Cyprus and Malta adopt the euro

A pavement is adorned with the euro in Malta's capital Valletta

Two Mediterranean island states, Cyprus and Malta, have begun using the euro, joining 13 other countries.

The countries' leaders made symbolic withdrawals of euros from cash machines just minutes into the New Year.

Major bank branches opened for a few hours in Cyprus despite the New Year holiday. The Maltese celebrated the euro's arrival with fireworks.

Cyprus and Malta have added just 1.2 million people to the number of Europeans using the single currency.

But they will have equal voting rights with the other 13 eurozone members at the European Central Bank.

Careful preparations

Both island nations prepared for the changeover thoroughly.

FACTS ABOUT MALTA Population: 407,000 Size: 316 sq km (122 sq miles), the smallest member of the eurozone GDP: 4.8bn euros (0.06% of total eurozone GDP) Biggest earners: Tourism, manufacturing but growth in financial services, IT Prime Minister Lawrence Gonzi is also Finance Minister Independent from UK in 1964

In Cyprus 300,000 currency converters were sent to households, while in Malta a euro telephone hotline has been running alongside 59 "euro centres".

The switchover in Cyprus will highlight the decades-old division between the south and the Turkish-controlled north of the island.

The Turkish lira remains the primary currency in northern Cyprus, which is outside the European Union and is recognised only by Turkey.

But Cyprus' euro coins are inscribed in both Greek and Turkish.

Aware of the previous experiences of some other eurozone members, Cyprus and Malta are watching retailers to ensure they do not use the changeover to round up their prices, contributing to inflation.

Euros will be accepted in Turkish-controlled northern Cyprus

The Cypriot government urged companies to round their prices down, while Malta signed 12 price stabilisation agreements with importers, which will last until March 2008.

Both the Maltese lira and the Cyprus pound will be legal tender until the end of January.

Commercial banks in Malta will exchange Maltese lira into euros free of charge until the end of March, and the central bank will allow exchange of lira notes until 2018.

In Cyprus, euros can be exchanged free of charge until the end of June and the central bank will allow exchange of pound notes until 2017.

Big benefits

Scrapping currency exchange costs and adopting a major currency raise hopes of a big boost to the islands' industries.

FACTS ABOUT CYPRUS Population: 778,000 (Greek Cypriots) Size (combined): 9,251 sq km (3,572 sq miles) GDP: 15.2bn euros (0.17% of total eurozone GDP) Biggest earners: Finance and tourism account for almost 80% GDP Independent from UK in 1960, Turkish northern Cyprus not part of EU

Malta is already enjoying a tourism boom, with double-digit growth expected this year, largely due to the arrival of low-cost airlines.

But it is also planning to become a magnet for hi-tech investment.

Several pharmaceutical companies have established research centres in Malta to develop generic copies of patented drugs.

And the German airline Lufthansa signed an agreement in 2007 for Malta to maintain and overhaul its planes.

The Cypriot Finance Minister, Michalis Sarris, has said the euro will benefit consumers and businesses alike because of the eurozone's low inflation, low interest rates and large market.

In the Turkish-controlled north many businesses have already begun accepting the euro and cross-border commerce is flourishing.

In 2003, the Turkish Cypriot authorities opened crossing points, prompting Turkish Cypriot shoppers to go south in search of greater choice and Greek Cypriots to head north for bargains and casinos.

The euro will also become legal tender on British military bases in Cyprus, the first part of sovereign British territory to adopt the currency.

Although the bases at Dhekelia, Episkopi and RAF Akrotiri are not officially part of the European Union, an estimated 10,000 Cypriots live or work there.

Residents use the shops, cafes and beaches on the bases, so the authorities in the sovereign base areas have decided to adopt the same rules as the Cypriot government.

Health Officials Seek Airline Passengers Who Shared Flight From India With Tuberculosis Patient

SAN FRANCISCO — Health officials were searching Monday for dozens of airline passengers who may have come in contact with a 30-year-old woman infected with a hard-to-treat form of tuberculosis on a flight from India.

The 30-year-old woman, who authorities declined to identify, was being treated at a Bay Area hospital. Officials said the chances that she had infected anyone else were minimal.

The woman arrived in San Francisco on Dec. 13 aboard an American Airlines flight that she boarded in New Delhi. The flight stopped in Chicago before continuing to San Francisco International.

"She did have symptoms on the flight," said Santa Clara County Health Director Dr. Marty Fenstersheib. "She was coughing."

Health officials said she was diagnosed with TB in India, but boarded the flight anyway. Such passengers are typically barred from boarding flights originating in the United States, but U.S. officials have little authority over who boards incoming international flights.

About a week after the flight landed, the woman showed up at the Stanford Hospital emergency room with advanced symptoms of the disease. Hospital spokesman Gary Migdol said the woman is in isolation and is in stable condition.

The woman will remain hospitalized until she tests negative for the disease, which will take at least two weeks, Fenstersheib said. Her stay could last longer because she has a strain of the disease that resists the most common antibiotics, he said.

Officials with the Centers for Disease Control and Prevention are asking health authorities in 17 states to contact 44 people who sat within two rows of the woman and urge them get checked for tuberculosis. The risk of infection is far lower than passing on influenza or the common cold, doctors said.

"TB requires pretty constant contact with someone," Fenstersheib said. About 1 percent to 2 percent of all tuberculosis cases are of the multi-drug resistant variety, he said.

CDC spokeswoman Shelly Diaz said the agency has not received any reports back. Diaz said it will take more than eight weeks to receive definitive results.

In May, a TB patient caused an international health scare when he flew to Europe for his wedding. There has been no evidence that the man spread the disease.

Zara owner's sales disappointing

Inditex says sales in Spain were in line with the rest of the world

The world's second biggest clothing retailer, Spain's Inditex, has reported worse than expected sales but better than expected profits.

Shares in the company that owns Zara, Massimo Dutti and Pull and Bear have risen more than 23% this year, but fell more than 4% in early trading.

There is concern about the effects of the housing slump in its home market, which accounts for 38% of its sales.

But its boss said sales growth in Spain was in line with the rest of the world.

Inditex reported net profit of 825m euros ($1.21bn; £593m) for the nine months to the end of October, which was 30% ahead of the same period last year.

That figure was better than expected, as a result of a programme of cost-cutting.

Sales rose 17% in the period to 6.63bn euros, which was worse than had been expected.

Inditex has been expanding aggressively, especially in fast-growing economies such as China and Russia.

It currently has stores in 400 cities around the world.

Microsoft buys UK mapping service

Microsoft makes acquisitions to strengthen its internet business

Microsoft has bought online mapping company Multimap to expand its web business, the US firm said.

Multimap, which was established in 1996, is among the UK's top 10 visited websites, receiving more than 10 million users each month.

Microsoft hopes that the acquisition "will play a significant role in the future growth of our search business".

Web search giant Google, Microsoft's arch-rival, provides its own online mapping service, Google Maps.

'Huge opportunity'

Microsoft's internet empire also includes services such as Virtual Earth, Live Search and Windows Live.

Earlier this year Microsoft bought a 1.6% stake in social networking site Facebook for $240m (£117m) and US online advertising firm aQuantive for $6bn.

It has not revealed how much it is paying for Multimap.

Sharon Baylay, general manager of the Online Services Group at Microsoft, said that the deal with Multimap presented "a huge opportunity to expand our platform business beyond the UK and globally".

Multimap has offices in America, Australia, South Africa and Turkey, as well as in London, and has a presence in 48 countries.

US banks reveal more debt losses

Banks had been making a huge profit from sub-prime loans

Three major US banks, including Bank of America and Wachovia, have warned that losses linked to investments in soured US home loans will get worse.

Shares in all three firms fell as each separately said earnings would take a hit as the value of mortgage-backed securities continues to decline.

Wachovia said it would write down $1bn (£489m) in its fourth quarter, nearly double its original estimate.

Regional lender PNC said it would miss its fourth-quarter profit target.

The swathe of bad news indicates that banks are still suffering from a killer hangover as a result of taking on too much risk when interest rates were low in the US, Europe and UK.

Many people on low incomes or with bad credit took advantage of rock-bottom mortgage repayments to get on the property ladder.

A lucrative market sprung up whereby these sub-prime mortgages, as they are called, would be packaged along with other debt of a higher quality and then sold to investors.

But with interest rates in the US at five-year highs as recently as August, sub-prime mortgage repayments have become much less affordable leading to steep loan defaults and subsequently a drop in value in investments centred on this sector.

Downbeat

Bank of America chief executive Ken Lewis said the firm's fourth-quarter results would be "disappointing", predicting further fall-out from the problems in credit markets next year.

The bank had last month forecast that it would have to write off $3bn of soured investments, but said on Wednesday it would be more than that.

Separately, Wachovia boss Ken Thompson was equally bearish and could not say when the credit crisis might ease.

He said Wachovia, the fourth-largest US bank, was facing "as tough an environment as I've ever seen".

Pittsburgh-based PNC, the largest bank in Pennsylvania, marked down its fourth-quarter earnings after its mortgage portfolio weakened by $1.5bn.

Oil climbs on central bank plan

Oil prices have been volatile on fears over the health of the US economy

Oil prices rebounded on fresh hopes that the global economy could remain robust after unprecedented action taken by a number of key central banks.

The plan to make available billions of dollars worth of loans to cash-strapped banks pushed a barrel of New York light crude up $4.37 to $94.39 a barrel.

A US government report showing an unexpected fall in crude stocks and heating oil raised supply fears.

Brent crude also hit $94 a barrel after sinking to $88 a barrel last week.

By the end of last week, world oil prices had fallen more than $10 from their November peak of near $100 a barrel.

The sell-off came when traders took profits as the certainty that the US economy would weather the sustained housing slump and financial market turmoil snapped and the spectre of a recession dawned.

Dramatic move

But a quarter point cut in US interest rates to 4.25% from 4.5%, delivered by the Federal Reserve after its meeting on Tuesday, persuaded energy traders that the Fed was focused on relieving the pressures facing the US economy and put oil back on the front foot.

These gains were dramatically extended following the earlier announcement that the Fed would team up with other key central banks, including the Bank of England and the European Central Bank, to assuage gummed up credit markets.

It is hoped the bold move will prevent commercial banks in the US, Europe and the UK from increasing charges on credit cards, unsecured loans and mortgages, bringing spending among indebted populations to a standstill.

"Anything the Fed is doing to help out is going to support oil prices," said Brad Samples, commodities analyst at Kentucky-based consultancy Summit Energy Services.

An energy department report showing US crude oil stocks at two-year lows after falling by a greater-than-expected 700,000 barrels supported fears that supply could be tight as the northern hemisphere prepares for a cold winter.

Stocks of distillate fuel, which include heating oil and diesel fuel, were also disappointing, declining 800,000 barrels. Analysts had predicted a decline of about 500,000 barrels.

A large oil spill off the Norwegian coast where 25,000 barrels of crude poured into the North Sea as it was being piped from a loading facility into an oil tanker would also have riled a sensitive market, analysts said.

Emerging giants spur telecom boom

The emerging giants are driving mobile phone use

Mobile phone users in China, Brazil, India and Russia are driving the global telecoms boom, a report by UK telecoms watchdog Ofcom suggests.

Since 2001, these countries have added 660 million new subscribers, accounting for 40% of total new mobile phone accounts globally.

Their large populations and economic muscle mean they will continue to grow and likely dictate technical standards.

New subscriptions in India alone doubled to 150 million in 2006.

The spread of networks into smaller towns, lower voice tariffs and intense competition spurred growth in the Indian market last year, which now has twice as many subscriptions as the UK.

Half the world

With 2.8 billion people, nearly half the world's population, and rising incomes, the four countries - referred to as the BRICs - still have the potential to acquire millions of new phone subscribers.

While Russia's mobile phone penetration is 106%, Brazil's is 53%, China's is 34% and India's is just 14%.

The absence of old-fashioned land-line infrastructure means that the BRIC countries are introducing new technologies at the same pace as more mature economies, the report said.

"Growth in the number of users of communication services within the four countries will continue," the report said.

The growth will be "driven both by penetration into lower income segments, through the expansion of coverage and the continuation of falling prices, and also rising economic prosperity in smaller towns and rural areas," it added.

Chinese use of mobile phones is on the rise

The sheer size of the BRIC market makes it likely that it will be key in deciding standards and dominant technologies, it added.

Investment capital is pouring in, as firms, tiring of more mature markets, are eager to take advantage of the returns on offer, it added.

Data boom

Most mobile firms in these four countries make their money from voice services.

But in the case of China, which enjoys the most developed mobile data market, generating 20% of mobile revenue from data services, consumers have proven eager to stay in touch by text.

Last year, mobile phone users in China sent 429 billion text messages, or 967 text messages per user.

That compares with 621 per mobile user in the UK.

China is also unusual in that the number of fixed lines grew by 79%, powered by the roll-out of fixed lines outside the main cities.

Digital television remains in its infancy in the four emerging giants.

Both Russia and India have seen their television industries grow quite fast, the former driven by an advertising boom, the latter by subscriptions to services such as Star.

UK welcomes world cash injection

Weakness in sub-prime loans have destabilised the financial sector

A joint plan by five central banks aimed at easing the credit crunch in financial markets has been welcomed by UK Prime Minister Gordon Brown.

Up to $110bn (£54bn) in loans will be made available to world money markets by central banks including the Bank of England and the US Federal Reserve.

In an interview with the Times newspaper, Mr Brown said there should be more focus on such co-operation.

Analysts say the unprecedented move is a sign of the severity of the problems.

Auctions

The Federal Reserve and the Bank of England will team up with the European Central Bank and central banks from Canada and Switzerland to offer the cash loans, to be made available in auctions.

Ideally, what we are looking for is the financial institutions to have written off their problems, built up confidence and be willing to lend to each other Peter Dunay Investment bank strategist

Such a co-operative act is a first, BBC business editor Robert Peston said.

Other analysts pointed out that the actions are on a greater scale than the moves taken by the Fed to shore up the economy after the 9/11 attacks on the US.

Mr Brown, due in Lisbon for the signing of the new European reform treaty, told the Times the moves were "the co-operative effort I've wanted to see for some time.

"It signals an international desire to act in what has been a period of global financial turbulence."

'Staving off recession'

Share prices in the US rose sharply after the plan was announced on Wednesday, but have since dropped again.

Five of the most powerful central banks are taking concerted action to stop a banking crisis turning into a recession, the BBC's Mark Gregory said.

The problem is that commercial banks in rich nations have sustained huge losses on investments that have gone sour, he said

This has made them reluctant to lend any more money, especially to each other.

By acting together to pump extra funds into the system in the form of loans, the central banks hope to have a bigger impact.

But they are also putting their credibility on the line, our correspondent added.

If the plan fails, it is unclear what else they could do to restore confidence.

Capital gap

Peter Dunay, chief strategist at investment bank Leeb Capital Management in New York, said the new money could only help, but there was a broader problem to consider.

"Ideally, what we are looking for is the financial institutions to have written off their problems, built up confidence and be willing to lend to each other," he told.

"Right now... they do not want to lend - they do not want to lend to the public, they do not want to lend to each other.

"They don't have the capital, they're very concerned and they're holding a lot of debt that is still a problem for them."