South Korea unveils $10.8 bln plan as markets eye more rate cuts

The package includes spending an extra 4.6 trillion won on regional infrastructure and providing 3 trillion won in tax benefits, mainly extending tax breaks on investment in factories, Finance Minister Kang Man Soo told reporters today in Gwacheon. Relief measures announced this year now total 33 trillion won, according to the finance ministry.

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South Korea's economic growth cooled to 0.6 percent in the third quarter, the weakest pace since 2004, as exports declined by the most in seven years and consumer spending stagnated.

 

Lawmakers last week approved the government's guarantee of $100 billion in bank debts to help lenders struggling to access foreign funds. South Korea will also supply banks with $30 billion in U.S. currency.     Â

 

South Korea's plan announced as the central banks in Europe and Australia looked set to cut rates again in a frantic battle to keep the financial crisis from shoving the world into its worst slump in decades.

 

In Europe, the Bank of England and the European Central Bank have both primed investors for another round of cuts later this week.

 

The U.S. Federal Reserve and central banks in Japan, China and India all cut borrowing costs last week in an effort to shield their economies from the fallout from the crisis, which started when the U.S. housing boom turned sour 15 months ago.

 

In yet another sign that even new economic powerhouses such as China were not spared the pain, the country's manufacturing survey showed a sharp drop in output in October, coinciding with official pledges to do more to boost domestic demand.

 

Interest rate cuts and a barrage of initiatives to shore up banks and pump-prime sputtering economies, encouraged some investors to shop for bargains after world stock markets fell 20 percent in October alone, their worst month ever.

 

Asian stocks rose for the fifth trading day in a row, up nearly 6 percent by 0600 GMT, and European markets were expected to follow, according to financial bookmakers.