US urges global action as Australian stimulus flounders

Australian lawmakers battled over a massive government stimulus package Thursday amid US calls for industrialised nations to take bold and immediate steps to revive the global economy.

The Australian Senate on Thursday voted down the government's proposed 42 billion dollar (28 billion US dollar) stimulus package designed to boost the economy.

Elsewhere, other nations took measures to fight off deepening economic woes amid a slew of grim earnings data from the likes of Rio Tinto, Electricite de France and ABB, with Japan's Pioneer announcing 10,000 job cuts worldwide.

US lawmakers agreed a compromise 789 billion dollar stimulus package while South Korea cut interest rates to a record low and Ireland announced a nine billion dollar liquidity injection into its top two banks, Allied Irish Bank and Bank of Ireland.

Lawmakers were set to battle over the Australian legislation after Prime Minister Kevin Rudd told parliament the government would reintroduce a revised plan later Thursday.

He said his government would not be deterred from taking "whatever action is necessary" and reintroducing the legislation would help Australia's "national economic interest."

Rudd's Australian spending plan was branded as financially irresponsible by the opposition who claim it will send the budget deep into deficit.

The wrangling came as Australia's unemployment rate reached a two and a half year high of 4.8 percent in January, data released Thursday by the Australian Bureau of Statistics showed.

US Treasury Secretary Timothy Geithner will urge G7 industrialized nations at a weekend meeting in Rome to do more to steady a global economy roiled by a housing meltdown and credit crunch that has spread to almost all sectors.

Geithner will go armed with the knowledge that US lawmakers in Washington struck agreement on a compromise 789 billion dollar stimulus plan and prepared to vote as early as Thursday to send the package to President Barack Obama.

"I want to thank the Democrats and Republicans in Congress who came together around a hard-fought compromise that will save or create more than 3.5 million jobs and get our economy back on track," Obama said.

It followed weeks of tortuous debate on the bill, whose draft 'Buy American' provisions limiting US infrastructure projects to using domestically produced materials prompted fears of protectionism.

Meanwhile, South Korea cut its key interest rate by 50 basis points to a record low 2.0 percent in an attempt to avert the first recession for a decade. The rate has now been cut by 3.25 percentage points since last October.

"Domestic economic activity has contracted at a faster pace across the board, including production, demand and employment," the central bank said in a statement.

Seoul last November announced a 10.7 billion dollar plan to stimulate growth this year, involving extra spending and tax cuts.

But waves of red ink continued to hit the global economy, with the financial crisis evaporating demand in sectors across the board.

Japanese electronics giant Pioneer Corp. said its 10,000 job losses would include 6,00 regular workers as it braces for a 130 billion yen (1.4 billion dollars) loss in the financial year to March.

The company said it would end production of plasma display panels and close plants in the United States and Britain, effectively quitting the television industry to focus on car electronics.

Anglo-Australian mining giant Rio Tinto posted a 50 percent slump in annual net earnings due to deteriorating demand for its products in the final quarter of 2008.

The company said earnings in the 12 months to December were 3.68 billion US dollars, down from 7.31 billion the previous year.

China's Chinalco said it would invest 19.5 billion dollars in Rio Tinto, in Beijing's largest ever investment in a foreign company.

French energy giant Electricite de France announced a 38.48 percent drop in net profits for 2008 to 3.4 billion euros (4.4 billion dollars).

Engineering giant ABB saw its net profit slip 17 percent in 2008 to 3.118 billion dollars, with the fourth quarter particularly difficult.

Net profit for the quarter was just one-eighth of that in the previous year at 213 million dollars.

Major Asia markets were lower Thursday, with Tokyo closing down 3.03 percent and Hong Kong shares down 2.3 percent at midday.

Source AFP

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