Tiger Airways in talks with regulators over grounding

Tiger Airways planes have been grounded in Australia by regulators on safety concerns

Tiger Airways will hold crisis talks with Australian regulators to try and counter safety claims and resume its domestic operations.

The Singapore-based low cost carrier's aircraft were grounded in Australia on Saturday by the Civil Aviation Safety Authority (CASA) on safety concerns.

The disruptions come at the start of peak school holiday season, which means less intense price competition.

Shares in Tiger Airways in Singapore plunged almost 20% on Monday.

The airline's domestic Australian flights will be grounded until July 9, but its flights to Singapore are not affected.

Shares of competitors rose sharply as a result, with Virgin Australia jumping 10.5% and Qantas climbing 6.5%.

Chief executive Tony Davis has flown to Australia for talks with the CASA.

The airline said in a statement to the Singapore Stock Exchange that he had been charged with getting its planes back in the air.

Tiger said Mr Davis was going to focus on "assisting Tiger Airways Australia to resume operations as soon as possible."

Tiger operates 10 Airbus A320s domestically in Australia. It moves about 9,000 passengers a day on 60 domestic flights.

It is the first time in Australia's aviation history that an entire fleet has been grounded.

Safety concerns

The grounding of the fleet came after the CASA said its concerns about safety had gone unaddressed by Tiger.

"CASA believes permitting the airline to continue to fly poses a serious and imminent risk to air safety," the regulator said in a statement.

The regulator said it had been closely monitoring the airline and had sent a notice threatening to suspend or cancel its licence over the safety issues.

"The suspension of Tiger Airways Australia follows the issue of a show cause notice to the airline in March 2011."

That notice included instructions for Tiger to improve the proficiency of its pilots, give them more training and to address issues such as fatigue management.

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Sony ranks as Asia's top brand, says Campaign magazine

Despite Asia's much hyped appetite for luxury goods, no designer brands were in the the top 25.

Sony has been ranked top in a survey of Asia's most valuable brands by the marketing magazine Campaign.

The company gained the top spot despite hacking attacks earlier this year that compromised the personal details of 100 million PlayStation users.

Japanese and South Korean consumer electronics brands occupied the top five slots, with Sony trailed by Panasonic, LG, Samsung and Canon.

No Chinese brand names cracked the top 100.

White goods and electronics maker Haier was the highest Chinese brand at 102.

"This year's survey reiterated the challenges Chinese and Indian brands are facing to gain consumer recognition beyond their home markets," the report said.

The highest ranked Indian brand at 89 was Amul, which makes milk products and ice cream.

Source: Campaign

The top five brands were unchanged from last year, reflecting their everyday appeal among Asia's shoppers.

And despite Asia's much hyped appetite for luxury goods, there were no luxury brands in the top 25. Chanel, Rolex and BMW ranked 30th, 42nd and 49th respectively.

Even though Prada listed on the Hong Kong stock exchange this year, it fell almost 100 places from last year's survey to rank 348th.

In China, Taiwan instant noodle brand Master Kong was the most commonly recalled brand after Sony.

The survey was conducted by market research firm TNS, which surveyed 3,322 consumers in Australia, China, India, Japan, Hong Kong, Malaysia, Singapore, Taiwan, South Korea and Thailand.

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Japan finds rare earths in Pacific seabed

The number of seabed mining applications is a growing focus for environmentalists' concern

Japanese researchers say they have discovered vast deposits of rare earth minerals, used in many hi-tech appliances, in the seabed.

The geologists estimate that there are about a 100bn tons of the rare elements in the mud of the Pacific Ocean floor.

At present, China produces 97% of the world's rare earth metals.

Analysts say the Pacific discovery could challenge China's dominance, if recovering the minerals from the seabed proves commercially viable.

The British journal Nature Geoscience reported that a team of scientists led by Yasuhiro Kato, an associate professor of earth science at the University of Tokyo, found the minerals in sea mud at 78 locations.

"The deposits have a heavy concentration of rare earths. Just one square kilometre (0.4 square mile) of deposits will be able to provide one-fifth of the current global annual consumption," said Yasuhiro Kato, an associate professor of earth science at the University of Tokyo.

The minerals were found at depths of 3,500 to 6,000 metres (11,500-20,000 ft) below the ocean surface.

Environmental fears

One-third of the sites yielded rich contents of rare earths and the metal yttrium, Mr Kato said.

The deposits are in international waters east and west of Hawaii, and east of Tahiti in French Polynesia.

Why rare earths are so important to the world's economy

Mr Kato estimated that rare earths contained in the deposits amounted to 80 to 100 billion tonnes.

The US Geological Survey has estimated that global reserves are just 110 million tonnes, found mainly in China, Russia and other former Soviet countries, and the United States.

China's apparent monopoly of rare earth production enabled it to restrain supply last year during a territorial dispute with Japan.

Japan has since sought new sources of the rare earth minerals.

The Malaysian government is considering whether to allow the construction of an Australian-financed project to mine rare earths, in the face of local opposition focused on the fear of radioactive waste.

The number of firms seeking licences to dig through the Pacific Ocean floor is growing rapidly.

The listed mining company Nautilus has the first licence to mine the floor of the Bismarck and Solomon oceans around Papua New Guinea.

It will be recovering what is called seafloor massive sulphide, for its copper and gold content.

The prospect of deep sea mining for precious metals - and the damage that could do to marine ecosystems - is worrying environmentalists.

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Australian retail sales dip, rates to be kept on hold

Analysts were expecting a rise in retail sales

Australian sales of retail goods, such as clothes and shoes, fell unexpectedly in May suffering the biggest drop in seven months.

Retail sales dropped 0.6% compared to the previous month, according to the bureau of statistics. Most analysts had expected a gain of 0.3%.

Other figures out on Monday showed that new home approvals also fell for a second straight month.

The data will strengthen arguments for keeping interest rates on hold.

The Australian dollar weakened slightly after the figures were released.

'Softness across sectors'

The Reserve Bank of Australia (RBA) meets on Tuesday to decide whether to raise interest rates from the current level of 4.75%.

Analysts say that weak consumer demand translated into the drop in retail sales.

"The softness was across sectors and regions, so there's little sign of the pick-up in economic momentum that the RBA was expecting," said Brian Redican of Macquarie Bank.

"The consumer clearly doesn't need any more encouragement from the RBA to stay on the sidelines. It lessens the need for another hike."

In April, retail sales rose 1.2%, revised up from 1.1%. Analysts were expected a pull back after the big bounce but the drop was much more than expected.

Making matters worse is the data on building approvals which fell 7.9% in May.

"All up it's a pretty weak set of data and not encouraging at all," said Michael Turner of RBC Capital Markets.

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Europe's insurers found to be 'robust'

The French insurance industry owns some 9bn euros in Greek debts

A stress test of Europe's biggest insurers has found them to be "robust" despite exposure to Greek debt.

More than 90% of the 221 firms examined met minimum solvency standards even in the most adverse scenario considered.

However, the exercise identified key vulnerabilities, including exposure to sovereign debts, such as Greece's, and natural catastrophes.

The tests were done by a newly-created regulator, the European Insurance and Occupational Pensions Authority.

None of the insurance companies - which comprise at least 50% of the market in each country - was identified.

'Distraction'

Insurance companies have large exposures to Greek and other troubled European government debt.

Not only have the firms invested in Greek bonds, they are also thought to have written insurance on Greek credit risk in the form of credit derivatives.

French insurers own some 9bn euros (£8bn, $13bn) in Greek government debt.

Meanwhile, German insurers have been asked by their government to participate in a plan to relend Greek debts coming due in the next two years, with Allianz having agreed to provide 300m euros.

German insurer Allianz has offered to contribute 300m euros towards a new bail-out of Greece

Besides sovereign debt exposure, the risks facing the insurance industry included:

• big losses on shares and other investments
• a sharp rise in interest rates
• a sharp rise in inflation, meaning the value of insurance claims outstrips premium payments
• major natural disasters
• a failure of the reinsurance market, which insurers rely on to share losses

It is second such set of stress tests for insurance companies, which shadow a similar exercise being carried out on the big banks by the European Banking Authority.

However, unlike the banks being tested, insurers that fail the test will not yet be formally required to top up the capital they hold to absorb future losses.

The latest tests for insurers come at a time when they are still fleshing out a new set of Europe-wide rules for the industry.

The Association of British Insurers has called the stress tests

"The UK insurance industry is currently under great pressure to implement an enormously complex regulatory framework," said the ABI's Peter Vipond.

"Rather than demand stress tests on the basis of a yet to be agreed framework, it would be better to focus on finalising the proposed rules and helping the industry put the infrastructure in place to make them work by 2013," he said.

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Greece crisis: S&P warns of debt default

There have been violent protests against the austerity measures in Greece

Standard & Poor's has warned that current proposals for restructuring Greece's debt would effectively constitute a default.

The ratings agency said plans for the private sector to roll over debts could trigger a default under its ratings criteria.

Last week, the Greek parliament passed tough austerity measures to secure further financial aid.

However, there is a growing sense that a debt restructuring is inevitable.

German and French banks have already agreed in principle to roll over loans to Greece in order to give the country more time to repay its debts.

This could involve effectively reinvesting the proceeds of maturing Greek debt into newly-issued bonds.

Standard & Poor's said that, depending on the circumstances, it viewed "certain types of debt exchanges and similar restructurings as equivalent to a payment default".

The options laid out so far for restructuring Greek debt would constitute such a default, it said.

Shares in European banks lost ground following the downgrade.

In the UK, Royal Bank of Scotland and Lloyds Banking Group both lost about 2.3%, in France Credit Agricole and Societe Generale fell about 2%, while in Germany Commerzbank slipped 1.7%.

Last month, Standard & Poor's downgraded Greece to CCC from B.

Fresh bail-out

Over the weekend, eurozone finance ministers approved the latest tranche of emergency help for the Greek economy.

They will release 12bn euros (£10.4bn, $17.4bn) in the next two weeks to help Greece meet spending commitments and avoid defaulting on its huge debts.

Last week, the Greek parliament passed tough austerity measures demanded by the European Union (EU) and International Monetary Fund (IMF).

MPs backed the measures despite angry protests on the streets of Athens.

Last May, the EU and IMF provided 110bn euros in emergency loans to Greece, and agreed last month to provide another 120bn euros in loans to try and help the country though its debt crisis.

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