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East African trade bloc approves monetary union deal


KAMPALA (Reuters) – The leaders of five East African countries signed a protocol on Saturday laying the groundwork for a monetary union within 10 years that they expect will expand regional trade.

Heads of state of Kenya, Tanzania, Uganda, Rwanda and Burundi, which have already signed a common market and a single customs union, say the protocol will allow them to progressively converge their currencies and increase commerce.

In the run-up to achieving a common currency, the East African Community (EAC) nations aim to harmonize monetary and fiscal policies and establish a common central bank. Kenya, Uganda, Tanzania and Rwanda already present their budgets simultaneously every June.

The plan by the region of about 135 million people, a new frontier for oil and gas exploration, is also meant to draw foreign investment and wean EAC countries off external aid.

“The promise of economic development and prosperity hinges on our integration,” said Kenya’s President Uhuru Kenyatta.

“Businesses will find more freedom to trade and invest more widely, and foreign investors will find additional, irresistible reasons to pitch tent in our region,” said Kenyatta, leader of the biggest economy in east Africa.

Kenyatta, who is due to face trial at the International Criminal Court on crimes against humanity charges in February, took over the chairmanship of the bloc from Ugandan President Yoweri Museveni, hosting the summit.

Kenya has launched a $13.8 billion Chinese-built railway that aims to cut transport costs, part of regional plans that also include building new ports and railways.

Landlocked Uganda and Kenya have discovered oil, while Tanzania has vast natural gas reserves, which require improved infrastructure and foreign investment so they can be exploited.

Tanzania, where the bloc’s secretariat is based, has complained that it has been sidelined in discussions to plan these projects, but Kenyatta said the EAC was still united.

Kenneth Kitariko, chief executive officer at African Alliance Uganda, an investment advisory firm, said the monetary union would boost efficiency in the region’s economy estimated at about $85 billion in combined gross domestic product.

“In a monetary union, the absence of currency risk provides a greater incentive to trade,” he said.

Kitariko said, however, that achieving a successful monetary union would require convergence of the union’s economies, hinting that some challenges lay ahead.

“Adjusting to a single monetary and exchange rate policy is an inescapable feature of monetary union … but this will take time and may be painful for some,” he said, referring to the fact that some countries may struggle to meet agreed benchmarks.

(Writing by James Macharia; Editing by Alistair Lyon)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/nZMg_hU2SgA/story01.htm

China may see IPO thaw in 2014 as regulator smoothes approval process


SHANGHAI (Reuters) – China’s securities regulator could streamline its approvals process for some initial public offerings (IPO) by next January, the regulator said on Saturday, mapping out reform measures.

But firms would still need to wait for China to restart the IPO market, frozen since October last year after authorities suspended listings in a bid to stamp out equity market fraud.

“After the announcement of these opinions, there would need to be around one month of preparatory work before firms could complete the necessary procedures,” the China Securities Regulatory Commission (CSRC) said on its website.

“We predict around 50 companies may be able to complete their registration procedures for IPO by January next year.”

There have been prior reports of the IPO drought coming to and end, but Saturday’s statement gives the strongest hint that China is contemplating the resumption of mainland listings.

The reforms were a key step in overhauling a lengthy approval process and moving it to a system based on registration to give the market a more prominent role, the regulator added.

“After our sector audit, when and how new shares are issued will be under market constraints and will be independently decided, while pricing of shares will more closely reflect true levels of supply and demand,” it said in the statement.

The reform will pull China’s IPO vetting process closer to those of developed countries, where firms register their IPOs and face a rigorous audit before listing.

China also announced details of a trial run for Chinese-listed firms to issue preferred shares, the government said in a separate statement on its website.

Investors have long complained that too many listed firms are required to sacrifice profits for wider policy aims. Many saw use of preferred shares as a way to dilute government influence and boost the value of other investors’ holdings.

IPO reform would not mean deregulation, the regulator cautioned, saying it would toughen monitoring of the sector and step up punishments for non-compliance.

(Reporting by Adam Jourdan; Editing by Clarence Fernandez)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/bUoPWgkmH2Y/story01.htm

Thyssen announces capital increase as U.S. deal sealed


FRANKFURT (Reuters) – Germany’s ThyssenKrupp (TKAG.DE) announced plans to for a much-needed capital increase after striking a deal to sell its U.S. steel plant to ArcelorMittal (ISPA.AS) and Nippon Steel Sumitomo Metal Corp (5401.T) for $1.55 billion.

It said late on Friday it would increase its capital by as much as 10 percent in a transaction excluding subscription rights, which would raise close to 1 billion euros ($1.36 billion) at its current share price.

ThyssenKrupp has been trying for more than a year and a half to find a buyer for its Steel Americas unit – comprised of the U.S. steel finishing plant and steel slab mill CSA in Brazil – which has drained billions from the company for the past few years and been an obstacle to raising fresh funds.

While the deal to sell the U.S. plant in Calvert, Alabama leaves ThyssenKrupp with its 73 percent stake in Brazil’s CSA, it removes at least one millstone from the company’s neck.

To avert a drop-off in business at CSA, which has been sending part of its production to Calvert, the sale includes a six-year agreement for the U.S. plant to buy 2 million tons of steel slab per year from CSA, or 40 percent of the Brazilian mill’s capacity.

ArcelorMittal said it would source the remaining slab for the Calvert plant from its own facilities in the United States, Brazil and Mexico.

ArcelorMittal and Nippon Steel are financing the purchase, which ArcelorMittal said would yield about $60 million of annual savings, through a combination of equity and debt.

DETERIORATING FINANCES

The deal to sell the U.S. plant has been expected to give a major boost to ThyssenKrupp Chief Executive Heinrich Hiesinger.

He has been trying to shift ThyssenKrupp away from the volatile steel business into higher-margin products and services such as elevators, submarines and factory components.

But he has fought an uphill battle since taking over in 2011 as the company was hit by scandals, while finances at the industrial conglomerate, a symbol of Germany’s industrial prowess, steadily deteriorated.

The company said on Friday that losses at Steel Americas, a regulatory fine and restructuring costs caused a third straight annual loss for the financial year through the end of September, though the loss narrowed to 1.5 billion euros from 5 billion a year earlier.

ThyssenKrupp said it would therefore pay no dividend to shareholders for a second year in a row but said its savings program and growth at its non-steel businesses should help it make significant progress toward break-even this year.

But in a setback, ThyssenKrupp said it agreed to take back Italian steel plant Terni and the VDM high-performance alloy unit from Outokumpu (OUT1V.HE) in exchange for an outstanding loan note, partly reversing last year’s sale of its stainless steel business to the Finnish company.

ThyssenKrupp said it would sell its 29.9 percent stake in the Finnish company but would take a significant loss on the stake’s 305 million euro book value as Outokumpu launches a rights issue.

ThyssenKrupp’s share closed down 0.8 percent at 19.27 euros on Friday, against a 0.2 percent rise in the DAX index .GDAXI of German blue chip shares.

($1 = 0.7345 euros)

(Additional reporting by Alexander Huebner, Matthias Inverardi, Clara Ferreira-Marques and Tom Kaeckenhoff; Editing by Tom Pfeiffer, Jonathan Gould and Eric Walsh)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/kQsvn221onY/story01.htm

U.S. Thanksgiving shopping binge brings Black Friday hangover


NEW YORK (Reuters) – U.S. retailers’ controversial choice to kick off the U.S. holiday shopping season early, on Thanksgiving, may not pay off as much as they had hoped.

Eager to entice cautious consumers, especially with six fewer shopping days this year than in 2012, many retailers launched sales on Thursday’s U.S. holiday, traditionally a day for family, friends and football games. Even Macy’s Inc’s flagship store in New York City opened then for the first time in its 155-year history, at 8 p.m.

Some U.S. shoppers played along, hitting the Internet and stores on Thanksgiving. But by late Friday morning, foot traffic looked a lot more like on a regular Saturday than the typical Black Friday frenzy that kicks off the holiday season.

“It’s a lot less than I thought,” said Alison Goodwin, from Horsham, Pennsylvania, who ventured to an area mall on Friday seeking gifts and maybe something for herself.

“It’s like any weekend in December,” Goodwin said.

While mall traffic appeared slower than last year, overall Black Friday online sales as of noon EST were up more than 7 percent from a year ago, according to IBM Digital Analytics Benchmark. That came on top of the 19.7 percent increase on Thanksgiving Day, the firm said.

Wal-Mart Stores Inc U.S. Chief Executive Bill Simon said Thanksgiving visits to stores of the largest U.S. retailer surpassed last year’s 22 million mark, and a swarm of online shoppers temporarily crashed its online site.

David Berman, founder of Durban Capital, a New York hedge fund that specializes in retail and consumer stocks, said U.S. shopping habits have permanently shifted with the exponential rise in online shopping, thanks largely to smart devices, notably Apple Inc’s top-selling iPad.

Sales of big-ticket items like smartphones have helped mask weaknesses in traditional retail, he noted.

“By our calculations, half of U.S. publicly held retailer sales growth is coming from SAA (Samsung, Apple and Amazon),” said Berman.

TOOTH AND NAIL

Retailers often record the majority of their annual sales during the end-of-year holiday shopping season, and rely on discounts and marketing blitzes to try and grab a slice of spending estimated at some $600 billion annually.

The battle for the consumer dollar has been particularly intense in a year when taxes have increased, unemployment has remained stubbornly high, and confidence has taken a hit from a recent government shutdown and uncertainty over the introduction of President Barack Obama’s healthcare reforms.

Offsetting those negatives has been the wealth impact of a rise in home prices and a rallying stock market, though those are more likely to help the luxury end of retailing.

Even Apple is not immune to this year’s heightened competition.

A new Ipsos/Reuters poll found that, among consumers thinking of buying a tablet, 21 percent favored Amazon Inc’s Kindle Fire, followed by 19 percent for Apple’s iPad and 17 percent for Samsung Electronics Co Ltd’s Galaxy.

In a rare gesture from the iPad-maker and a nod to intense competition from Samsung, tech giants like Microsoft Corp and Google Inc, and online retailer Amazon, Apple is offering gift cards worth up to $75 for every purchase on its website.

Shoppers lured to a Target store in Bensalem, Pennsylvania, by an even better iPad Air deal (a $100 Target gift card along with the $479 device) arrived too late on Friday morning, as the store had sold out.

Reuters reporters in several U.S. cities found shoppers cherry-picking discounted flat-screen televisions and other door busters without adding higher-margin items to their purchases – behavior that could bite into retail profits.

Overall, Berman said, “sales will eventually be OK but margins won’t.”

EBay Inc was the second best performer in the Standard Poor’s 500 index on Friday, gaining 2.5 percent, and Best Buy was third, rising 2.4 percent. Apple and Amazon were also in the top 10 on Friday, when trading closed early.

Kohl’s Corp and Nordstrom Inc fell 1.1 percent and 0.8 percent, respectively.

MIXED SIGNALS

The National Retail Federation is predicting that sales for the November and December holiday season will grow 3.9 percent to $602.1 billion – excluding such items as gasoline, restaurant meals or purchases of gift cards – leaving retailers to battle for a bigger slice of that somewhat larger pie.

However, NRF estimates each consumer will spend an average of $737.95 during the season, down 2 percent from 2012. Its forecast is based on an online survey and actual spending, including on gift cards. Retailers book gift card sales when the cards are used to make actual purchases.

While growing briskly, online sales still account for a small portion of overall sales in November and December. Holiday sales are forecast to grow 13 to 15 percent to as much as $82 billion, according to Shop.org.

This year’s holiday shopping results likely will mimic the slow-growing U.S. economy, said Can Erbil, an adjunct associate professor of economics at Boston College.

“Last year’s shopping season was actually pretty bad. The Connecticut school shootings, Hurricane Sandy, and fiscal cliff fears really hit the shopping season hard. So the benchmark is low,” Erbil said.

The sea of holiday deals failed to impress some shoppers.

For Luis Figueiro, a retired Brazilian on vacation in New York, called the scene at Macy’s flagship store on Thanksgiving evening “madness” and said the mobs of shoppers made it difficult to see the products on sale.

His wife, Irene, traveled with him from Rio with Black Friday deals in mind, but was disappointed to find that many items were not discounted.

“If someone comes without a clear notion of prices, it awakens something in you. But if you know what the items usually cost, you aren’t fazed,” she said.

(Reporting by Suzanne Barlyn in Philadelphia, Jennifer Ablan, Dhanya Skariachan, Phil Wahba, Marina Lopes, Beth Pinsker, David Gaffen in New York; Lisa Baertlein in Los Angeles and Edwin Chan in San Francisco; editing by Andrew Hay, Richard Chang and Bob Burgdorfer)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/4eRRbaTEUWU/story01.htm

Illinois union leaders bash pension plan as details emerge


CHICAGO (Reuters) – Illinois union leaders on Friday criticized the details of a controversial deal to reform the state’s woefully under-funded public pensions, as legislative leaders revealed more specifics of the deal they reached on Wednesday.

The agreement contains proposals to raise the retirement age and reduce automatic increases in pension payments, according to an overview of the bill released by the office of powerful Illinois House Speaker Michael Madigan.

Union opponents of the plan say it is little changed from a Madigan-backed proposal that was overwhelmingly defeated by the Illinois Senate earlier this year.

“It’s a bad rerun of a movie that we saw months ago and for public servants and retirees, it’s a horror film,” said Anders Lindall, spokesman for the American Federation of State, County and Municipal Employees (AFSCME).

Under the deal, the retirement age for workers who are currently aged 45 and under would gradually increase. And for high wage earners, the state would set a cap on the portion of their salaries used to calculate pension benefits, according to the overview issued by Madigan’s office.

The current 3 percent annual cost-of-living adjustment (COLA) for retirement pay, which is compounded annually, would be subjected to a formula aimed at benefiting longer-term, lower-earning workers. Increases would be tied to the inflation rate.

At the outset, cost-of-living increases would be suspended for anywhere from one to five years, depending on the age of the worker.

AFSCME’s Lindall said the cuts to the COLA would reduce the total value of a typical retiree’s pension payments by some 30 percent over 25 years of retirement.

Union leaders had questions about some aspects of the deal, including a provision to prohibit collective bargaining on most “pension matters.”

In the only pension-related issue that still could be resolved during talks, teachers can continue to negotiate with school districts to make contributions to their pensions in lieu of salary increases.

It was unclear exactly which “pension matters” would be included under the ban, said Dan Montgomery, president of the Illinois Federation of Teachers.

“It’s a sweeping, unnecessary, crude attack on public workers,” he said about the plan.

The Illinois Senate and House are expected to take up pension reform next week.

(Editing by Chizu Nomiyama)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/qUUeZCJ9Pz4/story01.htm

Bank of England’s Carney warns house-buyers on rates: newspaper


LONDON (Reuters) – Bank of England Governor Mark Carney has warned would-be British homeowners to consider the risks of higher interest rates, amid concerns that rising house prices could create a property market bubble, a newspaper reported on Friday.

“Think about the mortgage you are taking on, the debts you are taking on,” Carney was quoted as telling The Guardian.

“Are you going to be able to service that mortgage five years from now, 10 years from now, if interest rates are higher?”

On Thursday, the BoE unexpectedly said it would put the brakes on a scheme launched last year to help boost mortgage lending and would refocus it instead squarely on lending to businesses.

Earlier on Friday, data showed British house prices in November rose at their fastest pace in three years and mortgage approvals hit a nearly six-year high last month.

Carney told The Guardian he wasn’t worried about the British housing market as the BoE’s Financial Policy Committee was taking action and had powers to prevent a bubble, including the ability to recommend to banks that they do not offer mortgage loans that are too large.

“I’m less concerned about the housing market, given the steps the FPC has taken,” he was quoted as saying.

Carney reiterated his view that raising interest rates – currently at a record low of 0.5 percent – would be “a very blunt tool” for controlling the housing market and could hurt the wider economy.

The BoE has stressed it will be in no rush to raise interest rates even when unemployment falls to its threshold level of 7 percent for considering a tightening of monetary policy.

Carney also told The Guardian he opposed a European Union cap on bankers’ bonuses which is due to come into force soon.

(Writing by William Schomberg; Editing by Andrew Heavens)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/KPA3mW__x54/story01.htm

Bank of England’s Carney warns house-buyers on rates: newspaper


LONDON (Reuters) – Bank of England Governor Mark Carney has warned would-be British homeowners to consider the risks of higher interest rates, amid concerns that rising house prices could create a property market bubble, a newspaper reported on Friday.

“Think about the mortgage you are taking on, the debts you are taking on,” Carney was quoted as telling The Guardian.

“Are you going to be able to service that mortgage five years from now, 10 years from now, if interest rates are higher?”

On Thursday, the BoE unexpectedly said it would put the brakes on a scheme launched last year to help boost mortgage lending and would refocus it instead squarely on lending to businesses.

Earlier on Friday, data showed British house prices in November rose at their fastest pace in three years and mortgage approvals hit a nearly six-year high last month.

Carney told The Guardian he wasn’t worried about the British housing market as the BoE’s Financial Policy Committee was taking action and had powers to prevent a bubble, including the ability to recommend to banks that they do not offer mortgage loans that are too large.

“I’m less concerned about the housing market, given the steps the FPC has taken,” he was quoted as saying.

Carney reiterated his view that raising interest rates – currently at a record low of 0.5 percent – would be “a very blunt tool” for controlling the housing market and could hurt the wider economy.

The BoE has stressed it will be in no rush to raise interest rates even when unemployment falls to its threshold level of 7 percent for considering a tightening of monetary policy.

Carney also told The Guardian he opposed a European Union cap on bankers’ bonuses which is due to come into force soon.

(Writing by William Schomberg; Editing by Andrew Heavens)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/KPA3mW__x54/story01.htm

Bank of England’s Carney warns house-buyers on rates: newspaper


LONDON (Reuters) – Bank of England Governor Mark Carney has warned would-be British homeowners to consider the risks of higher interest rates, amid concerns that rising house prices could create a property market bubble, a newspaper reported on Friday.

“Think about the mortgage you are taking on, the debts you are taking on,” Carney was quoted as telling The Guardian.

“Are you going to be able to service that mortgage five years from now, 10 years from now, if interest rates are higher?”

On Thursday, the BoE unexpectedly said it would put the brakes on a scheme launched last year to help boost mortgage lending and would refocus it instead squarely on lending to businesses.

Earlier on Friday, data showed British house prices in November rose at their fastest pace in three years and mortgage approvals hit a nearly six-year high last month.

Carney told The Guardian he wasn’t worried about the British housing market as the BoE’s Financial Policy Committee was taking action and had powers to prevent a bubble, including the ability to recommend to banks that they do not offer mortgage loans that are too large.

“I’m less concerned about the housing market, given the steps the FPC has taken,” he was quoted as saying.

Carney reiterated his view that raising interest rates – currently at a record low of 0.5 percent – would be “a very blunt tool” for controlling the housing market and could hurt the wider economy.

The BoE has stressed it will be in no rush to raise interest rates even when unemployment falls to its threshold level of 7 percent for considering a tightening of monetary policy.

Carney also told The Guardian he opposed a European Union cap on bankers’ bonuses which is due to come into force soon.

(Writing by William Schomberg; Editing by Andrew Heavens)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/KPA3mW__x54/story01.htm

Bank of England’s Carney warns house-buyers on rates: newspaper


LONDON (Reuters) – Bank of England Governor Mark Carney has warned would-be British homeowners to consider the risks of higher interest rates, amid concerns that rising house prices could create a property market bubble, a newspaper reported on Friday.

“Think about the mortgage you are taking on, the debts you are taking on,” Carney was quoted as telling The Guardian.

“Are you going to be able to service that mortgage five years from now, 10 years from now, if interest rates are higher?”

On Thursday, the BoE unexpectedly said it would put the brakes on a scheme launched last year to help boost mortgage lending and would refocus it instead squarely on lending to businesses.

Earlier on Friday, data showed British house prices in November rose at their fastest pace in three years and mortgage approvals hit a nearly six-year high last month.

Carney told The Guardian he wasn’t worried about the British housing market as the BoE’s Financial Policy Committee was taking action and had powers to prevent a bubble, including the ability to recommend to banks that they do not offer mortgage loans that are too large.

“I’m less concerned about the housing market, given the steps the FPC has taken,” he was quoted as saying.

Carney reiterated his view that raising interest rates – currently at a record low of 0.5 percent – would be “a very blunt tool” for controlling the housing market and could hurt the wider economy.

The BoE has stressed it will be in no rush to raise interest rates even when unemployment falls to its threshold level of 7 percent for considering a tightening of monetary policy.

Carney also told The Guardian he opposed a European Union cap on bankers’ bonuses which is due to come into force soon.

(Writing by William Schomberg; Editing by Andrew Heavens)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/KPA3mW__x54/story01.htm