. growing hopes for the development of a new energy source. welcome to "newsline." i'm catherine kobayashi in tokyo. japan's semigovernmental energy body and a u.s. company have signed a deal to conduct a test for methane hydrate in the u.s. state of alaska. methane hydrate is a type of natural gas formed from methane and water. japan national corporation made an agreement with conoco phillips to carry out testing in northern alaska for next

january. the two entities plan to dig a well 1,000 meters deep to study how much gas can be extracted. a considerable amount of methane hydrate reserves have been identified in seabeds off japan's coast. japan is hoping that the experiment with the u.s. firm will help it to find ways to efficiently extract these gas molecules and put the fuel to practical use. japan's prime minister is visiting south korea and will meet his counterpart myung-bak on wednesday. >> translator: i want to have thorough discussions on future oriented japan/south korea ties including an economic partnership agreement. >> noda will likely urge south korea to resume negotiations for an agreement. it has been suspended for seven years. he will also discuss how the two countries and the united states

can resolve north korea's nuclear program and its abduction issues. noda is expected to hand over a set of ancient korean books. they include archives of royal protocol from the dynasty that have been kept in japan. it's believed that noda will invite lee to visit japan as soon as possible in a bid to continue the talks between the two nations. we are now joined we the latest in business news. we're seeing a credit downgrade in europe? >> yes. still very much continuing. major u.s. credit rating agencies have downgraded the ratings of financial institutions. moody's said on tuesday it lowered on spanish sovereign debt by two notches to single a 1. it's due to uncertainties over when the debt problems will be resolved.

meanwhile, standard & poors cut its credit ratings or two dozen italian commercial banks and investment firms. it cites confusion in the european markets. tuesday's downgrades follow a single notch cut in the rating of major french commercial bank bnp paribas last week. which are being devalued due to concerns over the issues country's fiscal 4e89. european debt problems are starting to affect u.s. institutions wel. go goldman sachs. u.s. stocks reversed most from the previous day largely on hopes of a rescue plan for eurozone economies. this wednesday morning we cross

over to remine. a bit of mixed news regarding the eurozone issue. but some mixed earnings reports as well. but how are stocks here reporting to that? >> mixed signals indeed. there was a report from a british paper earlier saying that plans were in place for a larger than expected refinancing amount to help weaker eurozone economies. and there was another report following that from other media firms actually squashing that news and saying that it was incorrect. the u.s. stocks actually ended higher on that news. but currencies actually painted a different picture. let's have a look at the opening levels for the topix right now. trading higher. we have seen the nikkei up higher. down 137 points yesterday.

showing the sentiment regarding eurozone progress. and no surprise then that we did see further currency market volatility following the news that moody's downgraded spain's government bond rating by two notches and conflicting reports again about eurozone refinancing news. so just having a look at the currency levels right now, the euro was the biggest mover gaping on the back of the first report. and we saw a trading ground of 106 at one point. but then retreating following the separate report denying the fact. so around 106 now currently mi. we should also be keeping any on commodity stocks today. crude oil rose to $88 a barrel. then conversely gold prices were dropping around 1.2%. investors shifting some funds into less risky assets.

into riskier assets i should say. also let's not forget a bit of a fallout there from the china gdp numbers yesterday showing a slower growth in the second biggest economy. we'll see related japanese stocks here. and also following earnings from apple and intell yesterday. apple not coming out as market expected. but we'll see how suppliers here in japan reflect that. but for now the nikkei and the topix higher. >> thanks a lot. major oil consuming nations discussed the release of oil reserves in a meeting that gan on tuesday in paris. members of the agency agreed that the emergency oil release this summer had some impact in easing the tight supply situation. some participants said that oil reserves should be released more flexible in emergency cases such as when crude oil prices soar or

a major disaster occurs. so far iea members have done so only three times in the past. the first release was during the gulf war in 1991. the second was when hurricane katrina hit the u.s. six years ago. and the third was in june this year after crude oil prices surged due to political turmoil in the middle east. japan's industry minister who's attending the meeting expressed concerns over oil prices. >> translator: it's important to stock oil, but countries also have to take proper measures to deal with price changes. we must take concerted efforts in dealing with this problem. >> here's a recap now of the latest market figures.

that's all for now in business. now it's back to catherine. >> thanks very much. residents of northern bangkok are taking steps to defend their city from more flood water. so far the center of the capital seems to be spared. but outlying areas remain under threat. >> reporter: this is the latest satellite map released by the thai authorities. it shows bangkok surrounded by areas of water. the thai capital remains under

threat particularly around. bangkok's governor has called for barriers to be reinforced. residents and military officials are racing against time. to be walls of sandbagged one and a half meters high. on the eastern side of the city, near the international airport, the flood is rising. this road heading toward airport as you can see the flood has started. and now the road has become a river. thailand has been suffering from this disaster in july. at least 315 people have lost their lives.

almost 2.5 million have been affected. the cost to the economy and to the lives of thai citizens remains hard to imagine. nhk world, bangkok. now to vietnam. the country held its first tsunami drill on tuesday. in the city of dunan on the coast facing the south china sea. >> reporter: vietnam has never experienced a tsunami before. after what happened in japan, its holding the first ever tsunami evacuation drill. more than 5,000 people took part in the drill. many of them live near the coast. after a tsunami siren sounds,

they follow directions from the police. and evacuate on foot to higher ground and buildings. resc workers conduct search operations for the missing. troops and firefighters rescue people trapped. they worked out ways to cooperate with doctors. >> translator: it was horrible to see media reports about the damage done by the march tsunami in japan. i'll use lessons from this drill to flee safely if a tsunami comes. >> translator: i think we'll make sufficient preparations thanks to this drill. we'll be able to evacuate residents swiftly. in case of a tsunami.

>> reporter: a u.n. report released after the march disaster warned that 8.6 earthquake was to strike off the coast of the philippines. vietnam could be hit by a tsunami measuring 3 to 10 meters high. nhk world, danang. the strength of the yen is having a serious impact on japan's export industries. and textile companies are struggling to compete in the global market place. one company sees innovation as the key to its survival by developing new technologies and searching out new markets. here is more on that. >> reporter: i am in sakai city. this city is famous for its textiles. sakai has been a center of

industry for years and plays a huge role in the textile industry. for over a century, soboishi has been manufacturing silk fabrics. with the yen near historic highs, the only way to compete the cheap silk is to develop unique product that inspire fashion designers overseas. this high-tech move requires ten years of development. it can weave an image into fabric and reproduce any detail picture accurately. the new technology has caught the eye of designers who create world renowned fashions. sobishi also invented a fabric that has silk and steel to retain whatever shape it is given. this immediate regenerated

interest from an italian fashion house. during the last ten years, sobishi has developed over 1,000 original items. sales have increased six fold with over half originating overseas. >> translator: the point is whether one can make something original or not. if we produce a unique fabric that no one else can make, we can compete. >> reporter: however, securing customers has become increasingly difficult in the face of the robust yen. to reduce costs, soboishi set out to showcase its product. directly at international trade fairs. it also developed a more reasonably priced product line to satisfy customers looking for

cheaper prices but the same look of silk. down below is silk. above is polyester. this month a major fashion house contacting soboishi to place a very large order. but the united states is a difficult market where tough price negotiations are common. soboishi has not found a way to meet their price yet. and it's negotiating with suppliers to reduce costs. >> translator: there is a limit to cost reduction without shifting production over sees. we have to develop a product that will buy even when a price higher than other countries.

>> reporter: the japanese textile industry is now at a cross roads to overcome a strong currency. it must compete on the world stage using a combination of fresh technologies and a readiness to depart from tradition. it is the story of an established company in search of new business model that will ensure its survival in difficult economic times. >> earlier, michio kijima spoke about the impact the strong yen is having on japanese manufacturers. >> what impact is the strong yen having on japanese industry as a whole? >> the rising yen is causing the nation's industry to hold out as companies are moving to overseas where markets are bigger and costs are lower. in august, nhk surveyed 100 major japanese firms. 98 responded. nearly 30% said they have moved

or were planning to move overseas. or were interested in the option. about 80% were manufacturers. the textile industry which i covered has also seen that major firms outsource production abroad. this is a dealing a blow to smaller firms. as they relocate overseas, small suppliers are struggling. a town that thrived on the business is not worried about its future. >> so what's going to happen to those small japanese. companies? >> compared to large companies, small firms cannot shift to overseas because they lack money and the connections. this leads to bankruptcies. a private research institute says that between january and august, when the yen reached a record high, 34 domestic firms went under because of the rising yen.

up 21% from the same period last year. the exports were major factors behind these failures. >> what do you think is a solution to the production in japan. >> there are things only japan can make in its own towns of small shops and craftsmen. we have to protect their skills and traditions which defines a japanese brand. as there's much interest right now in europe where countries like italy have protected their textile and brands. in covering this story, i learned the only way for japanese makers to survive is to identify what attracts the customers to the product. preserve it, and effectively market it. "newsline" is the place to

turn to for the latest on japan post-march 11th. we have two segments offering two unique perspectives on the fallout from the earthquake and tsunami. "nuclear watch" brings you insight and information on the impact of the fukushima daiichi crisis. and "the road ahead" examines japan's efforts to recover and rebuild. don't miss "nuclear watch" and "the road ahead" on "newsline. u.s. secretary of state hillary clinton made an unanounlsed visit to tripoli on tuesday. she congratulated the people on their uprising against the government of muammar al gadhafi. it was clinton's first trip since the collapse of gadhafi's government. she met with the leader of the libyan council. after the meeting she told reporters that the u.s. government will offer about $11 million in additional aid. the aid money will be used to treat wounded soldiers from the civil war. it will also go towards the

search f stolen surface to air missil missiles. >> people must renounce violence, they must give up arms, they must be committed to a democracy that respects the rights of all. and then of course you have an inexclusive democracy that includes people. but they must be committed to the goals of a true democracy. >> the national traditional council said on monday that it had secured control of central parts of sirte. these were the last strongholds held by gadhafi loyalists. gadhafi's whereabouts remains unknown. a professional government remains to be established. conflicts have been causing delays. clinton apparently wanted to show that the u.s. government fully supports the new libya. she encouraged libyans to inaugurate a new administration as soon as possible. the islamic fundamentalist

group hamas has released a soldier after five years in captivity in exchange for 1,000 prisoners. met with his family on tuesday after arriving in israel from the gaza strip by way of egypt. he was abducted near the gaza/israeli border in 2006. also on tuesday, israel freed 477 palestinian prisoners. a second group is to be released in two nt mos. thousands of family members and hamas supporters cheered and fired celebratory gun shots when the prisoners arrived on buses. there had been opposition in israel to the release of the prisoners. but the swap was prompted by strong demand from the israeli public to secure the release. military services compulsory for all citizens in israel. but the deal is not likely to help the stalled middle east peace talks.

hamas said they will continue armed struggle against israel. now let's take a look at the global weather forecast. >> hello. welcome to your weather update. let's start with east asia. a high pressure is keeping things settled across much of china, mongolia, and the korean peninsula. but some light to moderate rain will linger across inland china. northeasterly winds are creating problems in the peninsula. and a separate system will continue to dump heavy rain adross bangladesh. as well as northeastern india and northern myanmar for the next couple of days. as for japan, it's mostly dry but the pacific side will see more cloud cover as the day goes on. temperatures looking like this. we're expecting 19 degrees in tokyo.

and the same in seoul. taipei is expected to be 26 degrees. and 28 in hong kong. heading over to the americas, it's mostly dry in the west, but very stormy in the east. a couple of low pressure systems are dropping heavy rain across much of the southeastern corner of the u.s. as well as the region. the risk of thunderstorms, large hail, and damaging winds will continue throughout tonight here. we've had tornado watches in effect across the southern part of the florida peninsula. the stormy conditions will move northward and reach the northeastern states in the next 24 hours. meanwhile, light showers are lingering across ontario and quebec. that should ease on wednesday. it's mostly dry across the central and western parts of the u.s. and canada. but the british area will see rain. and the rain will move inland on wednesday. temperatures are looking like

this. hot conditions have eased in l.a. 24 degrees. and 22 in houston. and 17 in oklahoma city. the northeastern states are in the mild side. 19 degrees in new york and 12 in d.c. it's dropping down to only 13 degrees in atlanta. finally, let's go over to europe. a couple of low pressure systems are dropping heavy rain across much of scandinavian peninsula. the conditions will continue throw the day on wednesday. and the associated front is stretching from the baltic states through germany and into france. you're seeing wet and very windy conditions along the front. the rain will move south and reach this area. the alpine region will see heaviest rain and snow in higher elevations. meanwhile, it's thundery and wet in and around the black sea. that should ease in the next 24 hours. temperatures are shaping up like

this. the mediterranean countries are on the warmer side. 22 degrees in rome. and 24 in madrid. but it's dropping down to 12 in london and 13 in paris. and 12 in berlin. and it's going to be very sunny in moscow with only 6 degrees. and 9 in kiev. here's your extended forecast.

our lead story this hour. japan's semigovernmental energy body and a u.s. company have

signed a deal to conduct a test for methane hydrate in the u.s. state of alaska. methane hydrate is a type of natural gas formed from methane and water. japan oil gas and metals national corporation made an agreement with conoco phillips to carry out testing in northern alaska from next january. the two entities plan to dig a well 1,000 meters deep to study how much gas can be extracted. a considerable amount of methane hydrate reserves have also been identified in seabeds off japan's coast. japan is hoping that the experiment with the u.s. firm will help it to find ways to efficiently extract these gas molecules and put the fuel to practical use. and that wraps up this edition of "newsline." i'm catherine kobayashi in tokyo. do stay with us. we'll be back with more of your updates at the top of the next hour. we'll see you then.

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