No lift from Qantas no-frills plan

QANTAS has spelled out details of how its low-cost airline will take the fight to Sir Richard Branson when it takes off early next year.

The Australian carrier, in which British Airways holds 17%, boasted that it will be the cheapest airline in the country. Branson's no-frills airline Virgin Blue is to float in Sydney this month.

Qantas chief executive Geoff Dixon said the airline, to be called Jetstar, would buy 23 Airbus planes, eventually having an all-A320 fleet, a departure for the Boeing-dependent carrier.

Dixon says the discount end of the market is big enough for both he and Branson. 'The domestic pleasure market is growing rapidly and now represents over 60% of all passengers,' he added. 'Jetstar will concentrate on growing this market.'

Investors were unimpressed, however, with Qantas slipping 0.3% to A$3.32.

The overall market was also weaker with fears of an interest rate rise on Wednesday weighing down the banks.

The All Ordinaries index slipped 15.4 points to 3180.30.

Westpac fell 1.1% to A$15.13, National Australia Bank was down 0.5% at A$28.78 and ANZ down 0.6% to A$16.72.

In Tokyo, after days of denying it was planning to bail out regional bank Ashikaga, the Japanese government over the weekend said it was going to do precisely that.

The lender, based in Tochigi Prefecture north of Tokyo, was unable to repay debts. At the end of September, these exceeded assets by 102.3bn yen (£542m). The government will renationalise the bank but, unlike the £11bn bailout of Resona earlier this year, shareholders' equity will not be preserved and investors will lose their investment.

While Ashikaga shares were suspended, the news hit other regional lenders seen as vulnerable, such as Hokkaido Bank and Fukuoka City Bank.

Those banks have been told by the government to boost their earnings, making nervous investors even jumpier. Hokkaido Bank fell 12% to 114 yen and Fukuoka was down 14% at 121 yen.

The smaller regional banks are seen as more vulnerable than their larger cousins and most of the bigger banks rose after initial falls, on the belief that the bail-out will be good for the wider industry. UFJ Holdings was up 0.6% at 471,000 yen.

Elsewhere, investors were more confident, with the Nikkei 225 rising 302.70 points to 10,403.27.

The leader was Tokyo Electron, which was optimistic about orders for semiconductor-making equipment with potential for further growth as chip companies such as Samsung and Toshiba try to meet booming demand. The shares rose 3% to 7980 yen.

In Hong Kong stocks picked up after a weak opening, on strong growth data. The Hang Seng index rose 0.8%, or 97.62 points, to 12415.

Most blue-chips were slightly higher. Property group Cheung Kong rose 0.8% to HK$61.75, banking giant HSBC was up 0.4% at HK$119.50 and ports-to-telecoms conglomerate Hutchison Whampoa put on 0.4% to HK$57.

In Singapore the Straits Times index edged ahead six points to 1719.99 on stronger factory output numbers.

Banking group DBS rose slightly on optimism about the prospects for the coming year. The shares gained 1.4% to S$14.20.

Media group Singapore Press Holdings rose 1% to S$19.70.