Euro debt market jitters worsen

8 July 2011 Last updated at 12:19 GMT Mr Tremonti's future is looking uncertain The cost of borrowing for debt-laden Portugal, the Irish Republic and Italy hit new highs on Friday.

Greek debts also sold off, reversing a recent rally on hopes of a new rescue.

Financial markets were reacting to the European Central Bank's decision to raise interest rates, as well as political developments in Italy.

Italian economy minister Giulio Tremonti, a key figure in shoring up the country's finances, has been drawn into a corruption scandal.

Corruption charges

There is growing speculation that the economy minister may have to step down after Neapolitan prosecutors requested an arrest warrant for his close associate, Marco Milanese, on corruption charges.

The minister - who is seen as a stalwart defender of budget discipline - is seen as increasingly isolated within the Italian government.

Prime minister Silvio Berlusconi has said he will amend Mr Tremonti's draft budget in parliament, criticising his own minister:

"He is worried about the markets, I understand him. But I always remind him that in politics the result is made up of consensus and votes. He isn't interested in consensus, but we are."

Italy has seen a sharp rise in its 10-year cost of borrowing over the last week, rising from 4.85% to 5.3% - suggesting markets now view the country as almost as risky as recession-hit Spain, which must pay 5.65%.

Short-lived respite

Meanwhile Greece, the Republic of Ireland and particularly Portugal have seen the value of their debts in financial markets plummet further.

Their implied costs of borrowing in markets for three years now stand at 28%, 16.3% and 18.6% respectively.

The latest sell-off comes as it became increasingly clear that the European Central Bank was more concerned with fighting inflation - which required an interest rate rise from 1.25% to 1.5% on Thursday - than in holding down borrowing costs for embattled governments.

It follows what had been a short-lived respite in the market. Borrowing costs had fallen briefly on expectations that the eurozone would arrange a second bail-out package for Greece after the parliament in Athens pushed through further painful austerity measures.

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Diageo eyes China's spirit market

28 June 2011 Last updated at 05:42 GMT British drinks giant Diageo takes control of Chinese liquor firm Sichuan Chengdu Quanxing.

Drinks giant Diageo has agreed a deal that will allow it to expand its business in China's fast growing spirits market.

Diageo will acquire an additional 4% stake in Sichuan Chengdu Quanxing Group (Quanxing) for 140m yuan ($22m; ?13m), taking its holding to 53%.

The deal will give Diageo an indirect control of ShuiJingFang, a famous brand of popular Chinese spirit Baijiu.

Baijiu accounts for more than 30% of China's alcoholic drinks market.

"We are privileged to have the unique opportunity to participate at scale in super premium Chinese white spirits, one of the largest, fastest growing spirits segments in the world," said Paul Walsh, Chief Executive of Diageo.

'Iconic Chinese brand' Continue reading the main story

We have managed to quadruple the sales of ShuiJingFang in the regional duty frees in Asia in the last two years”

End Quote Gilbert Ghostine Diageo While Baijiu's popularity within China has been on the rise, Diageo said it was confident of turning the spirit into an international success as well.

"We are fully committed to build ShuiJingFang into an internationally successful iconic Chinese brand," said Gilbert Ghostine, President of Diageo Asia Pacific.

Mr Ghostine said that the brand was already being sold at 14 regional airports and three regional airlines were also carrying it.

He added that Diageo had managed to start sales of the brand at Dallas and Chicago airports and was targeting sales at two additional US airports by the end of the year.

"We have managed to quadruple the sales of ShuiJingFang in the regional duty frees in Asia in the last two years," he said.

"It is going from strength to strength," he added.

Full control

Quanxing currently holds a 39.7% stake in ShuiJingFang.

Diageo said it is seeking approval from the China Securities Regulatory Commission (CSRC) to launch a mandatory tender offer (MTO) for the remaining shares of Shuijingfang.

China's economic growth has seen its liquor market expand at a rapid pace

"Once the CSRC approval has been received, Diageo will immediately launch the MTO for the outstanding shares of ShuiJingFang in accordance with Chinese takeover regulations," the company said.

Diageo said that it would offer 21.45 yuan per share, the minimum price permitted by Chinese takeover regulations.

The company will need to pay close to 6.6bn yuan ($1bn) if all the shareholders accept its offer.

"Diageo will fund the MTO through its diversified financing sources and strong global cash generation," the company said.

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Deadly blasts at Pakistan market

11 June 2011 Last updated at 22:34 GMT Local journalist Rahimullah Yusufzai says the blasts happened in a busy market area late at night

At least 34 people have been killed and 90 wounded after two explosions ripped through a market in the north-western Pakistani city of Peshawar, police say.

The blasts occurred just after midnight in an area of the city that is home to political offices and army housing.

The number of attacks by militants in Pakistan has risen sharply since al-Qaeda leader Osama Bin Laden was killed in a US commando raid last month.

On Thursday, a bombing on the outskirts of Peshawar left four people dead.

An explosive device was planted in a pile of rubbish by the roadside in the Matani area, police said. The victims included a woman and a child.

Remote

A senior police official in Peshawar, Dost Mohammed, told the Associated Press that the first explosion on Sunday had been relatively small, and had drawn rescue workers, police and several journalists to the scene.

Minutes later, a large explosion rocked the area, causing the fatalities and most of the injuries. Eighteen people were said to be in a serious condition in hospital.

Nearly 20 people were said to be in a serious condition in hospital

Jamal Khan, a 22-year-old student, was in his flat when the first blast happened. He was hit by flying debris by the second blast after rushing downstairs.

"The explosion was so huge I will never forget it all my life," he told AP. "It was deafening, and then there was a cloud of dust and smoke. When the dust settled, I saw people crying for help and body parts scattered everywhere."

Mr Mohammed said initial reports suggested the second blast was caused by explosives hidden in a vehicle and detonated by remote.

However, several police officials later said it might have been carried out by a suicide bomber on a motorbike.

The source of the first explosion is still unknown.

The AFP news agency said the apparent target was a supermarket. But the blasts also occurred close to a building containing the offices of several newspapers and across the road from those of the top political agent to Khyber, a volatile tribal region. There is also housing for soldiers nearby.

Rahimullah Yusfzai, editor of the News International newspaper, told the BBC he was in his office nearby when the blast went off.

He said the area had many shops and restaurants and was popular with families and students.

"First there was a small blast, we thought it was a gas cylinder which had exploded. Many people then ran towards the site of the blast and then the second big explosion took place which was heard far and wide," he said.

"This is how the militants operate - there is, in almost all cases, a smaller blast then a bigger one when the police and the media arrive."

The incident came as Afghan President Hamid Karzai visited the capital, Islamabad, for talks with senior Pakistani officials.

Speaking at a joint news conference, Pakistan's Prime Minister, Yousuf Raza Gilani, said his country would give Afghanistan all the support it could, as Kabul pursued peace talks with the Taliban.

Mr Gilani said Pakistan's only aim was to support the peace process.

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