the government of south sue dan gained control of a remote village that was attacked over the weekend. some 4,000 army and police reinforcements have reportedly been sent to aville raj. they're fighting over grazing land. the u.s. republican party presidential race is about to get ready over iowa. candidates have been campaigning for weeks and tuesday night voters will take part in what is being called caucuses. they are a few hundred in formal get-togethers where people take the candidate they want to face president barack obama in november's general election. those are the top stories from cnn, the world's news leader. much more coming up on the iowa caucuses just ahead. "world business today" starts right now. good morning from cnn london. i'm charles hodson. a very good afternoon from cnn hong kong, i'm andrew stevens and welcome to the first edition of "world business today" of 2012. this is tuesday, january 3rd. it is a new year. but one report already suggests businesses may be haunted by the same cries of confidence this year as last. the republican party's race for the white house takes off this tuesday. they're claiming they boost business and put a dent in america's debt. why discount stores are replacing more established outlets on the high streets of the united kingdom. 2011 was eye year many in the financial world would rather forget. certainly, that was the case here in asia. most of the big markets were down between 15 and 25% last year. 2012 has got off to an optimistic start at least. markets in asia are higher boosted by encouraging manufacturing data. it's different in europe where the sector contracted for the fifth month in a row. but market are on the rise nonetheless. the question is how long will it all last. charles, there's been a lot of talk about recession in the euro zone. i guess there's not a lot to look forward to in that part of the world in 2012. it would seem in terms of the broader outlook. looking at the way the markets are behaving this morning, this is for example the first day of proper trade for london this year. essential essentially, what we're looking at is the fourth session in a row of gains. now, there were obviously dispatch -- disappointing uk manufacturing data of the we'll see that at the bottom of the hour perhaps. german unemployment proved just a little bit of a good surprise. dax up by nearly 1% falling to 6.8%. that's better than expected. what i think is really the issue here in term of these markets is a set of gains for some of the big uk listed mining stocks. in particular, strata. this is due to the fact that china we had manufacturing data which was not as disappointing as we feared. it all comes pack to china. slight losses of 2/3 of a percent andrew. >> you talked about china. it had a big impact in asia. if you look at the numbers, it's a healthy start to the new year. the nikkei and the chinese markets closed again but elsewhere, you can see some of the better performers right around this region. hong kong up by 2.4%. the market that disappointing pair. the data out of europe. they're focusing on the positive and the positive is indeed china. china. and the key here has been an expansion in manufacturing output no december from the contractually in november. it's only marginally up but still expanding. that's what investors want to see. they want to see if growing and of course, manufacturing is a key part of that economy. wasn't just china, though. the hang seng getting a pop. india, it's up by 2 hoyne 4% as well. that's off the december pmi. it came out at the fastest rate in six months according to a survey. it came in at 54.2. anything above 50 means it's contracting. it was at 51 in november. india also growing. australia also growing as well. december manufacturing there increasing at 2.4 points to just over 50 as well. the s&p as you see, up by 1.1%. there are so many resource plays in australia for the china market. not such good news on the broader metro economic front. for singapore, economy sh rinking again. down 4.9% according to the previous quarter. manufacturing output falling. the economy did grow by a pretty healthy 4.8%. missing the government's official target of 5%. it's a very choppy year for singapore last year. it's a very open economy there. it is hostage to the vagaries of global -- we saw the fall off in exports going into the euro zone. is there a reason to be cheerful in 2012? that seems to be where you're doing business. the latest report from grant thornton shows an overall balance of apartment mitchel and pessimism. it's far less balanced by region of the it's a polarized picture. the percentage figures show how upbeat or down beat they fell in the last two quarters of 2011 with zero percent as the equilibri equilibrium. across the board, it's -- there's progress in north america and even more so in the brick block of leefding developing nations. the region that of course is dampening the mood is hardly surprising. europe where the confidence index has shrunk. sunk or shrunk. either fits. from zero to minus 17% in the last quarter. one possible factor in this shortage of confidence is in apparent shortage it trade, also detailed in that report. let's talk us through those findings and the outlook for the year ahead. we're joined by the company's ceo. ed nusbaum. a disappointing picture here. >> clearly. the european business leaders are depressed about the future of their businesses and the economy overall. >> what about the prospects of if you like a meltdown, the worst case scenario? that seems to be quite real if the numbers are to be believed. >> business leaders have the lowest confidence level since the peak of the financial crisis in 2009. on the other hand, they see solutions out there if politicians are willing to take the tough actions necessary to fik the euro crisis. >> we could see this flipflop from being negative or at least finally balanced to being positive if that crisis were resolved. >> absolutely. we're sitting on a nice edge. there's a perfect balance here and if the politicians are willing to take the tough actions, fix the euro crisis, the euro zone issues, then bases can rebound. >>let have a look at the you state. clearly, the world's largest economy is extremely important in the global picture. he we may be looking at a recession in europe already. how confident are we about the strength of the recovery in the united states? >> it seems to be moving a lon. business leaders are confident that it will continue to move along. employment is up. they're anticipating future growth and the backlogs with starting to get better. >> let's look at the brick nations. they've done well, kept up blistering paces of growth. although we're seeing those reduce a bit in 2011 towards the end of 201. are we going to see more moderate growth from china? >> confidence levels are stronger. brazil is equally strong, stronger in the fourth quarter than previously in the year. we see a positive effort there. russia and india are a little more reserved. >>let focus in on india. clearly a very, very important economy. are you worried that we may see confidence collapse there? clearly, there have been a lot of political difficulties. >> in india, we're seeing a flat level of confidence. they remain overall confident in their economy, but it isn't going up or down. it's staying moderate. russia, we're seeing concerns about the political uncertainty and causing business leaders to be nervous about their economy goog forward. >> what business leaders care about motte is profitability. are we going to see companies struggle to make good earnings in to 2012? >> it depends where you are. continuing profits in the u.s. and china and brazil and concerns about profits in russia and other countries throughout the world. but the biggest issues are here in europe. >> thank you very much. we end exactly where we started, ed. thank you very much, ed nusbaum, ceo from grant thornton. andrew? charles, in the business confidence, a boost would be -- in the state of iowa today, six presidential hopefuls will claim they're the person to deliver it. the highly anticipated iowa caucus takes place this evening. it's the first contest in the republican party's nomination process for the u.s. presidential candidacy and because it's first, it attracts a lot of attention from the candidates and of course the media ahead of the 2008 election, republican candidates made 283 visits to that state. totaling 550 days. a good showing in the iowa caucus can boost a candidacy or prove to be the end of one's campaign. of course, front and center of every candidate's campaign is the state of the u.s. economy. current front-runner, mitt romney, wants americans to consider their priorities. >> i'm asked how am i going to balance the budget, by the way? what would i do to get our budge net alignment? i want to tell you, it's not going to be easy. it's just important. how am i going to do it? first of all, i'm going to look at all the programs we have and i'm going to say which of those programs do we absolutely have to have and i'll apply this test in deciding whether to keep them for eliminate them. is this program so critical to america that it's worth our borrowing money from china to pay for it? >> mitt romney there. the question of tax has proven one of the most taxing aspects of american political debate lately. they have a criticized standoff in congress. even within the republican party, proposals differ widely. take mitt romney for example. romney would ex continued the bush tax cuts, reduce dee ducks and lower tax rates over time. he would lower the corporate tax rate to just 25%. romney wants to repeal the estate tax and eliminate capital gains and dividends for households making less than $200,000. a year. compare that with ron paul. he wants to replace the income tax with a flat tax. he also wants to get rid of capital gains and estate taxes but he would cut the corporate rate to 15% compared with romney's 25. we'll bring you more on all of the candidates and their economic policies a little later in the show. charles? the new york stock exchange will ring its first opening bell in 2012 in a little over five hours from now. this week promises plenty of numbers to keep investors on their toes. the big item is the all-important jobs report for december. the unemployment rate in november fell to 8.6%. it's low for 201. some forecasters do think or perhaps fear it might tick back up again in december. we'll find out on friday. we'll also get a pair of reports on the manufacturing sector as well as the reading on construction spending. now, switching gears. automakers, car makers will report sales for december. expectations are pretty high. the automotive industry seems to have been on the upswing in 2011. sales expected to hit almost 30 million. that is the highest since that terrible year of 2008. we'll also hear from individual retail chains about how much they rang up in holiday sales. initial reports suggest it was a pretty good season. even though the general merchandise retailer, sears, has already warned that its sales were lower. that was a bit of a shock at the time, andrew. >> absolutely, charles. still to come here on "world business today," the sweet smell of success. as india's economy continues its rapid growth, something else is also in the air as they take to the roads in their millions. we'll have a report from the country's congested capital just ahead. welcome back. you're watching "world business today" live on cnn. >> india's economy has grown rapidly in recent years as we certainly have been covering. but the country's capital markets have been struggling to keep up and now the indian government is attempting to breathe some life into the country's investment scene allowing individual foreign investors to buy shares of locally listed indian companies. up until now foreigners have been able to invest in shares only through mutual funds and other institutional channels. the most certainly follows a pretty dismal year for foreign investment. take a look at this. i want to start in 2010. this is how much foreign capital flowed into indian equities in 2010. as you can see there, $29 billion. that was an all-time record. if you look we're actually below the break even line in 2011. this is how much actually flowed out last year. $380 million, a net total. that's had a direct effect on the main stock exchange. if you look at what the census is doing today, looks good. up on the back of the fairly strong manufacturing numbers. that's the daily chat. look at it over a year. you'll see a vastly different picture. healthy over a day. this is it over the year. it's trending down pretty much all of 2011. down by as you see now 22.5%. actually finished down by about 25%. that made it one of the worst performing indices of 2011. individual foreign investors will be able to buy indian stocks but only starting january 15th. we'll follow that story when it does happen, charles. looking at the comments. a lot of analysts are saying don't expect too much because it's been such an appalling year last year. it's going to be no urgency for foreign investors to get into this market any ways. >> interesting listening to ed nusbaum. they're confident, nor pessimistic. very much on a balance. as you mentioned, andrew and despite a dismal year, obviously for india's benchmark share ind index. country has been growing at a respectable rate of 8%. there are a lot of world leaders that would give their eye eye teeth to see that. india's capital is literally choking on its own success. our sara sidner reports now from new delhi. >> reporter: india's capital appears to be losing the battle against pollution. after a few years of beating back bad air quality, this vibrant city is one of the most polluted capitals in the world. you can see it and worse, feel it. >> the this student, the emphatic but simple demand by the technician to take a deep breath and exhale is exhausting. he rides his bike to college every day. his asthma attacks come more often. the increasing polluted air. >> i feel it less. you can feel the black air. >> doctors say bad air quality is adding to the number of respiratory diseases and lives at emergency rooms. >> it's major public health issue now. >> india's government fought hard in the late '90s to push power plants to the outskirts ofth city and mandated the buses and rickshaws to use compressed natural gas instead of diesel. built a fast and efficient metro. at first, the air quality changed for the better. >> even though we did some measures ten years ago, after that, nothing happened. like everything was on the upturn so all the gains that we had in the late '90s and early 2000s completely wiped out. >> why? because of more than a thousand new cars are registered in new delhi. in the winter shall the poor and cold burn anything they can. research groups say their -- road dust is the most prevalent followed by vehicular emissions, emissions from power plants and brick counts. even though the last two industries have been pushed outside of the city. the government recognizes pollution has increased in an effort to combat the problem, it's expanding the metro and bound to better enforce laws already in place. scientists warn, if no new measures are taken, living, working and visiting this colorful developing city may actually take your breath away for all the wrong reasons. sara sidner, cnn, new delhi. >> coming up here on "world business today," is the economy stupid? we'll see how a phrase from bill clinton's election campaign years ago is looking increasingly central for the republican race to the presidency this year as the party's hopefuls get to face off in iowa. start of the new year but the ferry is still in its route to hong kong island. you're watching "world business today" live on cnn. a strong storm has rolled into northwest earn europe slowing down travel at airports. iran cabrera joins us from the weather center. a big blurry around here this morning. >> it is blowing. checked in with london here. talking about upward of two-hour delays reported. pack your patience if you're headed to the airport, especially in or out of london. the flights will be significantly impacted because of this. i mean, take a look at this thing. looks like a hurricane rolling through. it's an intense area of low pressure off the atlantic. we've had so many this season, we ended 201 like this. here's another one. it's causing severe gales and we'll be talking about storm force winds. winds in excess of 100 kilometers per hour. the cold air wrapping around the scottish hills looking at significant snow. look at the squall line developing across the midlands and heading down to the south and ease. that will be across london. if the wind isn't delaying you at the airport, the heavy rain certainly will. we're going to continue to see that. not only in london but take a look. this continues and those squiggly lines there, it's all wind. 60 to 90-minute delays if you're lucky. the next couple of days, the travel delays will likely continue through the middle part of the week. an impulse coming in on the heels of this one. our storm track remains the same and the lows will continue to traverse that line that you see there. again, winds are going to be upwards of 100 kilometers per hour. further to the south, we'll be okay there. in fact, we'll continue to see snow across the region. flying into australia, the big story is there you are going to be in quite the heat. southeastern australia getting in with temperatures once again to the upper 30s to low 40s with heat warnings and advisories posted. as the latest weather, "world business today" continues after the break. stay with us. this is cnn. for cnn london, i'm charles hodson. i'm andrew stephens in cnn hong kong. you're watching "world business today." let's see what's going on in europe. markets now 91 minutes into the trading day. first day of trade in london this year. bit of catching up going on here on the fts foots i. certainly london i going well. it's going well on the basis of chinese manufacturing data which weren't as bad as expected. that's lifting big mining stocks here in london. skrerm an unemployment came in slightly better than expected. up to 4.42 million. more than 22% of the working population and spain is warning that its budget deficit could top the estimate of 8% of gdp in london. looking at worries there and perhaps reflected some of that in the paris can current. zurich playing catchup by 1.25%. >> that's a shocking number, isn't it? 22% unemployment in spain. wow. here in asia, charles, bit of a booming start to the new year. sentiment very strong in the opening day. the opening day for all the markets here. india is still trading. but the rest of the markets are all now closed. you see the hang seng up about 2.4%. australia up by around about a little over 1%. the sensex trading 2.5%. this is to do with positive manufacturing and the big number charles was talking about. china's manufacturing sector expanded in december. this is crucial. it contracted the month before, much to everybody's surprise and certainly most everybody's concern that the chinese manufacturing machine was actually starting to contract. it turned out to be just, well, early to say. analysts hoping it could just be a blip. so there has been quite a lot of buying on the back of the china story. manufacturing is back online. now, japan and mainland china markets reopened for the new year tomorrow. we'll be taking a look at what's in store for the asian markets as' whole this year. remember, of course, it had a pretty dismal year in 2011. the big markets down between 15% in australia. 25% in india. now, if analysts are right, there may be some reasons to be