WASHINGTON, Dec. 22--The Federal Reserve, working to combat the effects of a severe credit crunch, announced it had auctioned another $20 billion (13.9 billion euros) in funds to commercial banks at an interest rate of 4.67 percent. Fed officials pledged to continue with the auctions for as long as necessary, AP reported.
The central bank said Friday it had received bids for $57.7 billion (40.13 billion euros) worth of loans, nearly three times the amount being offered, indicating continued strong interest in the Fed’s new approach to providing money to cash-strapped banks.
It was the second of four scheduled auctions. The first auction, on Monday, of $20 billion (13.9 billion euros) resulted in loans being awarded at an interest rate of 4.65 percent. There were 93 bidders seeking $63.6 billion (44.2 billion euros) at the first auction and 73 at the second. Two more auctions will occur in early January.
In a statement Friday, the central bank said it would continue with further auctions for as long as necessary to address elevated pressures in short-term funding markets.
The new auction process was announced by the Fed last week in a coordinated action with central banks around the world trying to address a global credit crunch.
Federal Reserve Chairman Ben Bernanke and his colleagues decided to try the new process because their efforts to inject funds into the banking system through the Fed’s discount window, which makes direct loans to banks, had proven less successful than Fed officials had hoped.
Many banks had avoided using the Fed’s discount window out of concern that investors would see the move as an indication of underlying problems at their financial institutions. The auction process was developed as a second way to get money into the banking system with the hopes that it would not carry the perceived stigma of the discount window.
Economists said the first two auctions had gone well and appeared to be helping with the credit crisis. They said the Fed would not have announced a pledge to continue with the auctions if Fed officials did not think they were having a positive impact.

BEIJING, Dec. 22--Wall Street seeks to tap China’s $1.3 trillion in foreign reserves.
China has been making increasingly aggressive investments in some of the world’s most prestigious financial companies in recent months--most of them American. Morgan Stanley, Bear Stearns, Blackstone Group, and Britain’s Barclays have all negotiated major stakes by Chinese government-controlled investment funds, AP wrote.
Investment banks ailing from the subprime mortgage mess are looking for money to shore up their balance sheets. And China is leading a surge of strategic investments from Asia and the Middle East that so far have sunk about $25 billion into Wall Street banks.
That’s just the start of what some believe is a dramatic reversal of financial power in the shadow of Wall Street’s credit turmoil.
“Both Chinese private and government interests are controlling more and more of the US economy, and this is a result of the big trade and budget deficits we have,“ said Alan Donziger, professor of economics at Villanova School of Business. “These investments will make the US somewhat less independent, but this is inevitable when we live in a global economy.“
To be sure, Wall Street’s current predicament is “our own doing,“ he said. Turmoil in the credit markets have been fueled by defaults on subprime mortgages, and that’s caused the Federal Reserve to attempt a bailout of the industry through interest rate cuts.
Lower interest rates have caused the dollar to slide in value against other major currencies. And, for foreign governments, the devalued dollar makes investments in these financial institutions cheap.
In the 1980s, Japanese investors snapped up real estate and invested in businesses across a number of sectors. This new wave of foreign investment is different because Asian and Middle Eastern governments are taking stakes in financial institutions--a cornerstone of the US economy.
China agreed to pay $5 billion for a 9.9 percent stake in Morgan Stanley, and those securities pay 9 percent a year until they convert to shares in 2010. That translates to a gain of about $450 million of cash next year.
But, for Morgan Stanley investors, the infusion of new stock two years from now will dilute their shares--and potentially make owning Morgan Stanley’s securities less valuable. The same can be said about other banks that receive foreign investments.

NEW YORK,
Dec. 22--Oil prices jumped in light trading Friday after the government reported that consumer spending surged last month, raising hopes that the US economy will weather the crisis roiling credit markets and that demand for Oil and gasoline will strengthen.
The Commerce Department said consumer spending jumped 1.1 percent in November, the biggest one-month gain since 2004 and well above analyst expectations for a 0.7 percent increase, AP wrote.
Light, sweet crude for February delivery rose $2.25 to settle at $93.31 a barrel on the New York Mercantile Exchange.
Oil prices were also supported by stocks, which rose Friday, and a slightly weaker dollar. Energy investors often view stock market moves as reflective of overall economic sentiment. Also, Oil futures offer a hedge against a weak dollar, and Oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling. Many observers blame Oil’s rise last month to near $100 on speculators driven to Oil futures by the weaker dollar.
While Oil prices were higher Friday, trading volumes ahead of the holidays were about 25 percent of what they would be on a normal day, said Tom Kloza, publisher and chief Oil analyst at the Oil Price Information Service. Light volumes can exacerbate price moves. A similar pattern of light trading led to a choppy day Thursday.
Meanwhile, gold futures jumped Friday as the dollar retreated and Oil prices rose, leading investors to seek a refuge in precious metals. Trading volume was thin heading into the holidays.
Other commodities markets closed mostly higher.
Investors turned to gold as the dollar lost ground to the euro. The euro bought $1.4357, up from $1.4323 Thursday.
An ounce of gold for February delivery gained $12.20 to settle at $815.40 on the New York Mercantile Exchange.
Silver futures added 14.8 cents to $14.488 an ounce, while January platinum futures picked up $18.80 to $1,536.30 an ounce on the Nymex.

Venezuelan President Hugo Chavez

CIENFUEGOS, Cuba, Dec. 22--Venezuelan President Hugo Chavez presided Friday at a regional petroleum summit in Cuba, pressing his efforts to counter US influence in Latin America and the Caribbean by suggesting his neighbors pay for cheap oil with goods or services and not just cash.
Chavez said his plan to provide cheap oil to the region should go beyond financing mechanisms, in his opening speech to the Petrocaribe summit in Cienfuegos on Cuba’s southern coast. He suggested extending the kind of oil deal that Venezuela has with Cuba, which repays by providing doctors who offer free services in impoverished areas of Venezuela, to other countries, AP said.
Providing fuel in return for locally produced goods or services has been an option for some time under Venezuela’s current Petrocaribe pact, which offers oil to the region through long-term, low-interest financing. But it is unclear how many countries other than Cuba have taken up the offer.
Chavez also called for creating an international fund to promote solar, wind, geothermal and other alternative energy sources.
“Despite the Yankees, our gas is at the service of Venezuela first, and next to our brothers in the Caribbean,“ Chavez said in a reference to the United States.
Venezuela has the largest oil reserves outside the Middle East. It is South America’s largest oil exporter and the fourth-largest supplier of crude to the United States.
Chavez said Petrocaribe members’ collective debt for Venezuelan crude currently is nearly $1.2 billion (830 million euros) and is expected to grow to $4.5 billion (3.1 billion euros) by 2010. He is promoting Petrocaribe as part of a larger effort to create a regional confederation from Argentina to Cuba that will help the region counter US influence. Petrocaribe allows nations to repay Venezuela over up to 25 years with 1 percent interest as long as the price of crude is above $40 a barrel.
With Venezuela’s backing, Cuba is opening a renovated oil refinery that was left idle after the collapse of the Soviet Union--new evidence that Venezuela has replaced Moscow’s communists as a crucial patron of Cuba.
More than $136 million (94.5 million euros) in improvements have been made to the refinery. It is expected to process 65,000 barrels of crude daily and then increase capacity.

RIYADH, Saudi Arabia, Dec. 22--Saudi Arabia is planning to launch a sovereign wealth fund that is expected to dwarf Abu Dhabi’s $900 billion and become the largest in the world.
The effort is likely to be spearheaded by Saudi Arabia’s Public Investment Fund, which has a mandate to invest only internally, TradeArabia wrote.
The new fund will be a formidable rival for other government-owned investment funds in the Middle East and Asia, which are playing an increasingly active role in channeling capital to western companies, particularly financial companies hard hit by the US mortgage meltdown.
News of the Saudi plan comes as Temasek of Singapore is in “preliminary“ talks with Merrill Lynch concerning a multibillion-dollar stake in the ailing investment bank, according to a person familiar with the matter.
Merrill and Temasek have been talking for a while about this, although there are no indications that a deal is imminent,“ the person said. Temasek was also approached as a possible investor in UBS and Morgan Stanley, although the investment banks later struck deals with Government of Singapore Investment Corp and China Investment Corp respectively, the person said.
These stakes have avoided a serious political backlash but potential investments from the Saudis are likely to be subject to greater scrutiny, Financial Times said.
The effort is likely to be spearheaded by Saudi Arabia’s Public Investment Fund, which has a mandate to invest only internally.
Previously, the Saudis’ oil wealth had gone partly to the kingdom’s central bank, the Saudi Arabian Monetary Authority, and partly into the coffers of the ruling family.
While the balance sheet of SAMA is public information, bankers say the figures capture only a percentage of the total wealth of the country. Until now, SAMA’s investment policy has been conservative and largely limited to investment in bonds, especially US Treasuries, and shares.
That contrasts with the mandate of its peers in the Persian Gulf, which have increasingly been geared to provide higher returns for when oil reserves run out, by investing in alternative assets such as private equity and hedge funds.
In contrast to its neighbors, Saudi Arabia has expanded its spending and next year’s budget includes funds for infrastructure projects.

An Alitalia plane parked at RomeÕs Fiumicino International Airport.

ROME, Dec. 22--Alitalia’s board of directors said Friday it had advised the Italian government to pursue an offer by Air France-KLM to rescue the near-bankrupt airline with a long-term investment of 6.5 billion euros ($9.3 billion).
The board preferred the rescue plan by Air France, the world’s largest airline by revenues, to another proposed by the Italian company Air One, AFP reported.
“The proposal by Air France-KLM is the more opportune and calls for a significant investment plan (of) 6.5 billion euros ($9.3 billion) in the long term,“ Alitalia said in a statement.
The twice-postponed decision, which the statement said was unanimous, was reached after seven hours of discussion by the board of the flag carrier.
“The business plan presented by Air France-KLM was of great credibility and capable of resolving Alitalia’s strategic, industrial and financial crises,“ the statement said.
“The Alitalia brand and the Italian identity will remain a basic asset of the company and will be further developed to the benefit of the new group,“ it added.
“Air France-KLM, with a turnover of more than 23 billion euros and a capitalization of around 7.2 billion euros, is the world’s largest airline in terms of receipts and has proven successful experience in industrial integration and restructuring,“ it said.

BOGOTA, Colombia, Dec. 22--A mining company has found a huge gold deposit in central-west Colombia which could be one of the world’s biggest discoveries, Colombia’s mines and energy minister Hernan Martinez announced Friday.
Martinez said a foreign mining group, which he declined to identify, had made the potentially lucrative discovery during exploration work in the department of Tolima, AFP reported.
“The discovery is extremely big, that’s what the president of the company said,“ the minister said.
He said the company, which is listed in New York and London, would likely issue a public statement in February about the find.
Company officials believe the gold deposit could rank as one of world’s ten largest finds. Martinez said it is located close to a road and relatively accessible.
Executives have told the ministry it would likely cost around two billion dollars to mine the gold and require around 1,200 workers. They hope to get the mine up and functioning by 2011.
The find may enable Colombia to double its gold production which rose to 15.6 million grams last year, reaping around $281 million in export earnings.

TOKYO, Dec. 22--Japan must work harder to cut its greenhouse gas emissions to meet obligations under the Kyoto Protocol climate change treaty, a government report said Friday, urging more industrial and consumer efforts, use of alternative energy and tighter regulations, officials said.
Japan is falling far behind its Kyoto commitments to cut its emissions of carbon dioxide and other greenhouse gases to 6 percent below its 1990 level by 2012. Emissions in 2006 were 6.4 percent above 1990 levels, AP wrote.
Due to rising emissions, Japan needs to cut additional 20-34 million tons of emissions from the ongoing plan to achieve its commitment, said Environmental Ministry official Yuta Okazaki, citing the final draft of a government report.
The report, submitted to a joint advisory panel by officials from the Environment and Industry ministries, said Japan can still meet the target by stepping up efforts in coming years, Okazaki said.
Some members said the report was too optimistic about achieving the emissions reduction target through the extra steps, and that some of the additional measures, such as public energy-saving campaign and voluntary corporate efforts, were too vague, Okazaki said. Members also proposed a set of backup measures in case the new steps proved insufficient, Okazaki said.
Pushing forward climate change measures is a key agenda for Japan, the chair of the G-8 summit next year.