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If China catches a cold…

China has defied predictions of a hard economic landing for some time now so it is somewhat unsettling to see  investors positioning for a sharp slowdown in the world’s second-largest economy. Over the last 10 years, the world has become accustomed to Chinese annual GDP growth of above 9 percent. A seemingly insatiable demand for commodities from soya beans to iron ore has catapulted the Asian giant to near the top of the global trade table. China is the biggest trading partner for countries on nearly every continent, from Angola to Australia. But many are now fretting that an unhappy coincidence between stuttering global demand and domestic strains in the property and banking sectors could knock Chinese growth to below 7 percent (the level commonly identified as a ‘hard landing’), with grave implications for the rest of the world. “It used to be the case that if the US sneezes, the rest of the world catches a cold. But with the US already confined to the emergency room since 2008 thequestion is what happens if China catches a cold,” says Citi in a recent report. Many are now preparing for the first sneeze. Commodity exporters are expected to bear the brunt of a sharp Chinese slowdown. Investors have pared back exposure to Brazil, Russia, Chile and South Africa, citing fears over China. On the flipside, Turkey, Mexico, Israel and India have been identified as less vulnerable. Citi has constructed a currency index hedge against Chinese weakness, which comprises short positions in the Brazilian real, Russian rouble, Chilean peso, Korean won and Indonesian rupiah with long positions in the Turkish lira, Mexican peso, Indian rupee, Israeli shekel and Hungarian forint.  

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Keeping up with the catwalk

By Suzanne Plunkett Looking back at images from more than a decade ago, you could be forgiven for thinking that the job of covering catwalk season was once far less demanding, but just as fashions change, so do the demands on photographers. When I made my Fashion Week debut at a DKNY show in New York in the spring of 1999, all I had to worry about was getting a well-exposed, in-focus photo of every outfit on the catwalk. Since we were still shooting in film, this came with its own stresses. Every time I finished a roll, there was a desperate scramble to rewind and change before the next model paraded by. To ensure I didn’t miss anything, I adopted my own Fashion Week fashion: A particular leather jacket that had two pockets at chest level; the left side for unexposed films and the right side for exposed. Because I then had to dash back and forth to the darkroom to develop the films between shows, there was no time to focus on the hullabaloo surrounding the shows. The circus sideshow of celebrities, influential fashion figures and trend watchers was largely ignored by the cameras. Since the advent of digital, the stresses of juggling rolls of film have long gone (as has my leather jacket) but that hasn’t made the job any easier. While shooting the creations on the catwalk is still important, the appetite for different kinds of pictures has grown. Now in addition to shooting straight-up-and-down images of outfits during the show, Reuters photographers are also on the look-out for interesting details or wide angles. Liberated by our digital cameras and laptops, we are able to capture the flavor of Fashion Week’s particular brand of flamboyant theater: the frenzied scenes backstage as models get dressed, the game of spot-the-celebrity in the front row and the street style of freakishly-coiffed fashion bloggers. I even get to write blogs myself. Although we have more freedom these days, fashion week is still bound by routines. As the onset of digital and the spread of the internet has fueled the appetite for fashion images, the competition among photographers has also increased. To survive the scrum of photographers that crowd the end of the catwalk, preparation is everything. At London Fashion Week, I usually arrive at a show one or two hours before it starts. Once I get through the gauntlet of security guards and public relations women armed with clipboards and wristbands, I secure a spot on an elevated platform built for photographers. This entails marking off a square foot with tape printed with the Reuters logo which I then slash into strips with a knife to make it too fiddly for a rival photographer to remove (it happens!). Next, if I’ve been given access, I go backstage to photograph the models getting ready. This often produces some of the most striking images of Fashion Week – young girls lost in a sea of hands armed with lipstick, eyeliner, crimpers, hairspray and curling tongs. Then it’s back to the catwalk to watch the models do a run-through with show lighting. This is a last chance to check my camera’s white balance settings and make sure no one is trying to steal my spot. When the doors open to guests, I prime my flash, change my camera settings and prepare myself to compete with the paparazzi and showbiz photographers as the celebrities make their way to their seats. This is a tricky balancing act. If you spend too long chasing the fashionably late famous faces, you won’t make it back to the spot you’ve so carefully marked out. At the Matthew Williamson show this year, actress Sienna Miller arrived only seconds before the models’ high heels hit the catwalk. Once I am settled into my place, the lights dim, I once again change my camera settings and wait for the music to start. When the show is over I scramble out of my position and find a place to file my pictures. Usually this is on the floor near the catwalk of the next show. Fashions change, technology changes and so do the demands on photographers, but one thing remains constant: there’s no time for glamor in photojournalism.

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TEXT-Fitch ups Bank of Ceylon to 'AA+(lka)'

The upgrade reflects Fitch's view of the Government of Sri Lanka's (GOSL) increased capacity to support BOC, if required, as indicated by the upgrade of Sri Lanka's Issuer Default Rating to 'BB-' in July 2011 (for more information, please refer to the rating action commentary, published on 18 July 2011). The ratings reflect Fitch's expectation of support, underpinned by the bank's importance to the state, full-state ownership and its high systemic importance to the Sri Lankan banking sector; however, the probability of support is viewed to be moderate. As BOC's ratings are driven by expectations of state support, a change to Sri Lanka's sovereign rating may change BOC's ratings. An upgrade may also result from a demonstration of preferential support to the bank.The proposed debenture issue is rated one notch below BOC's National Long-Term rating reflecting its debt-like features. The debentures will have a maturity of five years with principal repayment as a bullet payment on maturity. Coupon payments will be semi-annual and annual at fixed and floating rates, and do not contain any deferral clauses. The debentures are to be listed on the Colombo Stock Exchange alongside BOC's other listed and rated debentures.BOC has a robust franchise in Sri Lanka, derived from its state ownership and consequent reputation for stability that serves as a competitive strength. The franchise derives further strength from BOC being Sri Lanka's largest bank (one-fifth of banking sector assets, loans and deposits at end-2010), as well as from its widely distributed presence and strong customer reach.Supported by its franchise, BOC benefits from a large share (53% of deposits at end-2010) of current and savings accounts in its deposit mix. The bank also has the largest foreign currency-denominated deposit base supported by remittance flows from residents working outside the country. Consequently, BOC enjoys a low-cost of funds. However, the bank's exposure to customer segments that are less flexible in terms of pricing has resulted in a low net interest margin (3.6% in 2010).Balance-sheet and off-balance-sheet exposure to the state (GOSL and state entities) represented 44% and 16% of assets, respectively, at end-2010. Fitch expects exposure to the state to remain high given BOC's strong links with the latter.BOC's gross non-performing loan (NPL) ratio declined to 3.5% at end-2010 from 5.7% at end-2009. The gross NPL ratio adjusted for state sector exposures also decreased to 5.3% from 8.3% though remained higher than 'AA(lka)'-rated peers. This resulted from an absolute reduction in NPLs and strong loan book expansion on the back of a broader economic upturn. Fitch believes that strong growth could elevate credit risk, and that close monitoring is required to limit asset quality deterioration.BOC's core and total capital adequacy ratios (CARs) decreased to 10.0% and 13.1% at H111 from 11.3% and 15.2% at end-2010 due asset growth. In this context, the bank plans to boost its Tier 2 capital base in Q411. Despite healthy CARs, Fitch notes that BOC's equity/assets ratio remained low at 4.2% at H111, and that a higher capital buffer is desirable, in light of its huge systemic importance and expected asset expansion. The bank indicates that the augmentation of Tier 1 capital is likely to largely depend on the retention of internal capital generated.BOC was established in 1939 under the Bank of Ceylon Ordinance No.53 of 1938. It had a broad domestic footprint of 875 service points and 352 ATMs at end-2010, and also has overseas branches in India and the Maldives and a subsidiary in London.BOC's ratings:National Long-Term rating: upgraded to 'AA+(lka)' from 'AA(lka)'; Outlook StableOutstanding subordinated debentures: upgraded to 'AA(lka)' from 'AA-(lka)'Proposed subordinated debentures of up to LKR5bn: assigned 'AA(lka)'

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Northrop pulls out of Farnborough air show

Northrop has participated in the air shows -- which alternate between Paris and Farnborough -- each year since it merged with Grumman in 1994, said spokesman Randy Belote.Belote said the company had already been reducing its footprint at the international air shows in recent years, but pulling out completely would save millions of dollars.He said it did not diminish the company's commitment to Britain or other international customers.Virginia-based defense consultant Loren Thompson said it would be the first time in decades that the company -- one of the five largest U.S. defense contractors -- was not present at the big international showcase of commercial and military aircraft."This is just the latest indication of how determined Chairman Wes Bush is to cut costs," Thompson told Reuters. "They're going to break the model in terms of what is expected in terms of industry leaders."Bush has realigned the company around four business areas focused on cybersecurity, logistics, communications and intelligence, and unmanned systems, and recently spun off the company's shipbuilding business.Belote said Northrop was reevaluating its participation in other international air shows as well, but was only prepared to announce its decision about Farnborough at this point.

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U.S. stock index futures point to lower start

* Earnings are in focus, with JPMorgan the first of the U.S. big banks to release third-quarter results. Analysts expect profits were likely to be squeezed by weak loan demand and low lending rates.* Google is reporting third-quarter earnings and investors will be looking to see how the slowing economy is impacting its advertising business.* In economic news, weekly U.S. jobless claims is due at 1230 GMT, with economists in a Reuters survey forecasting a total of 405,000 new filings compared with 401,000 in the prior week.* The minutes of the U.S. Federal Reserve Sept. 20-21 meeting released on Wednesday said officials could take more decisive steps to bolster a flagging economy and discussed the possibility of launching a fresh round of bond purchases.* Apple won another legal victory in its global patent war with Samsung Electronics' after a court temporarily banned the sale of Samsung's latest computer tablet in Australia.* A person familiar with the matter said there was no merit in a report on Wednesday that Akamai Technologies Inc was close to being acquired by Google Inc .* Research In Motion , the maker of the BlackBerry smartphone said email and instant messages may not be cleared until Thursday morning on the U.S. East Coast.* Bloomberg reported, citing people with knowledge of the matter, that DuPont Co is seeking buyers for its polyester-film joint venture as well as its powder-based paint business.* Pratt & Whitney, a unit of United Technologies Corp has agreed to buy Rolls-Royce Holding share of the International Aero Engines consortium in a $1.5 billion deal.* The CEO of AOL Tim Armstrong has been pushing the idea of a sale to Yahoo to top shareholders, which could see the company save $1.5 billion, according to sources with knowledge of the discussions.* The FTSEurofirst 300 index of top European shares fell 0.8 percent after hitting a nine-week closing high on Wednesday after weaker than expected Chinese trade data stokes global growth concerns, with miners the biggest losers.* U.S. stocks rose on Wednesday after political parties in Slovakia reached an agreement on ratifying a plan to boost the powers of the euro zone's rescue fund.The Dow Jones industrial average rose 0.90 percent, Standard & Poor's 500 Index gained 1 percent and the Nasdaq Composite Index shot up 0.84 percent.

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New York jury chosen to hear Viktor Bout arms dealing case

He faces 25 years to life in prison if convicted in a trial in federal court in Manhattan due to open on Wednesday and last no more than four weeks.U.S. District Judge Shira Scheindlin winnowed the jury pool by asking prospective jurors, among other questions, if they could be fair and impartial in a case involving the FARC, the Colombian militant group. Twelve jurors and three alternates were ultimately chosen from a pool of at least 150 prospects.Bout was arrested in Bangkok in 2008 in a sting operation by U.S. agents posing as arms buyers from the Revolutionary Armed Forces of Colombia, known as FARC. He was extradited to the United States in November to face trial.Washington classifies FARC, nominally a Marxist-inspired guerrilla army, as a terrorist organization and says it is deeply involved in the cocaine trade.According to court documents, Bout offered to sell the agents advanced man-portable surface-to-air missiles, as well as approximately 5,000 AK-47 assault rifles.While he was charged only in connection with the suspected arms deal in Thailand, U.S. authorities have said he has been involved in trafficking arms since the 1990s to dictators and conflict zones in Africa, South America and the Middle East.Defense attorney Albert Dayan and assistant U.S. attorney Brendan McGuire said they would deliver opening statements on Wednesday.Prosecutors did not say who they would call as their first witness, but jurors at some point will hear from Andrew Smulian, who has pleaded guilty to related weapons charges and has agreed to testify against Bout.As Tuesday's court proceeding was about to end, one of the selected jurors suddenly asked the judge to quit the jury. After she had been excused, the judge said the woman had said her fear of elevators would prevent her from serving.The final pool is composed of nine women and six men.

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UPDATE 3-WHO says world TB cases decline for first time

* Drug-resistant TB remains big challenge* TB as global pandemic affects almost third of worldBy Alina SelyukhWASHINGTON, Oct 11 (Reuters) - The number of people getting sick with tuberculosis has dropped for the first time, while the death toll from the disease reached its lowest level in a decade, helped by progress in countries like China, the World Health Organization said on Tuesday.In 2010, 8.8 million people fell ill with TB and 1.4 million died, both marking a notable decline over prior years, the United Nations health agency said in releasing its 2011 Global Tuberculosis Control Report."The findings reflect a significant milestone for global health," said Dr. Mario Raviglione, director of the WHO's Stop TB Department, at a news briefing. "But history teaches that we cannot be complacent about TB. The international community therefore must not perceive these achievements as job done."TB is a worldwide pandemic, with about a third of the world's population infected with the bacteria, although only a small portion ever develop the disease.The WHO has revised its estimates to show that the absolute number of cases has been on a decline since 2006, not on a slight rise as previously reported. The number of people ill with TB peaked at 9 million in 2005.The death toll from TB peaked at 1.8 million in 2003.The WHO officials attributed the decline to better data collection around the world; increased funding in China for addressing TB; better prevention and care in the former countries of the Soviet Union and Latin America as their standard of living improves; and a drop-off of infection in Africa, which had peaked with the HIV epidemic.The TB bacteria destroys patients' lung tissue, causing them to cough up the bacteria, which then spreads through the air and can be inhaled by others. If untreated, each person with active TB can infect on average 10 to 15 people a year.TB is especially common in Latin America and the Caribbean, Africa, Asia, Eastern Europe and Russia.The countries the WHO especially noted for progress in the fight against the disease were Kenya, the United Republic of Tanzania, Brazil and China, which saw a drop of nearly 80 percent to 55,000 TB deaths in 2010 since 1990.Globally, the TB death rate dropped 40 percent in 2010 compared to 1990, and all regions except Africa were on track to reach a 50 percent mortality decline by 2015.CHALLENGE OF DRUG RESISTANCESome countries routinely vaccinate children with Bacillus Calmette-Guerin, made by several companies including Merck & Co Inc . The vaccine doesn't always protect against TB.The infection is also treatable by antibiotics, such as isoniazid or Sanofi's Rifadin, but they must be taken daily for months to be effective.Because people do not always take the drugs as directed, multidrug-resistant (MDR-TB) and extensively drug-resistant (XDR-TB) strains have emerged. Leaving them untreated increases the risk of drug-resistant strains of TB spreading.In March of this year, the WHO warned that more than 2 million people will contract MDR-TB by 2015.Drug-resistant TB strains remain one of the biggest challenges, as only about 16 percent of patients diagnosed with MDR-TB are actually getting treatment, said Dr. Katherine Floyd, coordinator of the TB monitoring and evaluation unit at the Stop TB department."There is little interest by the industry in developing new drugs in general for antibiotics, but when it comes to TB in particular ... they cannot count on making a lot of money off the drugs and therefore don't invest," Raviglione said.Although many advances have been made in increasing access to diagnostic technology, clinics and treatment around the world, countries pay for some 86 percent of all anti-TB funding and continue to struggle with funding gaps.With that in mind, global health experts warned against complacency about the reported improvement."We know from the past experience that as soon as you drop the guard, TB comes back," said USAID's Dr. Ariel Pablos-Mendez.