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These are stories Report on Business is following Tuesday, Oct. 25. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Euro tensions run high Tensions are running high in the euro zone ahead of tomorrow's summit.

Italy has yet to tell the markets what it plans to do in terms of reform - it's being pushed by Germany and France - while Greece's Prime Minister George Papandreou gave a rousing talk today about how his country is going to be reborn when all is said and done.

Leaders of the 17-member monetary union are expected tomorrow to continue discussions - and maybe evern reach conclusions? - on a sweeping plan that would shore up euro zone banks, increase the heft of the region's bailout fund, known as the EFSF, and bring so-called haircuts among holders of Greek debt to up to 60 per cent, far more than originally planned.

"Financial institutions will not be too pleased at an outcome that hits the upper end of expectations but Greek banks are the ones most significantly at risk," said Elsa Lignos, senior currency strategist at RBC in London. "From a wider market perspective, it remains to be seen how far haircuts can be stretched before CDS is triggered."

As Derek Holt and Karen Cordes Woods of Scotia Capital point out, the outlook is far from certain.

"There is precious little that is new to point to by way of developments in Europe apart from the ongoing tensions concerning the extent to which Greek debt may be written down," the economists said today.

"Policymakers have a unified mandate to seek a 'voluntary' 60-per-cent writedown in contrast to ISDA's caution that there are limits to what constitutes a voluntary mark down (ie: without triggering a credit event that would invoke CDS coverage and potentially rock markets) and in contrast to push back from European banks," they said in a research report, pointing also to tomorrow's vote in the German parliament over the bailout fund.

"Tomorrow's vote in the Bundestag regarding the vague outline for EFSF plans will only be the first of several it seems as others including Finland and the Netherlands state their intentions to put the overall package of proposals coming out of this week's summit to another parliamentary vote. That could add at least several weeks of delays, amid greater uncertainty toward the outcome than the votes on the July proposals."

Carney on hold Bank of Canada Governor Mark Carney held his benchmark interest rate at 1 per cent today, chopping his domestic growth forecast for 2011 and 2012, amid a host of threats including a "brief recession" in the euro zone.

In explaining the decision to leave borrowing costs alone for a ninth consecutive meeting, as expected, the central bank hinted it is not yet considering an interest rate cut, saying there is "considerable monetary policy stimulus" in Canada and the financial system is working well, The Globe and Mail's Jeremy Torobin reports.

"Our base case remains that the Bank of Canada will keep rates unchanged until the start of 2013," said senior economist Michael Gregory of BMO Nesbitt Burns. "If anything, today's announcement increases our conviction."

India's central bank hikes rates India's central bank hiked interest rates by another quarter of a percentage point today, but that appears to be it for now.

The Reserve Bank of India has been focused on inflation, but is turning its attention to the global turmoil and the potential impact on the economy.

"The tone of the accompanying statement was more dovish with a greater emphasis on downside risks to growth and signs of optimism that inflation pressures will start to ease in coming months," said analysts at RBC's emerging markets group after the central bank hiked its key rate to 8.5 per cent from 8.25 per cent.

"As a result, the RBI's current assessment is that there is a 'relatively low' chance that further rate hikes will be required at the next policy meeting in December. Nevertheless, further rates hikes can not yet be ruled out if inflation fails to fall as quickly as the RBI hopes. In contrast to previous statements, the RBI is now clearly increasing its focus on risks to the growth outlook. Growth risks are now considered to be 'undoubtedly significant' and 'need to be given due consideration.'"

CP profit dips Canadian Pacific Railway Ltd. remains "vigilant" where Asia is concerned, the railway said today as it posted a dip in third-quarter profit.

Profit slipped by just over $10-million from a year earlier to $186.8-million or $1.10 a share, while revenue climbed to $1.3-billion.

"We currently see strength in our bulk franchise, but remain vigilant in monitoring economic signals from Asia," said chief executive officer Fred Green. "We are focused on sustaining and improving service and productivity through investments in locomotives, infrastructure, people and technology."

BP rebounds BP PLC heralded a "turning point" today as the energy giant continued to rebound from the massive oil spill in the Gulf of Mexico with sharply higher profits.

BP's profit climbed to $4.9-billion (U.S.) in the third quarter from $1.8-billion a year earlier, and revenue jumped more than 30 per cent to almost $98-billion.

BP also said it plans to divest some $15-billion more in assets than it had previously planned, bringing its asset sales to $45-billion by the end of 2013.

"BP was severely tested by the Deepwater Horizon accident," said chief executive officer Bob Dudley.

"It is now over a year since the well was finally sealed and we have continued to respond with a strong sense of corporate responsibility."

Salaries to rise Most Canadian workers will still see higher salaries next year, despite a rocky global economy, but pay hikes won't return to the pre-recession heyday.

Employees will get average salary increases of 3.1 per cent in 2012, the Conference Board of Canada said in its compensation outlook to be released today, The Globe and Mail's Tavia Grant reports today.

Business ticker

In Economy Lab The idea that a healthy lifestyle substantially decreases demand on the health care system has been repeatedly shot, stabbed, and poked at with sharp sticks, but it won't just die. Chris Auld looks at the issue.

In International Business Barack Obama, faced with 14 million unemployed workers and a jobless rate that won't budge, is tackling the U.S. economic crisis by focusing on where it began: the housing market. The Globe and Mail`s Steve Ladurantaye reports.

In Globe Careers At some point in our careers, we're likely to be asked to speak in public, and it's essential to be able to communicate with confidence when we're thrust into the spotlight. The Globe and Mail`s Dianne Nice reports.

From today's Report on Business

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
BP-N
BP Plc ADR
+0.59%37.68
CP-N
Canadian Pacific Kansas City Ltd
-0.33%88.17
CP-T
Canadian Pacific Kansas City Ltd
-0.54%119.43

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