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Britain's Melrose in talks to buy Elster for $2.3 billion

Mon Jun 18, 2012 6:39am EDT

http://www.reuters.com/article/2012/06/18/us-elstergroup-offer-idUSBRE85H0BB20120618

- British buyout group Melrose Plc NYN.L is in talks to buy German utility-meter maker Elster Group SE ( E8D1.F ) ELT.N in a deal worth $2.3 billion, which if completed would mark its first major deal in four years.

Melrose, which buys underperforming manufacturing businesses and turns them around before selling them, could offer $20.50 per Elster's American Depository Share, Elster said. The proposed offer would be at a 25 percent premium to the German company's closing price on Friday. Melrose, which plans to finance the deal through new debt and a rights issue, said it would not go ahead with the deal without a recommendation from Elster's board or an undertaking from Elster's majority shareholder, Rembrandt Holdings, a unit of private equity firm CVC Capital Partners CVC.UL. J.P. Morgan Cazenove analysts expect the company to raise about 1.2 billion pounds ($1.88 billion) through a rights issue. "One look at the shareholder register for Melrose shows you that you could probably do it in about an hour. It will not be a problem getting finance," Arden Partners analyst David Larkam said. Elster, which makes meters for gas, electricity and water utilities, embarked on a cost saving program in the first quarter, including the closure of four major facilities and a consolidation of operations and sites. "Given Melrose's track record of driving operational improvements we see the potential for material margin expansion over Melrose's investment timeframe," J.P. Morgan Cazenove analysts said in a note. Melrose sold its Dynacast business, which makes die-cast metal parts, for $590 million last year after steering the company through the financial crisis and overseeing a 32 percent jump in revenue at the business in 2010. Its last major acquisition was in 2008, when it bought crane, cable and hooks maker FKI Plc for 478 million pounds. It has been on the lookout for an acquisition after walking away from toolmaker Charter International CHTR.L in the face of a higher offer from U.S. company Colfax Group ( CFX.N ) last year. Shares in Melrose were down 1 percent at 377 pence at 0617 EDT on Monday on the London Stock Exchange. They have gained nearly 13 percent so far this year. (Reporting by Abhishek Takle in Bangalore; Editing by Don Sebastian and Brenton Cordeiro )

Lockheed, union agree to meet with federal mediators

Mon Jun 18, 2012 6:35pm EDT

http://www.reuters.com/article/2012/06/18/us-lockheed-strike-idUSBRE85H1TP20120618

- Lockheed Martin Corp ( LMT.N ), the Pentagon's biggest supplier, and a union representing over 3,600 workers, on Monday said they would meet starting Wednesday with federal mediators to try to settle a strike that began just over eight weeks ago.

The International Association of Machinists and Aerospace Workers (IAM) said the two sides would meet in Fort Worth, Texas starting on Wednesday for mediated bargaining sessions with officials from the Federal Mediation and Conciliation Service. The Federal Mediation and Conciliation Service, an independent federal agency that handles over 5,000 mediations a year, said it initiated the move after being in touch with both sides. Spokesman John Arnold said it was difficult to predict how long the mediation process would take, noting that each case was unique and posed its own unique challenges. The union welcomed the move, which came as the strike entered a ninth week, and said it looked forward to face-to-face meetings with the company. "While there remains no shortage of resolve on both sides of this dispute, we`re hopeful the FMCS can provide the independent perspective that often produces the framework for a resolution," said Mark Blondin, general vice president of the IAM Aerospace. Lockheed confirmed that it had accepted the mediation offer, but had no further immediate comment. "It's been a long eight weeks plus," said Paul Black, president of the local machinists union in Fort Worth, noting that the union and management remained at odds over pensions and health care benefits, but other smaller issues also needed to be resolved. He said the involvement of the federal mediation service was helpful because neither side wanted to be "the first to blink." To keep production running, Lockheed has hired over 300 temporary workers and borrowed 50 workers from other facilities since the machinists went out on strike on April 23 at the Fort Worth plant, where Lockheed builds the F-35 Joint Strike Fighter, and two military bases in California and Maryland. It is also using more than 1,100 salaried workers to keep F-35 production moving ahead. In addition, more than 510 union members have crossed picket lines to return to work. Lockheed remains locked in difficult negotiations with the Pentagon to finalize a contract for a fifth batch of 32 F-35 fighters, with U.S. defense officials demanding "substantial" cuts in Lockheed's labor and pension costs, according to a source familiar with the issue. Company officials say they believe the company's best and final offer was generous. (Reporting by Andrea Shalal-Esa in Washington and A. Anathalakshmi in Bangalore; editing by Carol Bishopric)

China May home prices fall, pace of declines picks up

Sun Jun 17, 2012 10:24pm EDT

http://www.reuters.com/article/2012/06/18/us-china-property-prices-idUSBRE85H02Z20120618

BEIJING - Average home prices in China's 70 major cities fell 1.5 percent in May from a year earlier, Reuters calculations based on official data published on Monday showed, and the pace of decline picked up in major cities such as Shanghai.

It was the third straight monthly decline on a year-on-year basis since the government imposed strict curbs on property speculation more than two years ago, with the price decline deepening from a fall of 1.2 percent in April. In month-on-month terms, home prices fell 0.1 percent, the eighth straight decline since the Reuters weighted index was launched in January 2011. The National Bureau of Statistics said new home prices fell 1.2 percent in Beijing in May from a year earlier and were down 1.6 percent in Shanghai. Month-on-month, they remained unchanged in Beijing and were down 0.1 percent in Shanghai. Many Chinese buyers worry about a rebound in property prices as the government loosens monetary policy to spur a slowing economy, although Beijing has retained its administrative curbs on the real estate market, local media reported on Monday. "It seems home prices and tightening policies have reached their bottom so quite a few home buyers are starting to panic again," the People's Daily, the mouthpiece of China's ruling Communist Party, said in an analytical report. This is reminiscent of 2009 when prices doubled in several months after Beijing rolled out a 4 trillion yuan ($628.43 billion) stimulus package, the newspaper said. China has relaxed monetary and fiscal policies after a more than two-year long tightening campaign to cool the country's red-hot property market as the euro zone debt crisis hit global financial markets and braked domestic growth. The central bank cut interest rates on June 7, the first such move in more than three years, after it lowered banks' reserve requirement ratio three times since November. "Although these measures are not aimed at salvaging the property market, they are a shot in the arm for the cash-strapped real estate market," the People's Daily added. Meanwhile, many Chinese cities have relaxed policies, although the central government has maintained its curbs against speculators. These measures have changed market sentiment and property sales have shown signs of a recovery since March. The semi-official China Securities Journal reported on Monday that transactions of new and existing homes combined rose 46.5 percent in Beijing in the first half of June as compared with the same period last year, citing data from the local housing bureau website. The newspaper also cited local consultancy Home Link as saying that 21 of the 76 new property projects that hit the market so far this year saw a rise in transaction prices. However, high inventories will cap any quick rebound in home prices in the near term, it cited Home Link analyst Chen Xue as saying. Vanke ( 000002.SZ ), China's largest developer by sales, said earlier this month it would take about 11 months to sell down unsold stocks in key cities such as Beijing, Shanghai and Shenzhen. The company's sales rose 19 percent in May from the previous month to 10.72 billion yuan ($1.68 billion), reversing a decline in April. ($1 = 6.3651 Chinese yuan) (Reporting by Langi Chiang and Kevin Yao; Editing by Jacqueline Wong & Kim Coghill)

BOJ more upbeat on exports, output; warns of euro-zone fallout

Mon Jun 18, 2012 2:03am EDT

http://www.reuters.com/article/2012/06/18/us-japan-economy-boj-report-idUSBRE85H08Y20120618

TOKYO - The Bank of Japan on Monday raised its assessment on exports and output but warned of risks to the economy from slowing Chinese growth and fallout from Europe's sovereign debt crisis.

"Exports are showing signs of a pickup" partly on solid U.S. automobile demand and are expected to increase moderately as overseas growth recovers, the central bank said in a monthly economic report for June. Production is also picking up moderately and is seen posting slight quarterly increases in April-June and July-September as companies in the automobile, chemical and steel sectors begin to restock inventory, the report said. The upbeat assessment compared with the previous month's view that export and output growth was flat. Japan's economy is expected to outperform most of its G7 peers this year and grow around 2 percent, helped by robust private consumption and spending for rebuilding from last year's earthquake and tsunami. That led the BOJ to keep monetary policy on hold last week and revise up its overall assessment of the economy to say it was picking up moderately, mainly on strength in domestic demand. In the June report, the central bank maintained its forecast that Japan's economy will soon resume a recovery but removed a line saying that strength in emerging economies will drive global growth, signaling that the slowdown in Chinese demand could cloud the outlook for exports. "Uncertainty over the course of the global economy remains high. Particular attention should be paid to how Europe's debt woes could affect global financial markets," the report said. The BOJ announces its assessment of the economy on the same day as its policy decisions, and issues a more detailed assessment of each component of the economy in a monthly report usually released the following market day. (Reporting by Leika Kihara ; Editing by Kim Coghill)

Euro zone banking union possible without treaty change: Barroso

Mon Jun 18, 2012 1:28pm EDT

http://www.reuters.com/article/2012/06/18/us-eurozone-bankingunion-barroso-idUSBRE85H1D820120618

LOS CABOS, Mexico - A banking union in the euro zone can be formed without changing the European Union treaties, the head of the EU executive arm Jose Manuel Barroso said on Monday.

"A banking union...can be done very quickly, we are ready to put forward a proposal by autumn ...and we can do it without a revision of the treaty," Barroso told a news conference. (Reporting By Luke Baker , writing by Jan Strupczewski, editing by Phil Blenkinsop)

Exclusive: Western firms tap China cash to bid for UK nuclear

Mon Jun 18, 2012 1:05pm EDT

http://www.reuters.com/article/2012/06/18/us-nuclear-horizon-sale-idUSBRE85H1BQ20120618

LONDON/FRANKFURT - China may soon control one of Britain's top nuclear projects after two Chinese state firms teamed up with Western players to bid for the $24 billion development, industry and financial sources told Reuters.

China, which has the world's largest foreign exchange reserves of $3.3 trillion, has been expanding into Europe's energy and infrastructure sectors by buying stakes in firms such as Britain's Thames Water and Portuguese utility EDP ( EDP.LS ). The British government wants to see new nuclear plants built, but cost overruns in the wake of the Fukushima nuclear disaster and the slowing global economy have made it increasingly difficult for Western developers to find the billions of dollars needed for these projects. Nuclear reactor builders Areva ( AREVA.PA ) and Toshiba-owned ( 6502.T ) Westinghouse, which both want Horizon to use their reactor designs in Britain, have picked separate Chinese nuclear companies to help bid for Horizon. "Areva and Westinghouse have both assembled consortiums of their own," said one source, who is familiar with the bidding process but who refused to be identified, while a second source in the banking sector confirmed the bidders. German utilities RWE ( RWEG.DE ) and E.ON ( EONGn.DE ), under pressure from Germany's decision to phase out all nuclear power, announced in March the sale of Horizon, a Gloucester-based joint venture through which they had planned to invest 15 billion pounds ($24 billion) to build plants at two UK sites in Oldbury and Wylfa, with combined capacity of at least 6 gigawatts. Westinghouse has teamed up with China's State Nuclear Power Technology Corporation (SNPTC), expanding their existing collaboration in China, to make a bid, while Areva has linked up with China Guangdong Nuclear Power Holding Co (CGNPC) to put forward a separate offer, the sources said. Westinghouse, Areva and SNPTC declined to comment, and officials at CGNPC could not be reached for a reaction. Japanese bank Nomura, which is acting for RWE and E.ON in the sales process, imposed a June 15 deadline for offers, which are expected at several hundred million pounds. Two other groups are also believed to have expressed an interest, with Japanese-U.S. joint venture GE Hitachi ( GE.N ) a likely candidate, one of the sources said. GE Hitachi refused to comment. The group has previously said it was interested in the UK nuclear market and that it planned to submit an application for design approval of its ESBWR reactor in the UK. [ID:nL5E7KF383] Last year, SNPTC and Westinghouse extended by two years a partnership in China to build the U.S.-based firm's AP1000 nuclear reactor. CGNPC chose Areva's EPR design for its Taishan nuclear power plant in China, and the two companies have founded an engineering joint venture in China. Both the AP1000 and EPR designs have reached the final stages of regulatory approval in the UK. Britain is trying to woo nuclear investors by reforming its electricity market in a way that guarantees a minimum price for producers of low-carbon energy, including nuclear power. Energy Minister Charles Hendry last month called Horizon's nuclear sites at Wylfa and Oldbury two of the most attractive sites in Europe to invest in new nuclear, adding that there had been strong interest in buying the joint venture. In a separate project, French utility EDF ( EDF.PA ) and Areva, together with junior partner Centrica ( CNA.L ), are planning to build four EPRs in Britain, and a final investment decision for the first plant at Hinkley Point in Somerset is expected later this year. ($1 = 0.6382 British pounds) (Additional reporting by Jonathan Gould in Frankfurt, Caroline Jacobs in Paris and Wan Xu in Beijing, editing by Jane Baird)

Safety scandals give foreign dairies a boost in China

Mon Jun 18, 2012 1:46am EDT

http://www.reuters.com/article/2012/06/18/us-china-dairy-foreign-idUSBRE85H07T20120618

BEIJING/SHANGHAI - Global food and dairy companies are making another round of big bets on China's fast growing dairy sector, seeking to position themselves as safe alternatives after a lethal baby formula scandal burned the industry four years ago.

They are lured by projections of 10 percent annual growth for the sector and by Chinese consumers' willingness to pay a premium for foreign brands as they remain wary of local brands' safety records. Just last week, China's top-selling dairy firm Inner Mongolia Yili Industrial Group Co ( 600887.SS ) recalled six months' worth of one brand of infant formula after government tests found it was tainted with mercury, a heavy metal that can cause neural damage if ingested. The news has sent Yili's stock sliding 13 percent over the last two days to trade at 21 yuan a share. The latest foreign bet comes from Danish-Swedish dairy group Arla ARLAF.UL, which said on Friday it would buy what amounts to a 6 percent stake in Yili's main competitor, China Mengniu Dairy Co ( 2319.HK ), from private equity fund Hopu for 1.7 billion Danish crowns ($289 million). The deal lifted Mengniu shares by 7 percent on Monday. "If you have an international brand, then there's a premium in the market, because food safety is a concern," said Kevin Bellamy, dairy analyst at Rabobank in the Netherlands. For some global milk producers, finding new markets is also crucial as they consolidate and expand production faster than their traditional, and mature, milk markets can grow. Milk and formula safety became a deep concern for Chinese parents after a 2008 scandal in which at least six babies died and 300,000 were sickened from drinking milk formula contaminated with melamine, a chemical used in fertilizer and plastic. But investing in China can mean reputational risk for international dairy firms. In 2008 Arla, which already has a formula joint venture with Mengniu, had to reassure its international customers that it did not sell Chinese-produced products elsewhere, after production at the Chinese plant was temporarily suspended due to the melamine scandal. In addition, Mengniu last year destroyed milk tainted with aflatoxin, a carcinogenic mould found in corn grown in humid climates. "To be a minority shareholder in a food company in China, regardless of the quality of your partner, you're still exposed to the supply chain," said dairy consultant David Mahon, head of Mahon China Investment Management, referring to the Arla/Mengnui deal. "The lesson from melamine would not have been learned, and that would be a pity." PRIVATE EQUITY China is the world's largest formula market and is expected to overtake the United States as the largest dairy market by 2020. Private equity firms Hopu, KKR & Co L.P. ( KKR.N ) and Carlyle Group ( CG.O ) all took stakes in China dairy companies between 2008 and 2009. Hopu is winding down its fund, and exited as the lockup on its investment expired, but KKR and Carlyle have invested in technology and production systems to bring Western style milk production to China dairy firms, including importing cows. Private equity funds typically exit their investments after three to five years, and Carlyle and KKR will hope to attract Western strategic buyers for their respective stakes. KKR has 24 percent of China Modern Dairy ( 1117.HK ) valued at about $266 million, while Carlyle has 24 percent of Yashili ( 1230.HK ) worth around $130 million. China Modern Dairy provides milk for the Shanghai market while Yashili supplies the wealthy Pearl River Delta. Among more recent private equity investments in the sector, Olympus Capital led a consortium to buy a significant minority stake in Huaxia Dairy Farm Ltd in mid-2011 for $45 million, providing expansion capital and bringing in a European strategic investor, Mueller Milch, for one of China's largest single dairy farms. SUPPLY CHAINS To keep up with growth, multinational dairy firms are looking to expand their production in China, but are taking pains to guard against quality problems, particularly the need to control the supply chain for raw milk. Nestle's ( NESN.VX ) sales in China are about to expand significantly, pending approval by the commerce ministry to incorporate the China operations of Pfizer Inc ( PFE.N ), which would boost its market share in infant formula to 12 percent. The Swiss food giant agreed in April to buy Pfizer's infant formula division for $11.9 billion. Greater China accounted for only 3 percent of Nestle's global sales in 2011, but sales in the region grew by 23 percent last year. Nestle buys milk directly from thousands of small dairy farmers in the flat green fields of northeast China. But it has already cut its small suppliers from nearly 30,000 to under 12,000, and plans to rehouse the rest in big dairy bases. This month it broke ground on a $377 million project with U.S. dairy and feed cooperative Land O'Lakes LNDLK.UL and other partners. It will house a training center and two huge modern dairy farms, one with 2,400 cows, the other with 8,000. "The farmers are moving into the cities, the system is getting consolidated, so we are moving towards more middle-to large-sized farms," Nestle's China chief executive Roland Decorvet told Reuters at the ground-breaking in Shuangcheng, near the northeastern city of Harbin. New Zealand dairy cooperative Fonterra FCGHA.NZ, which sells $2 billion a year of imported milk products in China, is also building large dairy bases near Beijing, the milk from which it sells at a premium to other dairies. In 2008, Fonterra lost almost all its $150 million investment in Sanlu Group, the state-owned Chinese dairy at the heart of the melamine scandal. COMING FLOOD Another driving force for foreign firms to ramp up their presence in China is a coming surplus of milk in Europe. The expiration in 2015 of national production caps in the European Union is expected to lead to a 6 percent jump in European milk production, bringing an additional 9 billion liters a year onto the market, said Bellamy of Rabobank. "They could supply more to European cheese, but that's pretty saturated. The Asian and Chinese markets are very attractive because of the percentage of growth we are seeing," he said. With its latest investment, Arla estimates its turnover in China will grow five-fold by 2016, from $119 million in 2011. "It will contribute positively to our cooperative owners' milk price from day one, as we are able to add more value to milk that we otherwise would have to sell on the global bulk trading market, where the profit is lower historically," Arla Foods CEO Peder Tuborgh said in a statement. ($1 = 6.3651 Chinese yuan) ($1 = 5.8865 Danish crowns) (Additional reporting by Stephen Aldred in Hong Kong; Editing by Jason Subler , Ron Popeski and Edwina Gibbs )

Microsoft announces Surface tablet

Mon Jun 18, 2012 7:54pm EDT

http://www.reuters.com/article/2012/06/18/us-microsoft-windows-tablets-idUSBRE85H1PB20120618

LOS ANGELES - Microsoft Corp unveiled a tablet called Surface on Monday, in a move to rival Apple Inc's massively successful iPad.

The world's largest software maker is on track to launch its touch-friendly Windows 8 operating system this autumn and wants to make a big impact with its own device to kickstart demand. The tablet will come in two versions, one running on traditional Intel Corp chips, and another using ARM Holdings. Both will have a fold-out cover that becomes a keyboard. A prototype was demonstrated by Microsoft Chief Executive Steve Ballmer at an event in Los Angeles. The tablets will be available when Windows 8 ships later this year, according to a Microsoft statement. No details on pricing were mentioned, except that it would be "comparable" with current ARM tablets and Intel-powered Ultrabooks. Microsoft shares rose slightly in after-hours trading. They closed down 0.6 percent at $29.84 in the regular Nasdaq session. Launching its own tablet potentially throws Microsoft into direct competition with its closest hardware partners such as Samsung Electronics Co Ltd and Hewlett-Packard Co. Sales of tablets are expected to triple in the next two years, topping 180 million a year in 2013, easily outpacing growth in traditional PCs. Apple has sold 67 million iPads in two years since launch. (See graphic, link.reuters.com/myc88s ) Apple, which makes both hardware and software for greater control over the performance of the final product, has revolutionized mobile markets with its smooth, seamless phones and tablets. Rival Google Inc may experiment with a similar approach after buying phone maker Motorola Mobility this year. (Reporting By Lisa Richwine in Los Angeles and Bill Rigby in Seattle; Editing by Bernard Orr )

Fitch cuts India rating outlook to negative

Mon Jun 18, 2012 8:13am EDT

http://www.reuters.com/article/2012/06/18/us-india-economy-fitch-idUSBRE85H0NM20120618

MUMBAI - Fitch Ratings cut its credit outlook for India to negative from stable, nearly two months after rival Standard & Poor's made a similar call, citing risks that India's growth outlook could deteriorate if policymaking and governance don't improve.

"A significant loosening of fiscal policy, which leads to an increase in the gross general government debt/GDP ratio, would result in a downgrade of India's sovereign ratings," Fitch said in a statement on Monday. The agency estimated general government debt for India of 66 percent of GDP at the end of the most recent fiscal year, compared with a median of 39 percent for BBB-rated countries. India's economy grew just 5.3 percent in the March quarter, the weakest in nine years, but earlier on Monday the central bank unexpectedly left interest rates on hold, sending bonds, stocks and the rupee lower. The rupee weakened further to 55.94 per dollar from around 55.82 before the Fitch statement. Bond yields were range-bound, while stocks were already shut for the day. "Against the backdrop of persistent inflation pressures and weak public finances, there is an even greater onus on effective government policies and reforms that would ensure India can navigate the turbulent global economic and financial environment and underpin confidence in the long-run growth potential of the Indian economy," Art Woo, a Fitch director, said in a statement. Fitch maintained its BBB- rating, the lowest investment grade. Fitch said it expects the Indian economy to grow just 6.5 percent in the fiscal year that ends in March, down from its earlier forecast of 7.5 percent, while it expects wholesale price index inflation to average 7.5 percent. "India also faces structural challenges surrounding its investment climate in the form of corruption and inadequate economic reforms," it said. A week ago, S&P said India could become the first of the BRIC economies, which also include Brazil, Russia and China, to lose its investment-grade status, prompting an angry response from the government. (Reporting by Tony Munroe ; Editing by Aradhana Aravindan)

Mexico to join Trans-Pacific trade talks: U.S.

Mon Jun 18, 2012 12:38pm EDT

http://www.reuters.com/article/2012/06/18/us-usa-mexico-trade-idUSBRE85H15M20120618

WASHINGTON - The United States on Monday said it welcomed Mexico's entry into ongoing talks on a regional free trade agreement in the Asia-Pacific, but was silent about the status of Canada and Japan's bids to join the negotiations.

"We are delighted to invite Mexico, our neighbor and second largest export market, to join the TPP (Trans-Pacific Partnership) negotiations," U.S. Trade Representative Ron Kirk said in a statement after a meeting between U.S. President Barack Obama and Mexican President Felipe Calderon in Los Cabos, Mexico. Kirk's office said the decision to invite Mexico into the talks was made with the eight other countries currently negotiating the TPP pact. It said the Obama administration would shortly notify Congress of its intent to enter into negotiations with Mexico. The nine countries currently negotiating the TPP are United States, Australia, New Zealand, Peru, Chile, Singapore, Malaysia, Vietnam and Brunei. Canada, Japan and Mexico asked to join the negotiations in November. (Reporting By Doug Palmer ; Editing by David Brunnstrom )

Taiwan's AU says U.S. patent case win affirmed

Sun Jun 17, 2012 10:44pm EDT

http://www.reuters.com/article/2012/06/18/us-au-idUSBRE85H00H20120618

TAIPEI - AU Optronics ( 2409.TW ), the world's No.4 flat panel maker, said a U.S. trade body had affirmed an earlier ruling that the Taiwanese company did not violate patents owned by Thomson Licensing.

The International Trade Commission upheld a preliminary decision that AU did not infringe on any valid claim of patents asserted by Thomson, AU said in a brief statement on Sunday. It did not elaborate. The case, brought by Thomson in 2010, concerned LCD panel display technologies. The company had sought a ban on imports into the U.S. of some AU products. Thomson is a unit of French digital video firm Technicolor ( TCH.PA ), which is restructuring after financial difficulties. (Reporting by Jonathan Standing )

Greek target delay would entail more aid: ECB's Asmussen

Mon Jun 18, 2012 11:42am EDT

http://www.reuters.com/article/2012/06/18/us-ecb-asmussen-idUSBRE85H0T320120618

BERLIN - Greece will need even more financial support if it is given additional time to meet the fiscal targets set out in its EU/IMF bailout program, a European Central Bank policymaker said on Monday, putting the onus on governments to tackle the crisis.

ECB Executive Board member Joerg Asmussen also said it was still too early to withdraw the central bank's emergency support measures in view of the heightened tension in financial markets. Euro zone officials have said the currency bloc might consider giving a new government in Athens some leeway on how it reaches its bailout targets. But Asmussen warned against doing so hastily and without a thorough evaluation of the situation. "As long as a country is running a primary deficit, extending the fiscal targets will automatically mean that there will be an additional external financing need," he said in a panel discussion at an event organized by Germany's Green Party. Asmussen was speaking a day after pro-bailout parties won a narrow victory in elections in Greece. That gave the euro and shares a brief rally on Monday, but did little to lessen concerns over Greece's ability to meet the terms of its bailout program. Athens had to turn to the European Union and the International Monetary Fund for money after it was shut out of bond markets as its debt burden was viewed as unsustainable. Under the current rules agreed with its creditors, it must cut its budget deficit to below 3 percent of GDP in 2014. TOO EARLY TO EXIT Asmussen said that the ECB's crisis support measures were not permanent and that the ECB was "conceptually and practically" prepared to end them. "But in light of increasing tension in financial markets, it would be premature to start the exit," Asmussen said. Asmussen added that the central bank's crisis measures could not replace the need for governments to consolidate budgets, make structural reforms and strengthen the banking sector. Some governments, however, still expect the central bank to ride to the rescue and ease their path back to growth. Spain's treasury minister on Monday urged the ECB to respond firmly to market pressures, implying it should buy Spanish debt after the country's borrowing costs rose to a euro-era high above 7 percent, seen as unsustainable in the long-term. But the ECB has been reluctant to do so and has stayed out of the bond markets for the past three months. Austria's central bank chief Ewald Nowotny urged politicians to have the courage to adopt structural change and cited the late June EU summit as a key date to show that. He said forming a banking union was one such idea. "I think for the foreseeable future this notion of a banking union ... is probably the most relevant one and with three specific aspects," Nowotny said, referring to common banking supervision, deposit insurance and a bank resolution scheme. (Reporting by Annika Breidthardt , additional reporting by Michael Shields in Vienna, writing by Eva Kuehnen; Editing by Hugh Lawson )

Tesco pays Aeon to rid itself of Japan business

Mon Jun 18, 2012 7:37am EDT

http://www.reuters.com/article/2012/06/18/us-aeon-tesco-japan-idUSBRE85H0CP20120618

TOKYO/LONDON - Tesco ( TSCO.L ), the world's No.3 retailer, has ended a nine-year attempt to crack Japan's tough retail market by effectively paying Aeon Corp ( 8267.T ), the country's No.2 general retailer, to take its loss-making business there off its hands.

The deal, which will allow Tesco to focus on fixing its main British business after a shock profit warning in January, will inevitably re-heat speculation over the group's long-term commitment to its much larger loss-making Fresh & Easy business in the United States. Many foreign retailers have struggled in Japan, hampered by fickle consumer tastes, a super-competitive landscape and prolonged, profit-sapping deflation. France's Carrefour ( CARR.PA ) and Britain's Boots ABAQUO.UL are among the firms to have pulled out over the past decade. The move is also the latest in a series by store groups exiting weaker markets as they struggle with sluggish demand in many developed economies. Carrefour announced a deal on Friday to pull out of Greece. Tesco, which trails Carrefour and U.S. industry leader Wal-Mart ( WMT.N ) by annual sales, put the Japanese business up for sale last August, hiring Goldman Sachs ( GS.N ) to find a buyer. Japan is the smallest of Tesco's 13 international businesses, consisting of 117 stores in greater Tokyo. TWO STAGE EXIT The deal with Aeon, first reported by Reuters, will see Tesco exit Japan in two stages. In the first phase, it will sell 50 percent of its shares in Tesco Japan to Aeon for a nominal sum. This will result in the formation of a joint venture with Aeon. Tesco will then invest 40 million pounds ($63 million) as a joint venture partner to finance restructuring, after which it will have no further financial exposure to the Japanese business. "Given ongoing trading losses of about 30 million pounds after approaching a decade in the market, Tesco appears to our minds to have taken the correct approach with funded withdrawal," said Shore Capital analyst Clive Black. He said it showed chief executive Philip Clarke is bringing greater focus and capital discipline to Tesco. The deal will help Aeon, which trails Japan general retailer Seven & I Holdings ( 3382.T ) in terms of market value, expand its reach in its home market as it tries to drive growth. Prior to the Tesco purchase, Aeon had spent more than $775 million over the last five years, according to Thomson Reuters data, including taking stakes in Japanese supermarket chains Maruetsu and Marunaka. Tesco's shares were up 0.5 percent at 302.65 pence at 0625 EDT, slightly outperforming the STOXX Europe 600 retail index .SXRP. Aeon shares closed up 0.63 pence at 961 yen before the announcement. FOCUS ON UK TURNAROUND After a surprise profit warning in January, Tesco is focusing on turning around its British business, which accounts for over 70 percent of its trading profit. Last week the firm posted a drop in underlying first-quarter British sales as its recovery plan struggles to gain traction. In April, Clarke rejected shareholder calls to pull the plug on Fresh & Easy but said he did not expect the chain to break even until its 2013/14 year, compared with the end of 2012/13 previously. Last week Tesco reported underlying sales growth at Fresh & Easy slowed to 3.6 percent in its first quarter from 12.3 percent in the fourth quarter, prompting renewed calls for management to reassess its strategy for the U.S. business. (Additional reporting by James Topham in Tokyo; Editing by Richard Pullin and Mark Potter )

CWW investors back Vodafone takeover

Mon Jun 18, 2012 10:19am EDT

http://www.reuters.com/article/2012/06/18/us-vodafone-cww-idUSBRE85H0ZT20120618

LONDON - Britain's Cable & Wireless Worldwide said on Monday that 88 percent of investors who voted over Vodafone's $1.6 billion takeover offer had backed the deal to create Britain's second largest telecoms operator.

The approval for Vodafone's scheme of arrangement came as little surprise after CWW's biggest investor Orbis earlier on Monday said it had decided to drop its opposition to the deal. CWW said the 'yes' votes represented some 99.15 percent of the shares held by the investors who voted. (Reporting by Paul Sandle )

J.C. Penney marketing, merchandise chief steps down

Mon Jun 18, 2012 5:09pm EDT

http://www.reuters.com/article/2012/06/18/us-jcpenney-idUSBRE85H1OK20120618

- J.C. Penney Co Inc ( JCP.N ) said on Monday that Michael Francis, who was in charge of the company's marketing and merchandising, was leaving the company, months after he was lured from Target Corp ( TGT.N ) as a key part of a new management team.

The move, announced in a three-sentence statement, comes weeks after the department store operator said it had a worse-than-expected 18.9 percent drop in same-store sales for the first quarter as it tried to wean consumers off of coupons and frequent discounts. J.C. Penney shares fell 5.8 percent to $22.94 in extended trading Monday afternoon after the departure was announced. Chief Executive Ron Johnson said when the sales decline was announced that the company's message was not clearly explained as it made the shift to a new pricing strategy. The company did not give a reason for the departure of the 49-year-old Francis. Johnson will assume direct oversight of Penney's marketing and merchandising functions, the company said. (Reporting By Phil Wahba in New York and Brad Dorfman in Chicago; editing by Andre Grenon )

BRICS economies to boost IMF funds, study currency swaps

Mon Jun 18, 2012 4:18pm EDT

http://www.reuters.com/article/2012/06/18/us-g2o-brics-statement-idUSBRE85H1K820120618

LOS CABOS, Mexico - The five BRICS emerging economies said on Monday they agreed to enhance their contributions to the International Monetary Fund and to explore currency swaps as part of efforts to promote global financial stability.

Leaders of developing world powers Brazil, Russia, India, China and South Africa met on the margins of the G20 summit in Los Cabos, Mexico, and "agreed to enhance their own contributions to the IMF," they said in a statement. The group did not say how much cash they would offer the IMF, which is seeking a $430 billion infusion of funds, but underscored that the monies would came with conditions on how they were used and were linked to reforms that would give the developing world more say at the Washington-based fund. "This is with the understanding that these resources will be called upon only after existing resources ... are substantially utilized," said the statement. "These new contributions are being made in anticipation that all the reforms agreed upon in 2010 will be fully implemented in a timely manner, including a comprehensive reform of voting power and reform of quota shares," it added. In another sign the big emerging economies were pushing for more influence in the global financial system, and seeking wider use of currencies other than the dollar and euro, the BRICS statement said the five leaders had "discussed swap arrangements among national currencies as well as reserve pooling." BRICS finance ministers and central bank governors were instructed to study the swaps and pooling arrangements and relevant internal legal issues and report back to the leaders at next year's BRICS summit in South Africa, the statement said. (Reporting By Paul Eckert and Lesley Wroughton; Editing by Padraic Cassidy )

EU ministers to end sanctions on Hungary, diplomats say

Mon Jun 18, 2012 5:10am EDT

http://www.reuters.com/article/2012/06/18/us-hungary-eu-idUSBRE85H0FU20120618

BRUSSELS - EU finance ministers will lift financial sanctions on Hungary on Friday, two EU diplomats said, restoring Budapest's access to half a billion euros of frozen funds and rewarding Prime Minister Viktor Orban for dealing with budget shortfalls.

Finance chiefs in March blocked 495 million euros ($625 million) in EU funds from 2013, to send a message to Budapest and other fiscally profligate nations that consistently high budget deficits were unacceptable in the European Union. But in a sign of better ties between Brussels and Orban's centre-right government in recent months, the European Commission said last month that Hungary had shown genuine progress in bringing down its deficit in a sustainable manner. EU finance ministers are now set to back that decision in their monthly meeting in Luxembourg on Friday, two EU diplomats said on Monday. "The blocking of those funds will be lifted, I expect that to happen," said a senior EU diplomat with knowledge of countries' positions on the issue ahead of the meeting. "There's no resistance to this, not when the Commission gives Hungary a clean bill of health." Another diplomat briefed on member states' positions concurred. "It is guaranteed," the diplomat said. Commission President Jose Manuel Barroso made his recommendation to lift sanctions after the EU executive improved its forecast for Hungary's fiscal deficit to 2.7 percent of economic output in 2013, below the EU's 3 percent ceiling. Budapest had angered the Commission and other EU countries by failing to rein in its deficit in a sustainable manner since it joined the EU in 2004 and the Commission's new powers to police budget deficits across the bloc served to put more pressure on Orban's government. The sanctions, used for the first time against an EU country on a budget issue, marked a low point between Brussels and Orban, whose centralizing style prompted Barroso to raise concerns about authoritarianism in Hungary. But relations have warmed in recent weeks as Budapest has also moved on bringing new central bank laws in line with EU norms. (Reporting by Robin Emmott; editing by Rex Merrifield )

Takeda to stop selling 13 Pfizer drugs in Japan

Mon Jun 18, 2012 12:02am EDT

http://www.reuters.com/article/2012/06/18/us-takeda-pfizer-japan-idUSBRE85H04I20120618

TOKYO - Takeda Pharmaceutical Co, Japan's biggest drugmaker, said on Monday it will stop distributing 13 Pfizer Inc drugs it now sells in Japan at the end of this year and Pfizer itself will begin selling them from 2013.

The 13 drugs include antibiotic Minomycin, anticancer agents Torisel and Mylotarg, and depression treatment Amoxan. The list did not include Viagra. Takeda said it will continue to distribute Prevenar, a pneumococcus vaccine for children, and the haemophilia B drug BeneFIX. It also said it and Pfizer will continue to work together on the arthritis drug Enbrel. (Reporting by Mayumi Negishi ; Editing by Michael Watson )

Euro slips, sentiment sours after Greek vote

Mon Jun 18, 2012 4:49pm EDT

http://www.reuters.com/article/2012/06/18/us-markets-global-idUSBRE8520GN20120618

NEW YORK - The euro fell and global equity markets were mixed on Monday after initial enthusiasm over a weekend victory for pro-bailout parties in Greek elections gave way to worry about the nagging debt crisis still facing the euro zone.

Market reaction was choppy as voters gave parties supporting Greece's economic bail-out a majority on Sunday, easing fears of a break-up in the euro zone and helping risk assets to rally, at least initially. Safe-haven government debt gained in light volume as investors shrugged off Greece's election results and awaited a two-day meeting of Federal Reserve policymakers that starts on Tuesday for potential signs of new stimulus measures. Investors also awaited news from Mexico, where world leaders at a G20 summit were set to put pressure on the euro zone to outline a lasting strategy to save the single currency. Wall Street opened lower but rebounded after a senior official with Greece's conservative New Democracy party said parties that broadly back the country's international bailout will form a coalition government on Tuesday. Greece will accelerate and widen a privatization program, while planned austerity cuts will be implemented over four years instead of two, said the source, who spoke on the condition of anonymity. The euro fell from a one-month high of $1.2747 hit in Asia as it came under pressure on reported selling by Asian sovereign investors. It was down 0.5 percent at $1.2576. The Dow Jones industrial average .DJI closed down 25.35 points, or 0.20 percent, at 12,741.82. The Standard & Poor's 500 Index .SPX rose 1.94 points, or 0.14 percent, at 1,344.78. The Nasdaq Composite Index .IXIC gained 22.53 points, or 0.78 percent, at 2,895.33. "As we go through this period of indecisiveness ... you're going to see the markets basically whip around in a sideways pattern," said Tom Schrader, managing director of U.S. equity trading at Stifel Nicolaus Capital Markets in Baltimore. An initial relief rally of risk assets fizzled and prices of safe-havens such as U.S. and German bonds, especially on the long end, rose. The swift reversal in sentiment was also fueled by data showing bad loans among Spanish banks rose to their highest since April 1994. "Lots of focus on the Greek election today, but in the scheme of things, it is noise," said Jens Nordvig, global head of FX strategy at Nomura Securities in New York. "Spanish yields have shot through the highs from November, and even the short-end is now looking shaky. Europe is facing much greater challenges than the risk of a Greek exit," he said. European equity markets reversed early gains to finish down or flat. Declines of 3.0 percent and 2.9 percent, respectively, for Spain's IBEX .IBEX and Italy's FTSE MIB .FTMIB indexes, pushed regional shares lower. The euro zone's blue chip Euro STOXX 50 .STOXX50E index ended 1.2 percent lower at 2,155.64 points, while the FTSEurofirst 300 .FTEU3 index of top European shares closed up 0.04 percent at 993.67 points. Spanish 10-year bond yields were 26 basis points higher at 7.18 percent after hitting 7.30 percent earlier in the session, the highest in the euro zone's history. Yields over 7 percent are considered unsustainable. "We're back to worries about Spain and a distrust in the euro zone in general. The question on everyone's mind is: 'At which level do Spanish bond yields become unbearable?'" said Frederic Rozier, a fund manager at Meeschaert Wealth Management in Paris. The price of benchmark U.S. 10-year notes rose 2/32 to yield 1.58 percent, paring earlier gains. The 30-year U.S. Treasury bond rose 18/32 in price to yield 2.67 percent. German 10-year bonds yielded 1.416 percent, after earlier sliding to a low of 1.384 percent. Oil prices fell. Brent August crude fell $1.56 to settle at $96.05 a barrel. Brent's settlement and intraday low were the lowest since January 2011. U.S. July crude slipped 76 cents to settle at $83.27 a barrel. The U.S. July crude contract expires on Wednesday. Gold fell for the first session in seven. U.S. gold futures for August delivery settled down $1.10 at $1,627.

Ex-AT&T employee admits leaking Apple, RIM info

Mon Jun 18, 2012 4:26pm EDT

http://www.reuters.com/article/2012/06/18/us-insidertrading-att-idUSBRE85H1MM20120618

NEW YORK - A former AT&T ( T.N ) employee admitted on Monday to sharing company secrets such as sales numbers for Apple Inc's ( AAPL.O ) iPhone to traders who illegally bought shares on the information.

Alnoor Ebrahim, 57, a U.S. citizen born in Tanzania, is the latest person to plead guilty in the U.S. government's crackdown on insider trading, which claimed its biggest target to date on Friday - former Goldman Sachs Group Inc board member Rajat Gupta. Ebrahim was part of a so-called expert-network ring where some employees of specialized firms such as Primary Global Research (PGR) helped funnel corporate secrets from consultants at companies to hedge funds. "I provided insider information concerning AT&T's sales of Apple's iPhone and RIM's (Research In Motion Ltd RIM.TO) Blackberry products, as well as other handset set devices sold through AT&T distribution channels," Ebrahim told U.S. District Judge Paul Oetken in Manhattan. Ebrahim pleaded guilty to one count of conspiracy to commit wire and securities fraud. Manhattan federal prosecutors, in a plea agreement with the defense, recommended that Ebrahim be sentenced to a maximum of two years in prison. "We took this matter very seriously and cooperated fully with the authorities," said AT&T spokesman Marty Richtman. "The conduct alleged was clearly against our code of business conduct, and Mr. Ebrahim is no longer an AT&T employee." An attorney for former Silicon Valley sales manager James Fleishman, who is imprisoned on conspiracy charges, identified Ebrahim as a PGR consultant in court documents last year. The case is U.S. v. Alnoor Ebrahim, U.S. District Court for the Southern District of New York, case number unknown. (Reporting By Basil Katz)

U.S. expands fire probe to 1.4 million Toyota vehicles

Mon Jun 18, 2012 11:21am EDT

http://www.reuters.com/article/2012/06/18/us-toyota-probe-idUSBRE85H14120120618

- Some 1.4 million Toyota Motor Corp vehicles are being scrutinized more closely by U.S. safety regulators looking for possible increased fire risk, the National Highway Traffic Safety Administration said on Monday.

The expanded probe includes the manufacturer's best-selling Camry sedan from model years 2007 to 2009. The probe was upgraded to an engineering analysis from a preliminary investigation, which may lead to an eventual recall. Often engineering analyses are closed without a recall. Fires have been reported at a high rate for Toyota models built from September 2006 to August 2008 that all have the same power window master switch design, the NHTSA said on its website. Nine injuries and 161 crashes or fires have been reported to either NHTSA or Toyota, but no deaths, NHTSA said. NHTSA reported there were another 49 warranty claims of fires or "thermal events" among the affected vehicles. The expanded probe affects the 2007-2009 model year Camry, Camry Hybrid, RAV4 and Yaris vehicles, as well as 2008 Highlander Hybrid SUV. In February, an investigation was opened by NHTSA into about 830,000 model year 2007 Camry and RAV4 vehicles. Monday's action expanded that to 1,424,747 vehicles, NHTSA said. (Reporting by Bernie Woodall ; Editing by Maureen Bavdek)

EU considering doubling term of Irish bailout: report

Mon Jun 18, 2012 8:36am EDT

http://www.reuters.com/article/2012/06/18/us-ireland-bailout-idUSBRE85H0TB20120618

DUBLIN - Ireland's international lenders are considering doubling the average repayment term of some of its 85 billion euro ($107 billion) bailout to 30 years from 15, state broadcaster RTE reported, citing sources among the lenders.

The move would be aimed at easing Dublin's efforts to return to long term debt markets before its EU/IMF bailout runs out at the end of next year. The extension would only affect loans from the European Union bailout funds, but not those from the International Monetary Fund, the broadcaster said. The issues has not yet been raised with the Irish government or other European leaders, it said. The International Monetary Fund on Friday urged Europe to do more to help Ireland return to bond markets next year, suggesting a refinancing of its crippling bank bailout or consider take equity in state-owned banks. (Reporting by Conor Humphries ; editing by Ron Askew)

China May home prices fall 1.5 percent on year: Reuters calculation

Sun Jun 17, 2012 10:06pm EDT

http://www.reuters.com/article/2012/06/18/us-china-property-price-idUSBRE85H02720120618

BEIJING - Average home prices in China's 70 major cities fell 1.5 percent in May from a year earlier, according to Reuters calculations based on official data published on Monday.

It is the third straight monthly decline on a year-on-year basis since the government imposed strict curbs on property speculation more than two years ago, with the price decline deepening from a fall of 1.2 percent in April. In month-on-month terms, home prices fell 0.1 percent, the eighth straight decline since the Reuters weighted index was launched in January 2011. The National Bureau of Statistics said new home prices fell 1.2 percent in Beijing in May from a year earlier and were down 1.6 percent in Shanghai. Month-on-month, they remained unchanged in Beijing and were down 0.1 percent in Shanghai. (Reporting by Langi Chiang and Kevin Yao; Editing by Kim Coghill)

Europe hits Wall Street, Oracle rallies late

Mon Jun 18, 2012 5:23pm EDT

http://www.reuters.com/article/2012/06/18/us-markets-stocks-idUSBRE84S0BG20120618

NEW YORK - The Nasdaq advanced on Monday, propelled by a rally in Apple and other big-cap tech stocks, but fears Europe's debt crisis is in danger of worsening limited broader gains.

Positive analyst comments lifted both eBay ( EBAY.O ), up 4.5 percent to $42.49, and Groupon Inc ( GRPN.O ), up 10.8 percent at $11.15. Apple Inc ( AAPL.O ) accounted for about half the Nasdaq's rise, climbing 2 percent to $585.78. The S&P eked out a slight gain as it bumped up against its 50-day moving average around 1,347 while the Dow ended lower. Oracle Corp ORCL.O shares climbed 5.3 percent to $28.57 in after-hours trading after the software maker reported fourth-quarter revenue that beat expectations, helped by record sales of new software licenses. A weekend election victory by pro-bailout parties in Greece removed one headwind facing the euro zone. But rising bond yields in Spain and Italy reinforced views that Europe has yet to control its debt crisis. The election "wasn't a game changer and does little to alleviate the larger issues that remain in Europe," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. A senior official with Greece's New Democracy party, the conservatives who won Sunday's election and who back Athens' international bailout plan, told Reuters that Greece would form a government on Tuesday. But there were conflicting signals about the way forward. The leader of New Democracy, Antonis Samaras, pledged his commitment to Greece's international bailout package, but also said there would have to be "some necessary amendments." Meanwhile, Germany's chancellor, Angela Merkel, said any loosening of agreed reform pledges would be unacceptable. The election results also offered little reprieve from contagion concerns as yields on both Italian and Spanish bonds rose, with Spain's 10-year yield climbing above the 7 percent mark at which other highly indebted euro-zone nations were forced to seek bailouts. <GVD/EUR> European authorities have already agreed to a 100-billion-euro ($125 billion) rescue for Spain's troubled banks. Market participants were also reluctant to take bets ahead of the U.S. Federal Reserve's two-day policy meeting, with investors keen to see if the Fed will announce new stimulative measures in its policy statement at the meeting's close on Wednesday afternoon. "Without knowing what will come from the Fed meeting on Wednesday, the market doesn't want to get ahead of anything," Luschini said. The Dow Jones industrial average .DJI was down 25.28 points, or 0.20 percent, at 12,741.89. The Standard & Poor's 500 Index .SPX was up 1.94 points, or 0.14 percent, at 1,344.78. The Nasdaq Composite Index .IXIC was up 22.53 points, or 0.78 percent, at 2,895.33. Last week, U.S. stocks rallied on Thursday and Friday on news that central banks of major economies would take steps to stabilize markets if necessary after the Greek vote. As a result, much of the bullish bias of the election news was priced in. The S&P 500 rose 5.1 percent in the last two weeks. An index of energy shares .GSPE fell 0.8 percent on Monday, with the sector ranking as the S&P 500's worst performer. U.S. crude futures dropped 1 percent after falling for six of the last seven weeks. <O/R> European shares erased early gains and closed flat, with the FTSEurofirst 300 index .FTEU3 up 0.04 percent. Also in the technology sector, Facebook ( FB.O ) struck a deal to acquire Face.com, whose facial-recognition technology has been in use on the social network. Facebook shares jumped 4.7 percent to $31.41, taking its cumulative gains in the last three sessions to about 16 percent. DSW Inc ( DSW.N ) plunged 11.3 percent to $52.13 after the footwear retailer gave a quarterly earnings outlook below analysts' expectations. Volume was light, with about 5.78 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion. About 57 percent of stocks traded on the New York Stock Exchange closed higher while the number of advancers and decliners on the Nasdaq was about even. (Editing by Leslie Adler)

Icahn's Intrieri taking seat on Chesapeake board: CNBC

Mon Jun 18, 2012 4:48pm EDT

http://www.reuters.com/article/2012/06/18/us-chesapeake-icahn-idUSBRE85H1NU20120618

- Vincent Intrieri will represent billionaire Carl Icahn on Chesapeake Energy Corp's ( CHK.N ) board of directors, CNBC reported on Monday.

Icahn and Southeastern Asset Management, two of Chesapeake's largest investors, will get four seats on the nine-member board, following pressure on the company to make governance changes. Icahn receives one seat, and Southeastern receives three. Intrieri, who represented Icahn at Chesapeake's annual meeting on June 8, has been a senior managing director at Icahn Capital LP since 2004. Chesapeake said it would name the four new directors and its new chairman on or by June 22. A spokesman for Chesapeake declined comment. Icahn was not immediately available for comment. (Reporting By Anna Driver in Houston and Mike Erman in New York; editing by Jim Marshall )

Russia says to contribute $10 billion to IMF

Mon Jun 18, 2012 7:17pm EDT

http://www.reuters.com/article/2012/06/18/us-g20-imf-russia-idUSBRE85H1VS20120618

LOS CABOS, Mexico - Russia will contribute $10 billion to the International Monetary Fund as part of efforts to boost the fund's firepower, a spokesman for President Vladimir Putin said on Monday.

The spokesman also said Russia was concerned by the amount of liquidity being pumped into the global economy, saying it was not a "systemic solution". (Reporting by Gleb Bryanski , writing by Krista Hughes)

EU says no plan to extend Irish bailout term

Mon Jun 18, 2012 11:43am EDT

http://www.reuters.com/article/2012/06/18/us-ireland-bailout-idUSBRE85H0T720120618

DUBLIN - Ireland's international lenders are not planning to double the repayment term on parts of its 85 billion euro ($107 billion) bailout, the European Commission said on Monday, rejecting a report by Ireland's national broadcaster.

State broadcaster RTE had cited sources as saying that Ireland's lenders -- the European Commission, European Central Bank and International Monetary Fund -- were considering doubling the average time allowed for repayment of some of their loans to 30 years from 15. "This is simply not true," EU commission spokesman Amadeu Altafaj in an emailed response to the report, without elaborating. RTE had said Ireland's creditors were considering an extension to loans from the European Union bailout funds, but not those from the International Monetary Fund. RTE replaced a story on its web site that said the country's international lenders were considering doubling the terms of some loans to one that said the lenders were "considering the effects" of changing the bailout loan terms. (Reporting by Conor Humphries ; Editing by Ruth Pitchford)

Obama to speak with EU leaders after G20 dinner: White House

Mon Jun 18, 2012 5:22pm EDT

http://www.reuters.com/article/2012/06/18/us-g20-summit-dinner-idUSBRE85H1P320120618

LOS CABOS, Mexico - U.S. President Barack Obama will discuss the euro zone crisis and the state of the global economy with European leaders after the G20 dinner in Los Cabos on Monday, a White House official said.

"It's a good opportunity to continue a dialogue between the United States and Europe on the situation in the euro zone and the global economy broadly," Deputy National Security Adviser Ben Rhodes told reporters on the sidelines of the summit. Lael Brainard, the U.S. Treasury Department's undersecretary for international affairs, said she expected European leaders to provide clear direction on the debt crisis at the G20, adding it was good to see Greek resolve following that country's election. (Reporting By Jeff Mason and Lesley Wroughton ; Editing by Jackie Frank )

Bank sector is Spain's main problem: ECB's Nowotny

Mon Jun 18, 2012 5:57pm EDT

http://www.reuters.com/article/2012/06/18/us-europe-spain-nowotny-idUSBRE85H1R520120618

VIENNA - Spain's economic problems are primarily in the banking sector and markets should calm down once the extent of bad loans is fully assessed, European Central Bank Governing Council member Ewald Nowotny said on Monday.

In an interview with Austrian television, Nowotny noted that an independent review was under way to determine just how much financing some Spanish banks needed to handle a property bust that made many loans go bad. "I think only when that (figure) is incontrovertibly there - and ascertained objectively - can it lead to a calming down of markets," he said. Asked whether Spain would need external aid for more than its ailing financial sector, Nowotny said: "I think what we are seeing at the moment is (the problem) is primarily in the banking sector, and this of course is connected to the real estate bubble we had. But if one is able to stabilize the banking sector that can also have a positive impact on the country's overall economy." The euro zone agreed on June 9 to provide up to 100 billion euros ($125.8 billion) to Madrid to recapitalize its banks, with the aid going to the government's bank rescue fund. The loans will accrue to Spain's sovereign debt, worsening its debt-to-GDP ratio and increasing its financing costs. ($1 = 0.7949 euros) (Reporting by Michael Shields ; Editing by Myra MacDonald )

Hong Kong auditors battle against criminal liability law

Mon Jun 18, 2012 12:41am EDT

http://www.reuters.com/article/2012/06/18/us-hongkong-auditors-idUSBRE85H06A20120618

- Auditors in Hong Kong are mounting an increasingly vocal campaign against a proposed new law that would make them face criminal sanctions for shoddy audit work.

The city's lawmakers are in the final stages of considering the new Companies Bill, which includes a clause that would make auditors criminally liable if they knowingly or recklessly omit a required statement from an audit report. The clause, which has the backing of the city's stock market regulator, aims to put more onus on auditors' responsibilities to ensure investors can rely on companies' financial statements. Similar rules already exist in the UK, while in the United States there is an independent statutory body, the Public Company Accounting Oversight Board, to keep auditors in check. In Hong Kong the profession is self-regulating, and has faced accusations that in some instances it has not always been tough enough on reckless auditors. The bill is scheduled to go before the Legislative Council for its final reading on June 27. However, the Hong Kong Institute of Certified Public Accountants (HKICPA) said the bill would drive people out of the audit industry as they would run the risk of being criminalized even if there is no dishonest intent behind their actions. "Talented young members of the profession will seek other career options with fewer risks and the quality of the profession will suffer," said Winnie Cheung, the HKICPA's chief executive, who sent a submission on the bill to the Legislative Council late last week. The association is also arguing that the rule would not apply to Hong Kong-listed companies that are incorporated offshore, meaning some companies may look to move outside of the city's regulatory regime. "Despite the good intent for the Companies Ordinance Rewrite to bring Hong Kong company law in line with international norms, the effect of clause 399 could drive more business offshore and create unnecessary barriers for business operations and companies set up in Hong Kong," said HKICPA President Keith Pogson, who is also a senior partner at Ernst & Young ERNY.UL. The debate comes as investment bankers in Hong Kong are also up in arms over proposed new rules that would make them criminally and civilly liable for the contents of listing prospectuses. A consultation from the Securities and Futures Commission is considering whether sponsors of initial public offerings should be fined or sent to jail if they are found to have misled investors. A series of accounting scandals at Chinese companies has also left investors questioning whether some auditors and bankers have failed in their roles to properly vet listed firms. In March this year Deloitte DLTE.UL resigned as the auditor of two Hong Kong-listed companies for alleged accounting irregularities. Hong Kong's Financial Reporting Council said in April that it had identified 13 Chinese companies listed in the city whose accounts where in need to close monitoring, though it declined to identify them. (Reporting by Rachel Armstrong in SINGAPORE; Editing by Kim Coghill)

Germany's Merkel says Greece must stick to commitments

Mon Jun 18, 2012 11:33am EDT

http://www.reuters.com/article/2012/06/18/us-g20-merkel-idUSBRE85H14Z20120618

LOS CABOS, Mexico - German Chancellor Angela Merkel said on Monday a new Greek government had to meet commitments made to international lenders.

Speaking to reporters at a Group of 20 leaders' meeting, Merkel said any loosening of agreed reform pledges after Sunday's narrow election victory for Greece's pro-bailout parties would be unacceptable. [ID:nL5E8HI7K9] (Reporting by Gernot Heller ; Editing by Kieran Murray )

India aims to raise $5.4 billion from privatization sales this year

Mon Jun 18, 2012 8:13am EDT

http://www.reuters.com/article/2012/06/18/us-india-stakesale-idUSBRE85H0N720120618

NEW DELHI - India plans to sell stakes in 15 state-run firms by the end of March next year, including shares worth $1.25 billion in miner NMDC ( NMDC.NS ), a finance ministry official said on Monday, in a move seen aimed at boosting investor sentiment following slower economic growth.

The government also wants to raise 300 billion rupees ($5.4 billion) from the sales to help plug a yawning gap in the fiscal budget. It raised just 140 billion rupees in the last fiscal year which ended in March, less than half of its 400 billion-rupee target. The poor markets and investor sentiment are likely to make sales equally difficult this year, analysts and bankers say. Apart from NMDC, the government plans to raise $622 million from the sale of a stake in capital goods-maker BHEL ( BHEL.NS ), $520 million from miner Hindustan Copper ( HCPR.NS ) and $365 million from Steel Authority of India Ltd ( SAIL.NS ), the official said. The divestment pipeline in the current fiscal year also includes a $158 million stake in Engineers India ( ENGI.NS ) as well as shares in Oil India ( OILI.NS ) and Hindustan Aeronautics. Last month state-owned steelmaker Rashtriya Ispat Nigam Ltd filed a draft prospectus for an initial public share offer for a 10 percent stake held by the government. Proceeds from the stake sales will help the government to meet its deficit target of 5.1 percent of gross domestic product for this fiscal year. Indian companies raised $6 billion through equity deals in the first quarter of 2012, more than double the amount raised in the same period last year, Thomson Reuters data showed, but weak markets and volatile exchange rates have limited activity. (Editing by Greg Mahlich)

Yahoo hires former Google director to lead ad revenue

Mon Jun 18, 2012 10:06am EDT

http://www.reuters.com/article/2012/06/18/us-yahoo-advertising-barrett-idUSBRE85H0U020120618

SAN FRANCISCO - Yahoo Inc has hired former Google director and media veteran Michael Barrett to help lead its efforts to reemerge as an entertainment and information destination that wins advertising revenue.

Barrett, who will take the title of Chief Revenue Officer, is one of new interim CEO Ross Levinsohn's first key appointments, underscoring signs that Yahoo -- a company that has suffered from strategy flip-flops under successive CEOs -- is now thinking of itself as more of a media company than a technology company. Those close to Levinsohn have said he is committed to building out Yahoo's own video programming and striking more syndication deals in pursuit of ads that command a higher price. This will be the second time that Barrett and Levinsohn have worked together. Both were once at Fox Interactive Media where Barrett also held the title of Chief Revenue Officer and oversaw worldwide revenue for properties including MySpace and FoxSports.com. Barrett was most recently at Google where he led integration efforts following the acquisition of digital advertising platform Admeld Inc where he served as CEO. He will assume his new position in July and be responsible for Yahoo's ad revenue and operations globally. Generic display advertising has lost favor to search-based ads and other more interactive formats but still generated $12.4 billion in U.S. industry revenue last year and should produce $15.4 billion in 2012, according to eMarketer analyst David Hallerman. Yahoo's share of that has been slipping, however, as advertisers turn to Google, Facebook and others. Video ads, while still a small part of the market at around 6 percent, are more promising, growing more than 50 percent yearly. (Additional reporting by Nadia Damouni in New York; Editing by Edwina Gibbs )

Greek vote pulls Cyprus from precipice: for now

Mon Jun 18, 2012 1:46am EDT

http://www.reuters.com/article/2012/06/18/us-cyprus-greece-idUSBRE85H08320120618

NICOSIA - Greece's election has pulled its smaller neighbor Cyprus back from the precipice - for now - but Nicosia still has urgent work to do to rescue its banking sector if it is to avoid becoming the next casualty of the euro zone crisis.

The relief of Cyprus officials was palpable on Sunday night as results came in from Athens showing conservative Antonis Samaras had won Sunday's vote promising to stick to a European bailout, although the government did not immediately comment. Cyprus, a small country with just a million people but a big offshore financial industry, still faces a European bank regulator deadline in just two weeks to find 1.8 billion euros - around a 10th of its GDP - to bail out its second largest lender. But that is just a fraction of the damage that would have been done to Cypriot banks if Samaras had lost to leftist Alexis Tsipras, who threatened to toss out the bailout, and European leaders had responded by cutting off Greece's funding. "Not Armageddon just yet. Armageddon put off for another day," said Fiona Mullen, a Nicosia-based economist for the consultancy firm Sapienta, who estimates Cyprus would need 10 billion euros or more if Greece were pushed out of the euro. "I was worried last week that Cyprus had left it too late to go to the European stability mechanism to cover itself - not only for a bank bailout but for a Greek exit. It seems to have got a bit lucky." She said the sigh of relief would be shared even by the government of President Demetris Christofias, the EU's only Communist leader, who is closer politically to Tsipras than to Samaras's New Democracy conservatives. Christofias supports easing the harsh austerity terms imposed on Athens in return for its bailout, but needs Greece to have a government that can work with Brussels to keep aid flowing. "TOO MUCH AT STAKE" "What is important for us is that there is a stable government. There is too much at stake for any uncertainty," lawmaker Pambos Papageorgiou, of Christofias's ruling AKEL Communist party, told Reuters. "New Democracy appears to have won, but there is a clear message from the electorate that they want to stay in the euro zone but be able to have a chance to recover as an economy," he said. "It depends very much how the euro zone reacts to the result: if they are willing to talk to the new government and make the austerity program a bit more viable, and also change some of the lending terms (for Greece)," he added. For its own part, Cyprus must still find the 1.8 billion euros by the end of this month to bail out Cyprus Popular Bank, which saw its balance sheet damaged in March when private-sector lenders wrote off most Greek government debt. Nicosia has said it is trying to arrange a bilateral loan, possibly from Russia, which lent it 2.5 billion euros last year. It could also get the funding from the European Financial Stability Fund, the EU's rescue mechanism, but Christofias wants to avoid funds that come with too many fiscal and regulatory conditions attached. Stelios Platis, who runs a financial consultancy firm in Cyprus, said the Greek result would buy Nicosia time, but not necessarily much. Cyprus still needs to find a way to reduce the massive exposure to Greek debt on the books of its banks. "I think Cyprus is buying some valuable time, during which it has to insulate itself from any shocks arising from Greece, mainly to dissociate its banking sector from its Greek operations," he said. "I wouldn't be too fast in drawing conclusions. Greece is not out of the woods yet," he said. "I think it does buy Cyprus a few months." (Writing by Peter Graff; Editing by Kevin Liffey )

Carrefour CEO says recovery will take three years

Mon Jun 18, 2012 6:52am EDT

http://www.reuters.com/article/2012/06/18/us-carrefour-agm-idUSBRE85H0LR20120618

PARIS - Carrefour ( CARR.PA ) chief executive George Plassat told shareholders on Monday that he needs three years to turn around Europe's largest retailer amid the deteriorating economic climate.

Plassat said his priorities were to reduce debt, examine whether to exit certain markets and reduce overhead costs while restoring power to local managers. "Have no illusions, there will be headwinds ... I cannot commit to short-term promises," Plassat told the annual shareholders' meeting. "It will take three years to relaunch the engine. You need three years to achieve anything that is solid." Retail veteran Plassat joined the world's second-largest retailer, behind Wal-Mart ( WMT.N ), in April with a brief to reverse years of underperformance in European markets. "The main origin of Carrefour's difficulties is the pace of its development," Plassat said on Monday. "For 15 years, the group has been racing after the cash necessary for its development. We need to restore the group's financial capacity in order to develop it." Plassat had a busy week ahead of the AGM, announcing that Carrefour was exiting Greece, where its sales have been falling because of the debt crisis, and buying Argentinian discount supermarket chain EKI. The news lifted Carrefour stock by nearly 6 percent on Friday. SHAREHOLDER ANGER Plassat's arrival raised hopes that Carrefour can be revived and that he can fuel a re-rating of a stock that fell 43 percent last year and has slumped another 20 percent this year. However, analysts point out that the tough economic climate and Carrefour's strong exposure to austerity-hit southern Europe complicate his task. Investors - including top shareholder Blue Capital, an alliance of France's richest man, Bernard Arnault, and Colony Capital - must be patient, they said. Though Plassat joined Carrefour in April, he was not due to become CEO until June 18. The handover was brought forward when Lars Olofsson retired at a board meeting last month, sparing him the discomfort of the shareholder meeting. During Monday's meeting, shareholders and staff expressed anger that the man they hold responsible for the Carrefour mess was leaving with a golden handshake, jeering and booing his name and mentions of his retirement package. Olofsson, whose three-year tenure was marred by a string of profit warnings and strategy U-turns including a failed merger in Brazil, will pocket 1.5 million euros ($1.9 million) in compensation for a non-compete clause in his contract, plus an estimated retirement package of between 350,000 euros and 500,000 euros. French shareholder advisory group Proxinvest, which described the package as "excessive" and "shocking", has recommended voting against it at a time of revolts over executive pay across Europe. (Reporting by Dominique Vidalon; Editing by Mark Potter and David Goodman)

Analysis: Big Greek risk morphs into more economic uncertainty

Mon Jun 18, 2012 10:50am EDT

http://www.reuters.com/article/2012/06/18/us-eurozone-economy-confidence-idUSBRE85H12O20120618

LONDON - Greece's election has averted the immediate threat of a euro break-up, but it does nothing to restore the magic ingredient missing in the European and global economies - confidence.

Investors and corporate executives are paid to calculate risk. But they cope badly with uncertainty, and the poll has swapped one big fat risk - a victory for radical leftists opposed to the bailout program keeping Greece afloat - for a fresh dose of uncertainty: what changes to the plan will be sought by Greek conservative leader Antonis Samaras, the narrow election winner, and how will the rest of the euro zone respond? Add in sluggish growth in the United States and China, which are also in a year of political change, and it is no wonder that animal spirits, or confidence, which Keynes identified as the intangible elixir of growth, is conspicuous by its absence. "Undoubtedly the outcome is better than it could have been, but all of the issues about renegotiations, fragile coalitions and uncertainty about growth programs are still there," said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh. He said the euro zone's travails were like Britain's weather of late - dark and depressing interspersed with the odd ray of sunshine. "Businessmen want to feel that the world economy is growing and that they should be thinking optimistically about how to expand, hire and invest," Milligan said. Instead, companies are hunkering down. World No. 2 truck maker Volvo ( VOLVb.ST ) is having second thoughts about ramping up output in Europe. "Given the current economic development in Europe, we are evaluating if the announced increases in production rates will be implemented as planned," the company said on Monday. Volvo was echoing another Swedish industrial bellwether, SKF AB ( SKFb.ST ). The world's leading bearings maker said last week that the euro crisis, coupled with a slowdown in China, was sapping confidence and demand. Consistent with their gloomy assessments, car sales are falling not just in France but also in more-resilient Germany. "The global economy is slowing and is slowing at a time when you have got such policy indecision that it's making investment very difficult," said Sean Darby, Hong Kong-based chief global equity strategist for Jefferies, an investment bank. WHERE'S THE GROWTH? China is easing some policies but keeping a tight grip in other areas, the United States faces a fiscal tightening next year and the euro zone is wedded to austerity, Darby said. "I cannot find an economy at the moment where there's a natural pro-growth policy. There isn't one." Investors are struggling to price in the implications of competitive currency devaluations that many governments are encouraging, while Madrid's abrupt admission this month that it needed outside help to clean up its banks has compounded uncertainty over the extent of the euro zone's woes, Darby said. "The fact that a country like Spain can deny how bad the problems are and suddenly get a bank bailout for 100 billion euros must worry participants that there's a whole lot of other stuff that's being covered up as well," he said. The owners of German chemical company Evonik RAGES.UL on Monday blamed the high level of market uncertainty, especially in the euro zone, for their decision to scrap what could have been Europe's biggest initial public offering in more than a year. <ID: nL5E8HICRQ> Motor sport racing company Formula One and London luxury jeweler Graff have also put their IPOs on ice. So what is needed to revive confidence? Beyond evidence that Greece is finally addressing its deep-seated problems and regaining the trust of its creditors, markets are clamoring for a roadmap leading to the closer fiscal, banking and political integration needed to underpin the single currency. That's why the European Union summit on June 28/29 looms large. Without an assurance that the euro zone is contemplating some way of eventually mutualising the debt issued by the currency bloc's members, bond investors may well continue to flee Italy and Spain and propel yields on their debt to levels at which they cannot refinance themselves in the market. At that point, Europe's third- and fourth-largest economies would have to ape Greece, Portugal and Ireland and turn to the International Monetary Fund and the European Union for emergency loans. Yields on Spanish debt surged on Monday to a euro-era high as a post-election relief rally petered out within hours. Italian yields also jumped. WHAT'S TO BE DONE? Ian Harnett, managing director at Absolute Strategy Research, a London consultancy, expects Greece will still be in the euro at the end of 2012. It was time, he said, for markets to recognize that the political will exists in the euro zone to do all that is needed to keep the single currency intact. To that end, Harnett believes the minimum requirement over coming weeks is to flesh out the idea of euro-wide bank deposit insurance to forestall the risk of destructive bank runs. "It strikes us that if you don't have deposit insurance you will have to have capital controls. Which would you prefer?" Harnett asked. Willem Buiter, chief economist at Citi, agreed that a blueprint for a banking union, of which a deposit guarantee scheme would be one component, could emerge as soon as at next week's summit. He also expects the euro zone in due course to beef up the role played by its embryonic rescue fund, the European Stability Mechanism, so it can help reschedule euro zone government debt. But Buiter, who coined the term "Grexit", still thinks Greece is headed for the euro exit at some point. "Ultimately we anticipate that a mixture of banking union and expanded ESM and a sovereign debt restructuring mechanism should be enough to keep a 16-nation euro area on the road," he told a conference call. Buiter favors granting the 500 billion euro ESM a banking license so it has more financial firepower, but he said there was not yet enough support for the idea. "It will probably take another couple of panics to get that implemented against continuing German and European Central Bank opposition," Buiter said. That comment goes to the heart of the frustrations of many academics and policymakers outside Europe: not until the euro zone is staring into the abyss do its leaders contemplate radical steps to put their currency on a solid footing. "In the euro zone and other advanced economies, politicians seem unable to come to terms with the need for decisive policy actions, instead settling for half-measures and defensive policy interventions when backed into a corner," said Eswar Prasad, a Cornell University economics professor and senior fellow at the Brookings Institution in Washington. To rebuild credibility and revive growth, Prasad urged politicians to summon up the resolve to tackle powerful vested interests and implement structural reforms to product, labor and financial markets. This would then create some space for back-loading measures to bring the rise in public debt under control. "The global economic recovery is being held hostage by political brinksmanship that has created policy paralysis, undermined confidence and stymied the effectiveness of macroeconomic policy tools. In the absence of political leadership to undertake decisive and concerted policy actions, it is hard to see the recovery gaining traction," Prasad wrote in a Brookings article. (Reporting by Alan Wheatley; Editing by Peter Graff )

Oaktree ends talks over standstill pact with Jakks

Mon Jun 18, 2012 7:13am EDT

http://www.reuters.com/article/2012/06/18/us-jakks-standstill-idUSBRE85H0NA20120618

- Private equity firm Oaktree Capital Management LP terminated talks over a standstill pact with toymaker Jakks Pacific Inc ( JAKK.O ) after failing to agree on terms.

Oaktree wrote to the Jakks Pacific's board on Friday saying it would be willing to restart discussions if the terms are acceptable, Jakks Pacific said in a filing with the U.S. Securities and Exchange Commission. A standstill pact is a takeover defense where a hostile bidder agrees to limit its holdings in a target company. Jakks Pacific bowed to investor pressure in April by agreeing to discuss Oaktree's $20 per share offer and outlined plans to buy back shares to put pressure on the private equity firm to raise its bid. The company, which received Oaktree's $670 million unsolicited bid last September, has repeatedly spurned the private equity firm's advances and adopted a poison pill takeover defense in March. Jakks Pacific shares closed at $18.53 on Friday on the Nasdaq. (Reporting by Juhi Arora in Bangalore; Editing by Viraj Nair)

Man Group woes mount as finance head exits

Mon Jun 18, 2012 4:58am EDT

http://www.reuters.com/article/2012/06/18/us-man-appointment-idUSBRE85H0F520120618

LONDON - Man Group Plc ( EMG.L ) announced the sudden departure of its finance director, the second key executive the group has lost in a week, hurting its attempts to regain investor confidence following an extended poor performance at its flagship AHL fund.

Man said on Monday Finance Director Kevin Hayes had left to pursue other professional interests with immediate effect, to be replaced by Jonathan Sorrell, son of WPP Plc ( WPP.L ) Chief Martin Sorrell and formerly Man's head of strategy and corporate finance. The departure was revealed on the same day Man - Europe's largest listed hedge fund firm - dropped out of Britain's FTSE 100 blue-chip stocks index, after watching its shares plunge by almost 70 percent in a year. Last week Man said its Head of Research Methodology Darren Upton, who led the team responsible for developing trading models for AHL, had left to join to ISAM, a rival company set up by former Man CEO Stanley Fink. Man shares were trading down 0.6 percent at 72.4 pence by 0850 GMT, lagging a 0.1 percent drop in the FTSE All-Share index .FTAS . Monday's announcement prompted concerns that Hayes' abrupt exit may trigger a fresh selloff from investors who have so far kept faith with Man despite watching its assets under management slide by more than $6 billion in the nine months to end-March. CLIENT OUTFLOWS Hayes himself had invested 88,100 pounds in 50,000 Man shares at 176.2 pence each in September, as two other senior executives also bought stock in a move seen at the time as an attempt to shore up confidence in the company following a surprise surge in client outflows in the previous quarter. Man Chief Executive Peter Clarke said Sorrell had played an instrumental role in Man's recent takeover of FRM, a move welcomed by analysts as a way of reducing dependence on AHL, which accounts for roughly 70 percent of the group's revenue. The $21 billion "black box" fund, named after 1980s founders Michael Adam, David Harding and Martin Lueck, is down an estimated 1.4 percent so far in 2012, after losing 6.4 percent last year. It was around 14 percent away from its so-called high-water mark in March, the level at which it can start earning performance fees for Man. "In his new position, Jonathan's experience in financial markets, especially his deep working knowledge of the hedge fund industry, will be extremely valuable as we continue to develop and evolve in challenging world markets," Clarke said. Clarke said Sorrell would "bring clear focus on costs", but investors and analysts are hoping for a swift reversal in client outflows as well as greater financial efficiency. Sorrell joined Man less than a year ago after a decade of service in the investment management and the securities and investment banking divisions at Goldman Sachs ( GS.N ), where he latterly led investments in a broad range of hedge fund firms. (Editing by Anjuli Davies and David Holmes )

India's finance minister says Fitch ignored positive economic trends

Mon Jun 18, 2012 8:30am EDT

http://www.reuters.com/article/2012/06/18/us-india-economy-finmin-idUSBRE85H0SQ20120618

NEW DELHI - India's Finance Minister Pranab Mukherjee said on Monday Fitch has not taken note of recent structural reforms in the economy including the strengthening of public finances, after the rating agency cut its outlook on Asia's third largest economy.

"The concerns expressed by Fitch on the economic growth potential, inflationary pressures, and weak public finances are based on earlier data. Government has already taken note of such concerns," Mukherjee said in a statement. Earlier, Fitch Ratings cut its credit outlook for India to negative from stable, nearly two months after rival Standard & Poor's made a similar call, citing risks that India's growth outlook could deteriorate if policymaking and governance don't improve. (Reporting By Rajesh Kumar Singh)

India adviser blames Fitch revision on "herd mentality"

Mon Jun 18, 2012 8:13am EDT

http://www.reuters.com/article/2012/06/18/us-india-basu-economy-idUSBRE85H0OW20120618

NEW DELHI - India's chief economic adviser Kaushik Basu on Monday said "herd mentality" of ratings agencies led to Fitch's revision of India's rating outlook to negative from stable, but added that the review was not surprising.

"There is a lot to be done and the next six months will be crucial," Basu said while addressing journalists at the Foreign Correspondents' Club in New Delhi. "The whole statement of Fitch is a pretty positive statement." Earlier, Fitch Ratings cut its credit outlook for India to negative from stable, nearly two months after rival Standard & Poor's made a similar call, citing risks that India's growth outlook could deteriorate if policymaking and governance don't improve. (Reporting By Ross Colvin ; editing by Anurag Kotoky )

BofA could sell non-U.S. wealth unit to Julius Baer-report

Mon Jun 18, 2012 4:58pm EDT

http://www.reuters.com/article/2012/06/18/us-bankofamerica-wealthsale-idUSBRE85H1CA20120618

- Bank of America Corp is close to a deal to sell its non-U.S. wealth management operations to Swiss private banking giant Julius Baer, CNBC reported on Monday.

Terms of the deal are still being finalized, but Julius Baer could pay $1.5 billion to $2 billion, CNBC reported. Reuters reported in April that Bank of America had put its wealth management business outside the United States up for sale. The business, which manages some $90 billion for rich clients, is not large enough to generate enough money for the U.S. bank, sources told Reuters. Bank of America and Julius Baer declined to comment on the CNBC report. Bank of America has been selling off non-core business units under Chief Executive Brian Moynihan to build capital. The second-largest U.S. bank by assets has trailed rivals in recovering from the financial crisis, largely because of huge losses and lawsuits tied to its 2008 acquisition of subprime mortgage lender Countrywide Financial. Bank of America's non-U.S. private banking business targets so-called "mass affluent" clients whose wealth is measured in hundreds of thousands of dollars, rather than super-rich private banking clients worth tens of millions. But outside the U.S. it has never been able to build up the business to match the scale of its home market, meaning it is far less profitable. (Reporting By Rick Rothacker in Charlotte, North Carolina and Douwe Miedema in London; editing by Leslie Gevirtz and Carol Bishopric)

Spain to issue up to 5 billion euros in bills, bonds this week

Mon Jun 18, 2012 8:33am EDT

http://www.reuters.com/article/2012/06/18/us-spain-debt-idUSBRE85H0SX20120618

MADRID - Spain's Treasury said on Monday it will issue from 2 billion to 3 billion euros ($2.52 billion-$3.79 billion) in 12- and 18-month bills on Tuesday and between 1 billion and 2 billion euros of bonds on Thursday.

Spain will auction bonds maturing April 30, 2014, July 30, 2015 and July 30, 2017 on Thursday. (Reporting By Paul Day, Editing by Nigel Davies)

Spain hammered after short-lived Greek poll relief

Mon Jun 18, 2012 11:36am EDT

http://www.reuters.com/article/2012/06/18/us-markets-bonds-euro-idUSBRE85H0KE20120618

LONDON - Spanish bond yields hit a new euro-era high above 7 percent on Monday as initial relief after a pro-bailout vote in Greek elections gave way to pessimism about the problems surrounding the bigger Spanish economy.

The swift reversal in sentiment, fueled also by data showing Spanish banks' bad loans rose to their highest since April 1994, bolstered German Bund futures, quickly erasing more than a full point of early losses, while European equities and the euro wiped out early gains. Political parties in favor of Greece's bailout lifeline began talks to forge a government on Monday after a narrow victory over radical leftists who wanted to tear up the existing aid agreement. That removed the risk of an imminent Greek exit from the currency bloc, but the slim margin left major doubts over how effectively a pro-bailout coalition could govern, with markets taking the view that Greece may still end up leaving the euro. "The Greek vote had the best outcome that one could have thought about," UBS rate strategist Gianluca Ziglio said. "But there's still going to be a lot of uncertainty and Spain is reaching levels in spreads ... which are scary." Spanish 10-year bond yields were 26 basis points higher at 7.18 percent, leaving the spread over benchmark German Bunds at 577 basis points. They hit 7.30 percent earlier in the session, the highest level in the euro zone's history. In a sign of growing fears over the sustainability of Spain's finances, short-term debt underperformed, with two-year yields rising 45 basis points to 5.54 percent. The spiraling borrowing costs are threatening Madrid's ability to fund itself and raising speculation that Spain may need a full-blown bailout. Greece, Ireland and Portugal were forced to seek international bailouts soon after their 10-year bond yields rose above 7 percent. "The bigger problem is 'How do you deal with Spain?' and there doesn't seem to be a satisfactory solution there," said Elisabeth Afseth, strategist at Investec in London. An audit later this week is expected to show Spanish banks needing between 60 and 70 billion euros ($75-88 billion) in capital. UBS's Ziglio said markets would have more confidence in the effectiveness of the capital injection if it was worth closer to 100 billion euros. ANOTHER AUCTION Spain said on Monday it plans to sell 2-3 billion euros in 12- and 18-month Treasury bills on Tuesday and 1-2 billion euros of bonds maturing in 2014, 2015 and 2017. The short maturities on offer were illustrative of Spain's discomfort in funding markets. Dwindling international investor demand has forced Spain to issue small amounts of shorter-term bonds, which are cheaper to issue and attractive to domestic banks but shorten the country's debt profile, creating large redemption humps down the road. Nevertheless, domestic banks were expected to make sure that the auction attracts enough demand to go smoothly. "It seems to me as if the primary dealers and domestic banks and money managers all recognize that if they don't turn up to the auctions the game is over," said a head of trading at one primary dealer. "Consequently we continue to maintain access to capital markets for the periphery." The cost of insuring against a Spanish default hit a record high of 612 basis points according to data monitor Markit. German Bund futures, which rise when investors are looking for safer instruments to park their cash, were last 25 ticks higher at 142.54. They came off highs of 143.09 after Fitch Ratings said it saw a lower risk of a disorderly Greek debt default and exit from the euro area, but traders warned volumes were low and the move could quickly reverse. (Editing by Ruth Pitchford)

Hungary says central bank deal would allow talks

Mon Jun 18, 2012 5:41am EDT

http://www.reuters.com/article/2012/06/18/us-hungary-imf-law-idUSBRE85H0FM20120618

BUDAPEST - Hungary said on Monday that it has reached a compromise with the IMF and the ECB over a disputed central bank law, which could unblock credit talks and shield the vulnerable forint currency from a deepening euro debt crisis.

However, no comment was immediately available from the IMF or central bank and after months of delays, any broader agreement over a financing backstop with the IMF and EU may still be a distant prospect. Analysts say Prime Minister Viktor Orban, facing a probable recession and falling public support, will not backtrack on unorthodox economic policies that international lenders will challenge. Mihaly Varga, the minister in charge of IMF talks, told public radio that once parliament approves the new law amendments, talks with the International Monetary Fund and EU can start about a financing backstop which indebted Hungary needs to cut borrowing costs. "Over the weekend ... we have managed to close our discussions relating to the central bank law and we managed to prepare the amendment which we can submit to parliament this week," Varga told Kossuth radio on Monday. "With this, the last remaining serious hurdle in the way of (credit) talks will be eliminated." The conservative government's policies over the past two years have included big windfall taxes on banks. It has managed to keep investors on side with the prospect of an IMF deal since January after the forint plunged to record lows and Hungary's debt rating was cut to "junk". The euro debt crisis, the Greek elections and a weakening forint in the past weeks have increased pressure on Hungary to sit down with its lenders and start talks. The offer of new changes come after the ECB and the IMF said the government's proposed law could undermine the Hungarian central bank's independence. Varga said the government would withdraw amendments submitted earlier and will put in a new amendment this week which will take into consideration the issues raised by the central bank, the European Central Bank and the IMF. He said that parallel to this, the prime minister will send a letter to European Commission President Jose Manuel Barroso in which he will undertake not to nominate a new deputy governor or further Monetary Council members until the end of the term of the bank's current leadership in March 2013. "We have managed to find a solution which is reassuring to everybody," Varga said. Varga said discussions continued over the weekend when he also spoke with Governor Andras Simor several times. He said the central bank was willing to support offering the compromise in a letter to the IMF, ECB and the European Commission. TOUGH TALKS AHEAD Hungary is not under immediate funding pressure because it has cash buffers which analysts say could be sufficient until early 2013, even without tapping international markets. But its government bonds are selling at yields of close to 9 percent, rates it cannot afford in the long run. Orban told Austrian newspaper Die Presse over the weekend that Hungary can fund itself without help from the IMF although a deal would reduce Budapest's borrowing costs and provide a backstop in nervous markets. But public support for Orban's Fidesz party fell to 22 percent in a Median survey last month, the lowest in a decade, which will make him reluctant to tweak policies such as a flagship flat income tax or a new tax on financial transactions which is meant to plug budget holes next year. "In our view, the government is likely to move forward very slowly with negotiations unless external market conditions force a swift compromise," Eszter Gargyan at Citigroup said. Most analysts expect an agreement in the fourth quarter. "News related to the 2013 budget draft does not suggest any improvement in fiscal governance that could pave the way for a smooth agreement ... In our view, the IMF will ask for more expenditure cuts to increase budget reserves and more ambitious expenditure cuts to create room for tax cuts on low wages in order to support job creation," Gargyan added. Last week Hungary more than doubled its revenue goal from the new transactions tax for 2013 to cover higher public spending while keeping the budget deficit at levels of below 3 percent agreed with the EU. (Reporting by Krisztina Than; Editing by Ruth Pitchford)

Spain says Europe working towards fiscal union

Mon Jun 18, 2012 1:38pm EDT

http://www.reuters.com/article/2012/06/18/us-g20-spain-idUSBRE85H1DJ20120618

LOS CABOS, Mexico - Spanish Economy Minister Luis de Guindos said on Monday that European leaders are united and working towards fiscal integration as they try to fend off a deepening debt crisis.

"I think that European leaders are united, we know perfectly well that we are all in the same boat," he told reporters on the sidelines of a Group of 20 summit in Mexico. "We know perfectly well that we have to keep going in one direction, in the direction of making more progress towards fiscal union and banking union and there, for example, I think that decisions can be taken very quickly and we could see those in the next few days." Leaders from France, Germany, Spain and Italy are due to meet on Friday ahead of a wider EU summit on June 28-29, where they aim to lay out a roadmap for closer fiscal links. De Guindos also said that Spanish bond yields, which earlier on Monday hit a new euro-era high above 7 percent, do not reflect the potential of the Spanish economy or the reforms already undertaken to cut its budget deficit and make the country more competitive. "We think ... that the way markets are penalizing Spain today does not reflect the efforts we have made or the growth potential of the economy," he said. "Spain is a solvent country and a country which has the capacity to grow." (Reporting by Krista Hughes ; Editing by Kieran Murray )

Analysis: ANZ's Asia gamble; time to splash the cash?

Mon Jun 18, 2012 4:32pm EDT

http://www.reuters.com/article/2012/06/18/us-anz-asia-idUSBRE85H1M420120618

SYDNEY - HSBC ( HSBA.L ) banker Michael Smith's 2007 presentation on how he would grow ANZ ( ANZ.AX ), Australia's No.4 lender, across Asia to rival his own bank and Standard Chartered ( STAN.L ) so impressed ANZ's board they appointed him CEO.

Five years on, Smith looks set to miss his initial target - to more than double Asia Pacific's share of ANZ's profits to 20 percent by this year - and will need stellar 25 percent profit growth over the next five years to hit updated goals. The new target has been widened and lengthened - to double the profit contribution from Asia Pacific, Europe and America (APEA) to 30 percent by 2017. APEA currently brings in 15-16 percent of overall profit. Missing those targets five years down the line would risk relegating ANZ to an also-ran in Asia, where Standard Chartered gets four-fifths of its income and more banks are looking to build a regional profile. Analysts say ANZ needs to throw its customary caution to the wind and make some acquisitions. Its "super regional strategy" aims to capture booming Asian growth, trade, investment flows and cash deposits as Western lenders pull out and a highly concentrated Australian banking market slows. Smith arrived at ANZ with more than a decade of Asian banking know-how and a reputation for deal-making, including HSBC's 19 percent stake in Bank of Communications ( 601328.SS ) and Hang Seng Bank's ( 0011.HK ) stake in Industrial Bank ( 601166.SS ), both in China in 2004. At ANZ, he's made just one Asian acquisition, but has overseen capital invested in APEA markets rise to $9 billion, or a fifth of group capital. "Our view is that the 2017 target is not achievable at the current run rate. ANZ will need to make some bolt-on acquisitions," said Paul Dowling, principal analyst at banking analytics firm East and Partners, adding that his analysis shows APEA will account for below 25 percent of ANZ profits by 2017. MISSED OUT After its most visible move into Asia, paying $550 million for Royal Bank of Scotland ( RBS.L ) assets in six countries in 2009, ANZ has missed out on other buys, such as a $4 billion auction for Korea Exchange Bank 004940.KS in late 2010. The current global economic turmoil should put more assets on the block in Asia as banks move to free up capital, and advisers who have worked with ANZ say it should target mid-sized, family-owned Hong Kong banks where valuations have slipped. It should also look at breaking into markets such as Thailand and Myanmar, they said. In Thailand, ING ( ING.AS ) is selling its stake in TMB TMB.BK, the country's seventh-largest lender, while General Electric ( GE.N ) is likely to sell its one-third stake in Bank of Ayudhya BAY.BK. "ANZ has been quite cautious so far. Sometimes one needs to loosen the purse strings. ANZ can't keep waiting," said one source who has worked with ANZ, noting the bank is the best capitalized among its local rivals and can easily raise the funding for acquisitions. ANZ has an experienced M&A team and has taken a look at a number of assets, but prides itself on its cost discipline, though Smith, who owns a collection of Jaguar and Aston Martin cars, admits his M&A team can't "twiddle their thumbs" for long. Large shareholders, who have been burnt in the past when Australian banks forayed overseas and had to take big writedowns, are content with domestic profits and so aren't pushing Smith to chase acquisitions. Despite the hype over Asia's growth prospects, clients still hold ANZ as a domestic play rather than in their regional portfolios. "To me, they're still an Australian bank with an Asia focus," said Simon Burge, chief investment officer at ATI Investments, which owns ANZ shares. M&A DISCIPLINE Smith, 55, may have to move swiftly. Brian Hartzer, one of the ANZ insiders Smith pipped to the CEO post five years ago, is now at rival Westpac Banking Corp ( WBC.AX ) and is seen there as CEO-in-waiting. Smith's other rival then, Graham Hodges, is ANZ's deputy CEO. Also, other Asian banks have renewed regional aspirations, such as Singapore's DBS ( DBSM.SI ) and Malaysia's CIMB ( CIMB.KL ). "Mike Smith has been among the most accurate callers of global economic conditions in the banking industry in the past few years," said Chris Hall, senior investment officer at Argo Investments, which owns ANZ stock. "He's been astute and cautious even when things looked to be picking up a couple of years ago. He knows assets and business lines will come up for sale from the national banks soon and he's in a good position to cherry pick," he said. A spokesman for ANZ notes that the bank's Asia earnings are in US dollars and so have faced forex headwinds as the currency has run up nearly a quarter between 2008 and now, as well as the impact of the global financial crisis. "We've moved from being a bank with a presence in Asia to an integrated and growing, regionally focused international bank," he said, adding ANZ would look at acquisition opportunities, though these will have to pass "consistent and disciplined M&A criteria" such as price and strategy fit. "The main focus of our strategy is organic growth, but as some European banks retreat to their home markets, we expect there may be opportunities. However, that's not our main focus. ANZ shares have lost a quarter of their value since Smith took over in October 2007, in line with most local rivals, but have outperformed the benchmark index .AXJO, Standard Chartered and HSBC. HIGH COSTS HAMPERING GROWTH The Asia growth strategy has come at the expense of ANZ's wealth management arm. The bank's share of Australia's $1.4 trillion wealth market, at under 10 percent, is little more than half that of its peers. But, at around 1.5 times book value and with a 12-month median price target of A$24 a share, ANZ trades in line with local peers National Australia Bank ( NAB.AX ), Commonwealth Bank of Australia ( CBA.AX ) and Westpac, and carries almost the same upside. In a recent presentation, ANZ said it was keen to get into Thailand and Myanmar and expand in China, Indonesia and India. Last month it invested A$300 million in its Chinese operations, taking its spending there to A$700 million. ANZ's APEA net profit has seen compound annual growth of 31 percent since 2007, on 38 percent revenue growth, but most of that came in the first three years. Growth has slowed to around 20 percent and will slow further as the base gets bigger and competition increases, analysts said. The bank has acquired over 1,300 Asian customers, including 250 global corporates in Asia Since 2009, and seen its trade finance and cash management businesses grow by more than 40 percent in June-December last year. Its global markets business revenue last year was $1.7 billion, well below HSBC's $11.6 billion and $4.6 billion at Standard Chartered. And costs are a persistent nag. Analysts estimate ANZ's APEA business return on equity (RoE) at 13 percent - versus the overall group's 19 percent. This is largely due to its Asia cost-to-income ratio of 56 percent, 11 percentage points higher than the group level and higher than the 52 percent for Asia at HSBC and Standard Chartered. ANZ blames those high costs on its investments, and has re-focused on cost controls by using cheaper locations, improving processes and reducing a focus on costly retail banking. Getting all its systems to comply with local regulations in different countries is likely to keep the pressure on costs. "It'd be great if ANZ says Asia technology and structure will take precedence. Tech investment is woefully slow and there are just too many role duplications," said a current ANZ staffer in Asia, who did not want to be identified. ANZ counters that it has made "significant progress" in building the technology and risk systems that underpin its super regional strategy. "These are not things you can build overnight, and given the capacity we've created over the past four and a half years we're now in a position to further accelerate execution of our strategy," the spokesman said. (Reporting by Narayanan Somasundaram; Editing by Ian Geoghegan )

Australia's Fairfax to slash newspaper jobs as media landscape shifts

Mon Jun 18, 2012 3:10am EDT

http://www.reuters.com/article/2012/06/18/us-australia-fairfax-idUSBRE85H0BR20120618

MELBOURNE - Australia's Fairfax Media ( FXJ.AX ), publisher of some of the country's leading newspapers, will overhaul its top mastheads and slash almost one-fifth of its staff, the beginning of a widespread shakeup of Australia's media sector.

The media industry's old guard is struggling with a massive shift online, declining advertising revenues for newspaper and TV, and shrinking market share for free-to-air TV as consumers' choices multiply for news and entertainment. Fairfax - which publishes the 181-year-old Sydney Morning Herald, Australia's oldest newspaper, as well as the Australian Financial Review and Melbourne's The Age - said it will cut 1,900 jobs over three years from its staff of 10,000. It will also shut two printing plants and reduce broadsheet newspapers to tabloid formats as it refocuses towards online distribution. "All the world's newspaper companies are experimenting with what sustainability looks like," said Margaret Simons, the head of the University of Melbourne's Centre for Advanced Journalism. "There is no business model that can support the hundreds of journalists that are employed by companies such as Fairfax," she said. In the United States, the Times-Picayune in New Orleans made headlines last week when it cut its print editions to three days a week, and in a conference call with analysts Fairfax said its options include a digital-only future if revenues continue to slide. Trends in the United States point to even tougher times ahead, as the newspaper industry's efforts to boost digital revenue and cut costs fail to keep pace with declines in the print business, a Moody's report said this month, while online advertising sales growth is stalling. Fairfax is considered vulnerable to a break-up or takeover, possibly by private equity, after its shares this month hit a record low below A$0.60 for a market capitalization of A$1.4 billion ($1.4 billion), down from A$7 billion five years ago. MORE CUTS LOOM Mining magnate Gina Rinehart, the Asia-Pacific region's richest woman with a fortune estimated by Forbes at $18 billion, wants to increase her control over Fairfax but she is not looking to buy out the group, media reports have said. Rinehart boosted her stake in the publisher to 18.7 percent from 13 percent, a filing by her company Hancock Prospecting showed on Monday, and she reportedly wants one or two board seats, which management has so far resisted. A call and e-mail to Hancock Prospecting seeking comment were not returned. Fairfax's classified advertisements were considered "rivers of gold" as recently as a few years ago, but revenues have collapsed as online web sites take over markets for real estate, job and car ads. Shares in Fairfax closed up 7.4 percent at A$0.650 against the broad market benchmark's .AXJO rise of 2 percent. Fairfax's announcement is expected to be followed shortly by news of a restructuring at its larger rival, News Ltd, Rupert Murdoch-controlled News Corp's ( NWSA.O ) Australian unit. News Ltd controls around 70 percent of Australian newspapers, one of the most concentrated levels of media ownership in the world, compared with Fairfax's 30 percent market share. News Ltd is preparing to announce job cuts of up to 1,500 staff from its work force of 8,000, according to a report on Monday on the Conversation, an independent web site run by former Age editor Andrew Jaspan. The Australian, a News Ltd newspaper, said on Monday that executives would brief investors on the restructuring this week. A spokesman for News Ltd declined to comment on job cuts. Communications Minister Stephen Conroy said the job losses at Fairfax were disappointing but the restructuring was part of a trend around the world as publishers adapt to the Internet. "The Internet will continue its march and sectors that were profitable previously are going to struggle as the Internet cannibalizes different parts of the economy. It's not something that you can stop, it is not something you can turn back," Conroy told reporters. TV TROUBLES Newspapers are not alone in feeling the revenue pinch of declining advertising, driven also by consumers cutting back on spending. In addition, free-to-air TV has struggled as audiences shift to pay-TV and other entertainment options online. Ten Network ( TEN.AX ), chaired by Lachlan Murdoch and Australia's third-ranked TV network, this month raised A$200 million in a deeply discounted share issue to boost its balance sheet, as quarterly revenue fell 12 percent from a year ago. Ten's share price has collapsed by two-thirds over the past two years. Rival network Nine Entertainment's owner, CVC Capital Partners CVC.UL, is fighting to retain control of the business as hedge funds circle, with A$2.7 billion in debt due in February 2013. Billionaire James Packer is hoping to bail out of the increasingly tough media sector completely, aiming to sell his media company Consolidated Media CMJ.AX and its 25 percent stake in pay TV operator Foxtel to focus on his more lucrative gaming interests. Fairfax Chief Executive Greg Hywood said the company's major newspapers were profitable and the changes unveiled on Monday were intended to ensure they remain so. Of the 1,900 job cuts, about 20 percent would be from editorial, 20 percent from the printing plants in Sydney and Melbourne and the remainder from other parts of the business, Hywood said. "They have had no choice, unfortunately," said Simon Marais, managing director of fund manager Allan Gray which holds 8.3 percent of Fairfax. "You had the sense there was structural change happening and nobody was doing anything. The future is very uncertain and you have to ensure that you can be flexible," he said. Fairfax publishes 400 metropolitan, regional and suburban newspapers and magazines, according to its web site, and owns radio stations and the country's top dating web site, RSVP.com.au. Under the restructuring, the newsrooms of the Sydney Morning Herald and The Age will be integrated to cut duplication, and an online pay wall system will start in 2013. The changes will result in one-off costs of A$248 million and lead to savings of A$235 million on an annualized basis by June 2015. Fairfax also sold down its stake in its New Zealand auction web site Trade Me ( TME.NZ ) to 51 percent from 66 percent for proceeds of A$160 million. Fairfax said it plans to keep the majority stake. ($1 = 0.9943 Australian dollars) (Additional reporting by James Grubel in Canberra; Editing by Edmund Klamann)

Obama encouraged by talks with Merkel on debt: U.S

Mon Jun 18, 2012 5:47pm EDT

http://www.reuters.com/article/2012/06/18/us-g20-summit-obama-merkel-idUSBRE85H1QK20120618

LOS CABOS, Mexico - U.S. President Barack Obama was encouraged by talks with German Chancellor Angela Merkel at the G20 about European plans to address the debt crisis, White House spokesman Jay Carney said on Monday.

"The two leaders agreed to work closely together, including at this G20, to build support for what needs to be done in Europe and the world to stabilize the situation and support growth and jobs," Carney told reporters in Los Cabos, Mexico. "The two leaders talked about the importance of taking steps to promote financial stability and increase European integration," he said. Carney also said that Obama and Merkel spoke about Syria briefly in their 45-minute conversation. (Reporting By Jeff Mason and Lesley Wroughton ; Additional reporting by Samson Reiny in Washington; Editing by Jackie Franks)

Indian and Chinese energy firms to renew pact

Mon Jun 18, 2012 12:56pm EDT

http://www.reuters.com/article/2012/06/18/us-india-ongc-cnpc-idUSBRE85H1B320120618

NEW DELHI - India's Oil and Natural Gas Corp (ONGC) and China National Petroleum Corp (CNPC) will renew a co-operation pact in areas such as exploration, an Indian oil ministry official said.

The energy-hungry Asian nations - widely blamed for a record rise in oil prices - usually compete for stakes in foreign oil and gas projects to secure supplies. But their rapid emergence as economic superpowers has helped form a strong foundation for greater co-operation. "Although we are rivals, the interests of India and China converge when it comes to hydrocarbons. With ONGC, they (CNPC) will sign an MoU (Memorandum of Understanding)," the official told reporters on Monday. He said the agreement, to be signed Tuesday, would be a renewal of a two-year-old pact between the companies. It comes after officials of CNPC met India's oil minister S. Jaipal Reddy and officials from ONGC's overseas investment arm ONGC Videsh, refiner Indian Oil Corp ( IOC.NS ) and gas utility GAIL (India) Ltd. Chinese and Indian oil firms are already working together on schemes in Syria and Sudan as the two nations seek reserves to feed their large economies, which require ever-increasing supplies of imported oil. (Reporting by Nidhi Verma ; Editing by David Hulmes)

Spain treasury minister urges ECB action on markets

Mon Jun 18, 2012 7:02am EDT

http://www.reuters.com/article/2012/06/18/us-spain-montoro-idUSBRE85H0MN20120618

MADRID - Spain's treasury minister urged the European Central Bank on Monday to respond firmly to market pressures, after a Greek election did little to soothe investor concern about the spread of the debt crisis, pushing Spanish bond yields to their highest since the inception of the euro.

"The ECB must respond firmly, with reliability, to these market pressures that are still trying to derail the joint euro project," Treasury Minister Cristobal Montoro told the Spanish Senate during a budget hearing. Yields on benchmark 10-year Spanish bonds rose by more than 20 basis points on the day to hit 7.138 percent by 0642 EDT, their highest since the launch of the euro in 1999, having gained a full percentage point this month alone. (Reporting by Jesus Aguado, Tomas Cobos and Amanda Cooper ; Editing by Fiona Ortiz )

Goldman relocates Wolff to head Europe merchant bank-memo

Mon Jun 18, 2012 5:02am EDT

http://www.reuters.com/article/2012/06/18/us-goldman-wolff-idUSBRE85H0FE20120618

HONG KONG - Goldman Sachs has relocated Andrew Wolff to London to head its European merchant banking division, following recent retirements, according to an internal memo seen by Reuters.

Stephanie Hui, a 12-year veteran of the merchant bank in Asia, has been promoted to head the Asia Pacific ex-Japan merchant banking business, reporting to Wolff. Wolff, who headed the bank's Asia Pacific merchant bank from 2004, and before that was with the merchant bank in New York for six years, will also co-head the Asia Pacific region with Tokyo-based Ankur Sahu. Wolff will sit on the bank's European and Asia Pacific management committees, while Sahu will take responsibility for Japan and India. Goldman confirmed the content of the memo. Hui played a lead role in the bank's investments in ICBC ( 601398.SS ) and in drugmaking company Shenzhen Hepalink Pharmaceutical Co ( 002399.SZ ). Goldman invested $4.9 million for 12.5 percent of Hepalink in 2007, and reaped a 200-fold return at the IPO price in 2010. (Reporting by Stephen Aldred ; Editing by Ramya Venugopal)

News Corp top lawyer to oversee hacking committee

Mon Jun 18, 2012 2:05pm EDT

http://www.reuters.com/article/2012/06/18/us-newscorp-hacking-idUSBRE85H1F820120618

- News Corp's Management and Standards Committee, which is investigating the aftermath of the media conglomerate's phone hacking scandal, will now report to the company's top lawyer, Gerson Zweifach, News Corp said on Monday.

The committee previously had reported to Joel Klein, who will now focus on his full-time role as chief executive of News Corp's fledgling education division. Zweifach, who joined the company in January, will report on behalf of the Standards committee to News Corp's independent directors through Viet Dinh, who chairs News Corp's nominating and corporate governance committee. The Management and Standards Committee was set up as an independent internal body in the wake of phone hacking scandal at News Corp's British tabloids. The committee has turned over thousands of emails and computers to British police who are investigating the affair. (Reporting By Yinka Adegoke ; Editing by Gerald E. McCormick)

Italy to ask euro ministers to debate debt cost curb

Mon Jun 18, 2012 1:07pm EDT

http://www.reuters.com/article/2012/06/18/us-eurozone-spreads-mechanism-idUSBRE85H1C420120618

BRUSSELS - Italy will push this week at a meeting of euro zone finance ministers for a semi-automatic mechanism involving the European Central Bank or the permanent bailout fund ESM to reduce spreads of euro zone bonds over Germany, Italy's European Affairs Minister Enzo Moavero said on Monday.

Italy has long complained about the rising returns that investors demand to hold its debt rather than benchmark German bonds, saying markets were not fully taking into account its reforms. Italy's benchmark 10-year bond yields rose to 6.06 percent on Monday, taking the additional return compared with German Bunds to 4.63 percentage points. "The idea is to possibly discuss at the Eurogroup/Ecofin this week mechanisms which would be triggered semi-automatically when spreads widen too much, with the aim to reduce them," Moavero told reporters in Brussels, adding that this it is an option currently under debate. Euro zone finance ministers and ECB President Mario Draghi meet in Luxembourg on Thursday and are joined by their non-euro zone colleagues from European Union countries on Friday. The European Central Bank has a program enabling it to buy government bonds in order to stop spreads ballooning. But it bought no government bonds for the 14th week in a row last week, ECB data showed on Monday, resisting pressure to intervene despite tensions before the Greek election and rising Spanish financing costs. The ECB has bought hardly any bonds from euro zone countries since Mario Draghi took over as president in November as policymakers have become increasingly wary of the program, emphasizing the need for governments to tackle the crisis. Speaking about the automatic mechanism proposal, Moavero said: "The ECB may do it, but in a framework which would respect its autonomy. The mechanisms would make automatic something that the ECB has so far done autonomously. The European Stability Mechanism (ESM) may also do that, although it cannot act as a bank." Asked if the ECB should re-start its Securities Market Programme (SMP) of buying bonds on the market, which was originally justified as needed to ensure that markets reflected its monetary policy decisions, Moavero said: "We do not ask them, because we respect the autonomy of the ECB, but obviously any move to reduce spreads is welcome." Moavero also said that he doubted if the euro zone's permanent bailout fund, the ESM, would be operational by early July as planned because of the ratification schedule in euro zone countries. "Considering the state of the ratification process (in all of Europe), it is unlikely that the ESM can enter into force at the beginning of July as we initially planned," Moavero said. Italy has not completed the process of ratifying the ESM yet in the Senate and is at an earlier stage in the Lower Chamber. France, Greece, Slovenia and four others have already ratified the ESM treaty and Germany will vote on it on June 29. "It's not impossible to finish the process (in Italy) before the summer break, but it is unlikely to respect the July deadline," Moavero said. (Reporting by Francesco Guarascio; Writing by Jan Strupczewski ; Editing by Ruth Pitchford)

Euro zone can reach banking union deal quickly: Van Rompuy

Mon Jun 18, 2012 1:26pm EDT

http://www.reuters.com/article/2012/06/18/us-eurozone-banking-union-idUSBRE85H1D220120618

LOS CABOS, Mexico - The euro zone will prioritize a quick deal on a banking union, an element of deeper economic integration which would entail combined banking supervision, the President of the European Council Herman Van Rompuy said on Monday.

"The priority is given to the banking integration and in the bank integration, I think we can reach, sooner than in other matters, an agreement on a more centralized and more common supervision," Van Rompuy told a news conference. He said that, while other elements of deeper integration such as a fiscal union or joint debt issuance were likely to take a long time, a banking union was likely to be possible much faster. "The president of the European Central Bank was speaking about a 10-year plan (of economic integration). I think that with a lot of issues we can go more quickly," Van Rompuy said, adding this would be possible if no treaty change was required. He also stressed that, while euro zone leaders would not make final decisions on anything at their next summit at the end of June, the decision to go ahead with further economic integration was more important than the pace of it. "But the most important thing is that we show the willingness to correct the weakness of the policy infrastructure of the common currency," Van Rompuy said. "Even if in June we don't take definitive decisions, the path, the trajectory, is very clear for everybody and, in this case, the pace is less important than the decision we make." (Reporting By Luke Baker , writing by Jan Strupczewski; editing by Philip Blenkinsop )

China home price declines slow, Beijing to keep curbs

Mon Jun 18, 2012 2:14am EDT

http://www.reuters.com/article/2012/06/18/us-china-property-prices-idUSBRE85H09B20120618

BEIJING - China's home prices dipped for the eighth straight month in May but the pace of decline eased, fanning talk that the market may be bottoming out and the recent monetary stimulus could set the stage for a rebound.

Home prices in the world's second-largest economy have fallen month-on-month since October, after China tightened policy more than two years ago to take the steam out of sizzling home prices. Still, Beijing reaffirmed hours after the data it would keep property tightening measures in place, concerned that inflationary pressures are still a problem even as the broader economy slows. Prices have declined but the cumulative drop is still mild, analysts say, keeping home prices near record highs and out of reach for the majority of China's burgeoning middle class. If Beijing moves to loosen restrictions now, it may mean the economy is slowing faster than expected. "Housing prices are stabilizing or approaching the bottom," He Yifeng, economist at Hongyuan Securities in Beijing. "But we still cannot see any signs of rebounding." Average new home prices fell 0.1 percent in May from a month earlier, narrowing from April's fall of 0.3 percent, according to Reuters calculations based on home price data in 70 cities published by the National Bureau of Statistics on Monday. Only 40 cities saw new home prices fall in May from April, as compared with 43 in April, 46 in March and 52 - the most so far - in December. The set of year-on-year data told a different story, showing the average new home prices dropped 1.5 percent in May. That marked the third straight month of decline, and compared with April's fall of 1.2 percent and March's dip of 0.7 percent. A total of 54 cities suffered year-on-year home price declines in May, by as deep as 14.2 percent in Wenzhou, an eastern city seriously hit by private business failures in recent months due to external headwinds. After the housing data, Chinese property shares .SSEP reversed earlier losses, while Chinese developers listed in Hong Kong jumped. PANIC AGAIN The People's Daily, the mouthpiece of China's ruling Communist Party, said in an analytical report on Monday that many home buyers worry about a rebound in property prices, as China has relaxed monetary policies, which changed market sentiment and boosted property sales since March. "It seems home prices and tightening policies have reached their bottom so quite a few home buyers are starting to panic again," it said. This is reminiscent of 2009 when prices doubled in several months after Beijing rolled out a 4 trillion yuan ($628.43 billion) stimulus package, the newspaper said. China has relaxed monetary and fiscal policies after a more than two-year long property tightening campaign cooled the country's red-hot property market, at the same time as the euro zone debt crisis hit global financial markets and put a brake on domestic growth. The central bank cut interest rates on June 7, the first such move in more than three years, after it lowered banks' reserve requirement ratio three times since November. "Although these measures are not aimed at salvaging the property market, they are a shot in the arm for the cash-strapped real estate market," the People's Daily added. Premier Wen Jiabao's government and its ministries have reiterated no change in its tightening stance for the real estate sector, which affects more than 40 other industries. The latest confirmation of that policy came on Monday, in a Xinhua report that cited the housing ministry. An unnamed spokesman from the housing ministry was quoted as saying that "all localities must firmly implement various property tightening measures as required by the central government." But the weakening economy, likely to grow at its slowest pace in more than three years this quarter, is fuelling expectations that Beijing will probably have to relax property curbs if external headwinds worsen. Reinforcing such expectations are local governments' steps to make it easier for first-time home buyers, by relaxing policies marginally so as not to irritate Beijing while stimulating local housing transactions. SALES PICK UP The semi-official China Securities Journal reported on Monday that transactions of new and existing homes combined rose 46.5 percent in Beijing in the first half of June as compared with the same period last year, citing data from the local housing bureau website. The newspaper also cited local consultancy Home Link as saying that 21 of the 76 new property projects that hit the market so far this year recorded a rise in transaction prices. However, high inventories will cap any quick rebound in home prices in the near term, it cited Home Link analyst Chen Xue as saying. Vanke ( 000002.SZ ), China's largest developer by sales, said earlier this month it would take about 11 months to sell down unsold stocks in key cities such as Beijing, Shanghai and Shenzhen. "I'm not worried about a home price rebound as long as the government keeps its tightening stance," Hui Jianqiang, head of research at the China Real Estate Association, told Reuters after the data. (Reporting by Langi Chiang and Kevin Yao; Editing by Ken Wills and Jacqueline Wong)

Nomura excluded from $6 billion Japan Tobacco share sale

Mon Jun 18, 2012 7:46am EDT

http://www.reuters.com/article/2012/06/18/us-nomura-jt-underwriters-idUSBRE85H0O320120618

TOKYO - Japan has excluded Nomura Holdings ( 8604.T ) from working on the government's sale of roughly $6 billion worth of Japan Tobacco ( 2914.T ) shares, in a blow to Japan's largest broker as it grapples with an insider trading scandal.

The Ministry of Finance said in a statement on Monday it had chosen JPMorgan Chase & Co ( JPM.N ), Daiwa Securities ( 8601.T ), Goldman Sachs ( GS.N ) and Mizuho Securities as underwriters for the share sale by the world's third-largest cigarette company. But it was the absence of Nomura, which dominates Japan's underwriting market with an unrivaled network of retail clients across the country, that caught the market's attention. "This is the sort of deal that one would have expected Nomura to be a shoe-in for," said Makarim Salman, head of Japan financials research at Jefferies in Tokyo. "Investors will start to worry whether there will be other such announcements on the horizon, particularly with Japan Airlines' IPO coming up." The decision came after Nomura earlier this month acknowledged for the first time that its employees had leaked confidential information on three separate public share offerings in 2010, confirming the findings of regulators, which have been probing the matter for months. The finance ministry is planning to cut the government's stake in Japan Tobacco to one-third from half to raise money to help fund reconstruction efforts in areas devastated by last year's earthquake and tsunami. The deal will easily rank as one of the largest equity offerings in Japan this year and was actively sought by banks eager to gain a track record with the government, even though the fees are expected to be relatively small. SELECTION CRITERIA Japan Airlines Co JAPACI.UL, which has emerged from bankruptcy, is looking to relist its shares on the Tokyo Stock Exchange in mid-September, in an IPO worth about 600 to 700 billion yen, according to a source with knowledge of the matter. Nomura has been selected as a global coordinator for that IPO. Nomura had been one of nine investment banks shortlisted earlier this month in the first round of bidding for the Japan Tobacco share sale. SMBC Nikko Securities, which ranks as the No. 2 underwriter in Japan so far this year, was also excluded from the offering in Monday's announcement by the finance ministry. The finance ministry has employed a new numeric scorecard for selecting underwriters for the Japan Tobacco offering. Among other factors, the scorecard put a lot of weight in the second round of bidding on the broker's strategy for selling Japan Tobacco shares, its proposed fee, and compliance. These factors could explain why JPMorgan and Mizuho were selected for the first time as underwriters for a Japanese government share sale, while experienced brokerages such as Nikko and Nomura were left off the deal. The ministry may also have weighed the risk that Nomura would be punished by the financial regulator, since that would disqualify it as an underwriter of state-owned shares. "The selection is just part of the preparation for the sale and actual timing or size of the sale has not been decided," the ministry statement said. Nomura declined to comment on Monday about its exclusion from the deal. (Editing by Muralikumar Anantharaman)

June home builder sentiment highest in five years: NAHB

Mon Jun 18, 2012 11:57am EDT

http://www.reuters.com/article/2012/06/18/us-usa-economy-housing-nahb-idUSBRE85H0Z720120618

NEW YORK - U.S. homebuilder sentiment nudged upwards in June to its highest level in five years, the National Association of Home Builders said on Monday.

The NAHB/Wells Fargo Housing Market index rose one point from the month before to 29, in another sign that the housing market may be slowly heading into recovery, and one point ahead of the expectations of economists polled by Reuters. May's reading was previously reported as 29. The index, however, was still below 50, meaning more builders view market conditions as poor than favorable. It has not been above 50 since April 2006. The single-family home sales component rose to 32 from 30 in May, its highest level since April 2007. The gauge of single-family sales expectations for the next six months held steady at 34 from May, and prospective buyer traffic also remained in place at 23. "This month's modest uptick in builder confidence comes on the heels of a four-point gain in May and is reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today's low prices and interest rates," said NAHB chairman Barry Rutenberg in a statement. David Crowe, NAHB chief economist, said in a statement that "overly tight lending conditions and inaccurate appraisals" are hindering the completion of further sales. Sentiment varied by region. The northeast and south registered slight declines in June, down two points to 29 and 26, respectively. The west and midwest saw increases of 4 and 5 points, up to 33 and 31, respectively. (Reporting by Anna Louie Sussman ; Editing by Chizu Nomiyama )

IEA lifts oil demand forecast but warns on economy

Wed Aug 11, 2010 6:47am EDT

http://www.reuters.com/article/2010/08/11/us-iea-report-idUSTRE67A1OM20100811

LONDON - Global oil demand growth will inch higher over the rest of this year and into 2011, but any rise will be wiped out if the economy is weaker than forecast, the International Energy Agency (IEA) said on Wednesday.

The increases were slight, and the IEA said in its monthly report that they could disappear altogether if the economy falters. "We are flagging that the signals that are coming out are pretty mixed," said David Fyfe, head of the IEA's oil industry and markets division. "We could lose all that (demand) growth in 2011 if GDP growth comes in about 30 percent lower than the consensus forecasts." U.S. crude oil prices extended losses following the report and were down 81 cents at $79.44 a barrel at 1037 GMT. "The report concurs with our view that global demand growth is slowing in the key economies, and that doesn't bode well. So the recovery is stalling, but it's unlikely that we will get a double-dip recession," said energy strategist Sabine Schels at Bank of America Merrill Lynch. The IEA said global oil demand would rise by 1.8 million bpd (mbpd) year-on-year to 86.6 mbpd in 2010, which was 80,000 bpd higher than the forecast in the July report from the IEA, which advises 28 industrialized countries. For 2011, it forecast consumption would rise to 87.9 million bpd, up 1.3 million bpd year-on-year and a 50,000 bpd rise from last month's forecast, taking account of baseline adjustments. Overall, the IEA still expects a slowdown in the pace of growth from this year to next on early signs of flatter fuel consumption in the United States and China. The IEA August demand forecast is higher than other major estimates, even after the U.S. Energy Information Administration revised its figure up on Tuesday to 85.91 mbpd for 2010. The Organization of the Petroleum Exporting Countries (OPEC) is expected to release its monthly report on supply and demand on Friday. SUPPLY PRESSURE Adding to the bearish elements for the oil price, IEA revised its supply forecasts upwards by more than the hike in demand. The organization predicted non-OPEC supply would grow by 200,000 bpd in 2010 to 52.6 mbpd and by 100,000 in 2011 to 52.9 mbpd compared with the previous month's report following an upwards U.S. baseline adjustment and higher Chinese output in the second quarter. Its figures for outright non-OPEC supply growth were 850,000 bpd for 2010 and 340,000 bpd for 2011 as additional supplies come on stream in the countries of the former Soviet Union and in Latin America. The upward trend in non-OPEC supply may be partially offset by regional project delays following BP's ( BP.L ) oil spill in the U.S. Gulf of Mexico, IEA said. The IEA raised estimates for lost output to 60,000 bpd in 2010 and 100,000 bpd in 2011 as a result of the leak. Oil stocks held in countries within the Organization for Economic Co-operation and Development amounted to a comfortable 61 days of forward cover in late June and were barely changed from May, the IEA said. The amount of crude oil in floating storage fell to 59 million barrels at the end of July from 85 million in June, the IEA said. But oil products stored at sea rose by 4 million barrels to 34 million over the same period. (Reporting by Emma Farge and Barbara Lewis ; editing by Jane Baird)

Record low mortgage rates do little for demand

Wed Aug 11, 2010 7:17am EDT

http://www.reuters.com/article/2010/08/11/us-usa-economy-mortgages-idUSTRE67321V20100811

NEW YORK - Home loan demand climbed last week but record low mortgage rates failed to light a fire in a market constrained by unemployment and tight lending practices.

Mortgage purchase and refinancing applications rose by less than 1 percent in the first week of August, even as 30-year loan rates fell to 4.57 percent, the lowest in 20 years of record keeping by the Mortgage Bankers Association. This contract rate, which excludes added lender fees and points, was down from 4.60 percent the prior week and 5.38 percent a year ago, the industry group said on Wednesday. "Consumers don't have a sense of urgency right now," said Patrick Lashinsky, president and chief executive of real estate brokerage ZipRealty in Emeryville, California "They think that interest rates seem to be continuing to go down, they don't expect home prices to go up, so instead of moving into home buying they're saving money for a downpayment, they're trying to improve their credit," he said. The U.S. housing market is still adjusting to life without up to $8,000 in tax credits, which ended on April 30 and fueled spring sales at the expense of summer activity. Many potential buyers are grappling with job loss or wage cuts, while sellers face a large pool of unqualified borrowers under more stringent lending guidelines, economists said. The Federal Reserve on Tuesday took new steps to keep interest rates low to stimulate the economy, which it said has slowed in recent months. Refinancings accounted for about 78 percent of all mortgage requests last week, continuing to far overshadow demand for loans to purchase homes. The seasonally adjusted market index, which includes purchases and refinancings, climbed 0.6 percent last week, according to the MBA. The refi index rose 0.6 percent while purchase demand rose for the fourth straight week but by just 0.3 percent. The average 15-year mortgage rate, meantime, also fell last week, from 4.03 percent to 3.95 percent, the lowest contract rate on record, the MBA said. "Affordability is just way too attractive" for U.S. housing to enter a double-dip, said Greg Miller, chief economist at SunTrust Bank in Atlanta. Many housing experts predict prices, which have already fallen roughly 30 percent from peaks set four years ago, to post a comparatively slim single-digit decline before stabilizing. "I don't know that we're bringing too many people out of rental housing, but folks who are willing to drop prices and sell have an incentive to do so now when purchasing something else can still be beneficial," he added.

GM credit facility complete, IPO filing Friday

Wed Aug 11, 2010 7:45pm EDT

http://www.reuters.com/article/2010/08/11/us-gm-idUSTRE67A4AO20100811

NEW YORK - Automaker General Motors Co has finalized its $5 billion credit facility and plans to file for its initial public offering on Friday, according to sources familiar with the situation.

The credit facility has a tiered structure, with commitment levels at $500 million, $300 million, and below. Major U.S. banks including Bank of America Corp, Citigroup Inc, Goldman Sachs, JPMorgan and Morgan Stanley have committed to the credit facility at the $500 million level, one source said. The total GM IPO will represent at least one quarter of the company, the source said, but added that Friday's filing will be for a nominal amount, below the eventual amount to be raised. When GM is ready to begin, it will start by trying to sell about $10 billion worth of shares and work up from there, the source said. GM's debut is likely before Thanksgiving, but the timing does not hinge on U.S. elections, the source said. A Dutch auction-style IPO is unlikely, three sources said. All the sources asked to remain anonymous because they were not authorized to speak publicly. (Reporting by Clare Baldwin and Soyoung Kim , editing by Leslie Gevirtz)

India may decide BlackBerry fate on Thursday

Wed Aug 11, 2010 2:50am EDT

http://www.reuters.com/article/2010/08/11/us-rim-india-idUSTRE67A0PN20100811

NEW DELHI - India may decide to temporarily shut down BlackBerry Messenger and email services if Research In Motion does not address security concerns in a meeting to be held between the government and operators on Thursday, government officials said.

India's home (interior) ministry will press for some deadline to be fixed for RIM to share encryption details when government officials meet telecom operators on Thursday. India says the Canadian smartphone maker's BlackBerry services could be misused by militants as security agencies cannot access the messages sent through these services. (Reporting by Devidutta Tripathy and Bappa Majumdar ; editing by Malini Menon)

IEA lifts oil demand forecast but warns on economy

Wed Aug 11, 2010 8:01am EDT

http://www.reuters.com/article/2010/08/11/us-iea-report-idUSTRE67A27J20100811

LONDON - Global oil demand growth will inch higher over the rest of this year and into 2011, but any rise will be wiped out if the economy is weaker than forecast, the International Energy Agency (IEA) said on Wednesday.

The increases were slight, and the IEA said in its monthly report that they could disappear altogether if the economy falters. "We are flagging that the signals that are coming out are pretty mixed," said David Fyfe, head of the IEA's oil industry and markets division. "We could lose all that (demand) growth in 2011 if GDP growth comes in about 30 percent lower than the consensus forecasts." U.S. crude oil prices extended losses following the report after earlier dipping on demand growth doubts and were down $1.01 at $79.24 a barrel at 1137 GMT. "The report concurs with our view that global demand growth is slowing in the key economies, and that doesn't bode well. So the recovery is stalling, but it's unlikely that we will get a double-dip recession," said energy strategist Sabine Schels at Bank of America Merrill Lynch. The IEA, which advises 28 industrialized countries, global oil demand would rise by 1.8 million barrels per day (mbpd) year-on-year to 86.6 mbpd in 2010, which was 80,000 bpd higher than its forecast in the July report. For 2011, it forecast consumption would rise to 87.9 million bpd, up 1.3 mbpd year-on-year and a 50,000 bpd rise from last month's forecast, taking account of baseline adjustments. Overall, the IEA still expects a slowdown in the pace of growth from this year to next on early signs of flatter fuel consumption in the United States and China. The IEA August demand forecast is higher than other major estimates, even after the U.S. Energy Information Administration revised its figure up on Tuesday to 85.91 mbpd for 2010. The Organization of the Petroleum Exporting Countries (OPEC) is expected to release its monthly report on supply and demand on Friday. SUPPLY PRESSURE Adding to the bearish elements for the oil price, the IEA revised its supply forecasts upward by more than the hike in demand. The organization predicted non-OPEC supply would grow by 200,000 bpd in 2010 to 52.6 mbpd and by 100,000 in 2011 to 52.9 mbpd compared with the previous month's report following an upwards U.S. baseline adjustment and higher Chinese output in the second quarter. Its figures for outright non-OPEC supply growth were 850,000 bpd for 2010 and 340,000 bpd for 2011 as additional supplies come on stream in the countries of the former Soviet Union and in Latin America. The upward trend in non-OPEC supply may be partially offset by regional project delays following BP's ( BP.L ) oil spill in the U.S. Gulf of Mexico, IEA said. The IEA raised estimates for lost output to 60,000 bpd in 2010 and 100,000 bpd in 2011 as a result of the leak. Oil stocks held in countries within the Organization for Economic Co-operation and Development amounted to a comfortable 61 days of forward cover in late June and were barely changed from May, the IEA said. The amount of crude oil in floating storage fell to 59 million barrels at the end of July from 85 million in June, the IEA said. But oil products stored at sea rose by 4 million barrels to 34 million over the same period. (reporting by Emma Farge and Barbara Lewis; editing by xxx)

U.S. expands homeowner aid for jobless

Wed Aug 11, 2010 2:23pm EDT

http://www.reuters.com/article/2010/08/11/us-treasury-homeowners-idUSTRE67A3SC20100811

WASHINGTON - The Obama administration on Wednesday nearly doubled to $4.1 billion the size of its foreclosure prevention program to help struggling homeowners hardest hit by falling home prices and rising unemployment.

Unemployed homeowners in 17 states and the District of Columbia could get as much as $2 billion under the program. The money, which will not be available for at least several months, is in addition to an existing $1.5 billion program aimed at preventing foreclosures in five states hard-hit by slumping home prices and another $600 million for five states with high unemployment. The Treasury announcement came just one day after the Federal Reserve said it was downgrading its U.S. economic outlook and pledged to provide additional support for the fragile economic recovery. The administration is broadening the geographic areas eligible to receive the mortgage aid funds, which are part of its $50 billion housing assistance program, most of which has not been spent. No new money has been allocated. The $50 billion Home Affordable Modification Program, itself part of the $700 billion bank rescue package approved by Congress in late 2008, has been widely criticized as ineffective. Housing finance agencies in Alabama, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island South Carolina, Tennessee and Washington, D.C., will be eligible for the funds announced Wednesday. Nine of the areas were already eligible for aid under one or the other of the existing targeted programs. Only Arizona was not included in the expansion. "We remain committed to helping struggling homeowners and this program will provide additional assistance to states hardest hit by unemployment," said Herb Allison, Treasury assistant secretary for financial stability. For details on the government program, see makinghomeaffordable.gov/ (Editing by Jeffrey Benkoe)

Apple says to replace overheating iPods in Japan

Wed Aug 11, 2010 7:04am EDT

http://www.reuters.com/article/2010/08/11/us-japan-apple-idUSTRE67A1DL20100811

TOKYO - Apple Inc's Japan unit will replace any iPod nano portable music players that overheat, it said in an online statement, improving an earlier offer to replace only their faulty batteries.

The concession on Tuesday came after Japan's trade ministry put the world's largest technology company under scrutiny, ordering it to publish an "easy to understand" statement on its website explaining how users of the devices could receive replacement batteries and obtain advice. The first generation models, sold between September 2005 and December 2006, have been responsible for around 60 incidents of overheating in Japan, including four cases of minor burns, according to the Ministry of Economy, Trade and Industry (METI). Apple described the incidents as "very rare" and has blamed the problem on a single battery supplier, without identifying the maker. A spokesman for the U.S. company in Tokyo on Wednesday declined to comment on the number of the devices sold in Japan or on the spat with the Japanese government. "We've worked closely with METI to make sure first-generation iPod nano customers who are concerned with their battery have the latest information," U.S.-based spokesman Tom Neumayr had said on August 6. METI said it was "truly regrettable" that it took Apple until Sunday to report around 30 of the incidents of overheating. (Reporting by Benjamin Shatil, Editing by Tim Kelly)

BoE inflation report suggests scope for policy easing

Wed Aug 11, 2010 6:23am EDT

http://www.reuters.com/article/2010/08/11/us-britain-bank-idUSTRE67A1DW20100811

LONDON - British inflation will fall well below its 2 percent target in two years, even if interest rates remain at record lows, the Bank of England said on Wednesday, leaving scope for further policy easing if the economy worsens.

The BoE noted that the prospects were "highly uncertain" and it was ready to move policy in either direction, but the central bank's August Inflation Report is likely to reinforce analysts' expectations that interest rates will stay at a record low of 0.5 percent for some time to come. In its August Inflation Report, the central bank sharply revised up its 2011 inflation forecasts but said price growth would slow rapidly to around 1.4 percent the following year when a January 1 2011 increase in value-added tax drops out of annual comparisons. This end-point was broadly similar to the two-year forecast in May's Inflation Report. Growth is expected to be slower -- seen at a rate of just over 3 percent in two years time -- because of the extra fiscal tightening announced in the government's June budget, weaker business and consumer sentiment and credit conditions remaining tighter than the central bank had expected. "Looking ahead, the UK economy is facing a major rebalancing away from private and public consumption and toward net exports. Achieving that rebalancing, while confronting these headwinds, is likely to mean a choppy recovery," King told a news conference. In May, the central bank had predicted growth of around 3.6 percent at its two year forecasting horizon. Ten-year gilt yields fell to a fresh 16-month low and sterling dropped against the euro after the release of the report, as investors bet that more monetary easing was possible. Late on Tuesday the Federal Reserve gave a somber assessment of the U.S. economic outlook and said it would reinvest the proceeds from its mortgage-backed securities portfolio into U.S. government bonds. "I think the policy measures they announced yesterday were ones that were much more designed to maintain the stance of policy to avoid an inadvertent tightening of policy," King said. "I interpret that as largely being to try to maintain the relatively easy stance of policy they've adopted." The BoE left interest rates at a record low of 0.5 percent last week and maintained its 200 billion pounds ($315 billion) quantitative easing program which had pumped money into the economy. "With the GDP downgrade it looks like in the short term the policy bias is probably toward further QE ... but on balance we still think there will be no change," said David Page, economist at Investec. (Reporting by Sumeet Desai and David Milliken, editing by Mike Peacock)

BoE forecasts leaves scope for further easing

Wed Aug 11, 2010 9:59am EDT

http://www.reuters.com/article/2010/08/11/us-britain-bank-idUSTRE67A2U320100811

LONDON - The Bank of England left the door open on Wednesday for more monetary easing, cutting its forecast for UK economic growth and predicting that inflation would fall well below its 2 percent target in two years.

A day after the Federal Reserve downgraded its outlook for the United States, the BoE's quarterly Inflation Report -- the first since a harsh government budget in June -- showed it too is worried about the durability of recovery from the worst recession since World War Two. "Business and consumer sentiment have shown signs of softening, measures of financial fragility remain elevated and there is great uncertainty about the outlook for both the United States and our most important trading partner, the euro area," Bank of England Governor Mervyn King told a news conference. Ten-year gilt yields slid to a 16-month low and sterling fell as investors bet the BoE could restart its asset-buying, or quantitative easing, programme which pumped its 200 billion pounds ($314 billion) into the economy before being put on hold early this year. The BoE said it stood ready to move policy in either direction and noted the outlook for inflation was "highly uncertain." Most analysts expect the QE programme to remain on hold and rates to remain at their record low of 0.5 percent for many more months to come. But few are certain. "It may take a more obvious slowdown in the economy to prompt the majority of MPC members to vote for a further bout of quantitative easing. But that may well materialize," said Jonathan Loynes at Capital Economics. "And if nothing else, there is further support here for our long-held view that interest rates are going nowhere for a long time." STUBBORN INFLATION The BoE forecast CPI inflation would fall to around 1.4 percent in two years. But that was not before remaining well above the target all through next year, a big upward revision to the forecast it made in May. King blamed this mostly on a rise in value-added tax due to come in at the start of next year but inflation -- currently at 3.2 percent -- has repeatedly surprised on the upside and has been above target for much of the last three years. "That does not mean the Monetary Policy Committee has taken its eye off the inflation ball, nor has gone soft on inflation. We have not. Rather, it is the consequence of a series of one-off price shocks," King said. He said there was yet little sign that above-target inflation had boosted people's expectations of further price rises but that the MPC would be watching this carefully. At least one MPC member, however, has been calling for interest rates to rise. Andrew Sentance voted to raise rates by a quarter-point in both June and July and probably this month as well though minutes of last week's meeting are not out yet. For now, Sentance appears to be in the minority and the bias appears toward further easing. The economy grew by 1.1 percent in the three months to June but output still remains well below the levels before the credit crisis. That Q2 figure might also prove the high-water mark given finance minister George Osborne announced the harshest budget in a generation in June. Most government departments will have their budgets slashed by a quarter over the next four years, potentially putting hundreds of thousands out of work. Taxes are set to go up too, putting a further dent in consumer spending power. Recent surveys show confidence already faltering and the housing market starting to come down again, particularly as credit is still no longer plentiful as it was before the crash. "We think that if the MPC witnesses further deceleration in the pace of recovery it will be tempted to ease policy further, engaging in further quantitative easing and boosting its asset purchases," said David Page, economist at Investec. "And we suspect that if necessary such an easing could occur before November's Inflation Report." (Editing by Mike Peacock)

Disney profit beats expectations

Wed Aug 11, 2010 7:03am EDT

http://www.reuters.com/article/2010/08/11/us-disney-idUSTRE67958K20100811

LOS ANGELES - Hit movies like "Toy Story 3" and higher advertising sales lifted Walt Disney Co's ( DIS.N ) quarterly profit above Wall Street's expectations despite dwindling theme park attendance in the United States.

Investors had expected solid numbers from the entertainment and leisure conglomerate after strong results from media rivals Time Warner ( TWX.N ) and CBS Corp ( CBS.N ) underscored an advertising rebound. Disney executives on Tuesday said spot pricing was running about 20 percent above "upfront" -- or advance -- advertising prices. Box office smashes like the latest Toy Story movie, "Iron Man 2" and "Alice in Wonderland" helped studio revenue rise 30 percent and generated a strong operating profit. Revenue at its media networks arm, home to sports cable network ESPN and broadcaster ABC, rose 19 percent to $4.7 billion. But the results included $344 million in previously deferred revenue because of annual programing commitments. "The cable division is the business that drives this business, and Disney had an impressive quarter," said RBC Capital analyst David Bank. Operating income in media networks rose 43 percent to $1.9 billion, outpacing analysts' forecasts for about $1.4 billion. The studio entertainment division chalked up a $123 million operating profit after posting a loss a year ago. But at the theme parks arm -- operator of Disneyland resorts around the world -- operating income slid 8 percent to $477 million as attendance and hotel occupancy dropped. Disney ended widespread ticket discounts in the quarter. This quarter, domestic hotel reservations were running about 9 percent below the prior-year quarter's pace, executives told analysts on a conference call. Disney's fiscal third-quarter net income rose to $1.3 billion, or 67 cents per share, from $954 million, or 51 cents a share, a year earlier. That beat the average analyst forecast for 58 cents, according to Thomson Reuters I/B/E/S. Total revenue rose 16 percent to $10 billion, surpassing Wall Street's target of just under $9.4 billion. Disney shares rose 1.4 percent to $35.80 after closing at $35.29. The stock has risen nearly 5 percent since the start of August as expectations of an advertising recovery solidified. Last week, Time Warner ( TWX.N ) raised its full-year outlook after quarterly revenue grew at the fastest pace in two years, thanks to better advertising sales at cable networks and strong turnouts for movies like "Clash of the Titans". That forecast came a day after CBS Corp's ( CBS.N ) strong quarterly report, allaying near-term fears that economic weakness could derail an ad recovery. (Editing by Carol Bishopric, Robert MacMillan , Gary Hill )

Fed offers fresh aid to shaky recovery

Tue Aug 10, 2010 8:27pm EDT

http://www.reuters.com/article/2010/08/11/us-usa-fed-idUSTRE6753HW20100811

WASHINGTON - The Federal Reserve on Tuesday took a small but significant step to counter a weakening U.S. economic recovery, saying it would use cash from maturing mortgage bonds it holds to buy more government debt.

The decision to reinvest proceeds from the nearly $1.3 trillion in mortgage-linked debt, acquired during the 2008 financial crisis in an effort to keep borrowing costs down, represents a policy shift for the central bank. Until recently officials had been avidly debating an exit strategy from the extraordinary monetary stimulus delivered during the financial crisis, but recent signs of weakness forced the Fed to downgrade its economic assessment. "The pace of recovery in output and employment has slowed in recent months," the Fed said after a one-day policy meeting. In June, the Fed had described the recovery as "proceeding." The action took investors by surprise. Many had expected the Fed to keep policy unchanged for now, and those who did expect some reinvestment of housing-linked bonds believed the funds would be directed back into mortgage securities. Analysts said the move could herald more aggressive monetary policy easing if more signs of a slowing economic recovery emerge. "Should the outlook continue to worsen, the Fed will likely initiate a new round of asset purchases," said Michael Gapen, economist at Barclays Capital. Still, a Reuters poll of U.S. primary dealers -- banks that deal directly with the Fed -- showed only 5 of the 13 who offered their views on the issue believe the Fed will eventually resort to fresh buying of Treasury notes beyond the reinvestments announced on Tuesday. U.S. stocks trimmed losses after the Fed's decision, but still closed lower on the day. Treasury debt prices rose sharply, with the yield on benchmark 10-year notes slipping to 2.77 percent, near 15-month lows. The U.S. dollar fell against both the euro and the yen. As expected, the Fed left benchmark overnight interest rates steady in a zero to 0.25 percent range and renewed its pledge to keep them low for an extended period. Kansas City Federal Reserve Bank President Thomas Hoenig dissented for a fifth straight meeting over the Fed's low-rate vow and said he believed the economy did not need further help. UNEASY CHOICES Under the new regime, the Fed will keep its holdings of domestic securities steady at around $2.054 trillion, primarily by buying government securities ranging from two to ten years in maturity. Investors were still trying determine just how much mortgage- and housing agency-backed debt held by the Fed would be maturing each year, with estimates hovering between $100 billion and $150 billion. While not insignificant, the amount was not generally seen as large enough to have a substantial stimulative impact on the economy. "The actual effect of what they're doing will be less powerful than the symbolic effect," said Burt White, chief investment officer at LPL Financial in Boston. "What this is telling the market is we're going to do everything and anything we can to make sure we've put a backstop on any possible risk of a double dip." The preference for Treasuries over mortgage securities could signal a compromise with some of the more hawkish Fed officials, who have opposed policies that could favor any particular sector of the economy. Economic data have been decidedly weak since the U.S. central bank's last meeting in late June. Consumer spending has softened and manufacturing growth appears to be losing steam. The unemployment rate, meanwhile, is stuck at 9.5 percent. Fed officials have said there are a number of steps they could take if the recovery falters. The Fed could lower the rate it pays banks to park their excess reserves at the central bank, currently at an already low 0.25 percent, or somehow redouble its already-stated commitment to keep interest rates low. The central bank could also, if things got bad enough, relaunch its bond-buying program. That policy is not without drawbacks. It could expose the Fed to charges that it is printing money to help fund the government's large budget deficit -- something Fed officials have repeatedly vowed not to do. Some officials have been worried that the economy could fall into a deflationary cycle of falling prices and depressed consumption if activity does not pick up. Consumer prices excluding food and energy rose just 0.9 percent in the 12 months through June, holding for a third straight month at the lowest level seen since January 1966. The fear of deflation elicits comparisons with Japan, which has long struggled with economic stagnation and falling prices. The Bank of Japan, which also met on Tuesday, decided to hold off on any further easing measures despite a rise in the yen, which has rallied near a 15-year high on expectations of further measures by the Fed.

India steps up demands for BlackBerry access

Wed Aug 11, 2010 3:53pm EDT

http://www.reuters.com/article/2010/08/11/us-blackberry-idUSTRE67151F20100811

NEW DELHI - Indian demands are giving a new headache to BlackBerry maker Research in Motion after New Delhi threatened a shutdown that could affect one million of the smartphone's 41 million users.

India, worried about national security, could ask mobile phone operators to block BlackBerry messaging and email until RIM provides them with access to data transmitted over the handset, a senior government official said on Wednesday. If a shutdown takes effect, BlackBerry users in India would only be able to use the devices for phone calls and Internet browsing. "If they cannot provide a solution, we'll ask operators to stop that specific service. The service can be resumed when they give us the solution," said the Indian official, who asked not to be named. The Indian demands follow a painful deal with Saudi Arabia, where a source said RIM has agreed to give authorities codes for BlackBerry Messenger users. The United Arab Emirates, Lebanon and Algeria are also seeking access. "By and large BlackBerry will hope for a solution... given India's potential. They wouldn't want to lose traction at a time when competition worldwide is stiff," said Kamlesh Bhatia, an analyst at technology research firm Gartner. India, recently a growing market for RIM, fears the BlackBerry could provide cover for subversive activities. In 2008, a Pakistani-based group used mobile and satellite phones to coordinate attacks in Mumbai that killed 166 people. RIM stock has ebbed about 2.8 percent since the international flap exploded two weeks ago. The Waterloo, Ontario-based company has declined to comment on the talks. The company has long been one of Canada's most successful, and Trade Minister Peter Van Loan said he had called Saudi officials to discuss the importance of the BlackBerry. Analysts say the relative buoyancy of the stock suggests that the government demands are not an immediate threat. Investor attention is focused more on whether the new BlackBerry Torch, a touch-screen model unveiled last week to compete against Apple's iPhone and handsets using Google's Android software, will live up to its hype. COMPETITIVE CONCERNS The controversy comes at an inopportune time for the Canadian-based company, even though analysts say it is likely to resolve the broad issue quickly and quietly. Competitors have eaten into RIM's once-dominant share of the North American smartphone market, pushing the company to look to places like India and Saudi Arabia for growth. The BlackBerry image could suffer if users feel RIM has compromised its Enterprise email system -- long valued by business executives and politicians for secure communications. Corporate and consumer customers both use its BlackBerry Messenger instant messaging. India seeks access to both email and Messenger, while Saudi Arabia has only targeted the instant messaging service. RIM is alone among its competitors in facing such demands. Unlike rivals Nokia and Apple, it operates its own network through secure servers in Canada and elsewhere. RIM has said BlackBerry's Enterprise system lets customers create their own key, and the company has neither a master key nor a "back door" to allow it or any third party to access crucial corporate data. India's security establishment wants RIM to give it access to encrypted messages in a readable format. Officials say RIM has proposed helping India track emails without sharing encryption details, but that is not enough. Internal security chief U.K. Bansal said the government plans to meet with telecoms operators on Thursday to press for a deadline to be set for RIM to share its encryption details. It was not clear if RIM would take part. Bharti Airtel and Vodafone's India unit are the largest providers of BlackBerry services in India. India authorities are particularly sensitive to the potential for the BlackBerry as a tool for violence and political instability. India cracked down on the entire mobile phone market after the Mumbai attacks. Authorities banned pre-paid phone subscriptions and still won't allow text messages in the volatile region of Kashmir. While national security appears to be India's main concern, Middle Eastern countries are concerned that BlackBerry users may spread pornography or violate restrictions on contact between unrelated men and women. (Writing by Paul de Bendern and Frank McGurty; Editing by Lincoln Feast and Janet Guttsman )

Macy's gains market share, sees better sales

Wed Aug 11, 2010 6:26pm EDT

http://www.reuters.com/article/2010/08/11/us-macys-idUSTRE67A2F120100811

NEW YORK - Macy's Inc ( M.N ) quarterly results showed the department store operator boosted sales and gained market share without relying as much on discounts as its rivals to get shoppers into stores.

Shares of Macy's rose 5.9 percent after the company posted better-than-expected earnings and raised its full-year sales and profit forecasts, helped by inventory management that protected its margins. Chief Executive Terry Lundgren said the retailer had gained market share, citing the "My Macy's" program which gives stores more leeway to choose merchandise by region, as well as its focus on exclusive brand lines. "They've done less discounting. Their gross margins are telling you that either there are fewer promotions, or the promotions that they're running are planned," said Sterne Agee & Leach analyst Ken Stumphauzer. Macy's was able to woo shoppers despite the threat of a new dip in consumer spending that has weighed on rivals like J.C. Penney Co ( JCP.N ) and Dillards Inc ( DDS.N ). Cincinnati-based Macy's said second-quarter net income rose to $147 million, or 35 cents a share, from $7 million, or 2 cents per share, a year earlier. Analysts on average expected a profit of 29 cents a share, according to Thomson Reuters I/B/E/S. Sales rose 7.2 percent to $5.54 billion, beating Wall Street forecasts of $5.5 billion. Macy's raised its forecast for full-year same-store sales growth to a range of 4 percent to 4.2 percent. It earlier expected 3.0 percent to 3.5 percent. The company also raised its full-year profit outlook by 10 cents a share to a range of $1.85 to $1.90 a share, compared with Wall Street's average forecast of $1.87 a share. Macy's shares closed up $1.14 to $20.52 on the New York Stock Exchange, in a sharply lower stock market. The shares of retailers J.C. Penney and Kohl's Corp ( KSS.N ) fell 0.9 percent and 1.3 percent respectively. Dillard's fell 4.23 percent. Kohl's and Penney report their earnings later this week. For a graphic on the three chains' same-stores sales see: link.reuters.com/bem54n GOING LOCAL PAYS OFF Macy's introduced its "My Macy's" program in 2008, aiming to reduce the risk of getting stuck with merchandise that shoppers in a given region don't want. It also aims to ensure that its stores don't lose revenue by not stocking the items shoppers are seeking. "They recognized they had a problem with their merchandise mix," said Wendy Liebmann, CEO of consulting firm WSL Strategic Retail. "You cannot have a one-size-fits-all mix." Every month this year, Macy's has reported superior same-store sales results to Penney and analysts said "My Macy's" had a lot to do with that. "They have a lot of district managers who are closer to the stores," said Stumphauzer. "As a consequence, the smaller stores are receiving a lot of attention, and those are the stores in my opinion that historically performed poorly versus Kohl's and versus J.C. Penney." Macy's operates about 800 namesake stores in the United States and 40 Bloomingdale's stores. Macy's sales at stores open at least a year rose 4.9 percent, surpassing Wall Street expectations in each of the three months of the quarter. Last week, Macy's reported a 7.3 percent rise in July same-store sales, while Penney and Dillards ( DDS.N ) posted unexpected declines as they slashed prices to move inventory. Kohl's posted an increase of 4.1 percent. Merchandise inventories were virtually unchanged from a year ago, helping Macy's gross margins rise 0.4 percentage points to 41.9 percent. Macy's has redoubled efforts to sell exclusive products, which make up more than 40 percent of sales and offer better margins. Last week, the company launched its Material Girl collection, designed in part by pop star Madonna. Macy's online sales rose 28 percent and contributed 0.5 percentage points to the same-store sales increase. Its upscale Bloomingdale's chain, which accounts for about 10 percent of sales, got a boost from higher-end spending. (Reporting by Phil Wahba; Editing by Michele Gershberg , Derek Caney , Lisa Von Ahn, Robert MacMillan , and Carol Bishopric)

Fortress to buy most of AIG consumer finance unit

Wed Aug 11, 2010 2:41pm EDT

http://www.reuters.com/article/2010/08/11/us-aig-fortress-idUSTRE67A2RK20100811

NEW YORK/BOSTON - American International Group Inc ( AIG.N ) is selling most of its consumer finance unit to hedge fund and private equity firm Fortress Investment Group ( FIG.N ) at a deep discount and taking a $1.9 billion pretax loss due to the sale.

AIG, majority owned by the U.S. government, said on Wednesday it will sell 80 percent of American General Finance to Fortress managed funds and affiliates as it restructures after a bailout. It will retain the rest of the business. AIG and Fortress did not disclose terms of the transaction. But a source close to the deal said Fortress was paying a "very small fraction" of the equity value of the business. Last week, AIG said it valued its investment in the unit at $2.4 billion. Fortress expects high demand for American General Finance loans amid reduced supply as some players -- under regulatory and other pressures -- exit the market for consumer loans to people with credit problems, the source said, declining to be named because the plans are not public. With about 1,200 branches American General Finance is one of the largest consumer finance firms in the United States and difficult to replicate, the source said. Its reach and contact with borrowers also mean its loans are faring better than its peers, the source said. American General's 60 day-plus delinquency rate on loans to people with credit problems is about 9 percent, compared with 30 percent to 35 percent for the industry, the source added. New York-based Fortress plans to reduce the unit's leverage, including through restructuring debt and asset sales, and has the time to do so because of strong cash flows, the source said. The companies expect the deal to close by the end of the first quarter of 2011. Fortress, one of only a few publicly traded hedge fund groups, was involved in a similar deal earlier this year when some of its funds bought European assets from Ally Financial's Residential Capital unit. In has made other recent acquisitions. It bought bond manager Logan Circle Partners for $21 million and announced a deal in July for loan servicing firm CWCapital. Still, Fortress's share price has been a disappointment for investors since it debuted at $18.50 in 2007. On Wednesday, the share price fell 4.8 percent to $3.99. AIG, once the world's largest insurer, nearly collapsed in September 2008 from credit default swaps that left it on the hook for tens of billions of dollars in payouts to some of the biggest U.S. and European banks. It has been selling assets to repay taxpayers, to whom it still owes more than $100 billion. American General Finance, which provides loans to people in the United States and the United Kingdom, has assets of about $20 billion and liabilities of about $18 billion. It reported an operating loss of $11 million for the second quarter on Friday, compared with a loss of $202 million a year ago. The loss narrowed because of a drop in the provision for loan losses due to favorable trends in credit quality. AIG's stock dropped 5.3 percent to trade at $38.08 on Wednesday. (Reporting by Michael Erman and Paritosh Bansal in New York, and Svea Herbst-Bayliss in Boston; Editing by Derek Caney , Robert MacMillan , Phil Berlowitz)

Cisco sees "unusual uncertainty," sales disappoint

Wed Aug 11, 2010 6:43pm EDT

http://www.reuters.com/article/2010/08/11/us-cisco-idUSTRE67A4M420100811

NEW YORK - Cisco Systems Inc's quarterly revenue and outlook missed Wall Street expectations and Chief Executive John Chambers cited "unusual uncertainty" in the economy, sending its shares plunging 8 percent.

The results from the world's biggest network equipment maker disappointed investors who had thought that growing Internet traffic would have spurred stronger sales of routers and switches, even amid concerns about the economic recovery. "We are seeing a large number of mixed signals in both the market and from our customers' expectations, and we think the words 'unusual uncertainty' are an accurate description of what is occurring," Chambers said on a conference call on Wednesday. "The Federal Reserve's comments yesterday that the pace and output of the recovery has slowed in recent months, and that the recovery is likely to be more modest in the near term than had been anticipated just a few months ago, are comments that most of our large customers that I have talked with recently would agree with." Cisco forecast its revenue this quarter would grow 18 percent to 20 percent from a year earlier, while the average analyst estimate had been for 21 percent growth to $10.95 billion. Revenue in its fiscal fourth quarter ended July 31 rose 27 percent from a year earlier to $10.8 billion, Cisco said. That was also below the average analyst forecast of $10.9 billion, according to Thomson Reuters I/B/E/S. Cisco is one of the technology sector's prime bellwethers due to its broad, global operations. Since Cisco's latest results are for the full month of July, instead of June for many of its peers, they are also seen as an early indicator of industry trends. While its quarterly earnings per share beat expectations by a penny at 43 cents a share, investors have been used to a bigger beat from the company, of 3 cents to 5 cents in recent quarters. Another concern was a decline in gross margin to 64.1 percent from 65.2 percent in the previous quarter. The company said the global shortage in components also affected margins, although conditions were improving. Some analysts have said profitability could continue to decline as Cisco enters more competitive markets like consumer electronics and data center servers. In addition to selling network equipment, the company has been expanding into new areas such as data center servers, and acquiring companies like Norwegian videoconference company Tandberg, to bolster its product line and maintain double-digit sales growth. Cisco also faces tough competition from Juniper Networks Inc, Alcatel-Lucent SA and Huawei Technologies Co Ltd. The company forecast gross margins in the current quarter of around 64 percent. The stock fell 8 percent to $21.82 in extended trading. Cisco shares have fallen nearly 9 percent so far this year, due to worries that slower growth in Europe and China could hurt a nascent recovery in technology spending. (Reporting by Ritsuko Ando; Editing by Richard Chang )

Markets close lower for year, Cisco down late

Wed Aug 11, 2010 6:10pm EDT

http://www.reuters.com/article/2010/08/11/us-markets-stocks-idUSTRE67A15320100811

NEW YORK - Stocks erased the year's gains in the broadest selloff in a month-and-a-half on Wednesday as fears of sustained global economic stagnation caused investors to flee to safer assets.

All three major indexes posted their worst percentage drop since July 16 following the Federal Reserve's bleaker assessment of the economy on Tuesday. The U.S. central bank said it would take steps to hold down borrowing costs. However, some traders questioned how effective these measures would be. "Adding liquidity to the system by saying they would buy Treasuries isn't helping the average man on the street," said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York. "This isn't going to be creating jobs or helping the housing market." There were more than five times as many declining stocks as advancing ones on the New York Stock Exchange while on the Nasdaq, more than eight stocks fell for each that rose. Only five of the S&P's 500 stocks ended higher. All 10 major S&P sectors were down more than 1 percent, led lower by the industrials .GSPI, down 3.9 percent, and the financials .GSPF, off 3.6 percent. Diversified manufacturer 3M Co ( MMM.N ) was the biggest drag on the Dow, off 3.5 percent. A report on soft factory data in China added to the worries about a global slowdown, pressuring equities and commodities and lifting the prices of Treasuries. The two-year note's yield fell to an all-time low overnight. "Some market participants had hoped Asia would bail us out of our dilemma," said Len Blum, managing partner at Westwood Capital LLC in New York. "If China isn't growing fast, then we can't hitch our wagon to that star, which will hurt commodities and stocks while people flee to the dollar." The Dow Jones industrial average .DJI was down 265.42 points, or 2.49 percent, at 10,378.83. The Standard & Poor's 500 Index .SPX was down 31.59 points, or 2.82 percent, at 1,089.47. The Nasdaq Composite Index .IXIC was down 68.54 points, or 3.01 percent, at 2,208.63. The Nasdaq was down 2.7 percent for the year, while the S&P 500 was down 2.3 percent and the Dow was down 0.5 percent. The CBOE Volatility Index .VIX surged 13 percent, suggesting investors see further choppiness in the market. Among the Nasdaq's top decliners was Cisco Systems Inc ( CSCO.O ), which fell 2 percent to $23.73 during the session, then slumped a further 7.9 percent to $21.85 in extended trading after the company reported weaker-than-expected revenues. John Chambers, the chief executive, said that while supply chain constraints were improving, challenges remained. He also affirmed the company's long-term annual revenue growth target of 12 percent to 17 percent. Pressured by Cisco, the stock market selloff was expected to continue into Thursday's session. S&P 500 futures were down 0.8 percent and Nasdaq futures fell 1.2 percent. Semiconductor company Cree Inc ( CREE.O ) fell 13 percent to $59.81 a day after it gave a revenue outlook for the current quarter below analyst estimates. Macy's Inc ( M.N ) was a rare bit of positive news, rising 5.9 percent to $20.52 after it reported second-quarter earnings that beat expectations and forecast strong full-year same-store sales growth. Dow component Walt Disney Co ( DIS.N ) fell 3 percent to $34.22 despite reporting better-than-expected third-quarter earnings and revenue late on Tuesday. After briefly piercing its July upward trendline on Tuesday, the S&P 500 traded below it during Wednesday's session and opened the door to testing the July 30 low of 1,088, which provided support. A breach of that 1,088 level takes near-term support down to 1,057, the July 20 low and roughly 3 percent below the benchmark's current level. Volume was light, with about 8.52 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's estimated daily average of 9.65 billion. (Reporting by Ryan Vlastelica; Additional reporting by Rodrigo Campos ; Editing by Kenneth Barry)

Job openings flat at 2.9 million in June

Wed Aug 11, 2010 10:30am EDT

http://www.reuters.com/article/2010/08/11/us-usa-economy-jobs-idUSTRE67A2Z020100811

WASHINGTON - U.S. job openings were flat in June while the number of new hires slipped, according to a government report on Wednesday that underscored the persistent weakness in the labor market.

The Labor Department said there were 2.9 million job openings in June, almost identical to May's tally. With some 14.6 million people unemployed in June, the figures indicate there were five job seekers for every available position. The sluggish pace of job growth remains one of the biggest threats to the fragile economic recovery. As long as unemployment remains high, demand will be tepid which means companies have little need to hire more workers. In the year before the December 2007 start of the recession, job openings were typically around 4.5 million, which shows just how far job creation has fallen. Hires totaled 4.3 million in June, down from 4.6 million in the previous month. Separations, which includes people who quit, retired, or were laid off, rose to 4.4 million from 4.2 million a month earlier. The hires rate, a measure of how many people were added to payrolls in the month, dipped to 3.3 percent in June from 3.5 percent, while the separations rate edged up to 3.3 percent from 3.2 percent.

Panel urges big thinking in "flash crash" response

Wed Aug 11, 2010 3:05pm EDT

http://www.reuters.com/article/2010/08/11/us-markets-regulation-flashcrash-idUSTRE67A29Q20100811

WASHINGTON - U.S. securities regulators said on Wednesday they are moving forward with technical fixes to the still-unexplained May "flash crash," but some market players say they want a more wholesale review of high-speed trading.

A regulatory advisory committee is still probing exactly what went wrong during the May 6 crash, which sent the stock market plunging 700 points within minutes and is weighing adjustments that aim to prevent a repeat. The committee -- a joint effort of the Securities and Exchange Commission and the Commodity Futures Trading Commission -- brought together money managers, brokers and academics at a hearing on Wednesday to get their views on what happened and how to fix it. "We don't have a rule here that was broken that caused this," said CFTC Commissioner Michael Dunn after the hearing, urging the advisory panel to recommend "rules of the road" to prevent a repeat performance. "One thing really struck me today ... was hearing from these panel members that what happened on May 6 can happen again. In fact they expect it to happen again," So far, the SEC has taken a targeted approach to reforms with stock-trading pauses called circuit breakers and better auditing of all buy and sell orders. SEC Chairman Mary Schapiro said a fast fix that calmed the market was needed. She also listed some technical areas that may yet need changes, including the use of market orders, "stub quotes," price collars, and self-help rules used by the dozen U.S. exchanges where today's high-speed trading is done. The agency is determining whether to deter or regulate stub quotes, in which market makers quote well off the public price of stocks, and placing collars on market orders to keep them relatively close to a reference price. Chris Nagy, TD Ameritrade Holding Corp's managing director of order routing, said collars would hurt his brokers' individual clients. "What we need to look at is addressing the structure of the markets more," he said. "There was a complete evaporation of liquidity in the marketplace" during the crash. Others at the CFTC-hosted meeting said fragmented markets and the explosion of high-frequency algorithmic trading may warrant a more sweeping revamp of the marketplace. "We believe a more fundamental consideration is warranted, and this is whether the current market structure has become too focused on the speed of execution over all other factors," said Kevin Cronin, director of equity trading at money manager Invesco Ltd. "At some point, we believe that speed and price discovery have an inverse relationship, and this dynamic needs to be well-understood." SEPTEMBER FOLLOW-UP REPORT In early September, regulatory staff will issue a "follow-up report" on the crash, CFTC Chairman Gary Gensler said. The advisory committee will consider the report and make recommendations, perhaps in October, he said. Regulators and exchanges have thus far pointed to a rare alignment of events on May 6 in the high-speed, electronic marketplace in which stocks, futures and exchange-traded funds traded simultaneously on dozens of venues at record volumes. Disparate exchange rules, a lack of liquidity and market jitters over Europe's escalating debt crisis are believed to have played a role in the flash crash. Schapiro said the process of breaking thousands of erroneous trades after the crash was "neither clear nor transparent" and has created uncertainty for investors about how such trades would be handled in the future. The SEC has proposed rules for trade-breaking. Although exchanges canceled thousands of trades after markets closed, the crash brought steep losses to some. Goldman Sachs Group Inc this week cited the flash crash as a factor in why it had 10 days of trading losses in the second quarter. Invesco's Cronin told the committee that the prospect of trade breaking likely exacerbated the plunge that afternoon. Charles Rotblut, vice president of the American Association of Individual Investors, said one of the crash's biggest impacts was on investor confidence. Trading volumes have dropped precipitously from the record highs reached in May, and worries have grown that whipsawed investors, particularly individuals, have retreated from the sharp volatility. David Ruder, joint committee member and a former SEC chairman, said it seems that these type of events will continue. "I just don't know what we can do to avoid this kind of computer-generated loss of confidence." (Reporting by Jonathan Spicer and Roberta Rampton; Editing by Derek Caney , Maureen Bavdek, Gunna Dickson and Steve Orlofsky)

U.S. review of Toyota recorders finds no new defects

Wed Aug 11, 2010 7:33am EDT

http://www.reuters.com/article/2010/08/11/us-toyota-recorders-idUSTRE6795A220100811

WASHINGTON - A key element of the U.S. government's investigation of Toyota Motor Corp ( TM.N )( 7203.T ) electronic throttles and other systems found no defects beyond what is known to explain crashes blamed on unintended acceleration, the Transportation Department said on Tuesday.

Findings presented to Congress on the agency's review of selected Toyota electronic data recorders are preliminary and could end up bolstering the automaker's contention that mechanical and equipment problems behind huge recalls and possible driver error are to blame, not vehicle electronics. The National Highway Traffic Safety Administration (NHTSA) said it drew no conclusions from the examination of 58 recorders as part of its multi-layered investigation to see if electronic throttles may have a glitches that in rare cases can cause unexpected surges or even wild acceleration. In more than half of the "black boxes" examined, there was no indication that drivers even applied brakes and in other cases partial braking was noted. "Reviewing event data recorders is one small part" of the government's "effort to get to the bottom of unintended acceleration in Toyota vehicles," said Transportation Department spokeswoman Olivia Alair. "At this early stage period in the investigation, engineers have not identified any new safety defects," Alair said. Toyota, which recalled more than 8 million cars worldwide this year and last over unintended acceleration related to sticking gas pedals and loose floormats that can jam the accelerator, has said its throttle systems are sound. Toyota had no immediate comment on the findings. Congressional committees are conducting parallel investigations and Toyota faces lawsuits, including an amended federal case in California that alleges the Japanese automaker ignored evidence of acceleration problems for most of the past decade and failed to remedy the problem. Toyota was fined $16 million this year for failing to disclose the so-called "sticky pedal" problem to regulators. In the data recorder examination, NHTSA examined recorders from vehicles involved in crashes whose drivers had alleged unintended acceleration or raised the possibility of unwanted acceleration. Of the 58 recorders studied, 35 showed no braking -- which could indicate driver error. Others revealed partial braking and there was no measurable data in five cases. Since 2000, electronic throttle control was cited in complaints associated with 52 Toyota crashes that reportedly killed 62 people, government auto safety records show. Additional findings from the government-led investigation of Toyota, that also includes U.S. space agency experts, are not due until later this year. A comprehensive report involving an independent scientific panel is not expected until 2011. (Reporting by John Crawley; editing by Andre Grenon and Carol Bishopric.)

Timeline: Cisco CEO John Chambers' comments on the economy

Wed Aug 11, 2010 6:43pm EDT

http://www.reuters.com/article/2010/08/11/us-cisco-timeline-idUSTRE67A55N20100811

NEW YORK - Cisco Systems Inc ( CSCO.O ) Chief Executive John Chambers said there was "unusual uncertainty" in the economy and gave a revenue forecast that was below Wall Street expectations, sending shares tumbling.

Chambers, one of Silicon Valley's longest-serving executives, is considered a good reader of industry trends. He was one of the first executives to flag the impact of the financial meltdown on the technology sector in late 2007. Here are some of Chambers' comments in recent years. AUG 2007 "I have been in this business for 30 years ... It's the strongest global economy I have been a part of." NOV 2007 Chambers warned of "dramatic decreases" in orders from U.S. banks. FEB 2008 Chambers said orders slowed rapidly from December to January in the United States and Europe. "It's the most cautious I've seen CEOs in the U.S. and Europe in many years." MAY 2009 On customer sentiment: "You can call it stability, you can call it leveling out ... for the first time many of them feel something solid beneath their feet as opposed to going into deeper and deeper water." FEB 2010 "In our opinion Q2 marked the second phase of the recovery with additional across-the-board acceleration -- in other words, balance across the board -- in all of our geographies and market segments." MAY 2010 "Given all the uncertainties regarding the strength and shape of the recovery, concerns about the recovery possibly slowing and the unknown extent of job creation, we encourage you to wait for additional economic data before becoming too optimistic." AUGUST 2010 "We are seeing a large number of mixed signals in both the market and from our customers' expectations, and we think the words 'unusual uncertainty' are an accurate description of what is occurring." (Reporting by Ritsuko Ando )

Japan debt safer than U.S. debt: China economist

Wed Aug 11, 2010 7:42am EDT

http://www.reuters.com/article/2010/08/11/us-china-japan-debt-idUSTRE67A23920100811

BEIJING - China has been buying record amounts of Japanese government debt because it is less risky than U.S. debt, at least in the short term, a Chinese government economist said on Wednesday.

Investing in Japanese bonds is safer because so much of the country's debt is held domestically, and the yen is on course to strengthen further, said Zhang Ming, an economist with the Chinese Academy of Social Sciences, a top government think-tank. "Even though the difference in yields is big, China has been abandoning U.S. debt and picking up Japanese debt. This definitely shows that it believes the risks of U.S. debt far exceed those of Japanese debt," Zhang said in a report issued by his research institute. The report was issued a day after the Federal Reserve said it would buy more U.S. government debt in a form of mild quantitative easing to counter economic weakness. Top Chinese leaders have previously registered their concerns about lax U.S. fiscal policies eroding the value of their investments in the United States. A source familiar with China's strategy for investing its foreign exchange reserves said the Fed's decision might, in fact, be well-received in Beijing. "The purpose for the Fed in buying Treasuries is to support U.S. economic growth, which is positive," he said. Chinese has already bought more than a net 1.7 trillion yen ($19.9 billion) of Japanese debt in 2010, far surpassing its record of 255.7 billion yen in 2005. At the same time, China has pared back its vast holdings of U.S. debt from $894.8 billion at the start of this year to $867.7 billion as of May, the most recent data shows. The two-year U.S. Treasury note yield fell to a record low of 0.493 percent on Wednesday. Japan's two-year notes are yielding around 0.135 percent, but all eyes are on the yen, which hit a 15-year high against the ailing dollar. But Ben Simpfenforder, an economist with Royal Bank of Scotland in Hong Kong, warned against reading too much into China's shift toward Japanese debt. "China's foreign exchange policy is constantly evolving in response to local and external conditions, and today's trends may reverse tomorrow," he said in a note this week. BETTER RETURNS IN JAPAN China has long said that it wants to diversify its foreign exchange reserves, the biggest in the world at $2.45 trillion. Analysts estimate that about two-thirds are invested in dollar-denominated assets. Along with diversification, China's reserve managers say they want to invest in liquid and safe assets and earn a reasonable return. Japanese debt is a good choice for now on all of these counts, said Zhang from CASS, the government think-tank. Foreigners hold a third of U.S. debt but only 5 percent of Japanese debt, making the Japanese market structure more stable, he said. Moreover, Japan's current account surplus and the unwinding of yen carry trades put on before the global financial crisis should continue to push the yen up in the short term, he added. But Zhang stopped short of calling this a decisive change in China's foreign exchange investment strategy. "The yield on holding Japanese debt is very low, and Japan has a series of systemic problems -- an aging population, high government debt, a liquidity trap -- which influence the mid- to long-term sustainability of Japan's debt," he said. "Whether China can continue to invest in Japanese debt will require closer observation," he said. Zhang also pointed out that China had not turned its back on the United States. While it cut about $161 billion of its short-term U.S. debt holdings in the 10 months to May, it actually added $88.5 billion of longer-term debt. The fundamental problem is that China should not be in a situation where it must buy either U.S. or Japanese debt, he said. "The choice between Japanese and U.S. debt is not a choice between good and bad. Rather, it is being compelled to pick between bad and worse," he said. If China slowed its accumulation of foreign exchange reserves by working to cut its trade surplus and allowing its exchange rate to appreciate, it would not need to invest so much in foreign debt. "This is the only way to get at the root of the problem," he said. ($1=85.34 Yen) (Editing by Kim Coghill)

Macy's shares rise after results

Wed Aug 11, 2010 8:12am EDT

http://www.reuters.com/article/2010/08/11/us-markets-stocks-beforethebell-macys-idUSTRE67A28O20100811

NEW YORK - Shares of Macy's Inc ( M.N ) rose in premarket trading on Wednesday, last trading up 1.9 percent to $19.77, after the company reported quarterly results.

(Reporting by Leah Schnurr )

Dollar drop as data prod Japan closer to policy action

Wed Aug 11, 2010 5:02am EDT

http://www.reuters.com/article/2010/08/11/us-japan-economy-idUSTRE67A0OD20100811

TOKYO - Weak Japanese economic data and a fall in the dollar to an eight-month low against the yen on Wednesday prodded Tokyo closer to fresh action to support an already fragile economic recovery.

Market speculation that the Bank of Japan (BOJ) will have to relax its already loose monetary policy has increased as policymakers have raised the alarm over a fall in the dollar against the yen, which they fear could hurt exports. The dollar dropped below 85 yen on Wednesday and while the finance minister said he was watching the market extremely carefully, he declined to comment on the possibility of currency intervention. If the dollar slips below November's low of 84.82 yen, it would mark the currency's weakest level in 15 years. "A rapid yen rise would boost deflationary factors, so the government and the BOJ must act as one in considering what to do given our commitment to act against deflation," Kohei Otsuka, the vice banking minister told Reuters in an interview. This week the BOJ avoided fresh policy action over the yen's rise, which some policymakers worry will undermine the exports that have pulled Japan out of the global downturn. A faltering U.S. recovery -- which prompted the Federal Reserve to take a fresh step on Tuesday to support the economy -- and a slowdown in China could further undermine Japan's recovery given its reliance on overseas demand. "Given the weak developments in the U.S. economy, the Japanese economy will probably suffer later this year, so the BOJ wants to save its measures until then," said Seiji Shiraishi, chief economist for Japan at HSBC. The BOJ slashed its policy rate to just 0.1 percent in the downturn and has set up a bank lending operation to support the recovery. "Ideally, central banks should be forward looking, but the BOJ has almost no measures left. It isn't good for a central bank to be backward looking, but for the BOJ it can't be helped," Shiraishi said. Indeed, BOJ inaction could backfire, analysts say, because the U.S. Federal Reserve's decision to keep buying government bonds will increase the allure of the yen against the dollar. Japanese policymakers showed further signs of uncertainty over how to tackle the yen and the economy. Otsuka, a former BOJ official and now a key policymaker in Prime Minister Naoto Kan's Democratic Party, warned that the yen was at a critical juncture. But Trade Minister Masayuki Naoshima adopted a more cautious tone, suggesting fresh action was not needed yet. Officials should monitor the economy further before considering extra stimulus, he was reported as saying by Jiji news agency. RECOVERY WEAKENING? Data showed that core private-sector machinery orders, a highly volatile series regarded as an indicator of capital spending, rose 1.6 percent in June, much less than a forecast for a 5.5 percent increase. Manufacturers surveyed in the data from the Cabinet Office forecast that core orders, which exclude those for ships and machinery at electric power firms, will rise just 0.8 percent in the July-September quarter over the previous quarter. Orders rose in April-June by 0.3 percent. Other figures showed wholesale prices fell 0.1 percent in the year to July, against a forecast for a 0.1 percent rise and underlining the stubborn deflation plaguing the country. Consumer prices have fallen from a year earlier for 16 straight months. "Many companies just don't expect Japan's economic growth to accelerate rapidly, so it's difficult for the corporate sector to boost spending," said Kiichi Murashima, economist at Citigroup Global Markets in Tokyo. "The BOJ has made it clear that they would need to see a lot more evidence of weaker growth before they would consider a move," he said. In addition, the ruling Democratic Party is preoccupied with a party leadership election in September, he added. The Fed's policy committee, the Federal Open Market Committee (FOMC), said on Tuesday it would use cash from maturing mortgage bonds it holds to buy more government debt in a step to support the economy. The BOJ held off on new policy steps to combat a stronger yen, saving its limited firepower in case the yen rallies more significantly. "The FOMC made an announcement and after that the market moves have become a little one-sided," Finance Minister Yoshihiko Noda told reporters before the dollar fell below 85 yen. "In any case, excessive and disorderly moves in the currency market would negatively affect the stability of the economy and financial markets. Therefore, I am watching market moves with utmost attention." A Reuters survey showed that data on August 16 is expected to show that Japan's economic growth halved in the second quarter to 0.6 percent from 1.2 percent in the previous quarter, as export growth and private consumption slowed. (Editing by Neil Fullick)

GM results to show gain over first quarter

Wed Aug 11, 2010 8:24am EDT

http://www.reuters.com/article/2010/08/11/us-gm-earns-idUSTRE67A05D20100811

NEW YORK/DETROIT - General Motors Co is preparing to report second-quarter results that will show a substantial gain over the first quarter in a report it will use to bolster its bid to return to capital markets and pay back taxpayers, two people familiar with the matter said.

GM, now 61 percent-owned by the U.S. government, is counting on the momentum from its quarterly results to help it clinch a $5 billion bank credit facility as it prepares a stock offering expected to be the largest ever for the U.S. market. GM has substantially completed work needed to register the IPO with the SEC but needs to complete negotiations with banks for its credit facility before that filing, the sources said. As part of that process, GM has been reaching out to financial institutions and investors in an outreach spearheaded by Chief Financial Officer Chris Liddell and intended to give them confidence in the automaker's outlook, according to people with knowledge of those private discussions. GM Chief Executive Ed Whitacre, appointed by the Obama administration to oversee the automaker's turnaround, said last week he expected the automaker's second-quarter result would be viewed positively by both potential investors and creditors. "It will be good. It will be impressive," said Whitacre, who has also said his top priority is shedding the automaker's ties to the U.S. government and the label "Government Motors" used by critics of its bailout. A GM spokeswoman said the automaker was not providing financial forecasts and would not comment. GM will report second-quarter results on Thursday. GM could finalize its bank credit facility by the end of August, allowing it to press ahead with its stock offering by the end of the year, the sources said. Meanwhile, GM's second-quarter results this week will show higher earnings than the first quarter's $865 million profit, its first quarterly profit since 2007, they said. For 2011, GM is projecting that it could generate $16 billion in earnings before interest, taxes, depreciation and amortization, one of the sources said. JPMorgan debt analyst Eric Selle has forecast GM's 2010 EBITDA at $11.4 billion. That measure of cash generation is important because it is one of the key measurements that bankers and investors will use to estimate how much the restructured automaker should be worth when it reemerges as a publicly traded company. RUNNING THE NUMBERS The U.S. government converted $43 billion of aid to GM into an equity stake in the automaker through a 2009 bankruptcy process that allowed GM to slash costs and return to profit even at sharply reduced sales rates. "We aren't seeing huge sales volumes for GM but we are seeing profit," said analyst Aaron Bragman with IHS Global Insight. "They have restructured to be profitable in a much weaker market." One key number for the U.S. Treasury is the $70 billion valuation mark for GM since that would allow U.S. taxpayers to break even on the still controversial bailout of 2009. Achieving EBITDA of $16 billion in 2011 would value GM at just over $70 billion applying the multiple of its nearest U.S. competitor by sales, Ford Motor Co. On another measure -- price-to-earnings -- GM would have to earn almost $10 billion in 2011 to justify a $70 billion value if investors applied Ford's multiple to its larger rival. GM's advisers for its upcoming IPO have said they believe the automaker could be valued at over $80 billion after accounting for its stake in supplier Delphi -- expected to IPO in 2011 -- and Ally Financial, formerly GMAC. Ron Bloom, the White House adviser overseeing the government's investment in GM and Chrysler, said he believed GM was still on track for a stock sale by the end of the year. A successful GM IPO would provide the Obama administration with a piece of evidence it could use in its argument that the unprecedented intervention in the U.S. auto industry in 2009 has been a financial success even as it saved jobs. Since GM remains privately held, Wall Street analysts have not prepared or released earnings forecasts. GM was helped in the second quarter by a 27 percent gain in U.S. sales compared with the first quarter and a shift in the market toward more expensive trucks and newer models that carry lower discounts. GM also scrambled to add production capacity in Canada for its hot-selling Chevrolet Equinox and GMC Terrain crossovers, moves that will boost revenue. Despite GM's progress, analysts say the automaker faces a continued challenge in Europe where industry-wide sales are sliding and it is restructuring its Opel unit. In addition, GM has struggled with its marketing since bankruptcy and has not yet reversed consumer perceptions of its main brand, Chevy, in the way that Ford has done under Chief Executive Alan Mulally, analysts say. "To get from where they've been to here is a tremendous accomplishment," Bernie McGinn -- president of McGinn Investment Management, who holds Ford shares -- said of GM. "But they are still behind Ford, and Ford is starting to fire on all cylinders," he said. (Reporting by Soyoung Kim and Kevin Krolicki, additional reporting by Philipp Halstrick in Frankfurt; Editing by Gary Hill )

Stocks plunge, dollar rallies on growth fears

Wed Aug 11, 2010 5:45pm EDT

http://www.reuters.com/article/2010/08/11/us-markets-global-idUSTRE67557720100811

NEW YORK - Fear roiled global markets on Wednesday, with stocks sinking and the dollar making its biggest one-day gain in nearly two years against most currencies.

Despite the dollar's broad gains, the Japanese yen hit a 15-year high against the greenback as declining yields on U.S. government debt prompted Japanese funds, heavily invested in dollar-denominated Treasuries, to repatriate profits. Commodity prices fell, with oil prices sliding 2.8 percent, on fears that a global economic slowdown led by the United States and China would reduce demand for raw materials. U.S. gold futures ended only slightly higher as gold's initial sharp gains faded during the stock market's steep slide. The three major U.S. stock indexes ended the session with losses of 2.5 percent to 3 percent, turning negative once more for the year so far. Fears about the sustainability of the global economic recovery increased after the U.S. Federal Reserve announced on Tuesday it would use cash from maturing mortgage bonds it holds to buy more government debt, maintaining the current level of monetary stimulus. U.S. Treasury debt prices rallied, with the 10-year note's yield near 16-month lows, in response to the Fed's expected re-entry into the bond market and stocks' sharp sell-off. Some investors saw the measure as a sign that policy- makers want to support financial markets while the economy goes through a possible pause in growth. "I don't think that we are in for a major correction for the equity market," said Klaus Wiener, head of research at Generali Investments in London. "The Fed is willing to support the economy. If the economy slows but does not fall into recession as I expect, then market confidence in the economy could improve again," he added. But that strategy, at least for now, seemed to have backfired. "If one of the Fed's goals in yesterday's statement was to instill confidence in the market that they will do anything to make things better, they accomplished the exact opposite in that today we are even more worried about economic growth," Peter Boockvar, equity strategist at Miller Tabak & Co in New York, said in a note to clients. NASDAQ DOWN 2.7 PCT FOR YEAR Adding to investors' woes was data showing a slowdown in Chinese investment and factory output growth, coupled with a Bank of England's downgrade of its growth forecast and a dovish tone from its governor, Mervyn King. Chinese annual factory output growth slowed to 13.4 percent last month from 13.7 percent in June ,but beat forecasts of a 13.2 percent rise. Year-to-date growth in fixed-asset investments slowed to 24.9 percent from 25.5 percent. "If China's economy slows down, industries worldwide will likely feel it in their revenue. That could darken the jobs picture in this country even further than it already is," said Keith Bliss, senior vice president at Cuttone & Co in New York. The MSCI All-Country World index fell 2.7 percent, while the FTSEurofirst 300 index of top European shares tumbled 2 percent to end at 1,040.87 -- a three-week closing low. Banking and commodity shares led European markets lower, with the STOXX Europe 600 banking index .SX7P falling 3.4 percent. On Wall Street, the Dow Jones industrial average .DJI lost 265.42 points, or 2.49 percent, to end at 10,378.83, while the Standard & Poor's 500 Index .SPX sank 31.59 points, or 2.82 percent, to 1,089.47. The Nasdaq Composite Index .IXIC tumbled 68.54 points, or 3.01 percent, to close at 2,208.63. For the year, the Dow was down 0.5 percent, while the S&P 500 was off 2.3 percent and the Nasdaq was down 2.7 percent. U.S. Treasuries rallied, with the two-year note's yield touching a record low of 0.493 percent earlier in the session. The benchmark 10-year note shot up 26/32 in price, with the yield at 2.68 percent, a 16-month low. "The fall in U.S. yields is a barometer of the cyclical position of the U.S. economy," said Adam Cole, head of currency strategy at RBC Capital Markets. "The market's reaction is that if the U.S. economy is slowing materially, it will not be in isolation, and it has therefore responded by selling risk." DANCE OF THE RISING YEN The dollar gained against a basket of major currencies as investors became more averse to risk, with the U.S. Dollar Index .DXY up 2.11 percent, its biggest one-day rise since October 2008. The euro was down 2.32 percent at $1.2871. The greenback was practically flat against the Japanese yen, however, after touching a 15-year low around 84.72 yen earlier in the session. Appetite for the yen increased as Treasuries' yield spreads over Japanese government debt narrowed, prompting the Japanese Finance Minister Yoshihiko Noda to say he was closely watching forex markets. Analysts said, however, his rhetoric was unlikely to escalate into currency intervention to weaken the yen. U.S. crude oil fell $2.23, or 2.78 percent, to settle at $78.02 a barrel. Crude oil futures prices were also pressured by a government inventory report showing refined products stockpiles rose more than expected last week, even though refiners reduced capacity more than 3 percent. In New York, U.S. gold futures gained $1.20 to settle at $1,199.20 an ounce, off an intraday high at $1,210.20. (Reporting and writing by Walter Brandimarte; Additional reporting by Chris Reese , Ryan Vlastelica and Steven C. Johnson ; Editing by Jan Paschal )

Wider trade gap trims growth estimates

Wed Aug 11, 2010 6:34pm EDT

http://www.reuters.com/article/2010/08/11/us-usa-economy-idUSTRE65M2WK20100811

WASHINGTON - The U.S. trade gap widened a surprising 18.8 percent in June on a wave of consumer imports from China and other suppliers, suggesting U.S. second-quarter economic growth was weaker than previously thought.

The monthly deficit jumped to $49.9 billion, the highest since October 2008, as imports rose 3.0 percent to $200.3 billion, the Commerce Department reported on Wednesday. U.S. exports, which President Barack Obama has hoped would help drive economic recovery and job growth, fell 1.3 percent in June to $150.5 billion. In financial markets, U.S. stocks erased the year's gains, the dollar rose the most in nearly two years and benchmark Treasury yields hit 16-month lows as a gloomy U.S. outlook and weak Chinese data suggested the world economy was slowing and led investors into safe-haven assets. The much-wider-than-expected gap prompted economists to scale back estimates of second-quarter U.S. economic growth, and reignited calls by some business and labor groups for Congress to get tough with China over its currency policy. "June's U.S. international trade figures suggest that the U.S. economy cannot rely on a boost from overseas demand to offset the current domestic weakness. In fact, overseas effects are exacerbating the domestic downturn," said Paul Dales, U.S. economist with Capital Economics in Toronto. In its first estimate of second-quarter gross domestic product growth late last month, the Commerce Department said the economy grew at a 2.4 percent annual rate in the April to June period. On Tuesday, the Federal Reserve said the pace of U.S. economic recovery has slowed in recent months, resulting in the Fed -- the U.S. central bank -- outlining a plan to nurture growth by using cash from maturing mortgage bonds to buy more U.S. government debt. The U.S. trade data was "spectacularly terrible" said Ian Shepherdson, chief economist with High Frequency Economics in Valhalla, New York, and he said it knocked 0.4 percentage point off their second-quarter growth estimate. Others were even more glum. Harm Bandholz, chief U.S. economist at Unicredit Research, ratcheted his second-quarter GDP forecast down to just 1.0 percent based on the trade data, weaker construction spending and less inventory build-up. U.S. stocks slumped on the gloomier Fed outlook and slower manufacturing growth in China that underscored the lackluster global economic recovery. The three major stock indexes .DJI .SPX .IXIC fell from about 2.5 percent to 3.0 percent. The U.S. dollar tumbled to a 15-year low against the yen . But it had its biggest daily gain in nearly two years against other major currencies .DXY as stocks fell and bond prices rose in a flight to safety. MOVE TO BOOST EXPORTS Obama appeared to take note of the wider trade gap at a White House ceremony on Wednesday to sign a bipartisan bill temporarily suspending duties on a long list of raw materials U.S. manufacturers use to make finished goods. "Our economy has fallen into the habit of buying from overseas and not selling the way it needs to, but it is vitally important that we reverse that trend," said Obama, who set a goal early this year of doubling exports. The National Association of Manufacturers, a top industry group, has said the Manufacturing Enhancement Act of 2010 signed by Obama would boost U.S. manufacturing output by $4.6 billion and support about 90,000 jobs. Senator Charles Grassley, an Iowa Republican, urged Obama to build on today's signing by pushing "without delay" for congressional approval of long-stalled free-trade agreements with South Korea, Colombia and Panama. U.S. imports of goods and services in June were the highest since October 2008, fueled by record imports of consumer goods and an uptick in imports of other nonpetroleum products. But that sign of higher U.S. demand was tempered by the drop in U.S. exports. Imports from China soared to $32.9 billion, the highest since October 2008. The closely watched U.S. trade deficit with the major East Asian manufacturer widened to $26.2 billion, also the highest since October 2008, while U.S. exports to China fell slightly. The big jump in the U.S. trade deficit followed Chinese government data on Tuesday that showed China's trade surplus surged to $28.7 billion in July, an 18-month high. Senator Charles Schumer, a New York Democrat, seized on that report to renew calls for legislation threatening China with duties on some of its exports to the United States. Pressure on lawmakers to act could intensify in the run-up to the November congressional elections. "The House and Senate must now step in and pass strong legislation to penalize China's currency manipulation and bring down our trade deficit," said Scott Paul, executive director of the Alliance for American Manufacturing. However, some analysts said the June surge in imports from China was due to manufacturers and exporters there trying to ship as many goods as possible before July 15, when government export rebates were reduced. China loosened its yuan currency from a nearly two-year peg to the dollar in June, but it has barely risen since then. Many lawmakers believe it is undervalued by at least 25 percent. U.S. imports from Germany and the 27-nation European Union also had their strongest showing since October 2008. Although U.S. automotive exports were the highest since October 2008, other important export categories such as capital goods, industrial supplies and materials, and food, feeds and beverages posted declines. A separate report showed U.S. home loan demand climbed last week but record low mortgage rates failed to light a fire in a market constrained by unemployment and tight lending. Mortgage purchase and refinancing applications rose less than 1 percent in the first week of August, even as 30-year loan rates fell to 4.57 percent, the lowest in 20 years of record keeping by the Mortgage Bankers Association. (Additional reporting by Emily Kaiser ; Editing by James Dalgleish and Philip Barbara )

Slowdown but no meltdown for China's economy in July

Wed Aug 11, 2010 1:16am EDT

http://www.reuters.com/article/2010/08/11/us-china-economy-idUSTRE67A0I620100811

BEIJING - Growth in Chinese investment and factory output slowed further last month as the government brought credit growth back to normal after a record lending spree in 2009 to counter the global financial crisis.

The figures, along with weaker retail sales, add to the picture of softening domestic demand painted on Tuesday by a sharp drop in import growth. "Industrial output continued to ease, indicating a moderation of economic activities. But a sharp slowdown in economic growth can be ruled out, because resilient household consumption will help compensate for a drop in investment," said Zhu Baoliang, a researcher with the State Information Center, a government think tank in Beijing. Annual factory output growth slowed to 13.4 percent last month from 13.7 percent in June but beat forecasts of a 13.2 percent rise. Year-to-date growth in investment in fixed assets such as flats and factories in urban areas slowed to 24.9 percent from 25.5 percent, undershooting forecasts of a 25.2 percent rise. However, after taking into account wholesale inflation, which dropped to 4.8 percent in the year to July from 6.4 percent in June, real growth on the month was steady, according to Ting Lu, an economist at Bank of America Merrill Lynch. "China's growth is slowing, but we see no sign of a hard landing," he said. "TOO RESTRICTIVE" Sheng Laiyun, a spokesman for the National Bureau of Statistics, which released the data, also struck a note of calm. He described the slowdown as moderate and a welcome step to a more sustainable model of growth that relies less on energy-intensive heavy industry. China this week ordered the closure of more than 2,000 obsolete, fuel-guzzling factories, steel mills and cement works. Some economists, though, were less sanguine. Yu Song and Helen Qiao, economists at Goldman Sachs, pointed to a moderation in annual retail sales growth to 17.9 percent in July, from 18.3 percent in June, that fell short of projections of an 18.3 percent increase. A slowdown in growth of money supply, the lubricant of every economy, was particularly alarming, they said in a note. Annual growth in the broad M2 measure of money slowed to 17.6 percent from 18.5 percent in June, a rate that economists had expected to be repeated in July. "We believe this level of broad money supply growth is clearly too restrictive as it will put more downward pressure on domestic demand growth in the near future," Yu and Qiao said. There are also question marks next to overseas demand. Although figures on Tuesday showed stronger-than-expected exports, the Federal Reserve warned overnight that the pace of the U.S. recovery had slowed. China is also concerned about the fragility of demand from Europe, which is drowning in debt. NO RELAXATION If growth does continue to soften, some economists believe the government could speed up targeted investments in areas such as low-income housing, rural development and clean energy. Another option would be to relax this year's loan quota of 7.5 trillion yuan, down from a record 9.6 trillion last year. Tao Wang, UBS's China economist, said there was no reason for a knee-jerk easing. "The slowdown is still moderate. If people were looking for policy relaxation, they would be disappointed from this set of numbers," she said. New loans in July alone totaled 533 billion yuan, the central bank said, below forecasts of a 600 billion increase. Zhu, the State Information Center researcher, said the government would not water down the full-year target. "It will not relax efforts to control lending growth, even though the economy is slowing," he said. Beijing is particularly anxious to take the air out of an inflated property market. Fearing that prices were feeding on themselves, Beijing increased down payments and mortgage rates, made it tougher to buy multiple homes and tightened financing for developers. The curbs are sapping demand for everything from steel to sofas. But apartment prices in major cities, while no longer rising, are still beyond the reach of ordinary people -- an incendiary issue for the ruling Communist party. While the case for loosening policy is not clear-cut, the consensus is that Beijing has no cause to tighten either, even though inflation rose back above the government's 3 percent target in July. Consumer price inflation accelerated to 3.3 percent, in line with forecasts, from 2.9 percent in the year to June, but economists said the jump was the fleeting result of widespread flooding across China that has boosted food costs. Overall, economists are confident that gross domestic product growth for all of 2010 will beat last year's outcome of 9.1 percent and catapult China ahead of Japan as the world's second-largest economy after the United States -- a ranking that, by some calculations, it has already been secured. (Additional reporting by Langi Chiang and Aileen Wang; Writing by Alan Wheatley ; Editing by Ken Wills and Jonathan Thatcher )

U.S. prelim August consumer sentiment seen up vs July

Wed Aug 11, 2010 4:11pm EDT

http://www.reuters.com/article/2010/08/11/us-usa-economy-sentiment-idUSTRE67A4LV20100811

WHAT: Thomson Reuters/University of Michigan's Surveys of Consumers preliminary reading on August consumer sentiment

WHEN: Friday at 9:55 a.m. (1355 GMT) REUTERS FORECAST: * Sentiment index is expected to inch up to 69.3 in August from 67.8 in July. Forecasts range from 64.0 to 74.0. * Current economic conditions gauge is seen unchanged from July at 76.5. Forecasts range from 75.0 to 78.0. * Barometer of consumer expectations is seen up at 63.7. It ended July at 62.3. Forecasts range from 59.8 to 68.0. FACTORS TO WATCH: While expectations are for a slight pickup in sentiment from the previous month, sentiment sagged in July to its lowest level since November on bleak prospects for jobs and income. The survey's final July reading on the overall index on consumer sentiment dropped to 67.8 from 76.O in June. Analysts say those employment concerns likely remain for consumers as July data on monthly payrolls from the U.S. government was weaker than expected. It also added to a slew of other data that underscored the view the recovery is slowing. Employment levels are considered significant to boosting consumer spending, which accounts for more than two-thirds of U.S. economic activity. The Federal Reserve, too, on Tuesday gave a gloomier economic outlook. "(Sentiment) has been steadily weak, and I think with the (stock) market down in May and June, I don't see much in terms of an uptick in prospects for consumer confidence. Obviously, 70 percent of (the economy's) growth is based on the consumer so that's another definite headwind," said Alan Lancz, president, Alan B. Lancz & Associates Inc., an investment advisory firm, based in Toledo, Ohio. The Standard & Poor's 500 index .SPX was down 8.2 percent in May and down 5.4 percent in June. The index jumped 6.9 percent in July, but is down more than 1 percent so far for August. In another reading of sentiment, the Conference Board, an industry group, said late last month its index of consumer attitudes fell to 50.4 in July from a revised 54.3 in June The June reading was revised up from an original 52.9.. MARKET IMPACT: A better-than-expected consumer sentiment number could lift stocks, which were in negative territory for the year on Wednesday amid increased worries about the recovery, while it would hurt the safe-haven demand for U.S. government bonds. An above-forecast report would likely be supportive for the U.S. dollar. (Reporting by Caroline Valetkevitch , Editing by Chizu Nomiyama)

Philanthropy becoming new status symbol for wealthy

Wed Aug 11, 2010 1:12pm EDT

http://www.reuters.com/article/2010/08/11/us-wealth-philanthropy-status-idUSTRE67A2WB20100811

NEW YORK - As dozens of U.S. billionaires pledge their fortunes to charity and the country struggles to shake off recession, philanthropy is a growing status symbol of the rich, experts say.

Being wealthy may no longer be about how many properties or fast cars a millionaire owns -- it could be about how much money they are giving away -- bringing hope to charities that Warren Buffett and Bill Gates' philanthropic push inspires others. "It will be something that's very important to the wealthy -- to be able to say: 'I give my money away as much as I spend it in all these other exciting ways,'" said Stacy Palmer, editor of the Chronicle of Philanthropy. "Clearly pressure on the elite is high right now to say that they are giving money away and that will make it trendy," she said. "People who have enough money to give away but maybe haven't thought about that ... those folks will want to do what Warren Buffett and Bill Gates are doing." Investor Buffett and Microsoft founder Gates are urging American billionaires to give away at least half their wealth during their lifetime or upon their death by signing the Giving Pledge, which so far has 40 members. While experts in philanthropy say recognition is not a key motivation for people to give, some say it would not be a bad thing if philanthropy became a greater badge of honor among the rich. "It would be naive to think that nobody cares about the attention because otherwise there wouldn't be any names on buildings," said Patrick Rooney, executive director of the Center on Philanthropy at Indiana University. "But it would not be a terrible thing if philanthropy became a more important status symbol than the car you drive or the street address and how many square feet you live in or how many residences you own," he said. Based on Forbes magazine's estimates of the wealth of the 40 members of the Giving Pledge, at least $150 billion could be given away. Gates and Buffett are the second and third richest people in the world, behind Mexican tycoon Carlos Slim, with fortunes of $53 billion and $47 billion respectively. GIVING BY RICH AN EXPECTATION The true measure of the wealthy should be their generosity, said Bradford Smith, president of the Foundation Center. "If philanthropy is indeed becoming the new status symbol of the wealthy it will do a lot more to change the world than buying Gucci bags," he said. But Paul Schervish, director of the Center on Wealth and Philanthropy at Boston College, said it was important that philanthropy as a status symbol was just a reflection of giving and not a motivation. "Philanthropy is becoming a regular part of the financial life of wealth holders in a substantial way," he said, adding that anything that is the right thing to do morally can become status symbols. But, he cautioned, the risk is that if giving is seen as the purview of the rich then it may devalue charity endeavors of regular Americans. Individual Americans gave more than $227 billion in 2009, according to a the Giving USA report by the Center on Philanthropy at Indiana University, down just 0.4 percent from the previous year despite the U.S. recession. Melissa Berman, president and chief executive of Rockefeller Philanthropy Advisors, said there was a growing expectation on wealthy families to not only give their money away but be actively involved in their philanthropy. "(The Giving Pledge) is going to have a tremendous impact and it's impact may be greater outside the United States ... because (China and India) are countries where there is less of a tradition of that kind of scale of philanthropy," she said. Gates and Buffett and planning to travel to China in September and India in March to speak to wealthy families about the Giving Pledge in the hope that it will drive a similar growth in philanthropy there. Wall Street Journal wealth columnist Robert Frank, author of "Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich," said the recession had helped spur America's rich to search for new status symbols. "Yachts, private jets, seaside mansions are so 2007," Frank wrote recently. "But being wealthy enough and generous enough to get on the Giving Pledge list may quickly become the ultimate badge of status -- both in the U.S. and abroad." (Editing by Mark Egan and Jackie Frank )

Nestle and CSM caution over higher input costs

Wed Aug 11, 2010 7:09am EDT

http://www.reuters.com/article/2010/08/11/us-food-idUSTRE67A1S720100811

ZURICH/AMSTERDAM - Food groups Nestle ( NESN.VX ) and CSM CSMNc.AS warned of a tougher second half due to rising costs but said price increases and forward buying will mitigate the impact of higher wheat and other commodity prices.

Switzerland's Nestle, the world's largest food group, cautioned on Wednesday of a more challenging input cost environment during the second half, while Dutch group CSM says it expects cost increases in a number of its raw materials. But Vevey-based Nestle still raised its underlying sales growth target for 2010 and saw its profit margin rising, while the world's largest bakery supplies group, CSM, saw a rise in second-half profits after saying it will have to raise prices. World wheat prices have risen sharply since the end of June due to drought in Russia, the world's third-largest exporter, hitting CSM's input costs while other commodities key to Nestle like coffee and cocoa are at high levels. Despite rising costs, Nestle reported a 5.7 percent increase in first-half food and beverage underlying sales, just short of a company-compiled consensus of 5.9 percent. It upgraded its 2010 target to see growth of around 5 percent, while previously it aimed to beat 2009's 3.9 percent increase. "While Nestle should face commodity inflation in H2, we consider that some pricing and ongoing cost savings will more than offset this," said food industry analyst Andrew Wood at Sanford Bernstein. The maker of Nescafe coffee, Kitkat chocolate bars and Buitoni sauces said price hikes and strong demand in emerging markets, particularly Latin America, helped boost sales in the first half, prompting it to raise its target. "This is an excellent set of figures....The company's portfolio means it can raise prices while others are cutting theirs," said Jon Cox, an analyst at Kepler Capital Markets. Nestle Chief Financial Officer Jim Singh told an analysts briefing, "For the second half we continue to see volatility in some raw materials and increased cost pressures." He kept his overall estimate that input costs will rise 2-3 percent in 2010. Nestle shares rose 0.6 percent to 51.8 francs by 0930 GMT after gaining 2.6 percent this year and underperforming a 6.5 percent rise in the STOXX Euro food and beverage index .SX3P. Overall group net profits rose 7.5 percent to 5.5 billion Swiss francs ($5.22 billion), with earnings per share up 13.5 percent to 1.6 francs. Food industry rival like Unilever ( ULVR.L ) ( UNc.AS ) and Danone ( DANO.PA ) have also cautioned that higher raw material prices and weak demand in Europe would hit the second half of 2010 but Nestle said its savings program should more than compensate for input cost pressures. Dutch CSM, which makes muffins and pastries for European and U.S. retailers, said it will raise its prices to offset higher raw material costs while it forecast higher second-half operating profit after first-half earnings beat estimates. "We remain cautiously optimistic for the second half of 2010...We expect to see a continuing challenging economic environment. In addition, we expect to see cost increases in a number of our raw materials," the group said in a statement. But the company was upbeat on its ability to cope with raw materials prices, saying it was able to mitigate volatility in costs with its forward buying policy. "They've had a pretty good first half... but the outlook is cautious. There remains some uncertainty about input costs. You don't know where volumes are going if you pass on too many higher prices," SNS Securities analyst Richard Withagen said. CSM shares dipped 1.5 percent to 20.89 euros. They have fallen more than 12 percent in the past month on concern about raw materials prices, especially wheat, but analysts have said CSM's history suggests the company should be able to pass on the higher commodity prices to its customers. CSM reported first-half earnings before interest, tax and amortization (EBITA) before exceptional items of 102.5 million euros ($133.4 million) compared with the average estimate of 96.5 million from a Reuters poll of seven analysts. (Additional reporting by David Jones ; Editing by Michael Shields )

Google to handle some ad sales on DirecTV

Wed Aug 11, 2010 1:16pm EDT

http://www.reuters.com/article/2010/08/11/us-directv-idUSTRE67A3AV20100811

NEW YORK - Google Inc said on Wednesday it will sell advertising spots on 11 cable networks carried by satellite television operator DirecTV Group.

The Google TV Ads system will handle the sales of commercial spots for such networks as Bloomberg, Fox Business and TV Guide. Google TV Ads, which was launched in 2008, is a marketplace where advertisers can buy national advertising inventory on networks carried by Dish Network Corp and now also DirecTV. Satellite and cable operators typically sell a limited number of commercial spots themselves, alongside spots sold by cable networks and their advertising agencies. Terms of the new partnership were not disclosed. Separately Google announced in May its plans for GoogleTV -- an on-screen search box that allows viewers to look through live programs, DVR recordings and the Web. Shares of DirecTV fell 1.5 percent to $38.82 but fared better than the 2 percent decline in the broader market. (Reporting by Jennifer Saba ; Editing by Derek Caney.)

Prudential Financial payouts to veterans OK in NJ: report

Wed Aug 11, 2010 6:01am EDT

http://www.reuters.com/article/2010/08/11/us-prudential-veterans-payouts-idUSTRE67A09C20100811

NEW YORK - A New Jersey insurance regulator has concluded that Prudential Financial Inc properly handled life-insurance benefits in a controversial matter involving a U.S. soldier killed in Afghanistan, the Wall Street Journal said on Tuesday.

The insurer's payout method drew wide attention after investigators began probing whether life insurers are defrauding families of deceased military personnel by siphoning millions of dollars of death benefits for themselves. At issue is whether insurers keep money in potentially risky "retained asset accounts" that they control and pay out low yields to survivors, rather than pay out lump sums when policyholders die. Following an article in Bloomberg Markets magazine about the practice, the U.S. Department of Veterans Affairs said it began a review, and New York Attorney General Andrew Cuomo subpoenaed eight insurers, including Prudential and MetLife Inc. The article featured the mother of the killed soldier who complained about the accounts, including that two retailers had rejected her checks. According to the Journal, in a response to a request from New Jersey insurance regulators, Prudential detailed in an August 4 letter that 25 checks from the mother's account were cleared from October 2008 through April 2010, with most of the proceeds withdrawn at that point. "This letter satisfies the department that Prudential acted properly and further reassures this department of the value of 'retained asset accounts,'" Thomas Considine, New Jersey's commissioner of banking and insurance, told the newspaper in an interview. A Prudential spokesman told the newspaper it processed 84,000 drafts for its retained-assets account program in 2009, with "few people reporting any problems." Prudential is based in Newark, New Jersey. Neither it nor Considine's office immediately returned requests for comment by Reuters. (Reporting by Jonathan Stempel in New York; Editing by Dhara Ranasinghe)

U.S. posts $165 billion July deficit, spending ebbs

Wed Aug 11, 2010 4:14pm EDT

http://www.reuters.com/article/2010/08/11/us-usa-budget-idUSTRE67A41020100811

WASHINGTON - The United States racked up a $165.04 billion budget deficit during July, 8.7 percent below the year-ago gap as economic stimulus and bailout spending subsided from peak levels, the Treasury Department said on Wednesday.

So far in the first 10 months of fiscal 2010, which ends on September 30, the shortfall between the government's income and its spending totaled $1.169 trillion, smaller than last year's record 10-month deficit of $1.267 trillion. Late last month, the Obama administration trimmed its full year fiscal 2010 deficit forecast by $84 billion to $1.471 trillion -- a level that still represents a record. And in a sign that deficits will remain stubbornly high for some time, the White House raised its fiscal 2011 deficit forecast by $149 billion to $1.42 trillion. July's deficit marked a 22nd straight month of red ink for the U.S. government, the longest string on record, due to heavy spending aimed at pushing the economy out of a prolonged slump, coupled with weak tax revenues. The latest data "kind of shows the modest improving trend we've seen this year -- a decline in TARP spending and a little bit of help on the revenue front," said Kim Rupert, head of fixed income analysis at Action Economics LLC in San Francisco. "Whether it is sustainable is largely dependent on how the economy goes." July is typically a deficit month, with the Treasury reporting only two July surpluses in the past 56 years, in 2000 and 2001. The July 2009 deficit of $180.68 billion was the largest ever for that month. The Treasury said spending outlays for July 2010 fell 3.5 percent to $320.59 billion from $332.16 billion in July 2009, which was a record for any month. A Treasury official attributed the decline largely to lower spending on economic stimulus programs and the Troubled Asset Relief Program. Meanwhile, receipts rose 2.7 percent to $155.55 billion from $151.48 billion a year earlier, due to higher corporate income tax collections and higher Federal Reserve earnings on investment securities. Individual income tax collections declined slightly. (Reporting by David Lawder; Editing by Chizu Nomiyama )

Bulls crave calm as Fed in focus

Sun Aug 26, 2007 12:15pm EDT

http://www.reuters.com/article/2007/08/26/us-column-stocks-outlook-idUSN0135773520070826

NEW YORK - Wall Street is heading for another volatile week, but the bulls could get a further reprieve if calm brought on by the Federal Reserve's liquidity injections and a surprise cut in its discount rate lasts.

The coming week has a slew of economic indicators, including July existing home sales and preliminary figures on second-quarter gross domestic product, which should shed more light on the economy's health. But paramount to Wall Street will be what the data says about the prospects for a cut in the fed funds rate as the housing slump fuels worries that the sector's slowdown could tip the world's largest economy into a recession. "Wall Street is banking on a mid-cycle slowdown that was expected but could get worse, suggesting that the Fed may want to lower the fed funds rate," said Rob Goodman, director of investments for Fairport Asset Management, in Cleveland. "A cut," he said, "is not out of the realm of possibilities ... and I don't expect Wall Street to be too negative going forward." But even with the burgeoning calm, money managers and analysts say a sense that there could yet be more upheaval due to weakness in the housing industry still pervades the market and could make for cautious trading ahead of the Labor Day holiday on Monday, September 3. Volume is likely to be lighter than normal with many of Wall Street's denizens on vacation or cutting the week short for the last long weekend of summer. Lots of economic numbers and exceptionally light volume often is a recipe for volatility. The Chicago Board Options Exchange Volatility Index .VIX, also known as Wall Street's fear gauge, ended Friday at 20.72, down 8.4 percent. The VIX is down almost 45 percent from August 16, when it climbed to 37.50, a five-year high. DOW UP 7 PERCENT FOR THE YEAR More worrisome, analysts and money managers said would be any news that pointed to further turmoil in the subprime mortgage sector. Last week, several mortgage providers, including Accredited Home Lenders Holding Co LEND.O, said they were cutting hundreds of jobs as the lending squeeze and lingering jitters in the credit markets take their toll. Still, the clamor for a cut in the fed funds rate is providing a cushion for stocks as shown by Friday's stock market advance. Surprisingly strong data on July new home sales and durable goods orders contributed to the market's calmer tone. Friday's gains sent the Dow Jones industrial average .DJI up 2.3 percent for the week, its best weekly advance since April 22. Both the Nasdaq Composite Index .IXIC and the S&P 500 .SPX notched their biggest weekly gains in five months, with the Nasdaq rising 2.9 percent and the S&P gaining 2.3 percent. For the year, the Dow is up 7.35 percent, while the S&P 500 is up 4.31 percent and the Nasdaq is up 6.68 percent. Before the latest turmoil, data showing the economy's pace of growth was stronger than expected would have rattled investors, quashing the oft-repeated view of a "Goldilocks" scenario -- an economy that's neither too hot nor too cold. But with investors still uncertain about the extent of the impact of the faltering housing market and losses from subprime mortgages, Wall Street is set to latch on to any news showing that the economy is weathering the real estate downturn, albeit with bumps along the way. "If the consumer can come out of subprime OK, then the market will come out of subprime OK," said Jim Fehrenbach, head of Nasdaq trading at Piper Jaffray, in Minneapolis. He said the jobs report, due before the Fed's policy-setters meet on September 18 to decide on interest rates, is among the pieces of data that may seal the market's fate in the days ahead, along with reports on housing. "If those numbers turn south, that's going to really increase recession fears," Fehrenbach said. But the August jobs report is still a ways off. The nonfarm payrolls report for August will be released on September 7. HOUSING, FED MINUTES AND GDP Looking at this week, however, the economic calendar promises plenty of numbers to crunch and there could be some surprises. Among the week's highlights will be data on existing home sales on Monday; the S&P/Case-Shiller Home Price Index on Tuesday, along with the Conference Board's August consumer confidence index and weekly store sales. The minutes from the Fed's most recent policy meeting on August 7, at which the Fed left its benchmark fed funds rate unchanged at 5.25 percent, are also due on Tuesday. The Federal Open Market Committee's August minutes could be particularly illuminating on the central bank's thinking before its surprise cut in the discount rate on August 17 and its statement afterward saying "tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward." Weekly data on mortgage applications will be released on Wednesday, while the government's preliminary report on second-quarter GDP is due out on Thursday, along with weekly data on initial jobless claims. This will be the second look at gross domestic product, which measures the output of all goods and services within U.S. borders, for the second quarter. The advance estimates of GDP were released on July 27. Friday's data features a reading on July personal income and spending, a report that includes one of the Fed's favored consumer price inflation gauges, the core PCE price index. (PCE refers to "personal consumption expenditures." The core PCE price index excludes volatile food and energy prices.) Also on tap for Friday is the release of the August reading of business activity in the U.S. Midwest from the National Association of Purchasing Management-Chicago and data on U.S. factory orders for July. The corporate earnings agenda is thin, with tax preparer H&R Block Inc ( HRB.N ) and computer maker Dell Inc DELL.O set to release quarterly results on Thursday. (Additional reporting by Caroline Valetkevitch ) (Wall St Week Ahead runs weekly. Questions or comments on this column can be e-mailed to: ellis.mnyandu(at)reuters.com)

Median price of homes seen falling: report

Sun Aug 26, 2007 2:05pm EDT

http://www.reuters.com/article/2007/08/26/us-usa-homeprices-idUSN2625186020070826

NEW YORK - Forecasters expect the median price of U.S. homes to fall between 1 percent and 2 percent this year in what would be the first such decline since 1950, when federal agencies began tracking such statistics, the New York Times reported on Sunday.

The Office of Federal Housing Enterprise Oversight is scheduled to release the home-price index on Thursday, and research firm Global Insight expects it to show a decline of about 1 percent between the first and second quarter, according to the newspaper. Global Insight also expects the decline of U.S. home prices to peak at 4 percent between their highest point in 2007 and the projected low point in 2009, the New York Times said. The New York Times said other forecasters expect the index to climb slightly in the second quarter before falling later this year. "For most people, this is not a disaster," Global Insight economist Nigel Gault told the newspaper. "But it's enough to cause them to pull back." Last week, Countrywide Financial Corp Chief Executive Angelo Mozilo said the U.S. housing downturn was likely to lead the country into a recession. (Reporting by Justin Grant )

Saxony state sells SachsenLB to LBBW

Sun Aug 26, 2007 1:36pm EDT

http://www.reuters.com/article/2007/08/26/us-sachsenlb-sale-idUSL2632489220070826

DRESDEN, Germany - The government of the eastern German state of Saxony on Sunday decided to sell its stricken lender SachsenLB to Stuttgart-based LBBW LBBW.UL for what sources said was 300 million euros in a move that speed further bank consolidation.

The bank was battered by heavy losses from U.S. subprime mortgages and other risky debt amid credit turmoil which has roiled world financial markets. Germany has borne the brunt of the European fallout so far from problems stemming from subprime home loans as two of the country's banks have almost collapsed, requiring high-profile industry bailouts. "The cabinet unanimously decided to sell the state's share in SachsenLB," Saxony spokesman Andreas Beese told reporters in the state capital Dresden. "Representatives of the state have been asked to act accordingly in a meeting of Sachsen LB owners tonight. The government assumes the meeting will approve the sale," he said. State premier Georg Milbradt earlier said SachsenLB had come under so much pressure that it could not continue its activities without a partner. SachsenLB would be run by LBBW as a subsidiary and LBBW had secured the right to return it to its owners -- Saxony state and local community savings banks -- if more unacceptable risks emerged, Milbradt said. LBBW owners were due to meet later on Sunday in Stuttgart. A source close to the company said LBBW was taking over 100 percent of SachsenLB at a price of 300 million euros ($407 million). Another source close to the negotiations said SachsenLB needed between 250 and 300 million euros immediately, which LBBW would inject in cash. SachsenLB is the second German casualty after the near collapse of small-company lender IKB IKBG.DE which was saved by a group of banks including state-owned KfW KFW.UL. In return for a 17 billion euro ($23.1 billion) credit line to keep it afloat, the owners were forced into agreeing to its sale, a milestone in Germany, where few state-owned banks are ever put up for auction. REFORM DEBATE The events are speeding long-running discussions about how to reform Germany's banking sector, where analysts have long been saying the country could function with fewer institutions and that the state should loosen its dominance of the industry. North-Rhine Westphalia state premier Juergen Ruettgers favours creating a northern and a southern group of state banks, according to an advance extract of a Focus magazine article. Ruettgers favored selling the state's 38-percent share in WestLB to Commerzbank ( CBKG.DE ), Focus also said. The SachsenLB debacle has also prompted calls for the reform of financial market supervision, especially the role of financial watchdog BaFin. BaFin said on Saturday that SachsenLB's Irish subsidiary had already been investigated in 2005 and problems with its risk exposure had been found. BaFin at the time had asked the Dublin subsidiary to make changes. A Finance Ministry spokesman said on Sunday the government was permanently examining the efficacy of banking supervision and that adjustments could be made if necessary. He added: "A functioning banking oversight is no insurance against wrong decisions being made -- which are often only seen as wrong decisions afterwards," he said. (additional reporting by Dave Graham, Patricia Nann, Hendrik Sackmann)

Comcast stock may soar on cash flow: Barron's

Sun Aug 26, 2007 1:25pm EDT

http://www.reuters.com/article/2007/08/26/us-comcast-stock-idUSN2640731120070826

NEW YORK - Comcast Corp. ( CMCSA.O ), the largest U.S. cable operator, could see its stock soar nearly 57 percent in the next year due to available cash flows that it can spend on operations, according to the August 27 edition of Baron's.

"What excites me is that this company has so much money to spend on its own future. They will have $4 billion to spend between now and 2009 on operations that offer a very high return," Tom Russo, who manages money at investment fund Gardner Russo & Gardner, told Barron's. "The potential is staggering and largely ignored in the stock." Russo's firm owns 10 million Comcast shares, the newspaper said. On Friday, Comcast's shares closed at $25.48 on the Nasdaq Composite Index. The stock is trading down about 15.6 percent from its 52-week high of $30.18 reached January 18. According to Barron's, the stock could climb to as high as $40 within the next 12 months. Philadelphia-based Comcast is leading the charge by U.S. cable operators to win subscribers from telephone companies by aggressively marketing its bundled television, high-speed Internet and phone services. Last month, Chief Executive Brian Roberts said he anticipates cable growth accelerating over the second half of 2007. (Reporting by Justin Grant )

Rio Tinto says receives approval to buy Alcan

Sun Aug 26, 2007 7:58pm EDT

http://www.reuters.com/article/2007/08/26/us-rio-tinto-alcan-idUSSYU00298520070826

SYDNEY - Global miner Rio Tinto Ltd/Plc ( RIO.L )( RIO.AX ) said on Monday it has received U.S. anti-trust clearance for its $38.1 billion ($36.3 billion) acquisition of Canadian aluminum maker Alcan Inc AL.TO.

The U.S. approval follows Canada's Quebec province government approval for the takeover earlier this month. Rio formally launched a pre-agreed offer for Montreal-based Alcan in July, trumping an earlier hostile offer by U.S. rival Alcoa ( AA.N ).

NBC in talks to buy Sparrowhawk Media: paper

Sun Aug 26, 2007 6:21am EDT

http://www.reuters.com/article/2007/08/26/us-nbc-hallmark-idUSL2627472120070826

LONDON - NBC Universal is preparing to buy Sparrowhawk Media, the private-equity backed owner of the Hallmark channel, for 175 million pounds ($351 million) to make its biggest foray into Britain's TV industry, a newspaper said.

Sparrowhawk's owners -- 3i ( III.L ) and Providence -- are close to concluding talks with NBC to sell the business, the Sunday Telegraph said in an unsourced report. The move will help NBC, controlled by General Electric ( GE.N ), to achieve its target of increasing the proportion of international revenues to its overall income to 30 percent from 20, it said.

Temasek approaches Nasdaq to buy LSE stake: report

Sun Aug 26, 2007 8:21am EDT

http://www.reuters.com/article/2007/08/26/us-nasdaq-lse-temasek-idUSL2624272420070826

LONDON - Singapore's state-owned Temasek Holdings TEM.UL has approached Nasdaq ( NDAQ.O ) to buy its 30 percent stake in the London Stock Exchange ( LSE.L ), a newspaper reported on Sunday.

The Sunday Times said in an unsourced report that Temasek had made the approach in recent days and the deal could lead to a full takeover of the LSE by the Singaporean investor. On August 20, Nasdaq Stock Market said it might sell its stake in the LSE, worth 800 million pounds ($1.6 billion), to bolster its chances of buying Nordic exchange operator OMX OMX.ST and it was already in touch with interested parties. The U.S. exchange company said later in the day in a statement that it would not sell its LSE stake to a single buyer. The reported interest by Temasek, which owns stakes in UK banks Barclays ( BARC.L ) and Standard Chartered ( STAN.L ), comes amid growing protectionism in Europe and the United States towards sovereign wealth funds making aggressive overseas investments in search of higher returns. The International Monetary Fund said in June it was growing uneasy about the trillions of dollars managed by largely secretive sovereign wealth funds because it fears their activities could disrupt financial markets. Government-owned investment vehicles such as Temasek and its sister agency Government of Singapore Investment Corp control about $2 trillion -- roughly the size of France's economy -- and are expected to grow to $12 trillion by 2015. The newspaper said several parties, including the New York Stock Exchange and the Chicago Mercantile Exchange ( CEM.N ), may enter the fray as well as investment and infrastructure funds, while the Observer newspaper said that Nasdaq was seeking to sell up to half of its LSE stake to Deutsche Boerse ( DB1Gn.DE ). Temasek and Nasdaq were not immediately available for comment, while Deutsche Boerse declined to comment. Nasdaq, eager to expand its presence in overseas markets, is locked in a $4 billion bidding war with Borse Dubai for OMX, which owns exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states. Nasdaq wants to use the sales proceeds to pay down debt and buy back shares, which would effectively raise the value of its cash-and-share bid for OMX and give it a boost in the fast-consolidating global stock exchanges. Stock exchanges around the world have been looking at tie-ups to achieve global reach and economies of scale as members demand more sophisticated products and cheaper trading. New York Stock Exchange owner NYSE Group became NYSE Euronext NYX.N after snapping up pan-European exchange Euronext in April, while the LSE is buying Italian rival Borsa Italiana after fending off several advances, including Nasdaq's. (Additional reporting by Ovais Subhani in Singapore and Andreas Framke in Frankfurt)

Home Depot cuts unit sale price by $1.8 bln: source

Sun Aug 26, 2007 7:41pm EDT

http://www.reuters.com/article/2007/08/26/us-homedepot-supply-idUSN2641454920070826

NEW YORK - Home improvement retailer Home Depot Inc ( HD.N ) agreed to cut the price of its supply division sale by $1.8 billion, a source familiar with the matter said on Sunday.

The source said a tentative new agreement has been reached for the private equity buyers to purchase the division for $8.5 billion. The original purchase price was $10.3 billion. Home Depot will also take a 10 percent equity stake in the division after the sale, the source said. The reduced price comes as the credit market crunch has forced banks to reel in loose lending practices that came to define the private equity deal frenzy of the last two years. The private equity buyers are Bain Capital, Carlyle Group CYL.UL and Clayton, Dubilier & Rice. The New York Times first reported the lowered sale price on its Web site on Sunday.

FACTBOX-Biggest falls in the Dow Jones Industrial Average

Wed Feb 28, 2007 3:56pm EST

http://www.reuters.com/article/2007/02/28/us-markets-stocks-factbox-idUSN2831988420070228

- Investors around the world were jolted on Tuesday by massive sell-offs in global stock markets.

Major U.S. indexes all fell by more than 3 percent, and U.S. blue chips suffered their largest one-day point loss since the day Wall Street reopened following the September 11, 2001, attacks. The 416-point drop in the Dow Jones industrial average was the seventh largest on record. Here is the list of the 10 largest one-day percentage and point losses for the Dow industrials: Percentage losses: Date Percentage Point Closing loss loss value - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - October 19, 1987 22.61 508.00 1738.74 October 28, 1929 12.82 38.33 260.64 October 29, 1929 11.73 30.57 230.07 November 6, 1929 9.92 25.55 232.13 December 18, 1899 8.72 5.57 58.27 August 12, 1932 8.40 5.79 63.11 March 14 1907 8.29 6.89 76.23 October 26, 1987 8.04 156.83 1793.93 July 21, 1933 7.84 7.55 88.71 October 18, 1937 7.75 10.57 125.73 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Point Losses: Date Percentage Point Closing loss loss value - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - September 17, 2001 7.13 684.81 8920.70 April 14, 2000 5.66 617.78 10305.77 October 27, 1997 7.19 554.26 7161.15 Aug 31, 1998 6.37 512.61 7539.07 October 19, 1987 22.61 508.00 1738.74 March 12, 2001 4.10 436.37 10208.25 February 27, 2007 3.29 416.02 12636.26 July 19, 2002 4.63 390.23 8019.26 September 20, 2001 4.37 382.92 8376.21 October 12, 2000 3.64 379.21 10034.58 Source: www.djindexes.com

Time Warner Cable sees revenue growth

Wed Feb 28, 2007 6:54pm EST

http://www.reuters.com/article/2007/02/28/us-timewarnercable-outlook-idUSN2826718420070228

NEW YORK - Time Warner Cable Inc. expects 2007 revenue growth in the mid-to-high 30s percentage range, the company said on Wednesday, a day before its shares begin trading on the New York Stock Exchange.

Analysts called the outlook from the cable division of Time Warner Inc. ( TWX.N ) conservative, adding that they believed its stock would likely trade at a similar valuation to peers like Comcast Corp. ( CMCSA.O ) and Cablevision Systems Corp. ( CVC.N ) "While investors have been expecting Time Warner Cable to show significantly higher than peer group growth in 2007, we believe growth is likely to be more in line with Comcast and Cablevision," Pali Research analyst Richard Greenfield wrote in a research note. He forecast 2007 revenue at $16.75 billion, which would be a 42 percent rise from the $11.8 billion in revenue that Time Warner Cable had reported for 2006. Time Warner Cable also forecast operating income before depreciation and amortization (OIBDA) to grow in the mid- to high-30s percentage range in 2007. Greenfield was looking for OIBDA of $5.96 billion, up 42 percent from last year's $4.2 billion. He initiated coverage of the stock with a "neutral" rating. Time Warner Cable said it expects 2007 free cash flow of $800 million to $1 billion, driven by its strength as a video and Internet provider as well as the sale of new phone services to subscribers acquired from Adelphia Communications Corp. last year. Time Warner Cable, the second-largest cable operator in the United States, acquired 3.3 million subscribers from Adelphia and market leader Comcast acquired 1.7 million subscribers from the bankrupt cable operator. Greenfield said Adelphia was "driving the lion's share" of Time Warner Cable's growth. Excluding Adelphia, revenue and OIBDA growth would be in the low to mid teens, he said. That compares to Comcast's forecast that 2007 total revenue will increase by more than 11 percent, with operating cash flow climbing 13 percent or more. Cablevision has said it sees both metrics growing in the "mid-teens" percentage. Time Warner Cable, on a conference call with analysts, predicted strength in its older cable systems. "Underlying this outlook is our confident expectation of impressive growth in our legacy systems," said Chief Executive Glenn Britt, referring to systems excluding those it gained as part of the Adelphia deal. He added that significant operational improvements are expected in the latter part of 2007 through 2008 from the acquired systems. Time Warner Cable's TWCA.PK shares rose 95 cents to $38.75 on the Pink Sheets on Wednesday. Its enterprise value, or market capitalization plus net debt, trades on a when-issued basis of 8.5 times 2007 earnings before interest, tax, depreciation and amortization based on Pali Research's estimates. That compares to Comcast's multiple of 8.2 and Cablevision's 8.3. Time Warner Cable, which will trade on the NYSE under the ticker symbol "TWC" ( TWC.N ), said it expected 2007 capital expenditure to rise by $600 million to $800 million.