US to probe Toyota Prius brake problems

　　

　　

　　

　　The US Transportation Department has opened an investigation into brake problems in the 2010 Toyota Prius.

　　The move follows an admission from Toyota that it had had a problem with the brake system in the hybrid, which the carmaker said was fixed in January.

　　The National Highway Traffic Safety Administration has received 124 reports from drivers about the issue, including four of crashes.

　　There have been no reports of any such accidents in the UK.

　　The investigation will look into allegations of momentary loss of braking capability while travelling over uneven road surfaces, potholes or bumps. However it will not suspend sales.

　　This latest alarm for the beleaguered carmaker - the world's number one - follows worldwide recalls of almost eight million cars due to separate floor mat and pedal problems.

　　No Prius recall

　　

　　Toyota vehicles made and sold in South Africa are the latest to be recalled, a company spokesman has told the BBC.

　　The Japanese government has also ordered Toyota to investigate brake problems but the company says it was "alleviated" at the end of last month by making changes to the software in the braking system.

　　Toyota's managing officer, Hiroyuki Yokoyama, said although the company had found a clash between the anti-lock brake system (ABS) and regenerative braking, more investigation needed to be done before deciding on whether to issue a recall on the Prius.

　　Earlier, he told a press conference in Japan: "As for whether this will mean a recall, we are currently looking into what we can do as soon as possible for our customers to buy our vehicles. However, we hope for a bit more time before deciding on specific measures."

　　As depressing the brakes further activated normal braking, Toyota said the glitch was not legally a safety hazard and said it had received no reports of any accidents related to it.

　　Mr Yokoyama said Toyota was listening and responding to its customers' concerns: "When we've been told something by our customers, our goal is to respond as soon as possible, and we have already changed the design for the Prius from January."

　　Toyota's admission follows 200 reports of complaints from drivers in the US and Japan. There have been no braking problems reported in Europe, the carmaker said.

　　In the UK, it confirmed that it would be nearly a week before it could start repairs on cars with defective accelerator pedals.

　　Profits surge

　　Earlier, Toyota reported a huge swing back into profit in the last quarter of 2009.

　　Its net income was 153 billion yen ($1.68bn; £1.06bn) after a loss of 164 billion yen a year earlier.

　　Toyota confirmed its estimate that it would lose about $2bn (£1.23bn) in costs and lost sales from its worldwide recall of potentially faulty vehicles.

　　It added it had not yet worked out the cost of the latest reports of brake problems with the new Prius.

　　Still growing

　　However, the firm said it still expected higher sales and to make a profit this year, despite the heavy blow to the company's reputation.

　　

　　Shares in Toyota hit their lowest level for 10 months on the Tokyo Stock Exchange on Thursday, with continuing concern about the safety of the company's vehicles.

　　Its eight million recall total includes 1.8 million cars across Europe - 180,865 of those in the UK.

　　The seven models being recalled in Europe are the Aygo, iQ, Yaris, Auris, Corolla, Verso, and Avensis, and cover manufacturing dates going back to February 2005.

　　In the US, they are the RAV4, Corollas, Matrix, Avalons, Camrys, Highlander, Tundra, and Sequoia, and cover dates going back to October 2005.

　　The parts needed to repair the cars will not arrive in the UK until next week, with the first repairs scheduled for Wednesday. Toyota says the process, which should only be carried out by its dealers, takes about half an hour.

　　The carmaker said it was not aware of any accidents resulting from the issue and that only 26 incidents involving accelerator pedals had been reported in Europe.

　　In a separate development, Ford said on Thursday it would repair up to 17,600 of its Ford Fusion and Mercury Milan hybrids built before mid-October that could suffer braking problems

 

Bank of America sued over Merrill Lynch bailout

　　

　　

　　Legal action has begun against Bank of America and its former bosses, accusing them of duping investors and taxpayers during the takeover of Merrill Lynch.

　　The defendants are accused of intentionally withholding details of huge losses Merrill was suffering.

　　New York state officials have filed the action against the bank, former chief executive Kenneth Lewis and former chief financial officer Joseph Price.

　　Bank of America said the charges were "regrettable" and lacked merit.

　　"The evidence demonstrates that Bank of America and its executives, including Ken Lewis and Joe Price, at all times acted in good faith and consistent with their legal and fiduciary obligations," a spokesman said.

　　He added that US financial watchdog the Securities and Exchange Commission (SEC) had access to the same evidence as New York state officials and had found no basis to bring charges.

　　After the Merrill bailout, Bank of America received $45bn (£28.5bn) in government funds.

　　'Arrogant scheme'

　　According to the lawsuit, the accused withheld the full details of Merrill's financial strife in order that its shareholders would approve the merger.

　　They had then "manipulated" the federal government by claiming they would back out of the deal unless US bailout funds were received, it was alleged.

　　"This merger is a classic example of how the actions of our nation's largest financial institutions led to the near-collapse of our financial system," said New York State attorney general Andrew Cuomo.

　　"Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large.

　　"This was an arrogant scheme hatched by the bank's top executives who believed they could play by their own set of rules. In the end, they committed an enormous fraud and American taxpayers ended up paying billions for Bank of America's misdeeds."

　　Earlier on Thursday, the SEC said Bank of America had agreed to pay $150m to settle complaints over its handling of the merger.

　　Last month Bank of America reported a net loss of $194m in the last three months of 2009. That compared with a loss of $1.8bn in the same period a year earlier.

　　It added that it had repaid the $45bn government bailout money it had received but, taking the impact of this into account, it made a loss of $5.2bn.

 

Economy and job worries hit stock markets and oil

　　

　　

　　Concerns about the US economy and the potential spread of debt problems in Europe led to large stock market falls.

　　On Wall Street, shares suffered their worst losses in nine months. Key European markets lost more than 2% Spain and Portugal fell about 5%.

　　In the US, worse-than-expected levels of unemployment benefit claims added to worries about the pace of recovery.

　　Analysts said the negative sentiment was largely behind the price of US crude oil falling sharply.

　　Brent crude fell by $3.83 to $73.14 a barrel in New York having gone as low as $71.47. In London, Brent crude slipped by $3.79 to $72.13 a barrel.

　　The discouraging jobs news had dampened hopes of a near-term economic recovery, said Fadel Gheit, an oil analyst at Oppenheimer & Co.

　　"When people say there's a light at the end of the tunnel, it's getting to be a very dim light and a very long tunnel," he said.

　　Psychological barrier

　　European markets suffered as a lack of demand for government bonds in Portugal re-ignited concerns that countries such as Portugal and Greece would not be able to fund their national deficits without a bail-out.

　　Investors moving out of the euro saw it slide to its lowest level against the dollar in more than eight months.

　　However Jean-Claude Juncker, head of the eurogroup of finance ministers, said on Thursday that neither Spain nor Portugal posed risks to eurozone stability.

　　In the US, where claims for unemployment benefits rose by 8,000 to 480,000 last week according to Labor Department figures, markets reacted badly. It was the fourth increase in the past five weeks and the number of lost jobs was the highest in two months.

　　The Dow Jones index fell by 268.4 points, 2.6%, to close at 10,002.2 points having briefly dipped below the psychological 10,000 points barrier in late trading for the first time since November last year.

　　Meanwhile the Nasdaq index slid 3% to 2,125.43.

　　Investors had been "spoiled" by almost non-stop gains since March last year said Bob Doll, global chief investment officer for equities at BlackRock.

　　"The consolidation or corrective phase is probably not over," he added.

　　In London, the FTSE 100 index closed at its lowest level in three months, shedding 2.2%, 113.8 points to 5,139.31.

　　Meanwhile France's Cac-40 index slipped 2.8% and Germany's Dax-30 lost 2.5%.

　　The falls in European and US markets were similar to those experienced in mid-January, when China's attempts to curb its growth brought concerns that other world economies would feel the impact.

Shell profits fall sharply on weak oil demand

　　

　　

　　Anglo-Dutch oil giant Royal Dutch Shell has reported a sharp fall in profits due to falling demand for oil from a weak global economy.

　　Profits between October and December last year were $1.2bn (£755m), down by 75% from the $4.8bn the company made a year earlier.

　　For the full year, Shell made $9.8bn, compared with $31.4bn in 2008.

　　Earlier this month, rival BP reported fourth quarter profits of $3.45bn, up by a third from a year earlier.

　　Shell also announced plans to cut 1,000 jobs as a part of a $1bn cost-cutting programme in 2010.

　　The disappointing results pushed Shell shares down 2.1% in early trading in London, more than any other stock.

　　"Our fourth-quarter 2009 results were impacted by the weak global economy," said Shell's chief executive Peter Voser.

　　"Oil prices have increased compared with a year ago, but gas prices and refining margins have declined sharply, because of weaker demand and high industry inventory levels."

　　He added that the outlook for 2010 was uncertain.

Bank of England's time-out for quantitative easing plan_By BBC

　　

　　

　　The Bank of England has decided against further quantitative easing (QE), the policy designed to stimulate growth in the UK economy.

　　Under QE, the Bank has pumped new money into the economy by buying assets such as government bonds, as a way to boost lending by commercial banks.

　　Last week, it revealed it had spent all of the £200bn it created for QE.

　　The Bank also kept interest rates on hold at a record low 0.5% for the 11th consecutive month.

　　'Further purchases'

　　

　　While halting QE, the Bank said the £200bn already injected into the economy through the programme would "continue to impart a substantial monetary stimulus to the economy for some time to come".

　　But it did not close the door on further spending.

　　"[The Bank] will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them."

　　One area that it will be looking at is banks' lending to businesses and consumers, as QE was designed to help boost lending.

　　"Conditions for lending in this country, especially to small and medium-sized businesses, are still much weaker than [the bank] would have wanted," said the BBC's economics editor Stephanie Flanders.

　　

　　Analysts said concerns about rising inflation were one factor in the Bank's decision to suspend QE.

　　"Inflation is considerably stronger than the Bank had expected and there are concerns that it won't get back within target [if QE continued]," Jason Simpson from Royal Bank of Scotland told the BBC.

　　Weak growth

　　Official figures in January showed that UK consumer prices rose in December by 2.9%, their fastest annual pace for nine months and above the Bank's 2% target.

　　Bank Governor Mervyn King warned last month inflation was "likely to rise to over 3% for a while", and could go even higher if energy prices and indirect taxes were to increase further, but added that it "should return to target in the medium term".

　　Although the UK did officially come out of recession in the fourth quarter of 2009 - ending six consecutive quarters of economic decline - the growth was just 0.1%, much less than expected.

　　For that reason, most analysts expect rates to stay at 0.5% until at least the second half of 2010 for fear of the UK falling back into recession.

　　Quantitative Easing

　　

　　First, with the permission of the Treasury, the Bank of England creates lots of money. It does this by just crediting its own bank account. It has created £200bn in this way.