Nokia to axe 3,500 jobs and close factory

Nokia will axe 3,500 jobs and close a manufacturing plant in Romania, as the Finnish handset maker continued its evolution to cope with the growing impact of smartphones on its markets.

Nokia, the world’s largest maker of mobile phones by volume, said the closure of the factory in Cluj would result in 2,200 job losses, with a further 1,300 to be axed at its Location and Commerce division. The division includes Navteq, the digital mapping group, which had just under 6,000 employees when Nokia bought it for $8.1bn in 2007.

Nokia, which employs some 138,634 people, said there could be further job losses announced next year as it changes production at its factories in Salo, Finland, as well as in Hungary and Mexico. These will shift away from assembly and packing of smartphones to focus on customising phones for different markets. Details of any cuts are expected in the first quarter of 2012.

“We must take painful, yet necessary, steps to align our workforce and operations with our path forward,” said Stephen Elop, Nokia president and chief executive. “With these changes we will emerge as a more dynamic, nimble and efficient challenger.”

Manufacturing operations at Nokia’s Cluj factory, which makes low-end feature phones rather than smartphones, will be moved to Asia where feature phones are predominantly used. Nokia has factories in China, South Korea and India and is building a further facility in Vietnam.

The Cluj factory, which took seven months to build at a cost of $88m, was only opened in 2008 as a replacement for a plant in Bochum, Germany.

“The European market has shifted towards smartphones, whereas the feature phone market is predominant in Asia and we can get greater scale and proximity benefits by using our Asian factories in China and Korea,” said Nokia.

Nokia has struggled to produce smartphones to match Apple’s iPhone and devices featuring Google’s Android software, and the Finnish handset maker is trying to revive its fortunes by using Microsoft’s Windows Phone operating system rather than its own Symbian system.

Analysts view the launch as crucial to claw back market share from the increasingly dominant Android and Apple operating systems, which have left Nokia struggling in the premium smartphone market even though it is still a strong competitor in low- to mid-tier handsets.

It emerged this week that Nokia was working on a new, Linux-based operating system for lower-end phones, codenamed Meltemi. While Nokia would not comment on any future products, it confirmed that the company was keen to innovate in the low- to mid-tier area.

“We have a lot of activities under way around connecting the next billion mobile users,” Nokia said.

Thursday’s move is part of a plan announced in April to cut its operating expenses by €1bn over the next three years, which included the axing of 4,000 staff. The 3,500 job cuts at the Romania plant and at the Location and Commerce divisions are in addition to the earlier redundancies.

Nokia shares, which have fallen more than 40 per cent over the past 12 months, on Thursday edged up 2 cents, or 0.38 per cent, to €4.20.

Commodities slide, asian stocks fall on euro crisis

Asian shares and commodities fell on Thursday on growing worries that Europe’s intractable debt problems will plunge the world economy into a second global financial crisis.

Copper fell below $7,000 a tonne, gold slipped below $1,600 an ounce to stand more than $300 below its record high earlier this month, and commodities-related stocks were dumped.

The past week has seen a broad selloff of commodities, equities and emerging markets bonds and a rally in the dollar that has been reminiscent of the rout surrounding the collapse of Lehman Brothers investment bank three years ago.

“Due to the high degree of uncertainty about the European situation and its effects on economic growth, there were anxious market moves in the U.S., and we will see similar moves today,” said Yutaka Miura, senior technical analyst at Mizuho Securities.

Tokyo’s Nikkei share average fell 0.9 percent, while MSCI‘s broadest index of Asia Pacific shares outside Japan dropped 1 percent, with its materials sub-index shedding more than 2 percent.

S&P 500 index futures were mildly negative, after Wall Street’s broad benchmark dropped 2.1 percent on Wednesday.

The latest source of nervousness was a vote in Germany‘s parliament at 0900 GMT on Thursday to approve new powers for the euro zone’s 440 billion euro ($598 billion) rescue fund.

Whilst opposition votes will ensure the bill passes, a big rebellion within Chancellor Angela Merkel‘s own center-right coalition could weaken her politically and cloud future policy making at a time when financial markets and other nations are urging euro zone leaders to act boldly and decisively.

The euro was little changed around $1.3540, while the dollar rose 0.3 percent against a basket of currencies.

“You would suspect weakness until Germany votes, given that it is the big guy that has to fund it,” said Gavin Stacey, head of Australia and New Zealand research at Barclays Capital.

“The euro is most likely to continue its trend deterioration until it gets really bad, forcing a resolution to come.”

As the commodities rout continued, gold fell 0.7 percent to around $1,596 an ounce and copper, which is highly sensitive to expectations for global growth, fell 4.9 percent to $6,898 a tonne.

U.S. crude oil futures fell 1.3 percent to $80.17 a barrel and Brent crude lost 0.8 percent to $103. ($1 = 0.735 Euros)

BAE Draws Curtain on Planemaking in Brough as 3,000 Jobs Go

BAE Systems Plc will cut 3,000 jobs in the U.K. and end a century of aircraft manufacturing at a site in northern England as it slows fighter-jet production.

About 900 jobs will go at Brough, while talks will start about ending manufacturing at the site, London-based BAE said in a statement today. BAE is also cutting more than 1,400 positions at two other facilities in northwestern England.

“These job losses are the unintended consequence of government austerity measures,” said Jason Adams, an analyst at Nomura International with a “neutral” rating on the stock. “The defense industry is in a state of excess capacity, and I’d expect further consolidation and restructuring.”

BAE has cut about 2,500 jobs in each of the last two years as it scales back production to adapt to shrinking defense budgets. Customers are under “huge pressure” over spending, and BAE has had to “significantly” change some programs, Chief Executive Officer Ian King said in the statement today.

Hawk Manufacturing

There isn’t sufficient work on the Hawk Advanced Jet Trainer program to maintain manufacturing at Brough, spokeswoman Leonie Foster said. Deliveries of 28 aircraft for the Royal Air Force are coming to an end, while new contracts, such as in India, require local assembly of the aircraft.

BAE won a 537 million-pound contract to deliver 57 Hawk jets to India in 2010, and will manufacture the jets locally in partnership with Hindustan Aeronautics Ltd. BAE is also competing for a Hawk contract in the U.S., with local production as part of the proposal.

Other planned job cuts include 51 in Christchurch, Dorset, 132 in Yeovil, Somerset, 78 at Farnborough, south of London. BAE said a year ago that it would cut about 740 jobs at the division supplying parts for military aircraft, including Brough in East Yorkshire. Brough also bore the brunt of 450 job losses in 2008 because of reduced workload on some programs.

Military aircraft production at Brough dates to 1916 and specialized in the manufacture of seaplanes before becoming part of Hawker Siddeley Aviation, when it made the Buccaneer fighter, and later British Aerospace, producing the Hawk trainer and vertical-takeoff Harrier jump jets. Brough now employs almost 1,300 people, according to BAE.

Eurofighter, F-35

Manufacturing of the Hawk, F-35 Joint Strike Fighter and Eurofighter Typhoon fighter jets will be maintained across fewer sites. In Brough, BAE aims retain Hawk engineering for structural testing on the Hawk trainer jet, F-35 and Eurofighter, Foster said.

The unite labor union said it will “be doing everything we can to mitigate the impact of these cuts,” Ian Waddell, Unite’s national officer for aerospace said in a statement. “We expect the Ministry of Defense to intervene urgently to protect these jobs.”

BAE, European Aeronautic, Defence & Space Co. and Finmeccanica SpA, the makers of the Eurofighter, need an additional order from partner nations by 2013 to maintain production. Eurofighter now makes 50 fighter jets a year. The U.K., Italy, Germany and Spain agreed to produce fewer combat jets to stretch production and the expected increase in F-35 production rates will be trimmed following pressure on the U.S. defense budget.

The Military Air and Information and Shared Services unit employs about 15,500 people across 28 industrial sites and Royal Air Force bases. It develops, delivers and supports military air platforms and technologies for the Typhoon, F-35 Lightning II, Tornado and Hawk.

BP May Quadruple Indonesian Gas Plant

BP Plc (BP/) is studying a fourfold expansion of the $5 billion Tangguh liquefied natural-gas plant in Indonesia as the region’s economic growth surges and Japan raises imports following its nuclear disaster.

The plan is part of a drive by Chief Executive Officer Robert Dudley to replicate the multibillion-dollar projects made by Royal Dutch Shell Plc that generate cash and profits for two decades and beyond, funding growth in other areas. The LNG plant now has two production lines, called “trains” in the industry.

“The space is being prepared in Tangguh for eight trains,” said Gde Pradnyana, a Jakarta-based spokesman for the Indonesian energy regulator, known as BPMigas. “You can speculate there are still a lot more reserves to be discovered.”

BP will invest $10 billion in Indonesia in the next decade to boost output at Tangguh, as well as expand into coal-bed methane, Dudley said in May. Indonesia, the world’s second- largest exporter of LNG after Qatar, needs new supply to replace shipments from aging plants in Aceh and Kalimantan provinces.

Tangguh, the most recent LNG project in Indonesia, started shipments in 2009. David Nicholas, a London-based spokesman for Europe’s second-biggest energy company, declined to comment on the eventual size of the plant.

Gas resources for a third unit at Tangguh are “almost confirmed,” Pradnyana said. A decision to build the 3.8 million-ton-a-year train may be made this year, he said, without disclosing how much gas has been discovered for a fourth unit. The plant has two trains with a combined production capacity of 7.6 million metric tons of LNG a year.

‘Much Needed’

“Tangguh expansion could be attractive to BP as a much needed source of LNG growth,” Frank Harris, head of global LNG at Wood Mackenzie Ltd., said in an e-mail.

Even so, there will likely be an obligation to sell some of the LNG on the domestic market at below-market rates, Harris said. Moreover, Tangguh’s reliability has come into question because of technical difficulties experienced during the start- up phase, he said.

Indonesia is competing to satisfy demand for LNG from China and India, the world’s fastest-growing major economies. Gas is the least polluting fossil fuel and China, which has 16 of the 20 most-polluted cities in the world, plans to use more of it for power generation.

Chinese gas demand, now about 100 billion cubic meters a year and roughly equal to Germany, may soar to match that of the 27-nation European Union by 2035, according to the International Energy Agency.

Biggest Importer

Japan, the world’s biggest LNG importer, may consume an additional 12 million tons a year, according to Sanford C. Bernstein & Co., after the earthquake and tsunami in March led to the closure of almost two-thirds of the nation’s 54 reactors.

Bernstein said in an Aug. 20 report that the LNG market will “significantly tighten” over the next three years, boosting gas prices.

North Asia spot LNG prices reached $17 a million British thermal units earlier this month, World Gas Intelligence reported Sept. 21. That’s more than four times the equivalent price for U.S. gas at Henry Hub in Louisiana.

The Tangguh project, in West Papua in the east of Indonesia, has multi-year contracts to supply 2.6 million tons a year to China, 1.15 million tons a year to South Korea and as much as 3.7 million tons annually to Sempra Energy.

Third Unit

The first two Tangguh trains have 12 trillion cubic feet of gas allocated to them, with more than 4 trillion assessed for a third planned unit, Pradnyana said.

The project taps six fields using two unmanned platforms and pipes to take the gas to shore where it is chilled to a liquid at minus 161 degrees Celsius (minus 258 Fahrenheit) to reduce its size and aid transportation.

“We all believe that the resource is there, the potential is there, we just need to do a bit more work,” Pradnyana said when asked about plans for a fourth unit.

Gas consumption in Indonesia, Southeast Asia’s biggest economy, increased 7.8 percent last year, according to BP. The government has passed a law insisting fuel is offered domestically before it can be exported.

Royal Dutch Shell Plc produces LNG in Australia, Brunei, Malaysia, Nigeria, Oman, Qatar and Russia. Shell’s Pearl gas-to- liquids project in Qatar may pay for itself in as little as two years with crude oil at $100 a barrel, according to independent consultant Alex Forbes, founder of Brighton, U.K.-based Forbes Communications Ltd.

Putin Return Complicates U.S. Policy

 

Vladimir Putin’s return to the Russian presidency next year will complicate the Obama administration’s efforts to advance arms-control and trade agreements, adding to already deep suspicions among U.S. policy makers and lawmakers about the country’s intentions and direction.

Agence France-Presse/Getty ImagesDmitry Medvedev, left, with Alexei Kudrin, in a file photo. Mr. Kudrin said he won’t remain as finance minister, adding to investor nervousness.

After the two nations cut a deal last year on a major nuclear-arms reduction treaty, talks have foundered over the next steps in reducing Moscow’s arsenal of tactical nuclear warheads and in overcoming its objections to a new missile-defense system for North Atlantic Treaty Organization members—areas in which Mr. Putin has at times publicly played the role of lead skeptic.

WSJ’s Richard Boudreax looks a how Vladimir Putin’s return as Russian president could hamper U.S. efforts to advance arms-control and trade agreements. Photo: REUTERS/Denis Sinyakov

President Barack Obama had forged a close working relationship with President Dmitry Medvedev, whose weekend announcement that he will step aside cleared the way for Mr. Putin’s return to Russia’s highest office. Officials in Washington had hoped Mr. Medvedev would become a counterweight to what they described in a series of State Department cables released by anti-government-secrecy group WikiLeaks as a “virtual mafia state” run by Mr. Putin. And the attention Washington lavished on Mr. Medvedev left people close to Mr. Putin feeling the prime minister was being snubbed, according to those people.

Mr. Putin declared his candidacy for the presidency at a pro-Kremlin party congress in Moscow on Saturday. He is virtually certain to prevail in tightly controlled elections in March.

The news of the anticipated switch at the top, which could reinstall Mr. Putin as president for as long as two terms, or 12 years, affirms Russia’s slide into what many see as a police state.

The White House sought to play down the impact of Mr. Putin’s return and what it means for President Obama’s “reset” in relations with Moscow.

“The reset has always been about national interests and not individual personalities,” said Tommy Vietor, White House National Security Council spokesman.

Added a senior Obama administration official: “We are sober-minded here. This is not a change in the political system because we have always known what the political system was.”

Still, in a sign that the transition might not go as smoothly as Mr. Putin had anticipated, Russia’s longtime finance minister said he won’t serve in the next government.

Finance Minister Alexei Kudrin had earned the respect of investors by running a string of fiscal surpluses in the boom years of Mr. Putin’s first two presidential terms. Investment managers said they were left uncertain whether Mr. Putin could effectively continue Mr. Medvedev’s program of modernizing the economy.

Mr. Medvedev is clearly favored in the U.S. as Moscow’s conciliatory face to the outside world, in contrast to Mr. Putin’s confrontational style. Lawmakers in Congress are particularly leery of Mr. Putin and could complicate the Obama administration’s efforts to pursue arms-control and trade agreements with Russia.

The White House has been trying to help Russia gain entry to the World Trade Organization, prodding Congress to abrogate the Jackson-Vanik amendment, a Cold War-era human-rights law that imposed trade sanctions on countries restricting emigration and was intended to pressure the Soviets to allow the exit of Soviet Jews to Israel.

Although Russia long ago abolished such exit restrictions, the law remains on the books.

David Kramer, head of the U.S.-based nonprofit group Freedom House, said Congress’s attitude may change with Mr. Putin’s formal return. “Putin is not held in high regard in the U.S. Congress,” Mr. Kramer said. “This will not help with Jackson-Vanik.” He added that the news represented “a major step back” for bilateral relations.

While Mr. Medvedev has championed WTO membership for Russia, Mr. Putin has been much more skeptical in public about the value of entering the organization. Mr. Putin has, in contrast, argued for greater protectionism and for building a trade bloc of former Soviet republics.

Administration officials, aware that Mr. Putin could well return to the presidency, say they have deliberately sought to avoid any appearance of playing favorites between the two leaders.

For protocol reasons, Mr. Obama has spent more time with Mr. Medvedev because they are both heads of state. They also see each other at multilateral meetings attended by Mr. Medvedev, rather than Mr. Putin.

But when Mr. Obama visited Russia in 2009, he saw both leaders, and when Vice President Joe Biden visited Russia earlier this year, he also met with both men separately.

Mr. Obama had argued to Congress that a reset in relations with Russia is in the U.S.’s interest. Amid some signs of warming, Russia has put some pressure on Iran to drop its nuclear-weapons program, and it has recently allowed the U.S. to ferry military supplies across Russia to Afghanistan.

The Senate in December ratified a major nuclear-arms reduction treaty with Russia. But talks over further reductions have foundered.

Greg Thielmann, a senior fellow at the Arms Control Association, a Washington think tank that promotes arms-control policies, said the changeover portends a shift in Russian style more than substance on these key policy issues. “But style and perceptions can affect substance over time,” he said.

Perhaps the most sensitive topic between the two countries remains the U.S.-backed missile-defense system, which is designed to help NATO allies defend against the threat of ballistic missiles from Iran. Russia says it believes the system could blunt its own nuclear deterrent.

Mr. Putin has been more vocally skeptical than Mr. Medvedev on the issue, and the prime minister’s spokesman Dmitry Peskov singled out the missile-defense dispute as a critical test of whether Mr. Obama is serious about a reset in relations.

“We have to prove the reset with concrete steps, not with words,” Mr. Peskov said on Sunday.

U.S. and Russian officials acknowledged little progress has been made trying to work out a deal that would blunt Moscow’s concerns. Russia has proposed combining NATO and Russian missile defense systems and creating a joint command and control structure. The U.S. has rejected that idea, arguing instead for “coordinated” but separate systems.

State Department cables released by the anti-government secrecy group WikiLeaks put a particularly blunt spotlight on what U.S. officials thought privately about the power dynamics at play in Moscow. In them, U.S. embassy officials describe Mr. Putin as an “alpha dog” who calls the shots and Mr. Medvedev as a hesitant figure who “plays Robin to Putin’s Batman.” In another cable, then-Defense Secretary Robert Gates is quoted as saying that “Russian democracy has disappeared” and that the government is “an oligarchy run by the security services.”

Banks Splinter on Europe Debt Crisis

Wall Street leaders, urging coordinated action from world governments to solve the European sovereign-debt crisis, struggled themselves during four days of meetings in Washington to agree on what’s needed to end it.

The chiefs of firms including JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS), Deutsche Bank AG (DBK) and Societe Generale (GLE) SA met for three hours at the National Archives on Sept. 23. They differed on which government and private solutions may restore confidence in European debt and banks, and on some elements of regulation, said two participants who spoke on condition of anonymity because the meeting wasn’t public.

“It was a big group there, they’re going to differ about stuff; there’s a lot of tension in the air because of the world we live in,” Morgan Stanley (MS) Chief Executive Officer James Gorman, 53, said as he left the event, which coincided with weekend meetings of the International Monetary Fund and Institute of International Finance. “There’s no one solution. It’s going to be 25 different things.”

Bank-stock indexes in Europe and the U.S. have dropped more than 30 percent this year and borrowing costs for European lenders have climbed amid concern that Greece and other European countries may default. The level of disagreement between bankers and government officials who gathered for the annual IMF meeting was matched only by their shared sense that the stakes have rarely been higher.

‘More Gravity’

“There’s not been a prior meeting at which matters have had more gravity and at which I’ve been more concerned about the future of the global economy,” said Lawrence Summers, a former U.S. Treasury secretary and White House economic adviser, who said it was his 20th annual IMF meeting.

Asian stocks fell today amid concern the European debt crisis may weaken economic growth. The MSCI Asia Pacific Index slid 1.2 percent to 110.38 at 11 a.m. in Tokyo, set for its lowest close since June 2010.

Discussion of European governments’ options, including how to use their 440 billion-euro ($596 billion) rescue fund, dominated the policy meetings. Most European parliaments, including Germany’s, still haven’t voted on a July 21 plan to endow the fund with more powers, including the ability to buy bonds and inject money into banks.

Geithner’s Plea

U.S. Treasury Secretary Timothy F. Geithner urged governments to unite with the European Central Bank to increase the firepower of the fund, known as the European Financial Stability Facility.

Failure to act carries the “threat of cascading default, bank runs and catastrophic risk,” Geithner said in a Sept. 24 statement to the IMF, his strongest public lobbying yet. Bank of Canada Governor Mark Carney said 1 trillion euros may be needed and U.K. Chancellor of the Exchequer George Osborne set a Nov. 3-4 Group of 20 summit as the deadline for a solution.

European policy makers indicated they may use leverage, or borrowed money, to increase the spending strength of the EFSF. Klaus Regling, its CEO, and German Finance Minister Wolfgang Schaeuble downplayed speculation that the fund might borrow from the European Central Bank or provide insurance on loans provided by the ECB directly to the private sector.

Finance officials this week will also discuss accelerating the establishment of a permanent rescue to July 2012, a year earlier than planned, according to a document prepared for the meetings and obtained by Bloomberg News. ECB Governing Council members Ewald Nowotny and Luc Coene said in interviews in Washington that the bank may step up its own response next week.

Bankers Mingle

The Institute of International Finance, an organization of more than 400 financial companies worldwide, holds its annual meetings in parallel with the IMF’s. In normal times, the private-sector bankers use the weekend to mingle with one another, and with government ministers and central bankers, trying to win business and get policy insight.

In some ways, this time was no different as bankers hunkered down in hotels around Washington for meetings with government clients and executives of other banks. JPMorgan and Citigroup Inc. (C), both based in New York, held cocktail parties. Even UBS AG (UBSN) feted guests with champagne and dance music on Sept. 24, the same day CEO Oswald Gruebel, 67, resigned following the bank’s announcement that it lost $2.3 billion on what it said were “unauthorized” trades.

Compares With 1930s

Yet in private discussions, bankers said the environment was exceptional. A senior European banker said he sees policy makers’ decisions as being as momentous as those in the 1930s. A senior U.S. bank executive said he’s more worried than he was at any point during the financial crisis of 2008 and 2009.

About 1,000 people attended a Sept. 24 IIF dinner, which featured a tribute to ECB President Jean-Claude Trichet, who’s stepping down Oct. 31 and will be succeeded by Mario Draghi, the governor of Italy’s central bank.

Guests dined on beef tenderloin stuffed with red chard, dates and pine nuts, and truffled potato crepes. They heard speeches about Trichet’s career and accomplishments from IIF Chairman Josef Ackermann, who’s also CEO of Frankfurt-based Deutsche Bank, as well as former Federal Reserve Chairman Paul Volcker and Carney, the Bank of Canada governor.

The ECB’s policies in recent years, such as buying bonds issued by weaker European nations and providing cash loans in return for banks’ bond holdings, have helped provide support for both governments and lenders. The policies also have stirred discontent as two German members of the ECB’s governing council resigned this year amid signs of growing disagreement about the central bank’s efforts.

ECB Easing

IIF Chief Economist Philip Suttle told conference attendees on Sept. 24 that solving the European crisis will require the ECB to reduce interest rates to boost growth.

“You need the ECB to ease significantly, and that probably means the euro needs to come down,” Suttle said.

Schaeuble, the German finance minister, addressed the same room hours later with a contrasting message: “We won’t come to grips with economies deleveraging by having governments and central banks throwing — literally — even more money at the problem,” he said.

At a panel discussion yesterday titled “Systemic Stability and Global Financial Firms,” bank executives including Goldman Sachs President Gary D. Cohn and Barclays Plc (BARC) CEO Robert E. Diamond, 60, discussed risk management and regulation without addressing the European crisis directly.

Restore Confidence

After the discussion, Cohn was asked what he thinks European leaders must do to restore investor confidence.

“The market needs to hear that they understand the depth and breadth of the problem,” said Cohn, 51. “They just need to convey to them that what they’re doing is big enough and powerful enough to get the market’s attention.”

Modeling a European rescue after the U.S. Treasury Department’s Troubled Asset Relief Program, which started injecting capital into banks in 2008, “would be a good solution,” he said.

Frederic Janbon, global head of fixed income at Paris-based BNP Paribas (BNP) SA, said he hopes policy makers stick with implementing the plan agreed to on July 21.

“Before we go to what we do after, we start by doing what we promised before,” he said in an interview.

Deutsche Bank’s Ackermann urged European nations to approve the 440 billion-euro rescue fund and to implement a bailout plan for Greece that are part of an agreement reached on July 21.

‘Seal the Deal’

“Our strong advice is to move on and seal the deal which was agreed on in Brussels at the end of July,” Ackermann, 63, said during a press conference yesterday. “To re-open that debate would not be productive and definitely not stabilize the turbulent situation we’re in.

JPMorgan Chief Economist Bruce Kasman, speaking a day earlier, said the July 21 bailout plan for Greece isn’t going to be enough to contain the crisis.

“Greece is insolvent and the European Monetary Union, the European Union as a whole, needs to deal with that,” Kasman said at a Sept. 24 panel discussion hosted by the IIF. “It hasn’t yet come to terms with that.”

At the private gathering of bank CEOs on Sept. 23, which was the first joint meeting of the IIF and the Financial Services Forum, the executives spent part of the session getting Carney’s views on the regulatory outlook. JPMorgan CEO Jamie Dimon, 55, criticized regulators’ plans to require the biggest banks to hold extra capital and got into a dispute with Carney, said three people with knowledge of the encounter.

Joseph Evangelisti, a spokesman for JPMorgan, and Jeremy Harrison, a spokesman for the Bank of Canada, declined to comment on what was said at the meeting.

“More generally, we have been engaged in constructive dialogue with a range of stakeholders, both domestic and international, as we move forward through this financial-sector reform process,” Harrison said in an e-mailed statement.

BP Plans Full Return to Gulf Drilling This Year

BP Plc (BP/) is preparing its rigs and workers to resume full drilling operations in the Gulf of Mexico, seeking to end a 17-month production slump following the worst U.S. oil spill.

The company has returned two rigs to the region’s deep waters and aims to get three more drilling by the end of the year, according to people with knowledge of BP’s plans, who declined to be identified because the program hinges on gaining approval from regulators.

For Chief Executive Officer Bob Dudley, who took the helm a year ago this week, reviving Gulf production is vital because they are the company’s most profitable fields. BP has lagged behind rivals in resuming drilling in the region and Goldman Sachs Group Inc. downgraded its recommendation because of lack of progress in the Gulf.

“Nothing else BP is doing in the world offers as much growth potential as the Gulf of Mexico,” said Colin McLean, chief executive officer of SVM Asset Management Ltd. in Edinburgh, which has about 700 million pounds ($1 billion) of assets under management and has sold all its BP shares. “Prospects in the Gulf are probably improving, but BP needs to be able to get production up.”

Spokesman Robert Wine declined to comment on BP’s drilling plans in the Gulf of Mexico.

A return to the Gulf is part of Dudley’s campaign to repair BP’s standing with investors, regulators and the U.S. public. The company took a $41 billion charge after the spill and has yet to get approval to drill new wells after the blowout on the Deepwater Horizon that killed 11 and started the leak.

Green Canyon

BP received permission to plug a well in the Green Canyon basin on Sept. 8 with the Development Driller II rig, owned by Transocean Ltd. (RIG), according to data on the website of the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement, or BOERME. The Development Driller III started an abandonment procedure in July in the same block near the Atlantis platform. The jobs are scheduled to last into October, the permits show.

The Discoverer Enterprise, also owned by Transocean, is set to work near the Thunder Horse platform. Ensco Plc’s DS-3 is slated to drill development wells in the Na Kika prospect, and Seadrill Ltd.’s West Sirius rig is scheduled for work on Kaskida, according to two people with knowledge of the plans. BP hopes all three rigs will be operating this year, another person said.

BOEMRE spokeswoman Melissa Schwartz confirmed in an e-mail that BP had received permission to modify wells at the Atlantis field. She declined to comment further on any permit applications.

Global Slump

BP’s problems in the Gulf have contributed to a global slump in output, which sank 11 percent in the second quarter after the company sold off $25 billion of assets in mostly producing fields. It also had longer turnarounds and maintenance periods as it implements higher safety standards and said production is likely to average 3.4 million barrels of oil equivalent a day this year, the lowest since 2001.

Gulf of Mexico oil is more than twice as profitable as production from the rest of BP’s portfolio, yielding about $60 in profit to the company when oil prices are $100 a barrel. In 2010, the Gulf of Mexico accounted for 28 percent of the company’s cash flow and just 10 percent of production, according to research by Citigroup Inc. analyst Alastair Syme.

The company’s payments into the $20 billion fund for spill victims demanded by President Barack Obama uses Gulf production as collateral. BP’s output in the Gulf has dropped to about 250,000 barrels a day from about 390,000 barrels a day before the spill, according to the company.

‘Drilling Backlog’

“BP may be able to start getting rid of its drilling backlog in the Gulf by the end of the year,” said Iain Armstrong, analyst at broker Brewin Dolphin Ltd. in London. “The market will get excited when BP starts getting drilling permits in its own name.”

BP on July 15 said it will implement a higher standard of safety in its drilling than regulations require. It will now only use blowout preventers on the Gulf floor with at least two so-called blind shear rams, which seal wellbores by cutting through the drill pipe. The blowout preventer for the Deepwater Horizon had one blind shear ram that failed to cut off oil and gas from the well. BP will also set up a real-time drilling operations center in Houston.

Dudley said July 26 that BP is eager to “get back to work” in the Gulf, working closely with regulators, and that the pace of BP’s return depends on getting approvals for new wells. He said the U.S. Bureau of Ocean Management says BP won’t be held to a higher standard than its peers in its applications.

Commodities Tumble in ‘Downward Spiral’

Commodities fell to a nine-month low, led by routs in metals, on deepening concern that governments are running out of tools to avert a global recession, eroding prospects for raw-material demand.

European officials may accelerate the setup of a permanent rescue fund as the sovereign-debt crisis mounts. On Sept. 21, the Federal Reserve said the U.S. economy faces “significant downside risks.” In the next two days, gold plunged the most since 1983, and copper had the biggest slide in almost three years. Today, silver posted the largest drop in 32 years.

“We’re in a downward spiral, and no one knows when it’s going to end,” said Robin Bhar, an analyst at Credit Agricole SA in London. “There is a lot of uncertainty at this time as to how demand will develop.”

The Standard & Poor’s GSCI Index of 24 of energy, metal and agriculture prices fell 1.3 percent to settle at 599.25 at 3:47 p.m. New York. Earlier, the gauge touched 594.12, the lowest since Dec. 2. This week, the measure slumped 8.2 percent, the most in four months. The benchmark has tumbled 21 percent since touching a 32-month high in April.

The world economy will expand 4 percent this year and next, the International Monetary Fund said on Sept. 20, cutting forecasts made in June for a 4.3 percent expansion and 4.5 percent in 2012.

Economic ‘Fears’

“We are seeing commodity prices correcting, so they are more compatible with the global economy,” said Christin Tuxen, a senior analyst at Danske Bank A/S in Copenhagen. “When we have fears over the economic cycle as we have now and a higher probability of contraction, it hits industrial metals and commodities.”

Copper futures for December delivery declined 20.85 cents, or 6 percent, to $3.28 a pound on the Comex in New York. In two days, the price tumbled 13 percent, the most since October 2008.

Yesterday, a preliminary index of purchasing managers in China, the world’s top consumer of industrial metals, indicated that manufacturing contracted.

“We are not predicting a recession in the Western world, but low growth for the long term,” Tuxen said. “We are looking for a rebound in China and Asia in the fourth quarter and in 2012, which will help copper and aluminum.”

Gold futures for December delivery fell $101.90, or 5.9 percent, to $1,639.80 an ounce on the Comex, the biggest decline since March 2008. In two days, the metal dropped 9.3 percent, the most since February 1983.

Fed Twist

This week, the Fed said it will increase holdings of longer-maturity Treasuries in a bid to bolster the economy, shifting from debt maturing in three years of less.

“Gold has to roll with the masses, as markets show their disappointment in the Fed’s ‘Operation Twist’,” Edel Tully, a London-based analyst at UBS AG, said in a report.

The metal has dropped 15 percent since reaching a record $1,923.70 on Sept. 6.

“Gold has become the source of liquidity for global-margin calls,” said Michael A. Gayed, the chief investment strategist at Pension Partners LLC. “Also, deflationary pressures are acting on gold.”

Silver futures for December delivery fell $6.477, or 18 percent, to $30.101 an ounce on the Comex, the biggest drop since October 1979.

“We’re in a ‘risk-off’ mentality,” Bill O’Neill, a co- founder of Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “Some of it certainly is a case of sell the winning assets to meet the margin calls for the losing assets. We’re seeing massive selling across the spectrum in commodities.”

Today, CME Group Inc., the Comex owner, raised margins to trade gold, silver and copper futures.

Crude oil and corn had the biggest weekly drops since May. Coffee prices have tumbled 20 percent this month, and cocoa is down to a one-year low.

Global economy pushed to the brink

Time is running out to find a solution to the eurozone crisis and prevent another global recession, finance ministers warned on Friday, as they hinted that discussions were under way to boost the firepower of European rescue funds.

Financial markets experienced another day of intense volatility as investors struggled to interpret an emergency statement from the Group of 20 leading economies, which met on the sidelines of the International Monetary Fund and World Bank meetings in Washington.

Investors were initially unimpressed by the G20’s message of support for the global economy, but several said they did not want to get caught out should policymakers unexpectedly decide on a radical policy response.

Gold continued to slide sharply and US oil prices traded below $80 a barrel, their lowest in more than a year. Shares rallied modestly in Europe and the US, accompanied by selling in government bonds and the dollar.

Many finance ministers reported a greater sense of urgency in discussions on the eurozone overnight on Thursday.

“Patience is running out in the international community,” said George Osborne, UK chancellor of the exchequer. “The eurozone has six weeks to resolve this political crisis.”

Eurozone governments have pledged to pass legislation by mid-October to make their rescue fund, the European financial stability facility, more flexible and are discussing ways to “maximise its impact in order to address contagion”.

 

European Union officials are warming to the idea that the EFSF could be “leveraged” to increase its strength, perhaps by guaranteeing larger European Central Bank purchases of Spanish and Italian sovereign debt, in an effort to isolate the two countries from the more intractable Greek debt crisis. François Baroin, French finance minister, said policymakers “need the right firewall to prevent contagion” and can discuss giving the EFSF “the necessary strength”.

Jean Claude Trichet, ECB president, delivered a robust defence of Europe’s handling of the crisis without hinting at new action the ECB might take. “We are not blind and we are not hiding what we see in the present situation,” he said.

Investors are bracing themselves for more ECB action, possibly next week or in early October. JPMorgan analysts predicted the ECB would cut interest rates by 50 basis points at its October meeting, while members of the ECB’s governing council hinted they could reintroduce 12-month loans to eurozone banks.

“I am very confident they’re going to move in the direction of expanding (their) effective financial capacity,” added Tim Geithner, US Treasury secretary. “They’re just trying to figure out how to get there in a way that is politically attractive.”

Even as discussions focused on containing the crisis, German officials insisted on balancing talk of a beefed-up EFSF by lobbying for reduced government borrowing. Wolfgang Schäuble, German finance minister, said a rejection of further fiscal stimulus was “widely shared” in the G20.

News Corp. Unit Sued in London by ‘A. Coulson’

he News Corp. (NWS)unit that published the Sun and the now defunct News of the World, was sued in London by a person identified only as “Mr. A. Coulson.”

The lawsuit was filed yesterday, according to court filings. Former News of the World editor Andy Coulson, who resigned as U.K. Prime Minister David Cameron’s press chief in January, was arrested in July as revelations widened that reporters hacked into the voice mails of celebrities, politicians and murder victims, and may have bribed police for stories.

News Corp.’s U.K. unit was considering whether it should stop paying Coulson’s legal bills following reports that the company made some payments to him after he became Cameron’s director of communications, the Guardian newspaper said in August. Glenn Mulcaire, the private investigator jailed in 2007 over phone hacking, sued the company last month after the company stopped paying his legal fees.

Available court documents didn’t specify the full first name of Coulson or the subject of the lawsuit.

Coulson’s lawyer, Jo Rickards, didn’t immediately respond to an e-mail seeking comment. News Corp.’s U.K. unit declined to immediately comment.

The case is A Coulson v. News Group Newspapers Ltd., case no. 11-3525, High Court of Justice, Queen’s Bench Division (London).