Global Investment News Briefs

Unemployment Hits 5% in Hong Kong; More Layoffs at Caterpillar; German Investor Confidence Rebounds; Lehman Auctioning Units; AIG Blows it Again; Bank Fiesta; Shell Pumps More Oil; Madoff Victims Get Tax Break

• Unemployment rose to 5.0% February in Hong Kong, up from the 4.6% in January and a 32-month high. The government recently announced a plan to create 120,000 jobs through increased infrastructure spending, adding temporary government jobs and subsidizing employers on new hires, Bloomberg reported.

• Caterpillar Inc. (CAT) said it will cut an additional 1,600 jobs, most of them at the company's operations in East Peoria and Aurora, Ill. This is on top of the 22,000 layoffs announced in January, and the 2,000 early retirement packages offered in February, Reuters reported.

• Investor confidence in Germany nearly hit a two-year high after the European Central Bank reduced its primary interest rate to a record low. "Expectations are getting ahead of themselves. Investors are looking at equity markets to provide a slightly more confident outlook, but in the economy there's no sign that we're near the bottom," Kenneth Broux, an economist at Lloyds Banking Group Plc in London, told Bloomberg.

• A source close to Lehman Brothers Holdings Inc. (LEHMQ) says the bankrupted company is auctioning off Lehman Brothers Bank FSB, a Delaware-based thrift, and Woodlands Commercial Bank, a Utah industrial bank, Reuters reported. "We're looking to realize value whenever we can get it," Lehman spokeswoman Kimberly Macleod said.

• American International Group Inc. (AIG), budgeted $57 million in "retention" pay for employees who will be fired, as part of a larger $1 billion program meant to retain staff,. "Spending a billion dollars on retention payments while the company is on its deathbed is ludicrous, particularly when some of those payments are going to employees the company plans to terminate," Representative Elijah Cummings, (D-Maryland) of the House Oversight and Government Reform Committee told Bloomberg. The insurer is under fire for handing out $165 million in bonuses to the derivatives unit blamed for the firm's near collapse, after its $173 billion government bailout.

• As Latin America's second-largest economy shrinks, the good times for Mexican banks and their parent companies may be ending, according to Fitch Ratings. Citigroup Inc.(C), Banco Santander SA (ADR:STD) and HSBC Holdings Plc (ADR:HBC)all have subsidiaries in Mexico that help buoy profit for their parents because of expanding demand from Mexicans for consumer loans and mortgages. Mexico's economy will shrink 1.9% in 2009, according to the average forecast of 30 economists surveyed by the central bank, Bloomberg reported.

• Royal Dutch Shell Plc (RDS) said it would increase production by a healthy 2 to 3% annually over the next four years. Shell's output has been falling for six years, but said big investments in low-decline projects will allow it to meet its annual growth target in 2009 through 2012. Shell, the world's second-largest non-government controlled oil company by market value, said the outlook for the industry was too uncertain to affirm longer-term targets, Reuters reported.

• Victims of Bernard Madoff's ponzi scheme will be able to recoup some money by claiming theft losses on their tax returns for 2008 under a new ruling by the IRS. Investors would theoretically have been paying capital gains taxes on the profits they made from the investments. The new IRS rule says investors should be entitled to a refund of those taxes, since those profits turned out to be phony, Reuters reported.