China Solar Panel Firm 'In Bond Default'

China has suffered what has been called its first corporate bond default, as the government tries to make its financial system more market-orientated.

A Shanghai-based manufacturer of solar panels paid only part of the 90 million yuan (£9m) in interest due on Friday for bonds issued in 2012.

Chaori Solar Energy Science and Technology had earlier warned it would struggle to make the payment.

According to two bondholders hit by the default, only 3% of the due amount was paid.

The solar industry has been heavily criticised in the past for levels of state subsidies.

Competitor nations including the United States, and Germany - Europe's largest solar user - have been vociferous critics of Chinese state support in the sector.

Manufacturers in the US and Germany have struggled as cheaper Chinese panels flooded their markets.

Beijing has previously bailed out troubled companies in an attempt to maintain confidence in its credit markets.

However the ruling Communist Party has promised to make the domestic market more productive and competitive.

Chinese citizens have complained that bailouts have not encouraged a need for risk aversion by big businesses.

Legal representatives for the bondholders hit by the default said they would pursue the money owed.

Lawyer Gan Guolong said: "The default today is already an established fact. We will definitely help recover bondholders' interests through relevant legal action."

A commentary published by the official Xinhua news agency hinted that government policy over defaults was hardening.

"The episode should help reduce the moral hazard caused by the widespread assumption that an almighty government will always bail out underwater investments with taxpayers' money," Xinhua said.

"That, after all, is the market playing its own decisive role."

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US Jobs Up As Part-Time Work Hits New Record

The number of new jobs in the United States accelerated in February, as the number of part-time workers in the month reached an all-time high.

The rise of 175,000 jobs helped ease fears of an economic slowdown.

The dollar rose sharply on the news and the Federal Reserve is now expected to continue tapering its quantitative easing stimulus package.

The US Labor Department said the 35% job jump comes on the back of 129,000 new positions in January.

The unemployment rate, however, rose 0.1% to 6.7%. The previous figure was at a five-year low.

"This bodes well for the economy since there were massive head winds," Adam Sarhan, chief executive at Sarhan Capital in New York, said.

"This report plays perfectly into the Fed's script of tapering."

US shares opened higher on the data. The British pound dropped at first against the dollar before recovering.

The dollar also hit a six-week high against the yen.

Analysts had expected harsher figures as snow and ice hampered economic activity across swathes of the US.

Economists had expected non-farm payroll numbers rising by only 149,000 jobs.

Revised figures for December and January were also released, showing 25,000 more jobs being created in that period than previously thought.

Last month's weather did impact average working hours, with February being the lowest level since January 2011.

Economists now expect a reversal once the weather improves.

A smaller survey of households, from which the unemployment rate is derived, showed that 6.9 million people with jobs reported they were working part-time.

That was the highest reading for February since the series started in 1978.

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TV Licence Dodgers May Not Be Prosecuted

TV licence dodgers may no longer face prosecution in the courts under new plans being considered by the Government.

Justice Secretary Chris Grayling says "serious work" on the plan is under way, with more than 100 cross-party MPs in support.

"The Culture Secretary (Maria Miller) and I both agree that this is a really interesting idea, particularly given the pressure on our courts system," Mr Grayling told The Daily Telegraph.

"Our departments will be doing some serious work on the proposal."

Efforts to change the law are being spearheaded by Tory MP Andrew Bridgen.

He said that for some cash-strapped families, the current law was "criminalising them for being poor".

"It is outrageous that so many people are brought into the criminal justice system through this means. I believe that non-payment should be treated in the way that parking tickets are," Mr Bridgen told the newspaper.

"It is absurd that the courts are being clogged up by such a minor offence."

Offenders currently face a £1,000 fine and a criminal record, as well as possible time in jail if fines are not paid.

Some 180,000 people faced magistrates last year after being accused of not paying the £145.50 fee, accounting for in excess of one in 10 of all criminal prosecutions.

Of those, 155,000 people were convicted and fined.

The proposed changes could see dodging payment of the TV licence become a civil matter, with a fine set by the Government.

A BBC spokesman said: "Legislation is a matter for the Government. However, changing the law could lead to higher evasion. Just a 1% increase in evasion would lead to the loss of around £35m, the equivalent of around 10 BBC Local Radio stations."

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'Bitcoin Founder' Denies Role Amid Tax Threat

A man tracked down to a modest suburban home in California has denied being the founder of Bitcoin, following a media report naming him.

Newsweek claimed a 64-year-old Japanese-American physicist was the mysterious 'Satoshi Nakamoto' behind the virtual currency.

But the man, who was mobbed outside his house after the report appeared, said he was misunderstood when approached by the publication.

"It sounded like I was involved before with Bitcoin and looked like I'm not involved now. That's not what I meant. I want to clarify that," the man who identified himself as Dorian Prentice Satoshi Nakamoto, told the Associated Press.

But the magazine stood by its story and said his career included classified work for the US government as a systems engineer.

The modest home of the alleged Bitcoin founder

It also insisted that he initially hinted of his role in the crypto-currency, that has unsettled the banking sector and frustrated governments.

His denial came just hours before the the Japanese government said Bitcoin was not a currency but it should be "subject to taxation".

Tokyo said banks would not be allowed to deal in Bitcoin transactions or allow accounts in the virtual wealth transfer vehicle.

It was launched five years ago and is generated by complex chains of connected computers around the world.

Japan said Bitcoin was not defined in law but added that if transactions were used for money laundering "that would constitute a crime".

Police are investigating the death of a Bitcoin exchange CEO, Autumn Radtke

Chief Cabinet Secretary Yoshihide Suga said: "As a matter of common sense, if there are transactions and subsequent gains, it is natural ... for the finance ministry to consider how it can impose taxes."

The move comes just days after police confirmed they were investigating the "unnatural death" of a Bitcoin exchange chief executive.

Autumn Radtke, 28, an American, was found dead at the base of a Singapore apartment block on February 26.

Officers said it is unclear how the boss of First Meta died, but ruled out foul play amid unconfirmed reports linking her with depression.

Last month, one of the world's largest Bitcoin exchanges filed for bankruptcy protection as it admitted hackers may have stolen all of its digital currency.

Japan's Mt Gox filed for bankruptcy which saw investors protest the closure

Mt Gox revealed 850,000 Bitcoins worth about £286m were unaccounted for following cyber attacks, and said it has 127,000 creditors.

Chief executive Mark Karpeles blamed a weakness in the exchange's computer system for the massive loss, which included 750,000 users' coins and 100,000 of its own.

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Coastal Areas Bid For £64m Storm Relief Fund

By Becky Johnson, North of England Correspondent

Coastal communities affected by flooding will be able to bid for a share of a £64m fund.

The Government has said projects to strengthen flood defences will be prioritised.

The fund was originally set up to ensure investment was made in seaside towns and villages, reduce unemployment and create apprenticeships and job opportunities for young people.

During the series of winter storms many coastal communities with already fragile economies have taken a battering both physically and financially.

In Aberystwyth, in west Wales, where the Victorian promenade was badly damaged as high tides and high winds combined to create the worst storms in living memory, the race is on to repair the seafront in time for the start of the tourist season at Easter.

The damaged rail line at Dawlish, in Exeter

Richard Griffiths who owns the Richmond Hotel on the seafront, describes how the waves broke over the promenade and through a sea wall before pummelling the front of his hotel.

He told Sky News investment in stronger defences will be essential to prevent future storms causing similar damage because tourism is a major source of income in the town.

"It's vital for the local economy that Aberystwyth is up and running. It is key to the whole area," he said.

The Government has announced that in England £17m is being allocated to flood hit areas including Great Yarmouth, Weymouth, Devon and North Tyneside.

New projects to help boost tourism across the UK include £170,000 to develop the Arran Coastal Way in Scotland, £270,000 to develop Northern Ireland's first lobster hatchery and £100,000 is being spent on a new water sports centre in Colwyn Bay in Wales.

Residents battle floodwater in Tirley, Gloucestershire

Chief Secretary to the Treasury, Danny Alexander, said: "The Coastal Communities Fund allows us to help communities across the UK to rebuild and regenerate their local economy, with projects this year supporting nearly 4,000 jobs and 1,000 training places.

"This is even more important given the extreme weather and I'm very pleased we're giving £17m of the fund to projects in areas hit by floods.

"Additionally, we have invested £5m from the fund's reserve into the government's programme for flood recovery."

But one expert has told Sky News that if, as he expects, we will see more frequent storms on the scale of those seen over the winter some communities may not withstand the damage.

Dr Stephen Tooth is a geography lecturer at Aberystwyth University. He has studied erosion and says it will be impossible to protect all coastal areas. 

He told Sky News: "There are some very difficult social and political decisions to be made here as to what we value and wish to defend. It's certainly not the case that you can protect everywhere. 

"Tough decisions are going to have to be made at various levels as to where the investment is going to be to protect our coastline, but I think there is tacit acknowledgement that we can't defend everywhere and to some extent, some sections of coastline are going to have to be allowed to erode."

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Birmingham City Owner Carson Yeung Jailed

The owner of Birmingham City football club, Carson Yeung, has been sentenced to six years in jail for money laundering.

Judge Douglas Yau handed down the sentence in a Hong Kong court after convicting the 54-year-old of five charges linked to the laundering of $93m (£55.6m).

Lawyers for the former hairdresser earlier said they were expecting a "significant" jail sentence.

He had faced up to seven years' imprisonment.

Lead defence lawyer Graham Harris told the judge that Yeung, who built a business empire from hair salons, fertiliser and property, "came from rags to riches, and he's likely to return to rags".             

The Chinese businessman took control of Birmingham City in 2009

Pleading for a light sentence, Mr Harris said there had been "no subterfuge" in Yeung's dealings, as the accounts in question were held in his own name and his father's.

Yeung was a generous philanthropist and head of a young family, with two children aged under three as well as a 19-year-old son, the lawyer said.

Before his emergence in English football, the businessman was little known in Britain.

He took control of Birmingham City in 2009 in an £81m takeover from David Sullivan and David Gold, now the co-owners of West Ham.

Throughout the trial, Yeung and the prosecution painted differing pictures of how the tycoon amassed his fortune.

The prosecution said the millions of pounds that passed through the five accounts came from "unknown parties without any apparent reason".

Yeung insisted he had accumulated his money through share trading, upmarket hair salons and business ventures in mainland China, as well as investing in casinos in Macau.

He also said he made up to £2.3m from gambling in Macau, adding that he gambled as if he were "running a business".

It emerged during the trial that his business dealings included transactions with businessman Cheung Chi-tai, who has links to the Macau casino industry.

Sentencing Yeung on Monday, Yau said any "right-thinking" person would conclude transactions between the pair were "proceeds of an indictable offence".

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Lloyds Commits To Credit Unions Amid Pay Row

By Mark Kleinman, City Editor

The taxpayer-backed Lloyds Banking Group will make a series of pledges on Wednesday aimed at combating financial exclusion, even as the industry runs headlong into another pay row.

Sky News understands that Lloyds will announce as part of its annual report that it will contribute an additional £1m annually to supporting credit unions, an increasingly popular form of alternative finance.

The commitment to credit unions, which the Government hopes will reduce the reliance on payday lenders of millions of Britons, will be one of dozens made by Lloyds under the slogan 'Helping Britain Prosper', launched by the bank's chief executive last month.

Sources said that Antonio Horta-Osorio would also promise to provide at least one in four so-called basic bank accounts, in line with its share of the broader current account market.

Other commitments would include employing a specific number of apprentices as Lloyds positions itself for a full return to private sector ownership later this year, they added.

Last month, the bank, which is 33%-owned by taxpayers, said it would employ women in 40% of its top 5,000 jobs within six years, while increasing net lending to small businesses and a host of other stakeholder-friendly measures.

Although the scale of some of the commitments is modest in the context of Lloyds' size, the bank hopes that they will convince politicians and the public that it is serious about changing its image.

The publication of Lloyds' annual report will include its remuneration report, which will show that the number of employees paid more than £1m in 2013 rose from 25 staff the year before.

The most toxic publicity, however, is likely to be reserved for Barclays, which also plans to release its annual report on Wednesday.

Barclays will say that it also increased substantially the number of millionaires on its payroll in 2013, as well as setting out the details of substantial pay hikes for Antony Jenkins, chief executive, and other senior risk-takers.

Lloyds and Barclays declined to comment.

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Standard Chartered To Slash Chief's Bonus

By Mark Kleinman, City Editor

Standard Chartered, the emerging markets bank, will reveal on Wednesday that it is slashing its bonus pool and its boss's payout as it bids to stave off the kind of row with investors that has hit rivals such as Barclays.

Sky News has learnt that Standard Chartered will announce alongside its annual results that it is paying roughly $1.2bn (£720m) in bonuses for 2013, down from $1.4bn (£840m) the year before.

The percentage fall in bonuses is substantially higher than the decline in the bank's profits for the year, reflecting its desire to demonstrate pay restraint, a source close to Standard Chartered's board said on Tuesday.

Peter Sands, the bank's chief executive, will see his bonus cut by a bigger margin than the reduction in the overall pool, according to a source.

StanChart is Liverpool's shirt sponsor

His £2m payout for 2012 had been reduced to not much more than £1m to reflect "a challenging year" for the bank, which sponsors Premier League side Liverpool, they added.

While a comparison with Barclays is unlikely to be explicitly drawn by Standard Chartered, the source said Mr Sands and Sir John Peace, its chairman, were keen to avoid the publicity over pay which had damaged its UK-based rival.

Last month, Barclays increased its bonus pool for 2013 to £2.4bn despite a slump in profits, a move which has sparked fury from a number of leading City investors.

Standard Chartered has been a darling of the stock market for many years, with its presence in Africa, Asia and Latin America underpinning a decade-long unbroken run of record profits.

That performance will come to an end on Wednesday when it is expected by City analysts to report a fall in earnings of about 6% to just over $7bn (£4.2bn).

The bank's shares have suffered recently as a consequence of City speculation about a dividend cut and rights issue, as well as broader concerns about the volatility of emerging market economies.

Standard Chartered plans to use Wednesday's results announcement to address speculation about its capital position, an insider said.

The bank is understood to be frustrated about what it perceives to be a lack of explicit guidance from the Prudential Regulation Authority, the UK banking regulator, about its future capital requirements.

Standard Chartered, which is in the process of selling a number of assets in markets such as Lebanon and South Korea, declined to comment.

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China Goes For Green Amid Slower Growth

China has moved to reduce the pace of investment to the slowest in a decade, as it seeks a more sustainable and 'greener' expansion programme.

Leaders of the world's second biggest economy have given the strongest hint of reversing the goal of greater economic growth.

It also promised to wage a 'war' on pollution, which has blighted large swathes of the country amid rapid industrialisation.

In an annual parliament meeting, Premier Li Keqiang said his country's goal was to expand the economy by 7.5%.

Delivering the message in a State of the Union style address, he stressed that growth would not halt planned reforms.

Mr Li, China's first premier with an economics doctorate, said the country would pursue reforms from the environment to the financial sector.

His measured language comes after more than two decades of double digit growth.

Although it has improved economic standing for millions of workers, it has left an unenviable legacy, reminiscent of Britain's industrial revolution.

Air and water pollution have become politically sensitive issues, formenting unrest, and it is saddled with ominous debt levels.

Premier Li Keqiang has impressive economic credentials

"Reform is the top priority for the government," Mr Li told around 3,000 select delegates of the National People's Congress- seen as a rubber stamp for the ruling Communist Party.

"We must have the mettle to fight on and break mental shackles to deepen reforms on all fronts."

He added that idle factories would close, more private investment promoted and an environmental tax plan accelerated.

The aim is to encourage more balance and a greener ethos in the economy, Mr Li said.

To aid the transformation, China's economic planner, the National Development and Reform Commission, said there would be 17.5% growth in fixed-asset investment this year, the slowest in 12 years.

Investment is the largest driver of China's economy and accounted for over half of last year's 7.7% growth.

At a plenum meeting last November, China announced ambitious reforms from investment- and export-fuelled growth towards a slower sustained expansion.

The new pledge signals that the plan continues, albeit with caution.

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Holidaymakers Warned Over Online Scams

By Tadhg Enright, Sky News Correspondent

Police have warned holidaymakers to be wary of online booking scams after £7m was stolen by fraudsters last year.

A total of 4,500 cases of booking fraud were reported to police in 2013, with almost a third of cases involving consumers paying for holiday villas and apartments that did not exist.

A report by fraud investigators from The City of London Police said the other most common scams included fake airline tickets and some package holidays to sporting events and religious pilgrimages.

Detective Superintendent Pete O'Doherty said: "The internet has changed the way we look for and book our holidays.

"Unfortunately it is also enabling fraudsters, using online offers of villas, hotels and flights that simply don't exist or promising bookings that are never made, to prey upon those looking for that perfect break."

Laura and Seán Parks told Sky News about their ordeal after they were scammed while trying to book a Valentine's Day break while Seán, a soldier, was home on leave from Afghanistan.

Having seen an online advertisement for log cabins near Loch Ness in the Scottish Highlands she was duped into paying £400 into the fraudster's bank account - only to find upon arrival that the cabins did not exist.

Seán said that booking service appeared to be legitimate: "The website looked 100%. Everything else, the invoices, they all looked genuine."

Laura added: "He was using a booking company, wasn't he? And I contacted the booking company to ask if they were aware of any of this and they weren't.

"But you have no reason to doubt anything when you have invoices coming through, and you're paying into a bank account."

The National Fraud Intelligence Bureau, the travel industry body the Association of British Travel Agents and the Get Safe Online campaign have urged consumers to be wary and prepared the following advice:

• Do your research: Do not just rely on one review, do a thorough online search to ensure the company's credentials. If a company is defrauding people there is a good chance consumers will post details of their experiences, and warnings about the company, online.

• Use your instincts: If something sounds too good to be true, it probably is.

• Pay safe: Never pay directly into an owner's bank account. Paying by direct bank transfer is like paying by cash and the money cannot be traced and is not refundable. Where possible, pay by credit card or a debit card that offers protection.

ABTA chief executive Mark Tanzer said: "Fraudsters are conning unsuspecting holidaymakers and travellers out of thousands of pounds each year - leaving them out of pocket or stranded with nowhere to stay through fake websites, false advertising, bogus phone calls and email scams."

Get Safe Online chief executive Tony Neate said it was vital for holidaymakers to do their research before booking.

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Childcare 'Costs Families More Than Mortgage'

Families are paying more on average for childcare than they spend on their mortgage, a new report says.

According to the Family and Childcare Trust study, parents are spending more than £7,500 a year on childcare for two children - around 4.7% more than the average mortgage bill.

Its also says some families may be spending more on childcare than they do on their weekly shopping.

Information for the report came from family or children's information services at councils in England, Wales and Scotland.

Each local authority was asked to give the cost of 25 hours and 50 hours of childcare as provided by nurseries and childminders.

They were also asked to give figures on the average cost of 15 hours childcare in an after-school club, or for a childminder picking youngsters up from school.

It found a family with one two-year-old child attending nursery part-time and a five-year-old in an after-school club will be forced to spend £7,549 a year on average.

This is higher than the UK average annual UK mortgage, which the report puts at £7,207.

Education and childcare minister Elizabeth Truss insisted the cost of childcare in England had stabilised for the first time in 12 years.

"In fact, once inflation is taken into account costs for the majority have actually fallen," she said.

"This means more parents are able to access affordable childcare and support their families.

"These reductions contrast with rising costs in Scotland and Wales, highlighting the difference this Government's reforms are making."

The Department for Education said that the survey shows that the cost of nursery for a child over two was now £106.19, compared to £106.52 per week last year, which it said was a 2% reduction in real terms.

Dr Steven Toole, head of policy at 4Children, said: "The cost of childcare remains a major challenge for too many families, resulting in some parents getting into debt and others having to give up or being prevented from taking up work.

"Recent 4Children research shows the scale of the struggle parents face with childcare, with one in four saying that affordable, flexible and accessible childcare would make the most real, positive difference to their family life."

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Hotel Prices Soar At Top World Destinations

A survey has highlighted steep price increases in many of the world's top holiday destinations, though England football fans may have reason to cheer.

The study, by hotels.com, found that despite a general strengthening of the pound against many local currencies, room costs were on the rise in more than half the most popular world destinations.

Comparing prices in 2013 with 2012 in 116 cities, the average cost of accommodation rose in 69 and fell in only 40.

Britons paying for hotels abroad would have forked out the most last year in Monte Carlo, where the average price was £198.

New York is among the most expensive destinations for hotels

Second was Muscat in Oman (£194) followed by New York (£185), Key West in Florida (£171) and Rio de Janeiro (£167).

Encouragingly for England football fans intending to travel to Brazil for this summer's World Cup, the price in Rio actually fell by 5% though separate studies have suggested fans face steeper bills in host cities during the tournament.

London prices rose from £110 in 2012 to £121 on average but the biggest percentage rise last year was 22% for New Orleans, where a hotel room price shot up from £120 in 2012 to £146 in 2013 as the city continued its recovery from the effects of Hurricane Katrina in 2005.

Price growth was steepest in New Orleans

The survey found that those looking for real bargains during trips abroad at the moment should head for Hanoi in Vietnam where average prices dipped 20% last year to £39.

Even cheaper accommodation can be found in Phnom Penh in Cambodia where prices last year fell to £33 on average.

The best-value European destination in 2013 was the Polish city of Krakow where the average hotel price was £62.

Kate Hopcraft, of Hotels.com, said: "There is no doubt that European hotel prices were some of those most badly affected by the economic fallout.

"Many of the destinations worst hit by the downturn have seen hotel prices stabilise, with some experiencing healthy rises."

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Virgin Money Backs Doubling Of Bank Bonuses

By Mark Kleinman, City Editor

Sir Richard Branson's banking arm will this week become the latest of Britain's high street lenders to say that it is supporting the payment of higher bonuses under new European rules.

Sky News has learnt that Virgin Money is to reveal alongside its full-year results that its shareholders have approved a request from its board to award up to 200% of the salaries of top executives as bonuses.

The disclosure, which goes beyond that required of the privately-owned Virgin Money, will come as the company says on Tuesday that it returned to profit for the first time since acquiring Northern Rock from the Government in 2011.

The bonuses decision, which reflects a 100% bonus-to-pay ratio cap without shareholder approval, was more of a formality for Virgin Money than listed rivals, which must put the move to their annual meetings this year.

People close to Virgin Money said that its results statement would provide detailed data akin to that of one of the major high street banks, each of which has announced its 2013 results during the last month.

Virgin Money's board has decided to do so in order to furnish potential investors with more information about the business as it prepares for an initial public offering on the London Stock Exchange in the medium term, one said.

A flotation is unlikely before next year at the earliest, they added.

The bank's results will show a strong performance in 2013 following the integration of Northern Rock, whose collapse in 2007 sparked Britain's financial crisis.

Jayne-Anne Gadhia, Virgin Money's chief executive, is expected to say that its savings book saw strong growth, reflecting its policy of offering customers the same rate across all channels and shunning teaser rates.

Last week, Royal Bank of Scotland said it was following suit in an attempt to win back the trust of consumers.

Mrs Gadhia's total pay package of about £950,000 in 2012 is understood to have risen to roughly £1.1m last year, an insider said.

Her base salary of £550,000 is likely to rise modestly in 2014, reflecting the Virgin Money board's  keenness to retain her as Virgin Money prepares for an assault on the UK current account market.

Its plans are being drawn up against a backdrop of growing political hostility to the dominance of the country's five major high street lenders.

Ed Miliband, the Labour leader, will ask competition regulators to recommend a legal market share cap for banks if he wins the next general election, which he argues would pave the way for the likes of Virgin Money to mount a more effective challenge.

Virgin Money recently began trialling a current account among the bank's staff, with early indications understood to have been positive.

The planned public launch of the product later this year could mark a potentially-significant phase in efforts to bolster competition in the market.

More than 80% of accounts are supplied by the five biggest lenders: the state-backed Lloyds Banking Group, owner of HBOS, and RBS, which owns NatWest; Barclays, HSBC and Santander UK.

Once the staff trial has been completed, Virgin Money will target consumers who are underserved by the major lenders, offering a basic account with no fees or charges and free access to the UK ATM network of cash machines.

It is also likely to say this week that it expects to be aided by the new seven-day switching system for current account providers which came into effect last autumn.

Virgin Money, which sponsors the London Marathon, now has more than 4m customers, having established a significant market share in loans, insurance and savings.

A Virgin Money spokesman declined to comment on Sunday.

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Ukraine Crisis: Investors In Flight From Risk

World stock markets have fallen while the Russian Rouble has hit its lowest ever level against the dollar as the crisis in Ukraine unfolds.

Investors are worried by the diplomatic stand-off between the West and Russia over President Vladimir Putin's decision to effectively occupy Ukraine's Crimea region in the wake of the change in leadership in Kiev.

The US threatened possible asset freezes and trade penalties as a response to Russia's military intervention.

The resulting flight from risk on the markets first saw stocks fall and gold rise in Asia, where the Nikkei in Japan lost 1.3%.

President Putin is risking economic isolation with the West

The Moscow stock exchange later lost up to 10% of its value when it opened for business while Russia's central bank reacted to a plunge in the value of the rouble by raising interest rates to 7% from 5.5%.

The central bank did not mention Ukraine in its statement, but said the decision was aimed at preventing "risks to inflation and financial stability associated with the recently increased level of volatility in the financial markets."

Gold is among the commodities to rise alongside oil and wheat

The rouble, which was already down nearly 10% this year, had fallen below 50 to the euro for the first time.

It began trading below 36.4 to the dollar, also a record.

Shares in Russian state-owned Gazprom were reportedly down more than 18% amid reports it will have to end discounted gas deals with Ukraine as tensions intensify over the debt-laden country's future.

European stock markets responded to the uncertainty in the region by falling more than 2% in some cases in early trading.

In London, the FTSE 100 lost 1.6% in the first few minutes of trading, with only two companies seeing any gains.

Commodities were also volatile, with Brent Crude oil rising 2% and a combination of the crisis in Ukraine and poor weather combining to push wheat costs up almost 5%.

Gold was another asset to see gains as investors looked to move their money towards the traditional safe haven.

The market instability played out as efforts to help shore up Ukraine's finances gained momentum.

It was confirmed an international Monetary Fund (IMF) mission will arrive in Kiev on Monday as the country seeks $35bn (£21bn) in financial assistance to avoid bankruptcy.

More follows ...

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Birmingham Owner Guilty Of Money Laundering

The owner of Birmingham City Football Club, Carson Yeung, has been convicted of money laundering charges in his native Hong Kong.

The 54-year old barber-turned-businessman had resigned from the parent company that owns the Championship side last month ahead of the verdict at the Hong Kong District Court.

He was found guilty of charges relating to his handling of $93m (£56m), described as criminal proceeds by prosecutors, using five bank accounts between January 2001 and December 2007.

Yeung had denied any wrongdoing.

Delivering his judgement, District Court Judge Douglas Yau said Yeung had lied about how he made his money and exaggerated the amount of profit generated by his hair salon business.

"I find the defendant not a witness of truth. I find that he is someone who is prepared to, and did try to, lie whenever he saw the need to do so," the judge said.

Yeung, who was dressed in a dark suit and striped tie,  will be sentenced on Friday morning.

The trial revealed the flamboyant businessman's close ties to Macau's casino world, both as an investor and gambler, and how that facilitated business investments that helped him amass his wealth.

The charges were unrelated to Birmingham City, which he bought in 2009 for £81.5m.

The club won the 2011 League Cup, ending 48 years without a major trophy, but despite the victory was relegated from the Premier League the same year.

Following Yeung's resignation from parent company Birmingham International Holdings last month, the company sold a 12% share in its UK subsidiary to a little-known Chinese advertising firm.

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Mt Gox Bitcoin Exchange Files For Bankruptcy

One of the world's largest bitcoin exchanges has filed for bankruptcy protection as it admitted hackers may have stolen all of its digital currency.

Mt Gox has revealed 850,000 bitcoins worth about $480m (£286m) are unaccounted for following cyber attacks and said it has 127,000 creditors.

Chief executive Mark Karpeles blamed a weakness in the exchange's computer system for the massive loss, which included 750,000 users' bitcoins and 100,000 of its own.

Debts at the company of £38m dwarf its total assets of £22.5m.

Mr Karpeles gave a grovelling apology in Japanese for the company's collapse, bowing in contrition and wearing a suit instead of his customary T-shirt at a news conference.

"I am sorry for the troubles I have caused all the people," he said.

However, he predicted the currency would continue to grow, claiming the industry is "healthy".

Angry investors are demanding answers over what happened to their bitcoins

Angry investors are demanding answers over what happened to their holdings of cash and bitcoins on the Tokyo-based exchange.

The collapse of the company has shaken the virtual currency world and heaped renewed regulatory attention on the bitcoin.

Created in 2009 as a way to make transactions across borders without third parties such as banks, supporters previously claimed security encryption made the currency immune to theft or counterfeiting.

Mt Gox took down its website on Tuesday after freezing withdrawals earlier this month in the wake of a series of technical difficulties.

Mr Karpeles said the company wanted to file a criminal complaint against what he said was a hacking attack but had no actual means of doing so.

It came as the Japanese finance minister said the collapse of the virtual currency was inevitable and Vietnam banned its use overnight.

Despite the problems facing the currency, the world's first bitcoin retail store has opened in Hong Kong.

However, Ken Lo, the CEO of ANXBTC, the exchange behind the store, said he believes an actual store will help break down some of the barriers to people adopting the virtual currency.

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Floods Fund: £2m To Support Tourism Firms

Tourism businesses affected by the recent flooding are to get a £2m boost from the Government.

Culture Secretary Maria Miller says the money will fund experts who will visit affected areas and offer practical advice to tourism firms such as how to access business support measures.

The advice sessions will be hosted by VisitEngland and run throughout March.

The fund comes on top of  the £10m set aside by Prime Minister David Cameron last month to help flood-hit businesses generally.

Ms Miller said: "We want to help all those tourism businesses that have been affected by the horrendous floods get back on their feet as quickly as possible.

"Experts will be put on the ground to help small businesses with practical advice and communications while a bespoke Easter marketing will bring people back to the areas hit."

Welcoming the funding, VisitEngland chief executive James Berresford said: "Our message to customers is 'Business as usual'.

"Despite many areas having been affected by bad weather and some travel disruption, the tourism infrastructure is largely unaffected."

VisitBritain chief executive Sandie Dawe said: "International tourism is worth around £1.5bn to the economies of south west England and Wales.

"We are already getting out the message that it is a great time to travel to Britain and will be intensifying that activity over the coming months."

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

:: Watch Sky News' special programme 'Battered Britain: From The Air' about the effect of the recent storms on the UK's landscape on Sunday, March 2, at 4pm.

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EU Pay Cap Triggers Pay Rise For Lloyds Boss

By Mark Kleinman, City Editor

The chief executive of Lloyds Banking Group is being lined up for a salary increase that could see his fixed pay almost double as it tackles new remuneration rules imposed by Brussels.

Sky News has learnt that Lloyds, which is 33%-owned by taxpayers, is likely to announce next week that it has decided to follow other big UK banks in awarding "allowances" to its most senior risk-taking staff.

Lloyds' board remuneration committee is understood to have met in the last few days to agree the move.

The decision still requires the formal approval of UK Financial Investments (UKFI), the Treasury agency which manages the taxpayer's stake in Lloyds.

If it gets UKFI's backing, the details will be announced as part of Lloyds' annual report, which is expected to be published on Wednesday.

From one perspective, UKFI's backing would not be surprising since George Osborne, the. Chancellor, has already mounted a legal challenge to the European Union rules.

Under the Brussels scheme, which affects pay deals awarded from this year onwards, banks can hand out bonuses worth up to 100% of an employee's salary without the consent of shareholders.

However, they must seek investors' consent to award up to double that sum in variable pay, which even at that upper limit is much less than many bankers have typically been paid.

The rules have prompted major banks operating in Europe - including Barclays, Goldman Sachs, HSBC and Morgan Stanley - to devise new monthly or quarterly payments which count towards an employee's basic salary for the purposes of calculating their annual bonus entitlements.

Stuart Gulliver, HSBC's chief executive, used the bank's annual results last Monday to attack the rules, pointing to the overwhelming backing its shareholders had given to its existing pay schemes.

Lloyds is understood to have identified approximately 50 executives who will be eligible for the role-based payments, which will be awarded in shares that recipients will have to hold onto for a lengthy period.

Much of the focus is likely to be on the allowance handed to Antonio Horta-Osorio, Lloyds' chief executive, who receives an annual salary of £1.061m.

Insiders said that while the plans had not yet been finalised, Mr Horta-Osorio was likely to receive an allowance of up to another £1m, which would mean that with the approval of Lloyds' shareholders, he could theoretically receive annual bonuses worth up to roughly £4m.

News of the bank's plans comes just a fortnight after Mr Horta-Osorio was awarded a £1.7m bonus for 2013 as an acknowledgement for his work in improving Lloyds' performance during the last year.

The payment will not vest until conditions relating to the share price or a further sale of the taxpayer's stake, and if they are met, he would not receive the bonus until 2019.

Sky News has also learnt that Lloyds' remuneration committee has decided to award Mr Horta-Osorio up to half of a deferred share award made in 2011 when he joined the lender from Santander UK.

That payout is likely to be worth in the region of £2m.

A Lloyds spokesman said that final decisions had still to be taken.

More contentious will be the decisions on pay made by Royal Bank of Scotland (RBS), the other big state-backed lender.

Ross McEwan, its chief executive, said on Thursday that RBS needed to be able to pay "fairly" otherwise he would not be able to retain key staff.

Analysts and investors interpreted the remark as a signal that he also wants to make additional payments, although he insisted that RBS was still consulting with shareholders.

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