said in a statement. US media conglomerate Tribune Co . meanwhile said it filed for bankruptcy protection in the face of a sharp drop in revenue and a heavy debt load. The owner of The Los Angeles Times and The Chicago Tribune as well as other news outlets seeks to "bring the level of our debt in line with current economic realities," Sam Zell, chairman and chief executive of Tribune, said in a statement. In further evidence of fiscal malaise hitting an already dire situation for US media, The New York Times said Monday it will borrow as much as 225 million dollars against its Manhattan headquarters building due to tightening credit and dwindling profits. Standard & Poor's recently downgraded its credit rating to below investment grade for The Times Company -- whose stock has lost more than half its value this year. In Brussels, Anheuser-Busch InBev said it would cut 1,400 jobs in the United States to reorganize following the merger of InBev and US-based Anheuser-Busch. "To keep the business strong and competitive, this is a necessary but difficult move for the company," company president David Peacock said in a statement. Elsewhere, Swedish steel group SSAB said it would cut 1,300 posts due to a sharp decline in demand and Russian flag carrier Aeroflot said it was planning to lay off 500 employees. Despite the largely bleak news, stock markets soared after US president-elect Barack Obama promised the biggest infrastructure investment plan in half a century over the weekend and signs mounted of progress on a US auto industry rescue. The Dow Jones Industrial Average leapt 298.76 points (3.46 percent) to finish at 8,934.18, after a brief push above the key level of 9,000. The Nasdaq vaulted 62.43 points (4.14 percent) to 1,571.74 and the Standard & Poor's 500 rallied 33.63 points (3.84 percent) to 909.70. European shares staged a spectacular rally as the London FTSE 100 index finished 6.19 percent higher while the CAC 40 in Paris added 8.68 percent and the Frankfurt Dax 7.63 percent. The surge on the stock markets began in Asia with Tokyo closing up 5.20 percent, Hong Kong rocketing 8.7 percent, Seoul rallying 7.5 percent and Sydney climbing 4.1 percent. In the US, expectations mounted that lawmakers may throw crisis-hit American automakers a financial lifeline to avert an industry collapse. After the stock market close, Democrats in Congress announced Monday that they will introduce a bill making available as much as 15 billion dollars in immediate aid for the troubled US automobile industry. "Fifteen billion is the maximum that's available, given the president's threat to veto anything else," said US Representative Barney Frank, one of the lawmakers spearheading talks on the rescue plan. Lawmakers said the bailout aimed to "give the automakers the chance to clean house and return to a responsible path toward profitability." The effects of the financial crisis continue to be felt across the world and ratings agency Standard and Poor's on Monday lowered its ratings for Russia, citing concerns over capital flight from the country. The US-based agency said it had lowered its foreign currency sovereign credit ratings on Russia to BBB/A-3 from BBB+/A-2, with a negative outlook.
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