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Fed Pledges $600 Billion More to Help US Economy

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Good evening, I'm Saijal Patel from CNBC and you're watching "Asia Market Daily".

Asian markets rallied today after the U.S. Federal Reserve announced a second stimulus package overnight.

Quantitative easing 'round two' - or QE2 - is aimed at lowering borrowing costs and reviving the American economy.

The Fed says it will buy an additional $600 billion worth of government bonds - by the middle of next year.

The overall size of the program is slightly larger than the $500 billion many analysts had expected.

New York Fed President William Dudley expects the program to have the same effect as a half a percent or three quarter of a percent interest rate cut.

But not everyone on the Fed committee agrees.

Kansas City President Thomas Hoenig warns the risks outweigh the benefits, fearing an increase in long-term inflation, which could destabilize the economy.

And former Federal Reserve Governor Robert Heller has the same concerns, telling CNBC the Fed's decision to essentially print money is the "road to ruin".

(SOT) Robert Heller, Economist & Former Federal Reserve Governor, Santa Rosa, USA:

"Banks have excess reserves, more than $1 trillion at the present time, so pumping more money into the banking system really will not make a big difference. The problem in the United States is qualified borrowers especially among the small businesses and the large business have enormous cash balances themselves on the balance sheet, so they don't need to borrow. Monetary policy at the present time really is impotent."

Elsewhere, BHP Billiton has received a surprise rejection from the Canadian government, over its $39 billion bid for fertilizer giant Potash.

Many analysts were expecting the deal to be approved but the Federal Government decided the takeover was of no net benefit to Canada.

This is only the second time Canada has blocked a foreign takeover, since rules guarding overseas investments were relaxed in 1985.

BHP says it's "disappointed" by the decision and will review its options, before the deadline for an appeal expires in 30 days.

(SOT) Ben Lyons, Investment Analyst, ATI Asset Management:

"We understand that some of the major concerns by the Canadian regulators is the possible loss of royalty revenue and the possible loss of jobs in this province where most of the mines are located. I think what the local government was after was a possible concession of up to a billion US dollars to offset some of those royalty losses to the province, and I think BHP was possible prepared to make a payment of up to $300 million. But you know making an upfront payment of a billion dollars as a facilitation payment or charm offensive, it's very unlikely that BHP would pursue that course of action."

Thanks for watching "Asia Market Daily". I'm Saijal Patel from CNBC, have a great night.

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