News Archive

Shares, dollar jolted by U.S., Italian politics, China disappoints

Mon Sep 30, 2013 1:57am EDT

SYDNEY (Reuters) – U.S. stock futures and the dollar came under pressure on Monday as a shutdown of the U.S. government seemed ever more likely, while the euro had political troubles of its own as the Italian government teetered on the edge of collapse.

Hardly helping was a surprise downward revision to activity in China’s factory sector. While the final HSBC Purchasing Managers’ Index (PMI) did edge up to 50.2 in September, that was well down on the preliminary reading of 51.2.

The end result was a shift out of equities and toward safe havens including the yen, Swiss franc and some sovereign debt. U.S. Treasuries also benefited from a view that the economic damage done by a government closure would be yet another reason for the Federal Reserve to keep interest rates low for longer.

“Weekend political dynamics in the U.S. and Italy are likely to keep markets on the defensive at the start of a busy week for data and policy events,” Barclays analysts wrote in a note.

The damage was clear in U.S. stock futures, where the SP 500 contract shed 0.7 percent, as did the E-MINI SP. In Europe, spread betters predicted markets in the UK, France and Germany would start with losses of up to 1 percent.

Asian stocks bore the early brunt, with MSCI’s broadest index of shares outside Japan .MIAPJ0000PUS down 1.2 percent at a two-week low. Still, it gained 5.7 percent for the month of September, on track for its best month since January 2012.

Japan’s Nikkei .N225 fell 1.5 percent on Monday and South Korean shares .KS11 lost 0.6 percent. Australia’s main index slid 1.4 percent .AXJO from five-year highs, their biggest one-day drop since early August.

The air of risk aversion lifted the yen across the board. The dollar fell to 97.89 yen from 98.20 late in New York on Friday, while the euro hit 132.10 yen from 132.78.

The euro lost ground to the Swiss franc, hitting its lowest since early May at one point. Against the U.S. dollar, it was off a quarter of a cent at $1.3496.

The tension also took a toll on emerging market currencies, with the Indonesian rupiah and Malaysian ringgit both weakening.

The losses came as Italian Prime Minister Enrico Letta said he would go before parliament on Wednesday for a confidence vote after ministers in Silvio Berlusconi’s center-right party pulled out of his government at the weekend.

Letta said he wanted to avoid elections under the current widely criticized voting system which he said would produce more stalemate, but it was not clear if an alternative majority could be found.

Meanwhile in Washington, it seemed increasingly unlikely that Republicans and Democrats could reach a deal on funding the government before the fiscal year ends at midnight on Monday.

If so, many government employees will be furloughed and the Labor Department will not issue its monthly employment report scheduled for Friday.

It would also set the stage for a far-more consequential fight to raise the federal government’s borrowing authority. Failure to raise the $16.7 trillion debt ceiling by mid-October might force the United States to default on some payment obligations – an event that could cripple the economy and send shockwaves around the globe.

Markets have always assumed it would never actually come to default, given the grave repercussions. Indeed, U.S. government debt still seemed to be considered a safe haven with 10-year Treasury yields falling 3 basis points to a seven-week low at 2.59 percent.

Investors also bid up Eurodollar futures on expectations that a drawn-out government shutdown and brinkmanship over the debt ceiling would keep the Fed from tapering its asset buying anytime soon.

The political bickering overshadowed data from Japan showing manufacturing activity expanded in September at the fastest pace since the earthquake and nuclear disaster of early 2011.

In commodity markets, gold was a shade firmer at $1,338.54 an ounce. Copper futures dipped 0.2 percent, but the metal was still on track for its biggest quarterly gain since March 2012 thanks to steadying global growth.

Diplomatic progress between the U.S. and Iran dragged Brent oil for November down 88 cents to $107.75 a barrel, while NYMEX crude lost $1.29 to $101.58.

(Editing by Eric Meijer Kim Coghill)

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Toshiba to cut 3,000 staff in ailing TV division

Mon Sep 30, 2013 1:56am EDT

TOKYO (Reuters) – Toshiba Corp (6502.T) said on Monday it would cut 50 percent of staff in its loss-making TV unit and cease production at two of its three overseas factories before the end of this fiscal year.

Toshiba said it would increase outsourced production to 70 percent from 40 percent and reduce its global staff in the division by 3,000, with two-thirds of those positions overseas. In July it said it would move 400 staff, included in that figure, to other business units.

The company did not say which two of its three factories in China, Indonesia and Poland it would close.

Toshiba’s TV segment has been in the red for the past two years due to weak global sales, partly due to a slowdown in Europe and a fall in domestic demand after a short-lived boost from the switch to digital broadcasting.

In July the company announced plans to cut a combined 10 billion yen ($101 million) in costs in its television and PC businesses this fiscal year, and then double that figure in the following year to cope with weak demand.

The company said it expected the measures to help its TV division to swing into the black in the second half of this fiscal year.

(Corrects location of factory in third paragraph to Indonesia from the Philippines.)

(Reporting by Sophie Knight; Editing by Jeremy Laurence)

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IBM settles with U.S. Justice Department over job listings

Mon Sep 30, 2013 1:39am EDT

(Reuters) – IBM has agreed to pay $44,400 in civil penalties to settle allegations that certain of its online job postings preferred foreign workers with temporary work visas over U.S. citizens, the U.S. Department of Justice said.

IBM had placed certain online job postings for application and software developers that contained citizenship status preferences for F-1 and H-1B temporary visa holders, the Justice Department said in a notification posted on its website late on Friday.

F-1 visas are issued to overseas students studying in the United States, while H-1B visas are provided to foreign nationals with technical expertise in specialized fields. (

The Justice Department said the job ads violated the anti-discrimination provision of the Immigration and Nationality Act (INA), which states employers may not discriminate on the basis of citizenship status “unless required to comply with law, regulation, executive order or government contract.”

As part of the settlement, IBM also agreed to revise its hiring and recruiting procedures and train its human resources employees to ensure compliance with the INA.

IBM could not immediately be reached for comment outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Gopakumar Warrier)

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Rosneft sets price for TNK-BP buyout of minority shareholders

Mon Sep 30, 2013 1:05am EDT

MOSCOW (Reuters) – Russian state-controlled oil firm Rosneft (ROSN.MM) said on Monday its board had set the price above the market to buy out minority shareholders of TNK-BP Holding (TNBP.MM).

Rosneft plans to buy out holders of ordinary shares at 67 roubles ($2.00) per share and holders of preferred shares at 55 roubles, the company said in a statement.

Rosneft’s CEO, Igor Sechin, said on Friday the company would consider buying the shares with a 20 to 30 percent premium to the current share price, prompting a rally in the stock so the ordinary shares rose to 60.20 roubles and preferred shares to 50.50 roubles.

Minority shareholders own around 5 percent of TNK-BP Holding which was acquired by Rosneft along with its parent TNK-BP in a $55 billion deal to create the world’s largest publicly traded oil company by output.

($1 = 33.4365 Russian roubles)

(Reporting by Maria Kiselyova)

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Shanghai free trade zone no game-changer for Hong Kong, for now

Mon Sep 30, 2013 1:00am EDT

HONG KONG (Reuters) – The launch of a Shanghai free trade zone heralds a new chapter in China’s drive to promote the yuan currency but it is unlikely to pose a competitive threat to Hong Kong any time soon and could instead provide more opportunities in the former British colony.

Underpinned by its strong rule of law and freedoms under the “one country, two systems” formula since it was handed over to China 16 years ago, Hong Kong is a long-time beneficiary of preferential economic policies.

It is China’s designated global offshore yuan center and is seen as a gateway to the world’s second-largest economy.

While the launch of the 29 sq km Shanghai zone has stoked debate from tycoons to taxi drivers as to whether this could be a turning point for the fortunes of the former British territory, market watchers expect little impact for now.

“Shanghai’s rise means that the international trading pie in the yuan only gets bigger and Hong Kong’s share will grow in absolute terms,” said Robert Minikin, a strategist at Standard Chartered Bank in Hong Kong.

Officials at the launch of the zone on Sunday promised a far more open and streamlined environment for foreign firms to do business in China, along with the relaxation of policies for a raft of service sectors, including banking.

However, the absence of senior Beijing leaders at the launch and few specifics on bolder reforms such as a more convertible yuan and liberalised interest rates left some disappointed, while officials stressed the zone remains a work in progress.


“This is the first time (for many policies in the zone),” Dai Haibo, the deputy head of the zone’s administrative committee, said at the launch. “We are like primary school students.”

Officials also suggested that more far-reaching reforms would take time, with some market watchers pointing to a closed-door party plenum in China in November as a likely platform for more policies to be announced by Beijing.

Dai, when asked why the zone would not offer low corporate tax rates of 15 percent similar to Hong Kong as originally speculated, suggested authorities wanted to bolster the confidence of foreign investors by easing restrictions through systemic changes, rather than dangling carrots.

While some officials in Hong Kong and the southern Chinese economic powerhouse of Guangdong have privately expressed concern about the Shanghai initiative, the public message has been one of symbiosis and collaboration.

“We feel there will be no negative impact on Hong Kong,” the Commerce Ministry’s international trade department director, Yin Zonghua, said in Shanghai on Sunday. “Hong Kong has its own advantages that can be utilised within the free trade zone … It will promote Hong Kong’s prosperity and stability.”

Hong Kong leader Leung Chun-ying also shrugged off any potential threat, saying one of the most important factors for the former British colony’s success was its strong rule of law.

The move in Shanghai dovetails with an announcement by China’s State Council, or cabinet, in May to develop a roadmap to open up its hitherto closed capital account by 2020.


Since being granted the right to launch yuan-denominated banking and settlement services in 2004, Hong Kong’s offshore yuan market has boomed, with more than 16 percent of China’s trade now denominated in renminbi. An overwhelming majority of it passes through the city of more than seven million people.

Yuan deposits in Hong Kong banks comprise about 10 percent of the city’s banking system and renminbi trading volumes have overtaken the local dollar, according to latest statistics from the Bank of International Settlements.

Shanghai’s initiative, however, will force Hong Kong to look more closely at the competitiveness of its massive financial services sector as costs soar and its business from China slows, as well as the pricing of its financial services.

“We don’t mind being expensive, but we have to provide value for money,” said Nicholas Kwan, research director for Hong Kong’s Trade Development Council.

As investors await further insight into what other incentives may be offered in Shanghai, three proposed similar zones in southern China – Qianhai, Hengqin and Nansha – are betting their proximity to Hong Kong will help stave off any threat posed by the mainland Chinese hub.

Qianhai, a coastal suburb of Guangdong province which surrounds Hong Kong, has so far struggled to take off, remaining a dusty wasteland some three years after it was first touted as a new “mini-Hong Kong”.

Hengqin island, near the gambling hub of Macau, is the most developed of the three, while the Nansha zone is still in the preliminary stages of development.

A source who recently met with senior Guangdong leaders said they were now lobbying Beijing to allow the province its own free trade zone, or to allow Qianhai the same latitude for foreign investment.

“Qianhai has Hong Kong, but Shanghai doesn’t … Hong Kong is widely known for playing an important role in China’s history of development,” said Wang Jinxia, director of the research and innovation center and a spokesman for the Qianhai Authority.

“The free trade zone in Shanghai won’t be finished by 2020, but here we have Hong Kong already.”

(Additional reporting by Yi-Mou Lee and Michelle Chen; Editing by Anne Marie Roantree and Raju Gopalakrishnan)

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N.Y. Attorney General settles with payday loan companies

Mon Sep 30, 2013 12:17am EDT

NEW YORK (Reuters) – New York Attorney General Eric Schneiderman’s office said on Monday it had reached settlements with five companies over charges of violating the state’s usury and licensed lender laws through the collection of so-called payday loans.

New York law limits interest rates for most lenders not licensed by the state to a maximum of 16 percent. But payday loans, which are taken out short-term, typically ahead of an employee’s paycheck to be repaid with earnings later received, can have annual rates of 100 percent to 650 percent, or even more, Schneiderman’s office said in a statement.

VR Recovery DBA Alexander Stefano, RJA Capital Inc, Westwood Asset Management LLC, Erie Mitigation Group LLC and Northern Resolution Group LLC agreed to pay a total of $279,606 in restitution and $29,606 in penalties, the New York Attorney General’s office said.

One debt-buying company was required to reverse 8,550 negative credit reports it had made to credit reporting bureaus on New Yorkers, and is prohibited from collecting on $3.2 million in payday loans, it added. All five companies will now be banned from collecting on payday loans from New Yorkers.

“These agreements are one more step in our continuing fight to protect New Yorkers from a range of unfair financial schemes — from predatory loans, to illegal foreclosures and other abuses by big financial institutions,” Schneiderman said in the statement.

Last month, New York’s Department of Financial Services said it had sent letters to 35 payday loan companies asking them to stop offering exploitative payday loans in New York via the Internet or by other means.

New York Governor Andrew Cuomo has said that illegal payday loans made over the Internet are made possible in New York by transactions that must pass through a specific financial electronic network and has called for collaboration between the network’s administrators, the banks and his administration to cut off access to payday lenders.

Schneiderman has also launched other similar probes. In July, he sent letters to some of the country’s largest companies over their use of cards to pay hourly employees, according to a person familiar with the matter.

The cards, which have grown in popularity in lieu of paper paychecks and direct deposit, can carry a host of fees, such as 50 cents or $1 for a balance inquiry and $1.50 for an ATM withdrawal. They may appeal to low-wage workers who do not have bank accounts.

(Reporting by Greg Roumeliotis in New York; Editing by Edwina Gibbs)

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Tokyo Electric set to receive $5.9 billion financing: source

Sun Sep 29, 2013 11:09pm EDT

TOKYO (Reuters) – Creditors are set to provide $5.9 billion in financing to Tokyo Electric Power Co (Tepco), a person involved in the talks told Reuters on Monday, offering a lifeline to the embattled owner of the crippled Fukushima nuclear plant.

Tepco’s major banks are prepared to provide 500 billion yen ($5.09 billion) in financing in December – 200 billion yen in loan rollovers and 300 billion yen in new financing – said the person, who has been involved in financing talks as a representative of one of the utility’s major creditors.

At the same time, Tepco’s application on Friday to restart an undamaged nuclear plant helped convince some wavering smaller banks to join a group of 28 financial institutions in rolling over 77 billion yen ($784 million) in loans due at end-October, the person said.

The utility’s success in winning a refinancing of the loans due next month was previously reported by the Nikkei and Asahi newspapers. The outcome of the larger funding round due in December has not been previously reported.

Tepco on Friday applied to restart its Kashiwazaki Kariwa facility, the world’s largest nuclear plant in northwestern Japan, although approval is uncertain and any restart is many months away.

The company’s president, Naomi Hirose, said in an interview published on Sunday that Tepco will likely make its first profit in three years in the year to March – without raising electricity rates or restarting reactors.

Once Asia’s largest utility, Tepco has posted more than $27 billion in net losses since the March 2011 earthquake and tsunami triggered nuclear meltdowns at the Fukushima Daiichi plant. Tepco shares have fallen 71 percent since the disaster.


Major Tepco creditors include Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group and Mizuho Financial Group, as well as the Development Bank of Japan, leading life insurers and trust banks.

A handful of smaller regional banks had been hesitant to roll over Tepco’s October loan as they tried to distance themselves from a utility that has come under renewed public criticism over its handling of contaminated water at Fukushima. Those banks were eventually won over by the firm’s application to restart the Kashiwazaki Kariwa facility.

After months of denials, Tepco admitted in July that hundreds of tonnes of contaminated water is flowing into the Pacific Ocean every day. Last month, Tepco said 300 tonnes of water with dangerous levels of radiation had leaked from a storage tank at the Fukushima plant.

Japan has pledged half a billion dollars to deal with contaminated water at the site, and Prime Minister Shinzo Abe has promised the government will take a prominent role in the clean-up.

Tepco shares climbed as much as 2.7 percent on Monday, reversing earlier losses. By the midsession, the stock was up 1.5 percent at 606 yen, while the benchmark Nikkei index was down 1.7 percent. Tepco was the most traded stock by turnover.

($1 = 98.25 Japanese yen)

(Additional reporting by Mari Saito; Writing by William Mallard; Editing by Edmund Klamann and Ian Geoghegan)

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Twitter to make IPO filing public this week: Quartz

Sun Sep 29, 2013 11:00pm EDT

NEW YORK (Reuters) – Twitter Inc plans to make its IPO filing public this week, news website Quartz reported on Sunday, citing a person familiar with the social media network’s plan.

Twitter, which is expected to be valued at up to $15 billion, filed with U.S. regulators on September 12 to go public, but did so confidentially and without providing a timeline under a process available to emerging growth companies.

Quartz said that Twitter’s IPO could still be delayed by a variety of factors, from changes to the prospectus to market conditions, to a potential shutdown of the U.S. government. Representatives for Twitter did not immediately respond to a request seeking comment on the Quartz report.

Twitter is leaning toward picking the New York Stock Exchange over Nasdaq for its highly anticipated initial public offering, a person familiar with the matter said last week.

Another person familiar with the matter said earlier this month that Twitter aimed for its shares to trade in the stock market before the U.S. holiday of Thanksgiving on November 28, a timeline also reported by Quartz on Sunday.

(Reporting by Greg Roumeliotis; Editing by Edwina Gibbs)

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Glencore seen unlikely to bid for OZ Minerals

Sun Sep 29, 2013 10:48pm EDT

MELBOURNE (Reuters) – Glencore Xstrata Plc is unlikely to pounce on OZ Minerals Ltd, a banker who knows both companies well said on Monday, playing down a report in a British newspaper that said Glencore was weighing a 750 million pound ($1.2 billion) takeover offer.

The Mail on Sunday reported that Glencore had acquired up to a 10 percent stake in OZ Minerals, citing City sources, and said OZ Minerals had appointed UBS (UBSN.VX) as a defense adviser.

OZ Minerals said on Monday it had received no proposal nor any substantial shareholder notice from Glencore. Under Australian rules, any investor directly holding at least 5 percent of a stock must disclose their ownership.

A banker who knows both Glencore and OZ Minerals well doubted Swiss-based Glencore would have any interest in OZ Minerals as Glencore is looking to conserve cash, and said even if OZ was a bargain its assets would not be a good fit.

OZ Minerals owns the Prominent Hill copper mine in South Australia, whose costs are rising as its mine life runs out. The mine’s copper is exported to China, so would not provide any feed for Glencore’s Mt Isa operation.

“There’s no obvious synergy,” the banker said, declining to be identified because he was not authorized to speak on behalf of Glencore.

OZ Minerals’ other key asset is the undeveloped Carrapateena deposit in South Australia, which Glencore would not want as it is selling off some undeveloped copper assets and has made clear it has no interest in spending on new mines.

OZ Minerals is sitting on A$433 million ($403.36 million) in cash, hunting for producing mines that could boost its output as Prominent Hill output declines, while it weighs whether to develop Carrapateena.

“There’s been pressure on them to buy another operating project,” said Mark Hinsley on equity research sales at Foster Stockbroking.

Shares in OZ Minerals Ltd (OZL.AX) rose more than 6 percent to a near five-month high of A$4.71 on Monday after the British report. They then eased to trade up 3.3 percent at A$4.56, valuing the company at A$1.38 billion.

The broader market was down 1.3 percent.

Glencore and UBS declined to comment to Reuters on the Mail on Sunday report.

(Reporting by Sonali Paul; Editing by Richard Pullin and Stephen Coates)

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