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OPEC inaction halts Europe rally; dollar firms

NEW YORK (Reuters) – Brent crude touched fresh four-year lows on Friday, knocking down both energy-related shares and currencies after OPEC’s decision a day earlier not to cut output reinforced prospects of an oil supply glut around the world.

The dollar mostly strengthened following the decision by the Organization of Petroleum Exporting Countries on Thursday, a move that slammed commodity currencies like the Norwegian crown, which fell to five-year lows against the greenback and the euro.

Euro zone government bond yields held near record lows as the falling energy prices pulled down consumer price growth across the bloc and raised the chances of more stimulus from the European Central Bank on increased deflation fears.

European shares snapped a five-day winning streak and the SP 500 slipped from record highs as the price of energy shares fell across the board on both sides of the Atlantic.

But other equity sectors rose, lifting the Dow industrials and the Nasdaq on Wall Street.

Brent crude oil steadied above $73 a barrel after earlier falling to $71.12, while U.S. crude fell 6 percent to below $70 a barrel. Investors said OPEC’s decision, in tandem with higher U.S. output, would leave oil markets heavily oversupplied.

“We are seeing continued oversupply,” said Bill Hubard, chief economist at “I think $70 a barrel will be the new norm. We could see oil go considerably lower.”

Brent LCOc1 rebounded 56 cents to $73.14 a barrel, while U.S. crude fell $4.44 to $69.25 a barrel.

The European oil and gas sector .SXEP fell 3.8 percent, while the SP Energy index .SPNY fell 5.8 percent. The energy index in Europe has lost $240 billion in market value since late June, more than the market cap of Royal Dutch Shell Plc (RDSa.L), Europe’s biggest oil major, Thomson Reuters data shows.

“At $72 a barrel, we’re well below the pain threshold for many companies in the sector, as well as many exporting countries such as Iran, Libya or Russia,” said IG France’s chief market analyst, Alexandre Baradez.

The pan-European FTSEurofirst 300 .FTEU3 fell 0.26 percent to 1,388.77, while MSCI’s all-country world equity index .MIWD00000PUS fell 0.24 percent to 426.28.

Stocks on Wall Street were mixed to slightly higher.

The Dow Jones industrial average .DJI rose 44.9 points, or 0.25 percent, to 17,872.65. The SP 500 .SPX fell 0.18 points, or 0.01 percent, to 2,072.65 and the Nasdaq Composite .IXIC added 17.17 points, or 0.36 percent, to 4,804.49.

German 10-year yields DE10YT=TWEB – the benchmark for euro zone borrowing – were down a fraction at 0.70 percent.

Yields on benchmark 10-year U.S. Treasuries US10YT=RR fell to 2.2043 percent, pushing its price up 8/32.

The dollar gained 0.71 percent to 118.52 yen JPY=, while the dollar index .DXY, which measures the greenback against a basket of major currencies, gained 0.67 percent to 88.192.

The euro EUR= came off its overnight lows of $1.2430 to last trade slightly lower at $1.2462.

(Reporting by Herbert Lash; Editing by Jonathan Oatis)

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Asia wilts after OPEC refrains from cuts

TOKYO (Reuters) – Oil prices, oil-related shares and oil-linked currencies all tumbled in Asia on Friday, in the wake of OPEC’s decision to refrain from cutting output despite a huge oversupply.

U.S. markets were closed on Thursday for the Thanksgiving holiday, leaving the spotlight on the Organization of Petroleum Exporting Countries’ meeting in Vienna where Saudi Arabia blocked calls from poorer cartel members to cut production to stem a slide in global prices.

“OPEC is clearly signaling that it will no longer bear the burden of market adjustment alone and this decision puts the onus on other producers,” Barclays analysts said in a note.

Crude prices had been under pressure ahead of the meeting, but the sharp dive afterward – the largest since 2011 – showed the decision was not fully priced in.

Brent crude LCOc1 stood at $72.60 a barrel after settling at a four-year closing low on Thursday, poised to fall more than 15 percent for its steepest monthly decline since November 2008. U.S. crude CLc1 was last down 6.5 percent at $68.93.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slumped 0.7 percent, on track for a weekly gain of nearly 1 percent but a monthly loss of about 1.6 percent.

Australian shares .AXJO dropped 1.6 percent as energy companies took a hammering, with Sundance Energy (SEA.AX), Drillsearch (DLS.AX), Santos Ltd (STO.AX) falling 10-16 percent.

The Nikkei stock average .N225 bucked the regional downtrend and added 0.9 percent, on track for a slight weekly gain and a hefty monthly gain of over 6 percent.

Japanese data out earlier on Friday showed Japan’s industrial output unexpectedly rose 0.2 percent in October, marking a second straight month of gains, the jobless rate fell and the availability of jobs edged higher.

But Japan’s annual core consumer inflation slowed for a third straight month in October due to falling oil prices.

“Japan is amidst a perfect positive storm,” said Stefan Worrall, director of equities cash sales at Credit Suisse.

“The oil price decline is stimulatory to world demand for Japanese exports, and offsets the impact of the weak yen on domestic energy costs.”

Two-year Japanese government bonds traded at a negative yield JP2YTN=JBTC for the first time in history on Friday, as the Bank of Japan’s massive bond buying quest to vanquish deflation crushed short-term debt yields.

The dollar rose about 0.4 percent against the yen to 118.20 yen JPY=, while the euro drifted down about 0.1 percent to $1.2455 EUR=.

But the greenback made dramatic moves against the currencies of oil-rich countries. The dollar rallied to 6.9570 Norwegian crowns NOK=, a high not seen in over five years, and was last at 6.9463.

The U.S. dollar spiked to a one-week high against its Canadian counterpart at C1.1355 CAD=D4, before steadying at C$1.1335 in Asia.

Spot gold XAU= extended losses into a third session on expectations that plunging oil prices could sap inflationary pressure and curb the metal’s appeal as a hedge. Gold was down 0.5 percent at $1,184.80 an ounce, down about 1 percent for the week and ready to snap a three-week rally.

On Thursday, the euro fell against the dollar, after data showed German inflation sinking to its lowest since February 2010, reinforcing bets the European Central Bank will ease monetary policy more aggressively.

The European Commission will tell France, Italy and Belgium on Friday their 2015 budgets risk breaking EU rules, but it will defer decisions on any action until early March, when France could face a multi-billion euro fine and Italy and Belgium be put on a disciplinary program.

According to draft documents seen by Reuters, Spain, Portugal, Austria, and Malta are also at risk of busting budget limits.

(Additional reporting by Thomas Wilson in Tokyo; Editing by Shri Navaratnam and Eric Meijer)

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Poor performance catching up with active stock fund managers

BOSTON (Reuters) – Stock-picking fund managers are testing their investors’ patience with some of the worst investment returns in decades.

With bad bets on financial shares, missed opportunities in technology stocks and too much cash on the sidelines, roughly 85 percent of active large-cap stock funds have lagged their benchmark indexes through Nov. 25 this year, according to an analysis by Lipper, a Thomson Reuters research unit. It is likely their worst comparative showing in 30 years, Lipper said.

Some long-term advocates of active management may be turned off by the results, especially considering the funds’ higher fees. Through Oct. 31, index stock funds and exchange traded funds have pulled in $206.2 billion in net deposits.

Actively managed funds, a much larger universe, took in a much smaller $35.6 billion, sharply down from the $162 billion taken in during 2013, their first year of net inflows since 2007.

Jeff Tjornehoj, head of Lipper Americas Research, said investors will have to decide if they have the stomach to stick with active funds in hopes of better results in the future.

“A year like this sorts out what kind of investor you are,” he said.

Even long-time standout managers like Bill Nygren of the $17.8 billion Oakmark Fund and Jason Subotky of the $14.2 billion Yacktman Fund are lagging, at a time when advisers are growing more focused on fees.

The Oakmark fund, which is up 11.82 percent this year through Nov. 25, charges 0.95 percent of assets in annual fees, compared with 0.09 percent for the SPDR SP 500 exchange traded fund, which mimics the SP 500 and is up almost 14 percent this year, according to Morningstar. The Yacktman fund is up 10.2 percent over the same period and charges 0.74 percent of assets in annual fees.

The pay-for-active-performance camp argues that talented managers are worth paying for and will beat the market over investment cycles.

Rob Brown, chief investment strategist for United Capital, which has $11 billion under management and keeps about two thirds of its mutual fund holdings in active funds, estimates that good managers can add an extra 1 percent to returns over time compared with an index-only strategy.

Indeed, the top active managers have delivered. For example, $10,000 invested in the Yacktman Fund on Nov. 23, 2004, would have been worth $27,844 on Nov. 25 of this year; the same amount invested in the SP 500 would be worth $21,649, according to Lipper.

Even so, active funds as a group tend to lag broad market indexes, though this year’s underperformance is extreme. In the rout of 2008, when the SP 500 fell 38 percent, more than half of the active large cap stock funds had declines that were greater than those of their benchmarks, Lipper found. The last time when more than half of active large cap stock managers beat their index was 2009, when the SP 500 was up 26 percent. That year, 55 percent of these managers beat their benchmarks.


In 2014, some recurring bad market bets were made by various active managers. Holding too much cash was one.

Yacktman’s Subotky said high stock prices made him skeptical of buying new shares, leaving him with 17 percent of the fund’s holdings in cash while share prices have continued to rise. He cautioned investors to have patience.

“Our goal is never to capture every last drop of a roaring bull market,” Subotky said

Oakmark’s Nygren cited his light weighting of hot Apple shares and heavy holdings of underperforming financials, but said his record should be judged over time. “Very short-term performance comparisons, good or bad, may bear little resemblance to long term results,” he said.

Shares of Apple, the world’s most valuable publicly traded company, are up 48 percent year to date. As of Sept 30, Apple stock made up 1.75 percent of Oakmark’s assets, compared with 3.69 percent of the SPDR SP 500 ETF.

Investors added $3.9 billion to Nygren’s fund through Nov. 19, Lipper said.

Still, some managers risk losing their faithful.

“We have been very much believers in active management but a number of our active managers have let us down this year and we are rethinking our strategy,” said Martin Hopkins, president of an investment management firm in Annapolis, Maryland, that has $4 million in the Yacktman Fund.

Derek Holman of EP Wealth Advisors, in Torrance, California, which manages about $1.8 billion, said his firm recently moved $130 million from a pair of active large cap funds into ETFs, saying it would save clients about $650,000 in fees per year.

Holman said his firm still uses active funds for areas like small-cap investing, but it is getting harder for fund managers to gain special insights about large companies.

For those managers, he said, “it’s getting harder to stand out.”

(Reporting by Ross Kerber; Editing by Linda Stern and Leslie Adler)

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Fukushima workers still in murky labor contracts: Tepco survey

TOKYO (Reuters) – The number of workers at Japan’s Fukushima nuclear plant on false contracts has increased in the last year, the station operator said, highlighting murky labor conditions at the site despite a pledge to improve the work environment.

The survey results released by Tokyo Electric Power Co (9501.T) (Tepco) late on Thursday showed that around 30 percent of plant workers polled said that they were paid by a different company from the contractor that normally directs them at the worksite, which is illegal under Japan’s labor laws.

A Reuters report in October found widespread confusion among plant workers at the Fukushima facility over their employment contracts and their promised hazard pay increase.

Many workers asked Tepco in the survey forms whether they were supposed to receive an equivalent of about $180 a day in hazard pay, the company said, adding that it did not mean each worker would necessarily see a pay increase of that amount.

Tepco said last November it would double the allocation for hazard pay to workers at Fukushima.

The company’s latest survey showed that more than 70 percent of workers did receive some explanation about a pay rise in the past year, while some 1,400 workers out of 2,400 that responded to the question said they did receive an increase in pay. Workers were not asked to detail their pay rise or when they received it.

The Japanese government and Tepco vowed last year to improve working conditions at the plant, where sub-contractors supply the bulk of workers conducting a cleanup after the worst nuclear disaster since Chernobyl in 1986.

Tokyo Electric, known as Tepco, said a questionnaire sent to thousands of workers at the plant indicated 30 percent of them were on false contracts, an increase of 10 percentage points since it carried out a similar survey in 2013.

The utility survey covered 6,567 contract workers at the station north of Tokyo and about 70 percent of them responded.

It did not question its own employees, who form a small part of the huge workforce on the clean up that is expected to take decades and cost tens of billions of dollars.

(Reporting by Aaron Sheldrick; Editing by Jeremy Laurence)

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UK retailers embrace ‘Black Friday’ discounts

LONDON (Reuters) – Britain’s high streets, malls and online sites were awash with discounts on Friday as more retailers than ever embraced U.S.-style “Black Friday” promotions, seeking to kickstart trading in the key Christmas period.

In the United States the Friday following the Thanksgiving Day holiday is called Black Friday because spending usually surges and indicates the point at which American retailers begin to turn a profit for the year, or go “into the black”.

Though Amazon introduced Black Friday to Britain in 2010, last year marked the first time major UK store groups such as John Lewis [JLP.UL], Dixons and Wal-Mart’s Asda participated in a serious way.

A survey commissioned by Barclays found that 65 percent of Britain’s multi-channel retailers planned Black Friday promotions this year.

This year new participants include Sainsbury’s, Britain’s No. 3 grocer, which is offering cut price deals on 13 product lines, including TVs, tablets, audio products and kitchen electricals in 485 stores.

Tesco, Britain’s biggest retailer, has extended Black Friday promotions to selected stores, having only participated online last year.

Marks Spencer, Britain’s biggest clothing retailer by sales, is also doing more this year, with all online deals, such as 30 percent off Autograph lingerie and men’s coats, mirrored in store. Dixons and Argos have also ramped-up their offers.

Asda said its event this year will be three times bigger than last year’s, with 441 stores taking part.

British retail sales growth slowed slightly in November against a backdrop of smaller price rises, but retailers are upbeat about Christmas, figures from the Confederation of British Industry showed on Wednesday.

Whether embracing Black Friday makes commercial sense for UK retailers remains open to debate. Analysts say it can delay autumn sales, pull forward Christmas sales that store groups would otherwise have made at full price, can blunt sales in subsequent weeks and also leaves consumers expecting more pre-Christmas promotions.

Some retailers have also been accused of inflating prices before then slashing them to give the appearance of bargains.

(Reporting by James Davey; editing by Keiron Henderson)

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Kinder Morgan loses bid to extend injunction against Canada protesters

VANCOUVER (Reuters) – Kinder Morgan Energy Partners LP said on Thursday that it would clear its equipment and crews off a mountain in the Vancouver suburb of Burnaby by month-end, after it lost a bid to extend an injunction keeping protesters away from the site.

A B.C. Supreme Court judge also threw out civil contempt charges against dozens of protesters arrested while rallying against the pipeline project due to confusion about the GPS coordinates in the original injunction order.

Kinder Morgan, which wrapped up drilling work at one of two sites on Burnaby mountain earlier on Thursday, said it will amend its work plan to ensure the second site is also cleared before the current injunction runs out on Dec. 1.

It had asked for an extension to Dec. 12.

The Texas-based company is doing surveying work as part of a regulatory review of a plan to more than triple the capacity of its existing 300,000-barrel-per-day Trans Mountain pipeline.

Environmentalists, aboriginal groups and many area residents are opposed to the expansion, which would allow the company to ship more tar sands crude from Alberta to a port in Vancouver and on to Asian markets.

A group of activists had for weeks been camped out at the company’s work sites. Late last week, Canadian police began enforcing a court order for their removal, and have so far arrested more than 100 people.

Kinder Morgan said that while it will not be able to finish all planned work before Dec. 1, it believes it has obtained enough data for the National Energy Board, Canada’s energy regulator, to complete its review of the project.

(Reporting by Julie Gordon; Editing by Eric Walsh)

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GlaxoSmithKline fires executive who raised race complaint in South Africa: Bloomberg

(Reuters) – Britain’s biggest drugmaker, GlaxoSmithKline Plc, fired an executive from its South African unit for refusing to appear for a performance review, which was called a week after he complained of racial discrimination in the workplace, Bloomberg reported, citing company documents.

The executive, who was fired on Oct. 3, refused to attend the company’s quarterly performance improvement plan, saying the program was designed to force him out, Bloomberg said on Thursday. (

In a company document seen by Bloomberg, GlaxoSmithKline said the performance program was meant to retain the executive and not force him out.

The executive in his complaint filed to GlaxoSmithKline’s compliance department through a confidential integrity hotline on Aug. 28, said the company’s African consumer healthcare division was a “white island,” Bloomberg reported.

The complaint said the division, which is GlaxoSmithKline’s most profitable unit on the continent, restricted black people from being appointed to senior management positions, Bloomberg said.

GlaxoSmithKline, which said the executive’s behavior amounted to gross insubordination, told Bloomberg it had begun investigating the matter.

The complainant, who had asked not to be identified because he was seeking to be reinstated, had said that only one out of the 21 top managers in the division were black, according to Bloomberg.

(Reporting by Shubhankar Chakravorty in Bangalore; Editing by Peter Cooney)

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Saudis block OPEC output cut, sending oil price plunging

VIENNA (Reuters) – Saudi Arabia blocked calls on Thursday from poorer members of the OPEC oil exporter group for production cuts to arrest a slide in global prices, sending benchmark crude plunging to a fresh four-year low.

Brent oil fell more than $6 to $71.25 a barrel after OPEC ministers meeting in Vienna left the group’s output ceiling unchanged despite huge global oversupply, marking a major shift away from its long-standing policy of defending prices.

This outcome set the stage for a battle for market share between OPEC and non-OPEC countries, as a boom in U.S. shale oil production and weaker economic growth in China and Europe have already sent crude prices down by about a third since June.

“It was a great decision,” Saudi Oil Minister Ali al-Naimi said as he emerged smiling after around five hours of talks.

OPEC said in a statement that members had agreed to roll over the ceiling of 30 million barrels per day, at least 1 million above OPEC’s own estimates of demand for its oil next year.

“It is a new world for OPEC because they simply cannot manage the market anymore. It is now the market’s turn to dictate prices and they will certainly go lower,” said Dr. Gary Ross, chief executive of PIRA Energy Group.

The wealthy Gulf states have made clear they are ready to ride out the weak prices that have hurt the likes of Venezuela and Iran – OPEC members which face big budget pressures, but cannot afford to make cuts themselves. Venezuela and Algeria had calling for output cuts of as much as 2 million bpd.

Venezuelan Foreign Minister Rafael Ramirez said he accepted the decision as a collective one and hoped that lower prices would help drive some of the higher-cost U.S. shale oil production out of the market.

“In the market, some producers are too expensive,” he said.

The OPEC statement made no mention of any need for members to stop overproducing, nor of any extraordinary meeting to reconsider the ceiling before a regular session next June.


The Organization of the Petroleum Exporting Countries accounts for a third of global oil output.

Gulf producers could withstand for some time a battle over market share that would drive down prices further, thanks to their large foreign-currency reserves.

Members without such a cushion would find it much more difficult, as would a number of producers outside the group. Russia’s rouble, which has been sliding for much of this year, extended losses on Thursday to trade more than 2 percent lower than the previous close against the U.S. dollar.

Russia is already suffering from Western sanctions over its actions in Ukraine and needs oil prices of $100 per barrel to balance its budget.

A price war might make some future U.S. shale oil projects uncompetitive due to high production costs, easing competitive pressures on OPEC in the longer term.

“Why would Saudi cut production in the current environment? Why would they want to support Iran, Russia or U.S. shale producers? So they must have decided: let the market establish the price. Once the market goes to a new equilibrium, prices will go higher,” PIRA Energy’s Ross said.

Kuwaiti Oil Minister Ali Saleh al-Omair said OPEC would have to accept any market price of oil, whether it were $60, $80 or $100 a barrel. Iraq’s oil minister, Adel Abdel Mehdi, said he saw a floor at $65-70 per barrel.

“We interpret this as Saudi Arabia selling the idea that oil prices in the short term need to go lower, with a floor set at $60 per barrel, in order to have more stability in years ahead at $80 plus,” said Olivier Jakob from Petromatrix consultancy.

“In other words, it should be in the interest of OPEC to live with lower prices for a little while in order to slow down development projects in the United States.”

(Additional reporting by Amena Bakr and Shadia Nasralla; Writing by Dmitry Zhdannikov; Editing by Dale Hudson, David Stamp and Robin Pomeroy)

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Airbus could shed full Dassault stake by end of 2015: sources

PARIS (Reuters) – Airbus Group and Dassault Aviation aim to oversee the complete sale of Airbus’s 4.8 billion-euro stake in the French planemaker by the end of next year, two people familiar with the matter said.

Plans to reduce the 46.3-percent stake were recently put on hold due to market volatility and Airbus Group said earlier this month there would be a second window of opportunity in early 2015.

So far it has said it plans to sell around 10 percent to institutional investors, while family-controlled Dassault Aviation has won approval from its shareholders to buy back up to another 10 percent.

But both sides agree the future of the entire shareholding should be settled by the end of next year, the sources said.

“The idea is to wrap up the entire operation by the end of 2015,” one of the people said, asking not to be named.

Airbus and Dassault Aviation both declined to comment.

Airbus inherited its stake from former state-owned Aerospatiale, and holds it on behalf of the French government in an increasingly uncomfortable arrangement that led to a decision earlier this year that it was not a strategic shareholding.

Unraveling the arrangement needs the agreement of the government and co-operation from Dassault.

Airbus, which has also come under pressure from at least one of its own fund shareholders to free up the resources tied up in Dassault, said recently it had held constructive talks with both the French government and Dassault on the issue.

Reducing its stake would result in an increase in Dassault’s slender market float – currently 3 percent of the company, which makes Falcon business jets and Rafale warplanes.

It remained unclear whether Airbus would seek to put all its remaining shareholding on the market or whether the Dassault family, which controls 50.6 percent of Dassault Aviation, would also buy part of the stock not included in the direct buyback.

But one of the people familiar with the matter ruled out the emergence of a second industrial shareholder to take the place of Airbus.

Family holding company Groupe Industriel Marcel Dassault was not immediately available for comment.

Activist hedge fund TCI wrote to Airbus Group, formerly known as EADS, in August 2013, urging it to sell its stake in Dassault and return the proceeds to Airbus shareholders.

(Editing by Pravin Char)

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