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Avon wins dismissal of lawsuit over China bribery


NEW YORK (Reuters) – Avon Products Inc (AVP.N) on Monday won the dismissal of a securities fraud lawsuit accusing the cosmetics company of concealing its inability to stop workers from bribing officials in China to win business there.

U.S. District Judge Paul Gardephe in Manhattan found no showing that Avon, former Chief Executive Andrea Jung and former Chief Financial Strategy Officer Charles Cramb intended from 2006 to 2011 to deceive shareholders about the company’s knowledge of alleged bribery, such as through corrupt “dinner and karaoke” events, and dependence on bribes to boost sales.

In a 59-page decision, Gardephe also said Avon shareholders did not show the company intended to deceive them about its ability to comply with the federal Foreign Corrupt Practices Act, which prohibits bribing foreign officials.

The lawsuit was brought on behalf of shareholders from July 31, 2006 to Oct. 26, 2011, and had claimed that Avon’s corporate culture was “actively hostile” to effective oversight. Gardephe said the plaintiffs may amend their complaint if they wish.

Gregg Levin, a partner at Motley Rice representing the lead plaintiffs, did not immediately respond to requests for comment.

Jennifer Vargas, an Avon spokeswoman, said the New York-based company does not discuss pending litigation.

Germany’s LBBW Asset Management Investmentgesellschaft mbH and SGSS Deutschland Kapitalanlagegesellschaft mbH are the lead plaintiffs. Other plaintiffs include pension plans in Chicago; Baton Rouge, Louisiana, and Brockton, Massachusetts.

Avon began an internal probe in 2008 into alleged improper payments in China, which it has said cost the company $300 million.

In May, Avon announced a tentative agreement to pay $135 million to settle related probes by the U.S. Department of Justice and Securities and Exchange Commission.

Jung had been Avon’s chief executive for 12 years when the company announced plans to replace her in December 2011, a year when its stock price fell 40 percent. Sheri McCoy, Jung’s successor, took over the following April.

In afternoon trading, Avon shares were down 25 cents at $12.46. They have lost roughly three-fifths of their value since the first bribery-related disclosure in October 2008.

The case is City of Brockton Retirement System et al v. Avon Products Inc et al, U.S. District Court, Southern District of New York, No. 11-04665.

(Reporting by Jonathan Stempel. Editing by Andre Grenon)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/odbaJsCP4Mw/story01.htm

Tag Heuer cuts some management and production jobs: LVMH exec


PARIS (Reuters) – Tag Heuer, the biggest watch brand within French luxury group LVMH (LVMH.PA), has cut some management and production jobs in Switzerland in response to an industry slowdown, the head of LVMH watches said on Monday.

Jean-Claude Biver said Tag Heuer had cut 46 managerial and production positions and placed 49 people on temporary unemployment from Sept. 1 until the end of the year.

Biver said the cuts resulted from having decided to produce only one chronometer movement as opposed to two, and to focus on the group’s core business of watches priced between 1,000 euros ($1,270) and 4,000, as opposed to more expensive items.

Biver said most of the cuts would affect Tag Heuer’s sites in La Chaux-de-Fonds and Chevenez in Switzerland, where he estimated the brand’s total staff to be around 600, of which 400 are in production.

Biver said the cuts were not only related to events in Hong Kong but said Tag Heuer had put on ice plans to rent a new shop in the city for sister LVMH brand Hublot.

Pro-democracy protesters in Hong Kong have been in a stand-off with police in the worst unrest since the territory’s 1997 handover from Britain, that has scared off tourists and put pressure on retailers’ sales.

“We have seen fewer Chinese, and particularly wealthy Chinese, coming to Hong Kong,” Biver told Reuters. “And this of course affects the industry.”

However, Biver said he was not planning any cuts at Hublot, as its sales were up more than 10 percent since the beginning of the year, or at LVMH’s Zenith brand.

WEAK DEMAND

Luxury watch makers are grappling with political instability in Hong Kong, the leading market for Swiss watches, and weak demand in China, where a government crackdown on expensive gift giving has hurt sales of upmarket timepieces.

Richemont’s (CFR.VX) flagship brand Cartier said on Friday it would reduce working hours for 230 employees at one of its watchmaking factories in Switzerland due to slowing demand.

Earlier this month, Richemont flagged weakening demand in Asia, its biggest market, while Italian fashion group Prada (1913.HK) said it expected no revenue growth this year and would open fewer stores.

Luxury goods stocks fell on Monday on the back of the political unrest, with industry leader Swatch Group (UHR.VX) closing down 2 percent, LVMH down 1.5 percent and Richemont down 1.7 percent. European stocks as a whole .FTEU3 fell 0.4 percent.

Analysts estimate between 10 and 15 percent of luxury goods sales are made in Hong Kong and the city represents more than 20 percent of luxury watch sales.

For Richemont alone, Hong Kong represents around 17 percent of sales, while for Swatch Group it delivers 15 percent of revenue, estimated luxury goods analyst Jon Cox at brokerage Kepler Cheuvreux.

Kepler Cheuvreux last week cut its growth assumptions for the Swiss watch market this year to 3.5 percent from 5.5 percent, principally due to weakness in Hong Kong.

(This version of the story was refiled to add dropped word “only” in fifth paragraph)

(Editing by James Regan and David Holmes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/YMVhZ6IjMP8/story01.htm

New Fed study suggests traders’ rate path view lags that of Fed


SAN FRANCISCO (Reuters) – The Federal Reserve will likely start raising interest rates in mid-2015, but so slowly that rates will end the year at just 0.55 percent, according to a San Francisco Fed study of betting in futures markets released on Monday.

By the end of 2016, rates will have risen to just 1.4 percent, based on options contracts on short-term interest-rate futures, according to San Francisco Fed economist Michael Bauer. The paper argues that options are better gauges of market expectations than futures contracts themselves when interest rates are near zero.

The bets suggest traders see the Fed raising rates at about half the pace that Fed officials themselves do. Fed officials see rates ending 2015 at 1.375 percent, and 2016 at 2.875 percent, based on the median of forecasts released by the U.S. central bank earlier this month.

It is the second study from the San Francisco Fed this month that suggests market expectations on rate hikes are behind the curve as seen by the Fed. Unlike the earlier study, Bauer’s does not explicitly compare market expectations to Fed officials’ forecasts, but focuses instead on a comparison of options and futures.

Futures contracts suggest a slightly more aggressive path of rate hikes than options, Bauer wrote, but such a reading of markets is “misleading” because it does not take into account the fact that near-zero interest rates prevent traders from the two-sided betting that is possible when rates are above zero.

“Option-based estimates of the most likely policy path indicate that market participants expect liftoff to occur around the middle of 2015, and further expect the subsequent policy tightening to be gradual,” Bauer wrote.

The Fed has held interest rates at zero to 0.25 percent since December 2008.

(Reporting by Ann Saphir; Editing by Chris Reese)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/N37RbdcpZlo/story01.htm

Toyota to recall 690,000 Tacoma vehicles in U.S. to fix suspension


(Reuters) – Toyota Motor Sales U.S.A. Inc, a unit of Toyota Motor Corp (7203.T), said it would recall about 690,00 Tacoma 4X4 and Tacoma pre-runner pickup trucks to fix issues with the vehicles’ rear suspension system.

“The involved vehicles’ rear suspension system contains leaf springs that are constructed of either three or four leaves. There is a possibility that a leaf could fracture due to stress and corrosion,” Toyota said in a statement on Monday.

If the vehicle continues to be used, it could lead to the broken leaf coming in contact with surrounding components, including the fuel tank and causing a leak, the company said.

“In the presence of an ignition source, this could result in a fire,” the car maker said.

Toyota said it was not aware of any injuries due to this.

The vehicles belong to model years 2005-2011, the company said.

(Reporting by Rohit T. K. in Bangalore; Editing by Sriraj Kalluvila)

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

RBS to invest $1.6 billion on services to corporate clients


LONDON (Reuters) – State-backed Royal Bank of Scotland (RBS.L) said on Monday it would invest more than 1 billion pounds ($1.6 billion) to improve services for its commercial and corporate customers.

The bank is keen to improve its image among small business customers after accusations about how its turnaround division dealt with struggling firms and the mis-selling of interest rate hedging products.

RBS said the investment, which will be made between 2014 and 2018, would result in simpler and quicker services for customers including account opening and lending, with most lending decisions being made within five days.

“The investment we’ve pledged today will speed up account opening, simplify lending processes and provide tailored tools to help our people support customers better,” said RBS’s Chief Executive Commercial and Private Banking Alison Rose.

The investment includes RBS setting up eight new regional business hubs to support entrepreneurs. The bank will also increase training for staff enabling relationship managers to make more decisions locally for their customers.

Tasked with recovering loans from customers struggling to pay, RBS’s turnaround division came under fire last year when UK government advisor Lawrence Tomlinson accused the division of pushing small businesses to collapse and then profiting from their demise.

An independent report commissioned by RBS, which is 80 percent owned by the government, cleared the bank of attempting to defraud its customers.

(Reporting by Matt Scuffham; Editing by Steve Slater)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/DOazT0cakJ4/story01.htm

GE inks more than $500 million power equipment order with Exelon


(Reuters) – General Electric Co (GE.N) said on Monday it has won an order worth more than $500 million to provide power-generating equipment to U.S.-based Exelon Corp (EXC.N), including four of GE’s highest efficiency gas turbines.

Exelon said it was planning to build two combined-cycle gas turbine units in Texas using the GE technology.

The new units are being built at Exelon’s Colorado Bend site in Wharton County, Texas, and at its Wolf Hollow natural gas plant in Granbury, Texas. Each will add about 1,000 megawatts of capacity to the respective sites.

GE said it was the first U.S. order for GE’s highest efficiency HA gas turbine, after winning customers from Japan, France and Russia, and now has orders for 13 units.

GE said the H-class turbine being sold to Exelon converts more than 61 percent of gas to electricity. The turbine allows for more than $8 million in annual fuel savings per gas turbine compared to the older F-class technology, GE said.

“With these more efficient turbines, they’re just going to use less fuel, and so that helps the consumer and the cost of electricity go down,” Victor Abate, president of power generation products at GE Power Water, said in an interview.

The H-class turbine stands as one of the important products as GE invests further in its power business.

The U.S. conglomerate earlier this year agreed to buy the power arm of France’s Alstom (ALSO.PA) for $16.9 billion, GE’s largest ever deal.

Aside from the four 7HA gas turbines, GE also will supply Exelon with two steam turbines and six generators. The equipment is expected to ship in 2016, GE said.

(Reporting by Lewis Krauskopf; Editing by Marguerita Choy)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/i3ONFriReh0/story01.htm

Family Dollar says state attorneys general to probe Dollar General bid


(Reuters) – (This September 26 story is refiled to add paragraph that says certain state attorneys general are also investigating Dollar Tree’s bid)

Family Dollar Stores Inc (FDO.N) said certain state attorneys general have notified the company that they will investigate larger rival Dollar General Corp’s (DG.N) takeover bid over competitive concerns.

Family Dollar spurned Dollar General’s sweetened $9.1 billion all-cash bid earlier this month, saying the offer still did not address antitrust concerns. Family Dollar instead said it was sticking with a lower $8.5 billion cash-and-stock offer from Dollar Tree Inc (DLTR.O).

After being spurned twice, Dollar General took its bid hostile and approached Family Dollar shareholders directly.

Dollar General has offered to sell up to 1,500 stores and to pay $500 million as break-up fee if the deal failed to clear antitrust reviews.

Family Dollar said on Friday it notified the FTC about the state attorneys general plans to investigate the Dollar General bid.

The company did not name the states involved in the investigation.

Some state attorneys general are also investigating the Dollar Tree takeover offer.

(Reporting By Nayan Das; Editing by Sriraj Kalluvila)

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

Fed’s Evans repeats call for patience in raising U.S. interest rates


(Reuters) – The Federal Reserve should be “exceptionally patient” in removing monetary policy accommodation, delaying interest-rate hikes until it is confident the U.S. economy can withstand them and only raising rates slowly once it starts, a top Fed official said on Monday.

In remarks that largely repeated those he made last Wednesday, Chicago Federal Reserve Bank President Charles Evans detailed to a group of economists the reasoning behind his call for restraint on rate increases, even if the result is inflation temporarily breaching the Fed’s target of 2 percent.

Despite immense progress since the depths of the recession, he said, U.S. inflation remains “stubbornly low,” and labor markets harbor more slack than last month’s 6.1 percent unemployment rate suggests.

In particular, he said, labor force participation has dropped faster than can be accounted for simply by the aging of the population, and wage growth, at just over 2 percent annually, lags the 3 percent to 4 percent that should be expected.

“We should be exceptionally patient in adjusting the stance of U.S. monetary policy – even to the point of allowing a modest overshooting of our inflation target,” Evans said in remarks prepared for delivery to the National Association of Business Economists in Chicago.

“I favor delaying liftoff until I am more certain that we have sufficient momentum in place toward our policy goals. And I think we should plan for our path of policy rate increases to be shallow.”

Evans rotates into a voting spot on the Fed’s policy setting committee in 2015, when most of his colleagues believe will be the year when they begin to raise rates for the first time in years.

The Fed has kept short-term interest rates near zero since 2008, and has bought more than $3 trillion in bonds to push borrowing costs down further and to boost investment and hiring.

The Fed plans to finish winding down its latest round of bond buying next month, and already some of the U.S. central bank’s more hawkish policymakers are calling for interest rate increases.

But prematurely restricting monetary conditions could deal a setback to the economy, Evans said on Monday, forcing the Fed to backtrack and prolonging the conditions that have prompted it to pin rates near zero in the first place.

“I am very uncomfortable with calls to raise our policy rate sooner than later,” Evans said.

(Reporting by Ann Saphir, editing by G Crosse)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/xLu2JQ-jEuI/story01.htm

U.S. pending home sales fall more than expected in August


WASHINGTON (Reuters) – Contracts to purchase previously owned U.S. homes fell more than expected in August, pointing to a still shaky housing sector.

The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, fell 1.0 percent to 104.7. Economists polled by Reuters had expected a decline of just 0.1 percent.

Despite the drop, pending sales were still at the second-highest level of the year. In July, sales had risen 3.2 percent, a touch softer than the previously reported 3.3 percent gain.

The index plunged last year after mortgage interest rates spiked, but have been on a rising trend since this past March.

Contracts signed last month declined in all major regions, except in the West, where they rose for a fourth straight month, the NAR said.

(Reporting by Elvina Nawaguna; Editing by Andrea Ricci)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/NcP8yi3i6nQ/story01.htm