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CNN Live Event/Special

CNN International's World Business Today

Aired March 24, 2011 - 04:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CHARLES HODSON, CNN ANCHOR: Well, hello again and good morning from CNN London. I'm Charles Hodson.

PAULINE CHIOU, CNN ANCHOR: And good afternoon from CNN Hong Kong. I'm Pauline Chiou. And this is WORLD BUSINESS TODAY.

HODSON: The top stories on Thursday, March 24th.

(BEGIN VIDEO CLIP)

HODSON (voice-over): Portugal's prime minister quits as parliament votes down plans to tighten austerity measures. Now, an EU bailout looms.

CHIOU (voice-over): Japan's devastating earthquake continues to disrupt the global supply chain. We look at why it can be harder to get ahold of a Toyota car or an iPad 2 in the next few months.

HODSON: And as the battle for Libya continues, Europe and the United States tighten their grip on assets owned by leader, Moammar Gadhafi.

(END VIDEO CLIP)

HODSON (on-camera): Well, as many European countries continue to battle their way out of debt, Portugal looks like it may be next in line for a big bailout. Portugal's parliament just rejected a new proposal for more austerity measures adding to the uncertainty about the country's political and economic future. All the opposition parties voted down plans by Prime Minister Jose Socrates for bigger budget cuts and a pension freeze. They said it put too much strain on the poor, but Mr. Socrates says austerity measures are necessary for the nation's economic health.

(BEGIN VIDEO CLIP)

JOSE SOCRATES, PORTUGUESE PRIME MINISTER (through translation): For several months, I have fought for a cause I consider absolutely fundamental to protect the nation, the need to avoid resorting to external aid in order for Portugal not in depth in the same situation as Greece or in the situation as Ireland. I always warn of the extreme negative consequences of resorting to external assistance.

(END VIDEO CLIP)

HODSON: Mr. Socrates said he would step down if he lost the vote, and as promised, he handed in his resignation on Wednesday, pending approval by Portugal's president. The debt laden country is still aiming to cut its budget deficit to 4.6 percent of GDP this year from 6.8 percent last year, and to 3 percent of GDP by 2012 to meet UK guidelines.

Well, Portugal's decision comes just as European finance leaders prepare to meet in Brussels later on Thursday. The focus is on the Euros own debt crisis, but now, Portugal's economic woes will probably be on the agenda. So, how are investors taking the news? Well, just a few minutes into Portugal's trading session, the benchmark index there is down by more than 1 percent.

To all look at the rest of Europe, clearly, big wobbles for the euro, and we are seeing a slightly weaker open despite a good, strong run up on Wall Street, which we'll get mention in a moment off by a tenth of a percent for the London and Frankfurt, the DAX there and off by half a percent in the case of the Paris (INAUDIBLE) SMI down by quarter of percent. So, let's have a look at the currency markets and you are seeing a little bit of weakness there on the part of the euro, 1.4064. 1.6213 in the cable, and the Japanese yen gaining slightly, 80.83.

Well, the turmoil in Portugal comes as the European Union convenes a summit in Belgium. The summit is expected to focus only overall debt crisis in the Euro Zone, but as Al Goodman tells us from Madrid, the EU may now be casting a nervous eye towards Portugal. Al, let's start with what's going on in Portugal. What actually, politically, has happened here?

AL GOODMAN, CNN MADRID BUREAU CHIEF: What has happened in Portugal, Charles, is that on top of the economic crisis with the specter of a possible bailout, many are saying now they have an excellent political crisis. So, the prime minister was trying to get through the latest austerity plan. All of the opposition on the right and left united, and basically, voted this down. He had said beforehand he would resign, and he made good on that.

Now, it's up to the air as when that there will be -- this is up to the Portuguese president, will there be new election that hasn't been decided. Will the Portuguese president try to appoint a successor without elections? All of that is up in the air. Apparently, the socialists, that's the prime minister's party think they have a good shot if there are new elections in June, and the main opposition, social Democrats, also think they have a good shot.

So, you have all of this uncertainty at what many analyst, especially from the financial sector say, is the worst possible time to have uncertainty in Portugal -- Charles.

HODSON: Well, it certainly sets the cat among the pigeons just as the European Union sits down to discuss this and many other topics. It does seem rather inevitable, I gather, that there will have to be a bailout from the EU for Portugal if it were to impose these measures.

GOODMAN: The problem -- indeed. The problem, many people say, is that Portugal still hasn't tackled the fundamental structural reforms that, for instance, here in Spain, they have been trying to tackle, and they have sort of kept the wolves away for a little while because many people think that if Portugal goes, after Greece and Ireland, that Spain would be the next logical candidate, but focusing on Portugal, just take look at their growth.

Very tepid growth for most of the last decade, just about 1 percent whereas wage growth was way higher than that. So, that's the kind of structural reform, the hard belt tightening that goes beyond just the budget cuts this year and next that hasn't been done, many people say. And that's why the EU may try to step in and save Portugal -- Charles.

HODSON: But it would seem certainly on past form wouldn't it, Al, that Mr. Socrates will be right, that if we do have an EU bailout as we've seen in the case of Ireland and Greece, they will impose conditions or the IMF will also step in (ph) and would impose conditions which will be rather hard on the Portuguese. So, in effect, they voted away a degree of sovereignty here.

GOODMAN: Indeed. And if the center right, social Democrats were to win if there were elections, they also might take measures that would be stiffer. The whole -- one of the problems for Mr. Socrates has been that he was accused in this most recent austerity plan of not trying to get a broad consensus. Whether he did or not, there's a lot debate on that, but clearly, will the people be hurt even more? It would seem that way with the bailout if it is to come, because Portugal has got really, really high yields on its purchasing of new debt, and that is seen as unsustainable by many -- Charles.

HODSON: OK. Al Goodman joining us there live from Madrid, many thanks -- Pauline.

CHIOU (on-camera): Well, Charles, you've been talking to Al about Portugal has been trying to avoid the fate of Greece and Ireland. Both of which have been bailed out with hundreds of billions of dollars from the European Union and the IMF, but here's the question. Do all of these countries really share the same financial problems? Bob Parker, a senior adviser at Credit Suisse talked to CNNs Richard Quest.

(BEGIN VIDEO CLIP)

BOB PARKER, SENIOR ADVISER, CREDIT SUISSE: The problem with Portugal is different from the problem in Ireland, where the problem was a real estate bubble bursting. In Greece, it was a problem with the public sector finances. Portugal has been a zero, well, this zero growth economy for many years now. So, it's a question of lack of revenue generation.

RICHARD QUEST, CNNI ANCHOR: Competiveness, unwinding of the economy.

PARKER: Correct. And they need to take actually not just budget action but structural action which Spain has taken quite successfully.

(END VIDEO CLIP)

CHIOU: So, the problems may be different, but the policy response has been pretty similar across all of these countries, which is lots of belt tightening -- Charles. HODSON: Well, something else swinging back over here to the UK, Pauline, austerity measures also in place here, of course, and the coalition government in London has just laid out its economic plans for the year ahead. Finance Minister George Osborne said on Wednesday that Britain's growth forecast has been cut to just 1.7 percent. Because of that slow economy, borrowing is expected to be higher than forecast, but Osborne says there's no need for more spending cuts or tax increases.

In fact, he's actually announced a bit of relief for business in the form of some tax cuts. British actually coming its corporate tax rate 23 percent by 2014, and the aim for move is to attract more businesses to the UK.

(BEGIN VIDEO CLIP)

GEORGE OSBORNE, CHANCELLOR OF THE EXCHEQUER: Let it be heard clearly around the world from Shanghai to Seattle, from Stuttgart to San Paolo, Britain is open for business. And to ensure that this is not a net tax cut for banks, I'm adjusting the bank levee rate next year to offset its effect.

(END VIDEO CLIP)

HODSON: Britain's five-year austerity program began last year -- Pauline.

CHIOU: Well, let's take a look at some market action right now. And stock market here in Asia struggled to find some clear direction this session. Australia's main benchmark was the clear standout today gaining just over 1 percent led by mining and metals companies. Energy stocks were up around most of the region with the exception of Tokyo electric power in Japan. That's the company that operates the nuclear power plant.

And TEPCO was the biggest loser on the Nikkei falling more than 14 percent by the close on those persistent radiation worries. On the other hand, this is interesting. Shares of beverage makers and companies distributing bottled water rose on expectations that the Japanese public will avoid drinking tap water for a while.

And let's take a look at how Wall Street did overnight. U.S. stocks ended the day higher on Wednesday. The nuclear emergency in Japan, the bumpy reopening of Egypt's stock market, and Portugal's debt crisis weren't enough to bring down investors. So, here's how the numbers settled at the end of session. The Dow closed up more than half a percent. The NASDAQ also added around half of one percent there. And the broader S&P 500 index was up almost 0.30 percent.

And let's take a look at how the futures are looking. U.S. markets look set for a mostly lower open when trading begins later on Thursday, and this is where U.S. futures stand in pre-market action. The Dow down just a fraction. The NASDAQ Composite up by more than a tenth of a percent. And the broader S&P 500 down by a little more than one-tenth of a percent, as well - Charles. HODSON: Now, the international coalition slows down Gadhafi's military machine. Just ahead, a close-up look at what that means for civilians in Eastern Libya.

(COMMERCIAL BREAK)

HODSON: Welcome back from CNN London and Hong Kong. This is WORLD BUSINESS TODAY.

CHIOU: Unrest and fighting continues across North Africa and the Middle East. An allied air strike targeted a Tripoli suburb early on Thursday on the sixth day of operations against Libya. A U.S. general says the U.N.'s no-fly zone now covers Libya's entire Mediterranean coastline. He says coalition air strikes have crippled Moammar Gadhafi's air force.

Meanwhile, in Syria, human rights activists and witnesses say 15 people were killed when security forces opened fire on anti-government protesters in Daraa, but Syrian state TV says it was armed groups that fired on the security forces.

A shipment of 16,000 pistols bound for strife-torn Yemen has been intercepted by police in Dubai. The police say the guns were being smuggled from Turkey.

And Egypt's stock exchange reopened on Wednesday. It had been shut for nearly two months, and the reopening went far from smoothly. The benchmark index plunged almost 9 percent in about five seconds. Foreign investors led a selloff that suggested lingering concerns about the country's stability.

Well, the problems in Libya and concerns over oil supply in the Middle East have been pushing oil prices higher. Right now, Nymex Crude is up just slightly, trading at more than $106 a barrel.

Meanwhile, Brent Crude for May delivery is up about 55 cents, trading at more than $115 a barrel at the moment, Charles.

HODSON: Col. Gadhafi's military machine was full throttle in oil rich Eastern Libya by the international effort to protect civilians there started in Benghazi. Our Reza Sayah looks at what it's achieved.

(BEGIN VIDEOTAPE)

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: These used to be part of a column of tank and armor pro-Gadhafi forces that, just a few days ago, were steadily advancing east to the rebel capital of Benghazi. Today, this place is a virtual outdoor museum of wrecked and charred military vehicles. This is what the allied forces did to the pro- Gadhafi forces during the first wave of the no-fly zone.

These pro-Gadhafi forces never had a chance this wreckage extends westward for kilometers. On this day, you have entire families here looking at the wreckage and the debris. Many people here on this day are convinced that if the allied forces had not intervened, these pro- Gadhafi forces would have moved in on Benghazi and took aim on innocent civilians.

UNIDENTIFIED MALE: You would have witnessed mass murder from Gadhafi to his people, which is something along history has not been recorded.

SAYAH: How far is the opposition willing to go to free Libya? I mean, are they going to take the war to Gadhafi and his regime?

UNIDENTIFIED MALE: I hope so. I hope so. (INAUDIBLE)

SAYAH: Back in the rebel capital of Benghazi, another rally in support of the opposition that made some significant ground westwards toward the strategically critical city of Ajdabiya where pro-Gadhafi forces are still controlling the entrances. Most of the people you speak to here say they're not finished. The mission is to continue to move west and topple the Gadhafi regime.

And if, indeed, that's the case, all eyes are going to be on the coalition. What are they going to do? Are they going to support the opposition forces or are they going to sit back and stay true to this stated intent of U.N. resolution 1973 and that simply is to end the bloodshed.

Reza Sayah, CNN, Benghazi.

(END VIDEOTAPE)

HODSON: Well, as the battle for Libya continues, Europe and the United States are tightening their grip on assets owned by the government of Col. Gadhafi. The U.S. has placed sanctions on 14 firms owned by the Libyan national oil company. U.S. officials are trying to restrict Gadhafi's revenue streams during the Libyan conflict. Oil, of course, accounts for a big part of those revenues. The European Union has also pledged further sanctions in line with the U.N. Security Council resolution, Pauline.

CHIOU: Well, just ahead, we'll have an update on the threat of radiation in Japan. Some workers at the nuclear power plant have been injured. So, we've got a live report on that. And also the latest on the safety of food and tap water in Japan. We're back in two minutes.

(COMMERCIAL BREAK)

HODSON: Welcome back. You're watching WORLD BUSINESS TODAY live on CNN.

CHIOU: There's a lot to update you on regarding the latest from Japan and the damaged nuclear power plant there. First, we've got reports of some injuries at that plant. Paula Hancocks is live at our CNN Tokyo bureau following this piece of news today. Paula, what has happened there?

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, Pauline, we're hearing from TEPCO officials that two workers have been hospitalized. And what they've told us happened is that three workers were working in the basement room of an engine room trying to lay cables, and they were standing in contaminated water. Two of those three have now been hospitalized. They say that their skin has believed to have been exposed to that contaminated water. Now, they think it may have been beta contamination rather than gamma rays.

They don't know at this point, but that could suggest that it's not as serious as airborne exposure by gamma rays. So, certainly, there is concern for these two workers. They've been taken to hospital straightaway, and also, other workers that are working in similar conditions where there is water on the grounds in the rooms that they're working in, they make sure that they have evacuated them as well so that this don't happen to anybody else -- Pauline.

CHIOU: And there's also still concern about the safety of drinking water in Tokyo. What's the latest with that?

HANCOCKS: Well, the government officials have actually lifted the ban on infants drinking tap water in Tokyo, itself. This was a ban that was put in place on Wednesday saying that there was more than double the amount of radioactive iodine in the tap water than was the government's set limit for infants, that's children up to the age of one, but at the same time in a neighboring prefecture, Chiba prefecture, just to the east of Tokyo, we understand that they have found in two out of three locations that the iodine levels in that tap water is higher than the legal limit.

So, certainly, that is a concern at this point. The government has been giving out bottles water to families that have infants. At this point, 240,000 bottles given out today. They'll do exactly the same on Friday, but they are saying in Tokyo, at least, you can drink the tap water once again for any infants -- Pauline.

CHIOU: All right. Paula, thanks so much for the update. Charles, as you can see, there's still lingering concern about the safety of the power plant workers as well as the safety of the residents -- Charles.

HODSON: Indeed. Well, in fact, this disaster has really rocked Japan just visible emotion (ph) and economic core and several major corporations are taking hits, including Toyota. The carmaker says a halt of full vehicle production in Japan is being extended through to March 26th. It cites the challenges involved in making and shipping parts for its cars. Toyota (ph) is sending employees at 13 North American plants that have total stoppage is not part of the game plan, but there could be interruptions.

Toyota's domestic plants have been shut down since the earthquake and tsunami on March 11th, nearly two weeks. Toyota's shared ended first day session down 2.72 percent. Now, the disaster in Japan has hit other kinds of manufacturing, too, especially electronics. That could make the already hard to find iPad2 even more elusive.

Makers of many of the components that are needed to make that popular tablet computer from Apple have stopped or slowed down production following the earthquake and the tsunami and the nuclear disaster. Shares of Apple have fallen about 5 percent since the quake struck, Pauline. CHIOU: Well, Charles, that news just gives you a snapshot of how important Japan is to the global supply chain. Now, Japan produces about one-fifth of the world's computer chips, and it exported more than $91 billion worth of electronic components just last year. And, we also want to talk about some companies. First, we'll talk about Sony. Sony has cut output at five plants, most of them in central and Southern Japan.

It's considering shifting production to other countries if parts shortages continue. And Canon has suspended operations at factories in Nagasaki and Oita prefectures. But other industries other than electronics are affected as well, and we're talking about mining. Let's take a look at what Rio Tinto is going through.

Rio Tinto is warning that waiting for key equipment parts from Japan may threaten its expansion plans. And let's go back now to the auto industry and talk about General Motors. They've suspended production of mid-sized pickup trucks at factories in the United States. Why? Because parts were not coming in from Japan.

And then, there's plane maker Boeing out of Seattle. Boeing is no stranger to delays and is also keeping a close eye on its supply chain. So, Boeing is developing mitigation plans. In a statement sent to CNN, the company says it's confident that it can manage the risks with minimal disruptions, but these are just a few of the examples of how interdependent businesses around the world are in in the 21st century.

HODSON: Absolutely. Well, as debt troubles continue to weigh on the Euro Zone, EU leaders are meeting to discuss possible solutions. We'll tell you what's on their agenda. That will be next.

(COMMERCIAL BREAK)






(COMMERCIAL BREAK)

CHARLES HODSON, CNN ANCHOR: From CNN London, I'm Charles Hodson.

PAULINE CHIOU, CNN ANCHOR: And I'm Pauline Chiou at CNN Hong Kong.

Welcome back to WORLD BUSINESS TODAY.

HODSON: A quick look at how European stock markets are moving a half hour into the trading session. Thirty-two minutes nearly.

And we're looking actually a little bit of reversal there, despite the bad news out of Portugal, which has hit the euro, obviously. But up slightly there for both the FTSE and the DAX, up about a quarter percent in the case of the DAX. Paris CAC still losing, but only about an eighth (ph) of a percent and the Zurich SMI with its head above all of this not being in the Eurozone down just very, very slightly -- Pauline.

CHIOU: Well, there was not a lot of momentum in the markets here in Asia, Charles, where the markets struggled to find a clear direction this session. Australia's main index was the stand out, gaining just over 1 percent, led by mining and metals companies. Energy stocks were up around most of the region with the exception of Tokyo Electric Power in Japan, that's the operator of that damaged nuclear power plant.

Now, TEPCO was the biggest loser on the Nikkei, falling more than 14 percent by the close on those persistent radiation worries.

On the other end, I found this interesting -- shares of beverage makers and companies distributing bottled water in Japan, they rose on expectations that the Japanese public will avoid drinking tap water.

Now, after a slow start to the session, U.S. stocks eventually ended in positive territory on Wednesday. Investors shrugged of dismal data from the U.S. housing market where new home sales in February were down dramatically. Also, they shrugged off the ongoing turmoil in Libya which has actually pushed oil prices up again to almost $106 a barrel.

So, here's how the numbers settled out. The Dow closed up more than half a percent. The NASDAQ also added around half of 1 percent. And the broader S&P index climbed about one-third of a percent.

The CEO of Goldman Sachs took the stand in a federal insider trading trial in New York on Wednesday. Lloyd Blankfein testified that a former bank director would pass on details of high-level strategy meetings to the hedge fund manager, Raj Rajaratnam who used that information to make trades. Now, Rajaratnam is accused of making $45 million from insider trading tips.

HODSON: European union leaders are meeting in Brussels today to work out more ways of tackling the Eurozone's debt crisis just as got worse with the latest news out of Portugal and the resignation of Prime Minister Jose Socrates. So, what can we expect from this meeting?

Emily Reuben joins me now here live in the London studio.

What are they going to say?

EMILY REUBEN, CNN CORRESPONDENT: Well, Charles, for months, European leaders have talked about using the summit in Brussels to finally reach an agreement on a comprehensive package of measures to contain Europe's debt crisis. The expectation was that this would include strengthening the European financial stability facility, raising its capacity from 250 billion euros to 440 billion euros.

However, documents leaked to the news agency "Reuters" have suggested that there won't be a decision on this until June, when leaders formalize the European stability mechanism, a permanent fund that will replace the EFSF in 2013.

HODSON: But, clearly, at the moment, you know, we're going from one crisis to another. We got another crisis in Portugal. The stakes are high here. There's a worry, isn't there, that after Ireland and Greece now, Portugal, next to, who knows, Spain?

REUBEN: Well, it's certainly is, Charles. Greece and Ireland, as you know, have both received bailouts. Portugal is very likely to be next. And the big worry is what will happen to Spain, the fourth largest economy in the Eurozone.

Well, there was some good news overnight for Spain overnight. The president of the Federal Reserve Bank of Dallas, Richard Fisher, said the markets underestimated Spain's ability to repay its debt.

Athens got a bit of a break recently, too. The E.U. is easing its terms of its bailout package that will save Greece almost $8.5 billion.

But are the problems here as much political as they are economic? A quick look at Ireland explains why.

The new (INAUDIBLE) Enda Kenny was elected with a mandate to renegotiate Ireland's bailout. He's reported to have been told that he'll cut the interest rates only if Ireland raises its super low corporate tax. Ireland would be unwilling to this because it's a symbol of national sovereignty. Yet the French and German government will find it hard to persuade their voters to give Ireland concessions when it is seen as stealing jobs through tax dumping -- Charles.

HODSON: OK. Emily Reuben -- many thanks.

Well, Ireland is, indeed, another country facing tough times. It was bailed out last year by the European Union, and now, Eurozone leaders are refusing to lower the interest rate that Dublin must pay on the bailout loan.

The sticky point is, as Emily referred to, the business tax rate, it's one of the lowest in Europe. But there are other issues in Ireland's finances, too.

Joining us now from Dublin to take a closer look at those is Constantin Gurdgiev from Trinity College.

Essentially, it sounds as if Ireland is really rather struggling under the weight, under the burden really of having to meet its obligations under the bailout. Is that about fair?

CONSTANTIN GURDGIEV, ECONOMIST, TRINITY COLLEGE: It's very fair, Charles. Indeed, if you look at the structure of the package that has been labeled as bailout, it's not really a bailout. It's just -- first of all, it's a set of loans which is divided between 22.5 billion from the IMF, 45 billion is coming from the European Financial Stabilization Fund and the European financial stabilization mechanism and the bilateral loans, 17.5 billion is packaged is Ireland's own funds, in other words cash that the government has saved during the boom years. It was supposed to overwrite the pension funds, is now going to finance the bank bailouts and those debts of finances.

So, this is not really bailout as such. If you look at punitive interest rates which have been applied under the European package, and let's remember that the IMF has just recently lowered on technical issues, along with the interest rate it charges from Ireland, it is the European part of the package where the punitive measures have been applied.

And as a result of that, the entire European mechanism is now in question because if you look at what happened in Ireland, Ireland is facing a severe debt crisis, both sovereign debt crisis and bank debt crisis. The European so-called cure to this problem, giving more loans, giving more debt to Ireland in that case with very high interest rate just simply made the disease incurable.

Let's run a few numbers very quickly -- Ireland's sovereign debt will now exceed 220 billion euro by 2015. And that's 130 percent of our GDP. If you add to it the guarantee by the state banks debts and liabilities, that will be 450 billion, or 265 percent of our GDP.

So, the sovereign, quasi-sovereign debt of Ireland is now going to be in excess of 275 percent of GDP. The level of debt is the problem, not just the interest rate being charged. And the fact that the European Union is refusing to recognize this and repeatedly making statements about the issues of cost of financing and things like that is just simply indicative to the entire world that the European Union is currently incapable of presenting a comprehensive and workable solution to the debt crisis in Ireland but also Portugal, also in Greece, also in Spain, and potentially Italy.

HODSON: Well, let's take a look at the possibility of a renegotiation because that clearly is something that the new government in Ireland is committed to. Presumably, the chances, though, of renegotiating are, in the present political and economic climate, nearly zero, aren't they?

GURDGIEV: Well, whatever chances are in the current political climate, the economic realities and financial market realities have clearly stated that something will have to be done. And not just in terms of renegotiating the loan's interest rate. Again, if you think about it, we've been talking about 1 percent reduction in the interest rate on the new component of those loans. That would save Ireland 450 million euro in interest payments every year.

This is something that the Irish deficits alone would swallow within a span of a week and a half to two weeks at the rate we're going right now. So, it's a joke. It's not really a solution as such. It actually just prolongs the problem, kicks the can down on proverbial street further into the future.

And as a result of that, the economy of Ireland has been stagnant. It's bleeding. It's losing people. It's losing investment and there is no prospect of recovery under this type of term.

So, renegotiating these terms is not going to do anything. We have to deal comprehensively with the levels of debt, with the principle. Let's put it in more simple terms. Ireland cannot afford paying the principle on these loans, let alone the interest rate on these loans.

And again, if you look at 265 percent of GDP being occupied by government and quasigovernment debt, that is simply not sustainable by any possible measures.

HODSON: OK. Constantin Gurdgiev joining us there live from trinity College, Dublin -- many thanks to you.

Pauline?

CHIOU: Well, we're going to revisit the situation in Japan, where the death toll there is near the 10,000 mark. And the challenges for the survivors continue to mount. And here's one issue: food safety. The government is restricting exports because of radiation fears. We'll have more on that coming up next on WORLD BUSINESS TODAY.

(COMMERCIAL BREAK)

YUKIO EDANO, JAPANESE CHIEF CABINET SECRETARY (through translator): This is very low level of radioactive content which will not be harmful for the health, even if consumed over a long period. And for babies under 12 months this time, the Tokyo metropolitan government took this measure based on a very conservative set of standards.

So, for other people, people other than babies, the radiation levels will have almost no effect.

HODSON: That's the official word from Japan's chief cabinet secretary regarding radioactive iodine levels in Tokyo's tap water. The government is distributing bottled water to Tokyo household with infants. However, a sign of improvement, new test in Tuesday showed that the tap water is now safe to drink.

People are still scrambling for the bottled water, though and who can blame them?

Well, welcome back to WORLD BUSINESS TODAY.

CHIOU: Let's turn to our Sara Sidner. She's been investigating what's being done to bring peace of mind to customers at the grocery stores, the dinner tables, and also, to the people of Japan.

(BEGIN VIDEOTAPE)

SARA SIDNER, CNN CORRESPONDENT: Fallout around the world from Japan's announcement that high levels of radiation have been detected in raw milk and vegetables. Now, several countries had banned or put a hold on imports of milk and fresh vegetables from certain Japanese prefectures.

The latest places to keep those items from reaching the marketplace are Singapore and Hong Kong, which is a major importer of Japanese food.

Australia now says it has a holding order in place, and that means that food is held and tested. And if it fails inspection, it's sent back.

The United States was the first to block vegetable, fruit and milk imports from Japan.

Now, let's look at the four prefectures affected by the ban. All of these here are affected by the ban. And they're in and around that heavily damaged area of the Fukushima Daiichi nuclear plant.

Now, for this picture. This is Fukushima area. This is a spinach farm that's there. It's a very heavily agriculture industry in that area. But, obviously, no one out there working. There's no reason to harvest that, because, of course, they cannot sell it.

And now, to a picture from the Philippines. You are seeing there someone from the Philippines authority testing Japanese food stuffs.

And, lastly, a shot here from Hong Kong. This is a place that sells sushi. And there's a little sign here that you can probably barely read. But it's basically telling people that their fish is not coming from Japan and listing all of the countries where the different fish is coming from, trying to assure the people who come and buy that all of their food is safe.

Now, while most countries are still accepting meat and fish from Japan, many are testing items from the affected areas.

In Hong Kong, some local restaurants have decided to take action even before the ban to ease any worries customers might have.

JENS CORDER, HOTEL GENERAL MANAGER, KOWLOON SHANGRI-LA: Well, the decision really is to sort of stop the -- or cease the importation of fresh produce from Japan. And that was really based on the fact that we were not really getting clear or consistent information, whether it be from various departments or government bodies or even the media as to the effects of the fallout or the situation in Japan. So, it's really just to take the ultra-cautious position of standing back and saying we're not going to import fresh produce at this stage.

SIDNER: Hong Kong has gone further than other places and banned the imports from one more prefecture located here -- this area here, very close to Tokyo. And that came after Japanese officials said radiation levels were higher than normal in Tokyo's tap water.

The bans are really a blow to a country that has a great reputation for high quality food.

Sara Sidner, CNN, Hong Kong.

(END VIDEOTAPE)

CHIOU: There's a merger in the cards and it's under pressure to change. So, are we seeing the demise of trading on the floor of the New York Stock Exchange? We'll look at that when WORLD BUSINESS TODAY returns.

(COMMERCIAL BREAK)

HODSON: (INAUDIBLE) high as investors increasingly turn to safe-haven assets. Right now, it's trading at more than $1,438 an ounce, beating the previous record set earlier this month.

Welcome back. Live from CNN Hong Kong and London, this is WORLD BUSINESS TODAY.

CHIOU: Two earthquakes have rocked New Zealand in just the past eight months, but new economic numbers show that the first quake back in September was not strong enough to push the country into recession. Two straight quarters of negative growth would have put New Zealand technically into recession. The country's gross domestic product for the October to December quarter grew by just 0.2 percent. And for the calendar year of 2010, New Zealand's economy expanded by 1.5 percent.

Well, staying in the southern hemisphere, let's look at the global weather picture right now.

Meteorologist Ivan Cabrera is at the CNN weather center with news of a heat wave in Western Australia.

Just how hot is it there, Ivan?

IVAN CABRERA, CNN METEOROLOGIST: It just unbearably hot. Of course, in the southern hemisphere, as you know, Pauline, we are now supposed to be in fall, autumn, right? It is not happening for our good friends in Perth, in Australia, where temperatures once again are into the 30s Celsius. We're talking temperatures into the 90s at times, approaching 100 degrees, just unbearable. And on top of that, it has not rained in Perth, in Western Australia, since the day before my birthday, February 1st.

And we are hoping for some rain. We are hoping for some cool weather. We're hoping for fall to arrive. It's not going to happen as long as this area of high pressure is down here because we're talking about those hot northeasterly winds that are going to continue with us there in Perth.

So, not looking good if you're looking for a hot vacation this is your place, really, temperatures in the mid-30s, unbearable stuff here. Twenty-nine should be our typical temperature in Perth, Australia.

And there, of course, we are talking about autumn. Let's switch to the month that brings us all kinds of weather, we're talking winter, blizzards in the northern tier of the United States, tornadoes down to the south of it. Chelsea, Wisconsin, 30 centimeters.

Do we have pictures of the damage that has been caused across the Mississippi Valley into Tennessee Valley? There with significant straight-line winds coming in, barreling through. National Weather Service crews will be out there surveying the damage, perhaps even some rotation with some of those thunderstorms.

And then on the backside of it, snow has been underway. Oh, my goodness. These poor folks are shoveling snow, Pauline Chiou, in almost April here. But that's the good thing about snow in March, right, it will begin to melt rather soon here.

So, Charles and Pauline, we'll hopefully be doing that rather soon. Folks are weary of the winter in the north. But here in the south, it's been fantastic. No complaints.

CHIOU: Yes. Enjoy it. But thank goodness for those snow blowers up north. You can't live without those.

CABRERA: Got to have them.

CHIOU: All right. Thanks so much, Ivan. Charles, back to you in London.

CABRERA: Yes. And now, Germany Deutsche Boerse says its pending merger with the New York Stock Exchange will not reverse its effected revenues. In fact, it's forecasting that its revenues may rise by as much as 10 percent this year. The tie-up will create the world's biggest stock exchange group.

So, what does that mean for the future of trading NYSE style?

Alison Kosik reports.

(BEGIN VIDEOTAPE)

ALISON KOSIK, CNN CORRESPONDENT (voice-over): At the New York Stock Exchange, the traditions are the same.

But the business of how stocks are traded has changed.

BEN WILLIS, DIR. OF FLOOR OPERATIONS, SUNRISE SECURITIES: The sound used to have a great deal to do with how we traded on the floor of New York. You could feel the market move by the increase in volume on the trading floor.

KOSIK (on camera): What do you say to the people calling for the death of the trading floor, as we know it?

WILLIS: Don't buy the flowers yet.

KOSIK (voice-over): And if you ask one of the younger traders, it's the human component here that makes the NYSE so unique.

JOE GRECO, MANAGING DIR., MERIDIAN EQUITY PARTS: Human interaction is the backbone of making a deal. Boil it down. You're dealing with millions and tens or hundreds of millions of dollars of other people's money, and there's a fiduciary responsibility to make sure that's handled properly. KOSIK (on camera): There's a little less noise and more elbow room on the trading floor of the New York Stock Exchange if you compare it to decades ago. But that's nothing new. What is new is some companies are actually planning to bring more people to work here.

(voice-over): Sunrise Securities is moving its trading desk from midtown Manhattan to the floor of the exchange in part because of the credibility factor.

WILLIS: We think adding New York Stock Exchange brand name as a stamp of approval. We'll be able to tell our customers, we have met the most stringent standards for trading in the world.

KOSIK: The global brand of the NYSE plays a key role in the pending merger with Germany's Deutsche Boerse. The deal will give the exchange's customer access to a bigger variety of stocks and other financial products. But what will it mean for the people who work here?

GRECO: I think the people who are here will be doing more business because of all the technology, the capabilities, and I think the enhanced vision of the world.

KOSIK: Joe Greco expects the NYSE to be a part of that world for decades to come.

GRECO: In my career, we had tremendous, tremendous change and innovation. And that's pretty cool. And I look forward to, you know, relaying that to someone 30 years from now and tell them, and they go, oh, thanks a lot, old timer.

KOSIK: Alison Kosik, CNN, New York.

(END VIDEOTAPE)

HODSON: Quick last look at the stock markets. And after a weak start, we were looking at some gains in Europe. Just about an hour into the trade, that is still the picture -- up by about a quarter to a third of a percent for FTSE and the DAX. Paris CAC still and indeed the Zurich SMI off by a tenth of a percent -- Pauline.

CHIOU: It was a little bit of a soft picture here in Asia, Charles, where the Nikkei was down by more than a tenth of a percent. TEPCO Company, the company that operates the power plant was down by about 14 percent. Hang Seng and the S&P ASX 200 in Sydney did end this session up.

And we are getting word right now that the Egyptian Stock Exchange has opened again for the second day after being closed for more than seven weeks. It is down right now by 6.76 percent. This is following that bumpy reopening yesterday where the market closed after the circuit breakers kicked in after about five seconds when the market went down more than 9 percent.

Experts are saying that they did expect a pretty big selloff for a couple of days in Egypt because of the turmoil in that region. And that is it for this edition of WORLD BUSINESS TODAY. Thanks for joining us. I'm Pauline Chiou in Hong Kong.

HODSON: I'm Charles Hodson in London. Back at 1:00 p.m. in London, 2:00 p.m. in Paris, Berlin and Lisbon. That is 9:00 p.m. in China and 10:00 p.m. in Japan.

Meanwhile, "WORLD ONE" is next.