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Weather seems to blame for U.S. slowdown, Fed’s Yellen says

(Reuters) – Unusually harsh winter weather appears to be behind recent signs of weakness in the U.S. economy, Federal Reserve Chair Janet Yellen said on Thursday, suggesting the central bank was poised to press forward in ratcheting back its stimulus.

Testifying to the Senate Banking Committee, Yellen said the Fed would watch carefully to ensure weather was indeed the culprit, but she reiterated that it would take a “significant change” to the economy’s prospects for the Fed to put plans to wind down its bond-buying program on hold.

Heavy snowstorms and cold snaps have hit U.S. employment, retail sales and manufacturing. The world’s largest economy added fewer than 200,000 jobs combined in December and January, well below expectations. Some investors think the Fed could alter its plans if a report on February hiring next week shows similar weakness.

“It’s really quite a range of data that has been soft recently. I think it’s clear that … unseasonably cold weather has played some role in much of that,” Yellen, the Fed’s former vice chair who took the reins on February 1, told lawmakers.

“What we … will be doing in the weeks ahead is to try to get a firmer handle on exactly how much of that set of soft data can be explained by weather and what portion, if any, are due to a softer outlook,” she said.

After more than five years of ultra easy monetary policy in the wake of the 2007-2009 recession, the Fed is taking the first small steps towards a more normal footing. It trimmed its bond buying by $10 billion in each of the past two months, and it expects to raise interest rates some time next year as long as the economy continues to improve.

Yellen reiterated her concerns about possible asset price bubbles, and suggested the Fed would move to a more qualitative description of when it plans to finally raise rates.

But her most revealing comments were on the bond purchases, which she said the Fed still intended to end sometime in the fall, although they were not on a “preset course.”

Asked by New York Senator Charles Schumer if the Fed would consider changing the rate of taper if weather turned out not to be the main factor in recent economic weakness, Yellen said the central bank would be open to reconsidering if the outlook changed significantly.

“But I wouldn’t want to jump to conclusions here,” she said.

The Fed has held rates near zero since late-2008 and it has pumped up its balance sheet to more than $4 trillion with its asset purchases. It is currently buying bonds at a pace of $65 billion per month, and will decide its next move at a meeting on March 18-19.

Reaction in financial markets was muted, with U.S. stocks gaining ground and the dollar drifting lower against the euro.

“I think the prevailing wisdom remains that there is a high hurdle to deviating from the current $10 billion per meeting taper trajectory,” Stephen Stanley, chief economist at Pierson Securities, wrote to clients.


Senators on the committee also asked about financial regulation and the possibility that the accommodative monetary policy could inflate asset-price bubbles.

Yellen acknowledged that such low borrowing costs “can give rise to behavior that poses threats to financial stability.”

“Therefore we need to be looking at that very carefully and we are doing so in a very thorough way,” she said.

The debate is heating up over whether the Fed should stand ready to raise rates earlier than expected to head off risky behavior that could imperil financial stability.

The central bank is monitoring the growth of credit and leverage for “potential worrisome trends,” Yellen said.

“I would say at this stage I don’t see concerns, but there are pockets of a few things that we’ve identified that do concern us,” she said.

“For example, underwriting standards and leveraged lending clearly appear to be deteriorating. We have addressed that with supervisory guidance and special exams and will continue to be very vigilant in that area.”

Another challenge on the Fed’s horizon is adjusting a policy promise, repeated last month, to keep rates near zero until well after the U.S. jobless rate falls below 6.5 percent. Unemployment was very close to that threshold at 6.6 percent in January, so Fed policymakers have suggested they want to find another way to telegraph their intentions.

“There is no hard and fast rule about what unemployment rate constitutes full employment and we need to consider a broad range of indicators,” Yellen said.

“Many members of the committee have emphasized this point and it’s one I agree with,” she added. “It moves in the direction of qualitative guidance.”

(Additional reporting by Lucia Mutikani, Ann Saphir, Elvina Nawaguna and Bill Trott; Editing by Chris Reese, Tim Ahmann and Andrea Ricci)

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S&P 500 ends at record after Yellen’s weather talk

NEW YORK (Reuters) – The SP 500 closed at a record on Thursday and ended in positive territory for the year after Federal Reserve Chair Janet Yellen said harsh weather seems to be to behind recent U.S. economic softness.

That gave some relief to investors who supported the view that heavy snowstorms and unusually cold weather – and not worsening fundamentals – were to blame for weak U.S. employment, retail sales and other data.

The advance lifted the SP 500 above its 2013 year-end closing level of 1,848.36, which has served as resistance in recent sessions.

“The market was worried. She could have excluded weather and perhaps talked more about the soft patch,” said Quincy Krosby, market strategist at Prudential Financial, which is based in Newark, New Jersey.

“I think she gave the market some comfort that she thought it was probably mostly due to weather-related issues.”

Testifying before the Senate Banking Committee, Yellen also said the Fed would watch carefully to make sure weather was indeed behind the recent weakness. But she said it would take a “significant change” to the economy’s prospects for the central bank to put plans to reduce its bond-buying program on hold.

Some retailers scored sharp gains for a third session, with the shares of J.C. Penney Co Inc (JCP.N) and others jumping after the companies posted strong results.

Mylan Inc (MYL.O) gave one of the biggest boosts to both the SP 500 and Nasdaq. Mylan’s shares shot up 9.4 percent to end at $56.27 after the U.S. generic drugmaker gave a 2014 forecast above Wall Street’s estimates. Mylan also said it plans to make a “substantial” transaction this year that would add to future earnings.

The Dow Jones industrial average .DJI rose 74.24 points or 0.46 percent, to end at 16,272.65. The SP 500 .SPX gained 9.13 points or 0.49 percent, to finish at 1,854.29, surpassing its previous record closing high set on January 15.

The Nasdaq Composite .IXIC added 26.869 points or 0.63 percent, to close at 4,318.933.

For the year, the SP 500 index is now up 0.3 percent.

After the bell, Gap Inc GSP.N shares slid 1 percent to $43.24 after the clothing retailer reported results. Shares of Deckers Outdoor Corp (DECK.O) tumbled 12.5 percent to $74.05 after the company, whose brands include UGG boots and Teva sandals, posted earnings.

During the regular session, J.C. Penney shares surged 25.3 percent to $7.47, a day after the U.S. department store chain forecast more improvement in its comparable sales and gross profit margin this fiscal year.

The SP retail index .SPXRT has climbed 4.2 percent for the week so far, including its slim gain of 0.1 percent on Thursday.

Among other retailers, Best Buy Co Inc (BBY.N) reported a better-than-expected profit on Thursday. The stock rose as high as $28.19 before ending at $25.57, down 1 percent.

Sears Holding Corp (SHLD.O) reported a quarterly loss that narrowed from the year-ago period, sending its stock up 6.5 percent to $43.01. Kohl’s Corp (KSS.N) said it expected modest sales gains in its new fiscal year and reported a lower fourth-quarter profit. Shares of Kohl’s rose 2.4 percent to $55.74.

The day’s economic data added to the positive tone, with orders for long-lasting U.S. manufactured goods excluding transportation, or durable goods excluding transportation, and a gauge of business spending unexpectedly rising in January.

About 6.5 billion shares changed hands on U.S. exchanges, below the 7 billion average so far this month, according to data from BATS Global Markets.

Advancers beat decliners on the New York Stock Exchange by a ratio of 2 to 1. On the Nasdaq, 17 stocks rose for every nine that fell.

(Editing by Jan Paschal)

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Jos. A. Bank rejects Men’s Wearhouse bid, says open to talks

(Reuters) – Men’s apparel retailer Jos. A. Bank Clothiers Inc (JOSB.O) rejected Men’s Wearhouse Inc’s (MW.N) revised takeover offer calling it inadequate, but said it was willing to talk with its larger rival about a higher bid.

Jos. A. Bank shares rose 3.8 percent in trading after the bell on Thursday, while Men’s Wearhouse shares rose 2.2 percent.

Men’s Wearhouse on Monday raised its cash tender offer to Jos. A. Bank shareholders to $63.50 per share from $57.50, and added it could increase the offer to $65 if it was able to conduct limited due diligence.

“Our board has authorized our meeting with you (Men’s Wearhouse) to establish a process that will enable you to advise our board as to the highest price you are prepared to pay in an acquisition of Jos. A. Bank,” the company said on Thursday.

Jos. A. Bank, which itself has offered to buy outdoor apparel retailer Eddie Bauer, said it was prepared to provide Men’s Wearhouse with a limited amount of due diligence information, under certain conditions.

Jos. A. Bank also said it would like to discuss the deal structure and the proposed stock component to its shareholders.

The company’s move is the latest in a saga that has played out since last October, when Jos. A Bank made an offer to buy out its larger rival. Men’s Wearhouse turned the tables with its own offer and then, in January, went hostile by taking its offer to its smaller rival’s shareholders.

Around that time, the merger efforts attracted the attention of the Federal Trade Commission who posed extra questions under a so-called “second request.”

Jos. A. Bank said on Thursday it would require certainty of closing a deal in light of the FTC’s pending second request.

In an effort to remain independent, Jos. A. Bank earlier this month offered to buy Eddie Bauer.

The tuxedo retailer said it believes the Eddie Bauer deal had “significant value,” and that the FTC has granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Jos. A. Bank shares were up 3.8 percent at $62.60 in trading after the bell after closing at $60.30 on Thursday on the Nasdaq.

Men’s Wearhouse shares were up 2.2 percent at $51.51 after closing at $50.42 on the New York Stock Exchange.

(Reporting by Siddharth Cavale and Devika Krishna Kumar in Bangalore; Editing by Savio D’Souza and Lisa Shumaker)

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Ex-Madoff aide pleads ignorance, naivete at U.S. fraud trial

NEW YORK (Reuters) – Ponzi scheme. Treasury bond. The Standard Poor’s 500 index. The collapse of Lehman Brothers.

Those were among the subjects that Annette Bongiorno said on Thursday she did not understand, despite spending more than 40 years as one of the key employees at Bernard Madoff’s investment firm.

Bongiorno is one of five former Madoff workers on trial in federal court in Manhattan for abetting his fraud, which fell apart in December 2008, costing investors an estimated $17 billion in principal losses.

Facing questions from a government prosecutor about her alleged role in concealing Madoff’s multibillion-dollar fraud, Bongiorno did not deny that she entered thousands of backdated trades in customers’ accounts, sometimes years after they had purportedly occurred.

But she said, again and again, that she was simply following Madoff’s orders, knew next to nothing about Wall Street and had “no clue” that anything she had done was illegal.

“All the trades were backdated,” she said. “I did what I was told.”

Also on trial are former director of operations Daniel Bonventre, portfolio manager Joann Crupi and computer programmers Jerome O’Hara and George Perez.

Bonventre and Bongiorno have taken the witness stand in their own defense, betting that the jury will accept their claims that they were duped by Madoff into believing the business was legitimate. All five defendants have said they were unaware that Madoff, who pleaded guilty and is serving a 150-year prison sentence, was running a Ponzi scheme.

During her testimony, Bongiorno said she believed Madoff was trading stock in bulk and then deciding later how to divvy up the transactions among his customers, a practice she thought was permissible.

Assistant U.S. Attorney John Zach repeatedly showed Bongiorno documents on which she had plotted out backdated trades to enter into customer accounts, though no trading actually happened.

“You were the one who wrote all these trades in?” Zach asked.

“Yes,” Bongiorno replied.

“And your testimony is that for every single one of these trades, Mr. Madoff told you what to do?” he asked, sounding a skeptical note.

“Yes,” she answered.

Upon Madoff’s arrest, Bongiorno said, she had to ask another employee what a Ponzi scheme was. And under questioning from Zach, she said she couldn’t explain the difference between a stock and a bond and struggled to define the SP 500.

At one point, Zach showed Bongiorno documents indicating that sales of Lehman Brothers stock were entered into her account in October 2008, a month after the investment bank collapsed, but backdated to August.

“Do you remember what happened to Lehman Brothers in September 2008?” Zach asked.

“No, but I guess you’re going to tell me,” she said.

Zach then showed Bongiorno several front-page newspaper articles from that month about the financial crisis and questioned her about the timing of the backdated trades.

“That didn’t raise a red flag for you?” he asked.

“If I was told to do it, I did it,” she said.

Zach also sought to demonstrate that Bongiorno used proceeds from the fraud to finance a luxurious lifestyle, showing the jury photographs of her Bentley sedan and the high-end condominium in Boca Raton, Florida, where she planned to purchase a $6.5 million home.

The trial, which began more than four months ago, will resume on Monday and is expected to end in March.

The case is USA v. O’Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-0228.

(Reporting by Joseph Ax; Editing by Eddie Evans and Douglas Royalty)

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U.S. automakers extend discount wars through March

DETROIT (Reuters) – General Motors Co (GM.N) and Ford Motor Co (F.N) this week ramped up deep discounts on many of their U.S. models, extending those offers through March in an effort to lure customers back into winter-ravaged showrooms.

Some of the heaviest discounts are being offered by Ford and Chevrolet dealers on full-size pickups – $8,000 and more on the 2014 Ford F-150 and $9,000 and more on the 2014 Chevrolet Silverado, according to Internet listings posted Thursday.

But U.S. dealers also are sweetening deals on a wider range of vehicles, from low-priced economy cars such as the Chevrolet Sonic to popular crossovers such as the Ford Escape, fueling fears of an escalating “discount war” among the bigger manufacturers.

The latest offers come as the Detroit automakers and a number of their competitors appear to have been slammed by a third straight month of extreme weather in many parts of the United States, causing inventories of unsold vehicles to remain at unseasonably high levels.

“We believe short-term pent-up demand is building, but it’s difficult to know when it will be released,” said analyst Joseph Spak of RBC Capital Markets. “It could be March or spread out over a few months (and) is also likely dependent on the weather.”

Analysts polled by Reuters estimated U.S. vehicle sales in February will be relatively flat from a year ago, at around 1,196,000, representing an annualized rate of 15.4 million. After dismal sales in January, analysts had predicted an uptick in February.


The challenge for GM and Ford has been to maintain a delicate balance between pricing and discounts, one of the key incentives offered by the industry. This task is made a bit easier with big pickups, high-margin vehicles that traditionally provide the lion’s share of pretax profit in Detroit.

Automakers were able to maintain record transaction prices in February, with the industry average topping $29,000, according to research firm J.D. Power.

GM, which introduced its redesigned Silverado and GMC Sierra pickups last summer, has seen the biggest gain – around $5,000 per vehicle – in truck prices from a year ago, according to research firm Kelley Blue Book.

Because it has been spending relatively less on incentives this year than Ford, GM’s share of full-size truck sales has dropped several points to less than 35 percent.

GM spent an estimated $3,204 per vehicle in incentives in February, compared with $3,305 for Ford, according to research firm TrueCar.

That could change as GM phases out heavy-duty versions of the Silverado and Sierra this spring while building up production of redesigned editions.

Analyst Brian Johnson of Barclays Capital said U.S. vehicle inventories are down slightly from January, but so far the automakers have maintained relatively strong first-quarter production schedules.

“Should inventory levels remain elevated through April, we could see the issue addressed” via higher incentives or production cuts, Johnson said.


At the retail level, discounting continues at a furious pace, judging from dealer websites reviewed Thursday by Reuters.

Chevrolet dealers were offering promotional deals on a wide range of models as the GM brand wrapped up a nationwide Presidents Day sale and prepared for two new March promotions.

The new promotions are dubbed Chevy Truck Month and Chevy Open House, according to trade publication Automotive News. The March incentive programs are expected to provide discounts of up to $7,000 or more per vehicle, according to a GM source who declined to be named because the programs have not been formally announced.

A number of Chevrolet dealers in the meantime are offering even better deals, many of them over the Internet.

On Thursday, David Stanley Chevrolet in Oklahoma City, Oklahoma, advertised a 2014 Silverado for $27,900, or $9,260 off the sticker price.

In Chandler, Arizona, Thoroughbred Chevrolet advertised a 2014 Malibu sedan at $17,395, or $5,860 off sticker, and a 2014 Sonic hatchback for $10,495, or $4,500 off.

Ford has boosted and extended discounts on many of its U.S. models through March 31. The company now is offering rebates of up to $4,000 on the full-size 2014 F-150 pickup and as much as $6,000 on selected models such as the 2014 Focus Electric.

But Ford dealers across the United States continue to advertise even steeper discounts on the Web.

Hall Ford Lincoln in Newport News, Virginia, on Thursday was offering a 2014 Ford Taurus Limited sedan for $34,000, a discount of $6,090 off the suggested retail price, and a 2014 Escape SEL crossover for $29,000, a discount of $5,600.

Brandon Ford in Tampa, Florida offered deep discounts of up to $7,200 on the 2014 F-150 pickup and $8,360 on the heavy-duty F-150.

Will the discount wars continue beyond March? That depends on the weather and on whether a “bounceback” in demand materializes, analysts said. As RBC analyst Spak noted: “Incentives, once introduced, can be hard to pull back.”

(Editing by Matthew Lewis)

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KPMG International names John Veihmeyer new global chairman

NEW YORK (Reuters) – KPMG International KPMG.UL, the world’s fourth-largest accounting and consulting network, said its U.S. firm’s chief executive, John Veihmeyer, will become the group’s next global chairman.

He will succeed Michael Andrew, who has held the job since May 2011 and is retiring after being diagnosed with a serious medical condition to focus on his recovery, KPMG said in a statement on Thursday.

The change will take effect when Veihmeyer’s appointment is ratified, which is expected at the March meeting of senior partners, a spokesman said.

Veihmeyer has been chairman and CEO of KPMG’s U.S. firm since 2010. A graduate of the University of Notre Dame, he is a member of the Business Roundtable, the U.S.-India Business Council and the Business-Higher Education Forum.

(Reporting by Dena Aubin; Editing by Kevin Drawbaugh and Richard Chang)

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GDF ditches monopoly past, invests in growth markets

PARIS (Reuters) – GDF Suez (GSZ.PA), with its traditional European business under pressure, plans to focus investment on power production in fast-growing emerging economies and on Europe’s shift to renewables and energy efficiency.

The French former gas and power monopoly plans to invest 9 to 10 billion euros per year in the next three years, of which only 2.5 billion to maintain existing assets, with a focus on small to medium-size acquisitions. In 2013, GDF invested 7.5 billion euros.

“It is clear that the utilities business model is changing. We want to grab all new opportunities,” Chief Executive Gerard Mestrallet told a news conference about 2013 earnings.

GDF announced a 15 billion euro writedown on European gas-fired power plants and gas storage facilities that knocked the firm to a 9.74 billion euro loss.

Mestrallet said that once two planned power plants in Germany and the Netherlands are finished, GDF will build no new power plants in Europe for the foreseeable future and will focus generation investment on growth markets.

At the end of 2013, GDF had 15 gigawatts of projects under construction or under advanced development, of which close to 90 percent in fast-growing markets. One gigawatt is roughly equivalent to the output of one nuclear plant.

The group is also targeting strong international growth for energy services. It wants to increase revenues from energy efficiency by 40 percent between 2013 and 2018 and to double sales outside Europe by 2019.

GDF unit Cofely is the European market leader in energy services – heating, cooling and ventilation systems and services – with sales of around 15 billion euros.

GDF also aims for more growth in its liquid natural gas (LNG) business, which is booming due to high demand in Japan and other Asian countries.

It is targeting production of 59 to 63 million barrels of oil equivalent (mboe) by 2016 vs 52 mboe in 2013 and aims to develop its LNG supply portfolio from 16 million metric tons per annum (mtpa) to 20 mtpa by 2020.


The former French monopoly gas supplier’s unions are not happy with the shift out of GDF’s traditional French market and have denounced the 2008 merger between GDF and Suez that created the company.

In an interview with Le Monde newspaper, Mestrallet said GDF cannot cling on to its old monopoly supplier heritage.

“This old world, I am writing it off in our accounts. I want to change GDF’s culture and invest in the new world,” he said.

Mestrallet told a results briefing on Thursday that GDF’s investments in Europe would focus on the socalled energy transformation – a shift to less polluting sources of energy and greater energy efficiency.

The group wants to be a leader in renewable energy, he said, adding that GDF is investing strongly in biogas.

He has also created a new division that will focus on new activities like smart grids, digital metering, demand management and LNG retail. The new unit reports directly to Mestrallet.

Mestrallet said that, with GDF’s debt now under 30 billion euros, a year ahead of schedule, it has halted a divestment program that targeted 11 billion euros of asset sales and which realized 5 billion euros worth of sales in 2013.

The firm plans to return to its normal rhythm of two to three billion euros worth of “rotational investment”, focused entirely on growth.

(Editing by Tom Pfeiffer)

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Hedge fund manager Loeb launches proxy battle at Sotheby’s

(Reuters) – Billionaire hedge fund manager Daniel Loeb is mounting a proxy fight at Sotheby’s with the goal of winning three board seats after the auction house’s promise to return $450 million to shareholders failed to appease activist investors.

Loeb’s $14 billion Third Point, Sotheby’s biggest investor with a 9.53 percent stake, said on Thursday in a regulatory filing that it is proposing a slate that includes Loeb, restructuring expert Harry Wilson and former investment banker Olivier Reza.

This lays the groundwork for a potentially bitter fight between one of the hedge fund industry’s loudest fighters and a 270-year old company best known for selling hundreds of millions of dollars worth of paintings at hushed auctions.

For Loeb, an art collector who last year compared Sotheby’s to “an old master painting in desperate need of restoration,” this marks his first proxy contest since scoring a big victory with board seats at Yahoo in 2012.

In the filing, Loeb acknowledges some of Sotheby’s recent positive steps but criticizes the company for failing to make more significant changes, singling out its decision last year to put in a poison pill to protect itself from shareholders like Loeb. “Much remains to be done to enhance the company’s competitive position,” Loeb wrote.(

Sotheby’s said in a statement that it is “disappointed that Third Point has chosen this path.”

Ever since activist investor Mick McGuire’s Marcato Capital Management last summer became the first hedge fund to ask the auction house to overhaul its balance sheet and consider selling its glass-fronted Manhattan headquarters, the company has become something of a magnet for hedge funds.

Third Point, which now owns 6.55 million shares, built up its position over the summer. Both Marcato and Third Point have strong track records including returns of more than 20 percent last year while the average hedge fund was up only 9 percent. York Capital Management and Eton Park Capital Management also rank among the company’s top ten shareholders and beefed up their holdings in the fourth quarter.

Four weeks ago Sotheby’s said it will return $450 million to shareholders through stock buybacks and special dividends, as well as separate its agency and financial services units.

McGuire immediately criticized the plan for not going far enough and suggested that Sotheby’s should return at least $1 billion of capital to investors within 12 months.

Loeb is weighing in now.

Board members have been there too long and it is time for new blood, including an owner in the boardroom, he said.

The company defended its board saying, “The Board is composed of 12 highly qualified directors, 10 of whom are independent, and three of whom joined the Board in the past three years.”

The company also said that it has tried to reach an agreement with Loeb, having had six meeting with Third Point and numerous conference calls.

Loeb currently serves on no corporate boards and first proposed getting a board seat for himself at Sotheby’s last year. Now he may be taking a page out of the playbook he used to win influence at Yahoo where he, Harry Wilson and Michael Wolf joined the board in 2012 after reaching a settlement with the company, helped select Marissa Mayer as CEO and earned $1 billion for Third Point.

While Loeb’s words to Sotheby’s are pointed, they are far more muted than in previous battles, suggesting that Loeb, who counts state pension fund among his clients, may be taking a slightly more measured path, for now.

For example, Loeb did not renew last year’s call for Chief Executive Officer William Ruprecht to be replaced and may be interested in trying to work with him now, a person familiar with his thinking said. Loeb also praised the addition of Domenico De Sole to the board.

Sotheby’s, late on Thursday, reported weaker-than-expected quarterly profit, hurt by higher operating expenses and increased competition. The auctioneer reported earnings of $1.30 per share for the fourth quarter, missing the average analyst estimate of $1.40 per share, according to Thomson Reuters I/B/E/S.

The company’s shares closed down 0.3 percent at $50.37 on Thursday. They touched a high for the year of $51.16 earlier in the session.

(Reporting by Svea Herbst-Bayliss in Boston and Siddharth Cavale in Bangalore; Editing by Don Sebastian and Phil Berlowitz)

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Morgan Stanley Asia-Pacific Fund Announces Tender Offer for 20% of its Shares

Morgan Stanley Asia-Pacific Fund, Inc. (NYSE: APF) announced today that its Board of Directors has approved a tender offer to acquire in exchange for cash up to 20 percent of the Fund’s outstanding shares at a price equal to 98.5 percent of the Fund’s net asset value per share as of the close of regular trading on the New York Stock Exchange (“NYSE”) on the business day immediately following the day the offer expires (the “Tender Offer”). The Tender Offer will commence on or about March 6, 2014.

Additional terms and conditions of the Tender Offer will be set forth in its offering materials, which will be distributed to the Fund’s stockholders. If more than 20 percent of the Fund’s outstanding shares are tendered, the Fund will purchase its shares from tendering stockholders on a pro rata basis at a price of 98.5 percent of the Fund’s net asset value per share. If the Fund’s shares trade at a premium, the Tender Offer will not be conducted.

Morgan Stanley Investment Management, together with its investment advisory affiliates, has over 550 investment professionals around the world and $373 billion in assets under management or supervision as of December 31, 2013. Morgan Stanley Investment Management strives to provide outstanding long-term investment performance, service and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide.

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 43 countries. For further information about Morgan Stanley, please visit

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