News Archive


Volkswagen’s Audi aims to launch two electric vehicles by 2018: CEO


FRANKFURT (Reuters) – Volkswagen’s (VOWG_p.DE) premium Audi division aims to bring two purely electric vehicles to market by 2018 as it tries to catch up with rivals such as Tesla Motors (TSLA.O) and BMW (BMWG.DE).

Audi’s Chief Executive Rupert Stadler told German daily Frankfurter Allgemeine Zeitung (FAZ) in an interview to be published on Saturday that the launch of an electric sports car and a sports activity vehicle (SAV) were under way.

An excerpt of the article was made available to Reuters on Friday.

The SAV would be a four-wheel drive with a range of more than 500 km (310 miles) per battery load, Stadler said.

He also told FAZ that Audi’s push to develop electronic drive and digital technologies would mean the division adding 2 billion euros ($2.4 billion) to its investments by 2019. Audi’s investment budget through 2018 amounts to 22 billion.

(Reporting by Ludwig Burger; Editing by Louise Ireland)

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Wall St. opens up, on track for positive week


NEW YORK (Reuters) – U.S. stocks rose on Friday, with major indexes hitting new records and on track for a second straight weekly advance, though trading was light with many traders still out for the Christmas holiday.

The day’s move was broad, with all 10 SP 500 industry sectors higher on the day. The advance continued Wall Street’s recent upward bias, with the SP up about 6 percent from a recent closing low hit earlier this month.

The SP is on track for its 52nd record close of the year, the most since 1995 and the fourth-best annual record ever, while the Dow is on track for its seventh straight daily raise, its longest streak since March 2013.

“The overall trend remains higher, but we’re reaching a point where we’re overbought. Six percent since last Tuesday is such a strong move in such a short period of time, even if bulls have the upper hand in the longer term,” said Adam Sarhan, chief executive of Sarhan Capital in New York.

Recent gains have come on strong economic data, including a bullish read on economic growth earlier this week, as well as accommodative measures from central banks. Chinese media this week reported that the country’s central bank was moving to further ease liquidity conditions inside banks.

The Nasdaq biotech index .NBI rose 1.7 percent, though it remains down 3.8 percent in a week marked by heavy volatility. Celgene Corp (CELG.O) rose 2.9 percent to $112.73 as the SP 500’s biggest percentage gainer, followed by Gilead Sciences (GILD.O), up 2.6 percent to $93.66.

At 9:55 a.m. (1455 GMT) the Dow Jones industrial average .DJI rose 63 points, or 0.35 percent, to 18,093.21, the SP 500 .SPX gained 9.07 points, or 0.44 percent, to 2,090.95 and the Nasdaq Composite .IXIC added 23.27 points, or 0.49 percent, to 4,796.75.

For the week, the Dow is up 1.6 percent, the SP 500 is up 1 percent and the Nasdaq is up 0.6 percent. It is the second straight weekly gain for all three, and the ninth positive week in the past ten for the Dow and SP.

The SP Retail index .SPXRT rose 0.6 percent in the first trading session after Christmas. Among notable names, Best Buy Co (BBY.N) rose 1.1 percent to $39.31 while Macy’s Inc (M.N) dipped 0.2 percent to $64.14.

“The data still isn’t in yet, but things are looking positive since the shopping season coincided with a big drop in crude oil, which means lower gas prices,” Sarhan said. “That translates to more disposable income, which could mean stronger retail sales.”

Advancing issues outnumbered declining ones on the NYSE by 2,112 to 617, for a 3.42-to-1 ratio on the upside; on the Nasdaq, 1,654 issues rose and 640 fell for a 2.58-to-1 ratio favoring advancers.

The benchmark SP 500 index posted 45 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 47 new highs and 7 new lows.

(Editing by Meredith Mazzilli)

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Oil rises further above $60 as Libyan output slumps


LONDON (Reuters) – Oil rose further above $60 a barrel on Friday as unrest in Libya cut supplies, offsetting a growing supply glut in top consumer the United States and weak imports by Japan.

Fighting in Libya has cut output there to 352,000 barrels a day, a state oil company spokesman said on Thursday, or about half November’s average. This countered the U.S. Department of Energy’s (DOE) report showing a big stockbuild.

“Libya is a supportive factor,” said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland. “The fighting in Libya is starting to be more and more about a battle for the oil resources and this will not end well.”

Brent crude LCOc1 was at $60.59 at 1409 GMT, up 35 cents, while U.S. crude CLc1 added 38 cents to $56.22 in thin trade as many countries were still on Christmas holiday.

In Libya, a rocket set a storage tank at the country’s biggest export terminal, Es Sider, on fire as armed factions allied to competing governments fought for control, officials from both sides said on Thursday.

On Friday, officials said the blaze had spread to two more tanks.

The market had come under pressure from Wednesday’s DOE report, which showed a 7.3 million-barrel rise in crude inventories to their highest December level on record. Analysts had expected a seasonal decline. [EIA/S]

Nonetheless, Brent still managed to close above $60 on Wednesday, validating that psychological support level as the bottom of Brent’s trading range of $60 to $70 for now, Jakob said.

Crude imports by Japan, the world’s fourth-biggest oil buyer, dropped 17.3 percent in November from a year earlier to 14.68 million kilolitres (3.08 million bpd), government data showed on Thursday.

However, there is not enough downward pressure to keep prices down, Singapore-based Phillip Futures said in a note.

“Prices seem adamant on staying above support levels and it seems they will hold for this festive season,” it said. “We continue to attribute this to the short-covering at the end of the year.”

(Reporting by Alex Lawler and Henning Gloystein; Editing by Robin Pomeroy and Pravin Char)

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Russia forecasts economic slump as bailed-out bank gets more funds


MOSCOW (Reuters) – Slumping oil prices have put Russia’s economy on course for a sharp recession next year, its finance minister said on Friday, as authorities scaled up their bailout for the first bank to succumb to the recent rouble crisis.

The economy is slowing sharply as Western sanctions over the Ukraine crisis deter foreign investment and spur capital flight, and as a slump in oil prices severely reduces Russia’s export revenues and pummels the rouble.

The government has taken steps to support key banks and address the deepening currency crisis in the past week, including a sharp and unexpected interest rate hike, but analysts are pessimistic on the outlook for both the economy and the rouble.

Finance Minister Anton Siluanov told journalists on Friday the economy could shrink by 4 percent in 2015, its first contraction since 2009, if oil prices averaged their current level of $60 a barrel.

Siluanov also said the country would run a budget deficit of over 3 percent next year if the oil price did not rise.

“Next year we will, without doubt, have to bring the Reserve Fund into play,” he said, referring to one of Russia’s two rainy-day funds intended to support the economy at times of crisis.

Crude prices have almost halved from their June peak amid a global glut and a decision by producer group OPEC not to cut output. Saudi Arabia said on Friday it was prepared to withstand a prolonged period of low prices.

“We need to have our budget break even at $70 per barrel by 2017,” said Siluanov.

Russia’s government imposed informal capital controls this week, including orders to large oil and gas exporters Gazprom (GAZP.MM) and Rosneft (ROSN.MM) to sell some of their dollar revenues in a bid to shore up the rouble.

Russians have kept a wary eye on the exchange rate since the collapse of the Soviet Union, when hyper-inflation wiped out their savings over several years in the early 1990s.

The rouble’s will inevitably lead to higher inflation next year, which after years of stability threatens President Vladimir Putin’s reputation for ensuring Russia’s prosperity.

ROUBLE TROUBLE

The Russian currency slipped on Friday after hitting its strongest levels in more than three weeks earlier in the day,

At 1320 GMT, the rouble traded at over 54 per dollar, a sharp rebound from its recent all-time lows of 80 but still far weaker than the 30-35 range it was trading at in the first half of 2014.

“If oil goes down to $50 (per barrel)… I don’t think our authorities will be able to artificially maintain the (rouble) rate even with higher sales by exporters,” said the head of treasury at a major Russian bank, who asked not to be named because he is not authorised to speak to media.

On Friday, Russian authorities also significantly scaled up rescue funds for Trust Bank, saying they would provide up to $2.4 billion in loans to bail out the mid-sized lender.

The falling rouble has prompted panic buying of foreign currency in Russia and a spike in deposit withdrawals, heaping pressure on a vulnerable banking sector whose access to international capital markets has already been restricted by Western sanctions.

Siluanov said on Friday that authorities would provide additional capital to the country’s second-largest bank, VTB (VTBR.MM), and fellow state lender Gazprombank.

VTB could receive 250 billion roubles and Gazprombank 70 billion roubles to help fund investment projects, including those planned by Russian Railways, he said.

It was not clear whether this support would be in addition to the 1 trillion rouble capital boost the banking sector is set to receive as part of legislation recently approved by parliament.

Credit agency Standard Poor’s said this week it could downgrade Russia’s rating to junk as soon as January due to a rapid deterioration in “monetary flexibility” in the country.

Meanwhile Russian gold and forex reserves have fallen to their lowest levels since 2009. Last week, reserves dropped by as much as $15.7 billion to below $400 billion, down from over $510 billion at the start of the year.

(Additional reporting by Vladimir Soldatkin, Dmitry Zhdannikov, Yelena Fabrichnaya and Alexander Winning; Writing by Dmitry Zhdannikov and Alexander Winning; Editing by Hugh Lawson and John Stonestreet)

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Russia’s Finance Minister sees economy shrinking 4 percent in 2015


MOSCOW (Reuters) – Finance Minister Anton Siluanov said on Friday that the Russian economy could contract by 4 percent next year and that the budget could have a deficit of more than 3 percent of gross domestic product if oil prices average $60 a barrel.

Siluanov also told journalists that his ministry had recalculated its budget forecasts to take into account oil prices at $60 a barrel and that he expected the ruble’s average exchange rate to be around 51 rubles per dollar in 2015.

He added that state bank VTB (VTBR.MM) could get 100 billion rubles ($1.9 billion) from the National Wealth Fund by the end of the year and 150 billion rubles more in 2015, while Gazprombank GZPRI.RTS could get 70 billion rubles this or next year.

(Reporting by Dasha Korsunskaya; writing by Alexander Winning and Vladimir Soldatkin)

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Japan inflation slows and output slips, keep BOJ under pressure


TOKYO (Reuters) – Japanese annual core consumer inflation slowed for a fourth straight month in November due largely to sliding oil prices, highlighting the challenges the central bank faces in achieving its 2 percent inflation target.

Factory output unexpectedly fell and real wages marked the steepest drop in five years, underscoring the fragility of the recovery and dealing a blow to premier Shinzo Abe’s stimulus policies aimed at pulling the economy out of stagnation.

The core consumer price index (CPI), which excludes volatile fresh food but includes oil products, rose 2.7 percent in November from a year earlier, matching a median market forecast, government data showed on Friday.

Stripping out the effects of a sales tax hike in April, core consumer inflation was 0.7 percent, slowing from 0.9 percent in October and far below the Bank of Japan’s 2 percent target.

“While the economy is recovering, falling oil prices and slowing inflation will force the BOJ to ease policy further at some point next year,” said Hiroshi Watanabe, senior economist at SMBC Nikko Securities.

In a worrying sign for the central bank, inflation-linked government bond prices JP00190083=MUFG slumped over the past several weeks as investors’ inflation expectations hit their lowest since Haruhiko Kuroda became BOJ governor in March 2013.

Japan’s economy slipped into recession in the wake of April’s tax hike, though analysts expect growth to rebound in the current quarter as exports and output pick up.

Factory output slid 0.6 percent in November after two straight months of gains, largely the effect of big-ticket items such as computer chip-making equipment and boilers boosting October output and confounding market expectations of a 0.8 percent rise.

In a glimmer of hope, however, manufacturers surveyed by the government expect output to rise 3.2 percent in December and increase 5.7 percent in January.

Economics Minister Akira Amari told reporters the drop in November was likely a temporary blip, given the sharp increase projected for coming months.

Kuroda stressed last week that Japan was on track to hit the price goal, shrugging off speculation that a recent plunge in oil prices would weigh on consumer prices and force him to ease policy again early next year.

But many analysts remain doubtful that the BOJ can meet its pledge of accelerating inflation to 2 percent in the next fiscal year, beginning in April 2015.

Reflecting the recovery, job availability hit a 22-year high and the number of part-time workers exceeded 20 million for the first time since relevant data became available in 1984.

But companies remained reluctant to increase wages, a bad sign for consumption. Household spending fell 2.5 percent in the year to November, against a market forecast for a 3.8 percent drop.

(Editing by Eric Meijer and Richard Borsuk)

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China’s antitrust regulator says Qualcomm case to be settled soon


BEIJING (Reuters) – The Chinese government said on Friday that it will soon settle its antitrust investigation of U.S. mobile chipmaker Qualcomm Inc.

The National Development and Reform Commission (NDRC), the country’s anti-monopoly regulator which launched a probe of the San Diego-based company 13 months ago, said the case would be settled lawfully, according to an online statement.

The notice cited Xu Kunlin, director general of NDRC’s anti-monopoly bureau.

The NDRC also said it had completed its seventh round of discussions with Qualcomm President Derek Aberle and his team earlier this month.

Qualcomm will continue to cooperate with the regulator to reach a settlement, the NDRC statement said. A company spokeswoman could not immediately be reached for comment.

The regulator provided no indication as to when discussions with the U.S. chipmaker would resume.

The NDRC said in February that Qualcomm was suspected of overcharging and abusing its market position in wireless communication standards.

An imminent decision in the case is expected to force the company to pay fines potentially exceeding $1 billion and require concessions that would hurt its highly profitable business of charging licensing fees on phone chipsets that use its patents.

The NDRC said in August that Qualcomm had expressed its willingness to improve and correct pricing issues.

At least 30 foreign firms, including Qualcomm, have come under the scrutiny of China’s 2008 anti-monopoly law, which some critics say is being used to unfairly target non-Chinese companies.

U.S. President Barack Obama pressed his Chinese counterpart Xi Jinping during talks in November on the use of Chinese antitrust policy to limit royalty fees for foreign companies.

While Western business lobbies had criticized China’s use of its antitrust law earlier this year, the elevation of the controversy to the level of presidential talks indicated that it had become a centerpiece of commercial friction between the world’s two largest economies.

Chinese Premier Li Keqiang told Qualcomm Executive Chairman Paul Jacobs last month that opportunities in China remained far greater than the challenges, in a meeting on the sidelines of the World Internet Conference.

Jacobs said the company was having “difficult discussions” with the regulator to find a “win-win solution”.

(Reporting By Matthew Miller and Beijing Newsroom; Editing by Muralikumar Anantharaman and Edmund Klamann)

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Prosecutors raid LG headquarters over washing machine row with Samsung


SEOUL (Reuters) – Prosecutors raided the headquarters of LG Electronics on Friday as part of a probe into whether the South Korean company had damaged the washing machines of rival Samsung Electronics at retail stores in Germany, LG said.

The raid comes amid an increasingly bitter rivalry between the two companies which compete in home appliances, TVs and smartphones, and ahead of the world’s biggest consumer electronics show at Las Vegas in January.

Samsung had asked the Seoul Central District Prosecutors’ Office to investigate LG employees who Samsung says were seen deliberately destroying several of its premium washing machines on display at two stores in September ahead of the IFA electronics show in Berlin.

On Friday, investigators searched the Seoul offices of LG Elec’s home appliance head, Jo Seong-jin, and others and secured documents and computer hard disks related to the IFA fair, Yonhap News Agency said. They also combed through LG Electronics’ home appliance factory in the southeastern city of Changwon, the report said.

“We regret today’s raid by prosecutors,” LG Electronics said in a statement.

“Our company – a global company – was raided as a result of a rival’s unilateral and excessive claims, and we are concerned that this would seriously undermine our corporate activities and external credibility,” it said.

A Samsung spokesman declined to comment, while prosecutors were not available for comments.

Samsung sued LG Electronics employees after the incident in Germany, and LG said the company has counter-sued Samsung employees on Dec. 12.

Media reports have earlier said prosecutors banned LG’s Seong-jin from leaving the country ahead of the Consumer Electronics Show (CES) to be held January 6-9.

(Editing by Muralikumar Anantharaman)

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Hyundai Motor promotes younger executives, with eye on succession planning


SEOUL (Reuters) – Hyundai Motor and affiliate Kia Motors promoted younger executives on Friday, in moves analysts said would help smoothen an eventual leadership succession at the family-owned conglomerate.

Hyundai Motor said it elevated chief marketing officer Cho Won-hong to executive vice president. Cho, 50, was handpicked by the automaker’ s heir apparent Chung Eui-sun, people familiar with the matter said.

Its domestic public relations chief Kong Young-woon, who too is 50, was also elevated to the post, making the duo the second-youngest executive vice presidents currently at Hyundai.

At Kia, Kim Gyun, a 52-year-old at the strategic planning division, was also promoted to executive vice president.

“When you look at this year’s management reshuffle at Korean firms, you have to focus on executive vice presidents, not CEOs, because they are the ones who will support scions when they take over,” said Chung Sun-sup, head of local research firm Chaebul.com.

“The promotion of young executives should pave the way for the future of the junior Chung,” he said.

Both Hyundai and Kia did not elaborate on the reasons for the promotion of the executives.

While Hyundai Motor Group chairman Chung Mong-koo, 76, has given no signal that he plans to step down soon, he is expected to eventually hand over reins to his only son and vice chairman, Eui-sun, who is 44.

At Samsung Electronics, vice chairman Jay Y. Lee is seen accelerating moves to take over from his father Lee Kun-hee, who was hospitalized in May for a heart attack.

Cho, who earned an MBA at the Wharton School of the University of Pennsylvania and served as head of consultancy Monitor Group’s Korean office, started his stint at Hyundai in 2010.

“Automakers are injecting younger blood into the organization to cope with a paradigm shift and lead innovations,” said Lee Hang-koo, a senior researcher at the state-funded Korea Institute for Industrial Economics and Trade.

BMW said early this month that Harald Krueger, a 49-year old production chief, will succeed Norbert Reithofer as chief executive of the German car maker in May of next year.

(Additional reporting by Norihiko Shirouzu; Editing by Muralikumar Anantharaman)

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