Mexico City Shaken by Magnitude-6.5 Quake

A magnitude 6.5 earthquake centered in the southern Mexican state of Guerrero shook the capital of Latin America’s second-biggest economy. Two people were killed in Guerrero, the country’s civil protection agency said.

The quake occurred at 7:47 p.m. local time and was centered 166 kilometers (103 miles) southwest of Mexico City, according to the U.S. Geological Survey.

“All services in Mexico City are functioning normally,” Mexican President Felipe Calderon said via the Twitter website at approximately 10 p.m. An 18-year old was killed in Iguala, Guerrero, when a restaurant roof collapsed, and a 25-year old was killed on the Chilpancingo-Acapulco highway, the civil protection agency said in an e-mailed statement.

Petroleos Mexicanos, the state-controlled oil company known as Pemex, said its infrastructure wasn’t damaged. Mexico City Mayor Marcelo Ebrard said on Twitter that the capital’s airport, subway and the water systems are functioning normally.

The temblor left 30 neighborhoods in Mexico City without power, the Excelsior newspaper reported, citing the federal electricity commission. Police chief Manuel Mondragon y Kalb said in an interview with Foro TV two buildings in the city were reported to be damaged, including one that was leaning on another structure. He confirmed power outages in some parts of the city.

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net; Ben Bain in New York at bbain2@bloomberg.net

To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net

UN economists fear 2nd recession of global economy

United Nations, Dec 2 (ANI): The global economy is at a risk of facing another major downturn, a report has suggested.

The 2012 World Economic Situation and Prospects (WESP) report, which complied by UN economists, said 2012 would be crucial in shaping the economic future.

"The situation in the world is rather grim. We have a situation where we may well be at risk of a double dip. In any case, it is very likely that there will be further slowdown," UN Assistant Secretary-General Jomo Kwame Sundaram said.

The report predicted three possible scenarios for the global economy in future: a baseline projection, as well as optimistic and pessimistic projections.

It predicted that developing nations, expanding by 5.4 percent in 2012 and 5.8 percent in 2013, would be major drivers of growth, Xinhua reports

These figures, however, indicate a slowdown from earlier growth figures.

The report also said high unemployment, particularly in developed countries, is adversely affecting growth, and added fiscal austerity measures that have been passed in response to high public debt in developed countries were partly responsible for the cause.

The report said additional fiscal stimulus could help counter the crisis.

"If there's no more fiscal stimulus there's no other factor that will keep up the demand, particularly in developed countries, " Sundaram said, adding that without stimulus, unemployment may grow and economic growth may decrease, which would only make national debt problems worse.

The report calls on countries to effectively coordinate their efforts to counter global economic problems. (ANI)

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Pollution-Curb Wrangles Send Carbon Credits Slumping; CO2 Permits Slide

Pollution limits in the only treaty curbing greenhouse gases may lapse at the end of next year because of a rift between richer countries and developing ones over how to combat global warming.

China, India, Brazil and their allies are pushing for an extension of theKyoto Protocol, which requires industrialized nations to cut emissions through 2012. Japan, Canada and Russia refuse to sign that plan, and the U.S. never ratified it.

The impasse risks undermining the $142 billion a year market designed to cap carbon-dioxide linked to burning fossil fuels, which are blamed for damaging the climate, and stunting investments in renewable energy that jumped 32 percent to a record $211 billion last year. Negotiators from 190 countries will gather for two weeks of United Nations climate talks starting Nov. 28 in Durban, South Africa.

“We need an international agreement to have any formal new targets, and it’s equally clear that those new targets are a long way from being agreed,” Henry Derwent, president of the International Emissions Trading Association and a former U.K. climate envoy said on Nov. 21. “We are just going have to live without targets for a reasonable period of time.”

Carbon Permits Slump

European Union carbon permits dropped as much as 13 percent today, losing more than one-fourth of their value this week, as slower economic growth and Europe’s debt crisis held back factory production. United Nations emissions credits plummeted as much as 16 percent to a record low of 4.53 euros in a move that reflected concerns about the outcome of the summit, said Per Lekander, a Paris-based analyst at UBS AG.

“In the middle of the most serious financial crises since World War II and with several world leaders facing elections, climate mitigation is on the back-burner and neither Asia nor U.S., and possibly also not Europe, will sign up to anything which is costly,” Lekander said.

“It would be a big surprise to me if Durban didn’t become another Copenhagen,” he said, referring to the 2009 summit that disappointed investors.

The talks under the UN Framework Convention on Climate Change aim to outline a future for the market-based mechanisms including carbon trading sketched out in the 1997 Kyoto treaty. They’re also talking about how to implement a fund that would channel part of the $100 billion a year industrial nations have pledged in climate aid to developing nations.

‘Very Low Chance’

Last year’s talks in Cancun, Mexico, left open the most difficult issue of whether to extend emissions limits in Kyoto or start afresh with a new treaty. Developing nations such as China and India didn’t have requirements for cutting back carbon under Kyoto and since have become two of the three biggest polluters.

“With current positions that countries are starting with in Durban, I’d give Kyoto extension a very low chance,” said Niklas Hoehne, director for energy and climate policy at Ecofys, a Dutch consultant that has the EU among its clients. “This is the last moment to save” the Kyoto treaty, and “if it’s lost, we’re in a bottom-up mode when everybody proposes what they want to do -- a different and weaker system.”

Failure to extend Kyoto would cast a shadow over long-term prospects for limiting global warming. Should countries give up on agreeing to targets after the current limits expire in December 2012, the treaty’s relevance would diminish.

President Barack Obama isn’t scheduled to attend the talks in Durban and has stepped back from pushing climate measures through the U.S. Congress after the Senate rejected carbon cap- and-trade legislation.

Kyoto ‘Lessons’

“One of their lessons from the Kyoto experience was they won’t get ahead of the U.S. Congress,” said Dirk Forrister, head of President Bill Clinton’s 1997 task force on climate. “We have a divided Congress. Some want action on climate change. Others don’t want to mention the words.”

The EU is asking the talks to agree on a timeline for adopting a new treaty that would replace Kyoto. The 27-nation bloc, which has adopted a law to cut greenhouse gases by 20 percent in 2020 compared with 1990 levels, is ready to sign up for a new commitment period under Kyoto if other countries agree on when they’ll adopt a legally binding global deal.

EU Climate Commissioner Connie Hedegaard has ruled out moving without promises for emissions cuts from other nations.

“Let’s be frank: At best we could only get the EU, Norway and maybe two or three more countries to sign up for a second Kyoto period,” Hedegaard said this week in Oslo. “That will not make any difference whatsoever for the overall trend in global emissions. It would also take away pressure from other countries, both developed and developing, to engage in more ambitious climate action.”

China, EU Talks

A road map to a new UN treaty by 2015 would be “the most optimistic” outcome of the Durban summit and progress on it will rely on talks between China and EU, according to Bloomberg New Energy Finance. “Although by no means aligned on their expectations and there’s a long way to go, these two countries offer the best hope for constructive talks,” BNEF analysts said today in a report.

China says goals for developing countries should be voluntary, and India urges industrialized nations to take account of their historical responsibility to clean up the emissions they created in past decades.

“We in developing countries are not spoiling the party,” Indian Environment Minister Jayanthi Natarajan said in New Delhi. “We’re not refusing to cooperate. You all know how far we’ve walked, how far we’ve gone to cooperate, how much action developing countries are taking voluntarily to reduce their carbon footprint.”

South Africa, which is hosting the climate talks, wants to avoid having the effort to constrain global warming fizzle on its soil.

“We cannot from conference to conference repeat the same rhetoric without getting to a practical implementation,” Cedric Frolick, house chair in the South African parliament, said in an Oct. 31 interview. “We simply cannot afford for Durban to become the graveyard of the Kyoto Protocol.”

To contact the reporter on this story: Ewa Krukowska in Brussels atekrukowska@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

Opening up retail to help growth, curb inflation: RBI

CHANDIGARH (Reuters) - India's growth story is still "credible" and the move to open up the economy to global supermarket chains will help growth and control inflation, the central bank governor Duvvuri Subbarao said on Friday.

"It's commendable that government has taken the initiative. Let's hope that it will improve the logistics chain and supply chain management in agriculture," Subbarao said in a speech in the north-western city of Chandigarh.

Late Thursday, the government approved 51 percent foreign direct investment in the supermarket sector, paving the entry of firms such as Wal-Mart , Tesco and Carrefour into one of the world's largest untapped markets.

"It's important for not only raising overall growth but also important for containing inflation and improving quality of life over 50 percent of population," Subbarao said.

Opening up the retail sector to global players has been a much awaited reform but has been long hobbled by political differences. The Congress-led government's biggest ally Trinamool Congress is opposed to the move.

The central bank chief said that inflation needs to be brought down to 5 percent initially and then even lower, consistent with India's integration with global economy.

Subbarao said the current inflation situation is a consequence of both supply shocks and demand pressures.

Monetary tightening needs to be supplemented by supply side measures to raise potential economic output, he said.

"Raising agricultural production and productivity is, important for containing price pressures, raising rural incomes and making growth more inclusive," Subbarao said.

India's inflation, which is largely driven by high food and global commodity prices, plus expansive fiscal policies, is the highest among major economies in Asia. It's wholesale prices rose more than expected in October as the cost of food and fuel increased.

The high inflation print, above 9 percent for the 11th month, was further evidence of the Reserve Bank of India's inability to achieve a breakthrough in its fight against inflation despite 13 rate rises since March 2010.

In its October 25 mid-quarter review of monetary policy, the RBI had said that a rate hike may not be warranted if inflationary pressures start to ease by December.

Slowing growth, stubbornly high inflation, rising interest rates, political gridlock, gloom in the West and a sliding rupee have conspired to dampen investor and corporate sentiment in Asia's third-largest economy.

The RBI has lowered the country's growth forecast to 7.6 percent for the current fiscal year ending in March from 8 percent previously.

Subbarao says a reduction of federal and state fiscal deficits are important steps for a stable macro environment.

India's fiscal deficit during April to September was 2.92 trillion rupees, or 70.8 percent of the full-year target, government data showed. Most expect it to breach the 4.6 percent of GDP target for the fiscal year.

The government said it would sell debt worth 2.2 trillion rupees, sharply above the budgeted 1.67 trillion rupees in the October to March period.

Subbarao said that India being a emerging economy with a partly open capital account, floating exchange rate and a monetary policy that takes into account global developments, has to continue to manage the "impossible trinity."

The impossible trinity refers to the economic hypothesis that a country simultaneously cannot have a fixed exchange rate, an open capital account and an independent monetary policy.

RUPEE VOLATILITY TO REMAIN

The central bank chief said the volatility in the foreign exchange market will remain until the euro zone crisis is resolved.

"Until there is a credible solution to the sovereign debt problem in Europe, we will see movements in the exchange rate," Subbarao said.

He added that the central bank is watching the rupee, but could not say whether it will intervene in the forex market directly.

The rupee has skidded nearly 17 percent from a 2011 high reached in late July as risk-averse investors flee emerging markets, increasing the difficulties for a government already struggling with high inflation, slowing economic growth and a widening trade gap.

The rupee touched an all-time low of 52.73 on Tuesday and state-run banks were spotted selling dollars in the market in recent sessions, sparking talk of RBI intervention.

Wednesday, RBI deputy governor Subir Gokarn said intervention has been aimed at smoothing sharp movements in the rupee.

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