News Archive


Japan $29 billion stimulus seeks quick boost for regional economies: draft


TOKYO (Reuters) – Japan aims to give a quick boost to lagging regional economies and low-income households with subsidies, merchandise vouchers and other schemes in a $29 billion stimulus package aimed at rejuvenating a two-year reflationary effort, a draft of the plan showed.

The draft, seen by Reuters on Wednesday ahead of its official release, also urges the Bank of Japan to hit its 2 percent inflation goal as quickly as possible, and promises to do its utmost to halve Japan’s primary budget deficit in the fiscal year starting next April, to curb a runaway public debt.

The package, worth around 3.5 trillion yen ($29.06 billion) and expected to be approved by Prime Minister Shinzo Abe’s cabinet on Saturday, follows a massive victory by his ruling coalition in a general election earlier this month, giving him a fresh mandate to push through his “Abenomics” stimulus policies.

The stimulus will not require fresh debt issuance as the Finance Ministry will fund it with unspent money from previous budgets and tax revenues that have exceeded budget forecasts as the economy recovered, officials say.

The package centres on subsidies and payouts to local governments to carry out steps to stimulate household consumption and support small firms, as Abe focuses on regional economies ahead of nationwide local elections planned in April.

Eligible schemes could include distributing coupons to buy merchandise or fuel subsidies for low-income households. It will also seek to bolster the housing market by lowering the mortgage rates offered by a government home loan agency.

The draft says the economy is still in a moderate recovery trend but lingering areas of weakness persist, including consumer spending, which was hit hard by an April sales tax hike.

“This package is aimed at ensuring a virtuous economic cycle and spreading the benefits of Abenomics to all regions by swiftly focusing on fragile parts of the economy,” it said.

The aggressive monetary and fiscal stimulus deployed under Abenomics has boosted stock prices and driven down the yen, producing windfall gains for big exporting companies and share investors.

But low-income groups, small firms and rural areas have been hit hard by rising import costs caused by a weak yen, and by a rise in living costs due to the sales tax hike.

(Writing by Tetsushi Kajimoto and Leika Kihara; Editing by Edmund Klamann)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/cowGK2Mm3HQ/story01.htm

Global stocks rise, dollar strong as U.S. growth lifts holiday mood


LONDON (Reuters) – The strongest growth for the world’s largest economy in over a decade delivered pre-Christmas cheer in global markets on Wednesday as stocks maintained their strong run and the dollar hovered at an 8-1/2 year high.

The U.S. economy grew at a 5.0 percent pace in the third quarter, the quickest in 11 years.

Despite the approaching Christmas break, there was a late flurry of data that showed unemployment claims falling for a fourth straight week and a small uptick in mortgage applications.

The Dow Jones industrial .DJI rose 35.9 points, or 0.2 percent, to 18,060.07, the SP 500 .SPX gained 2.42 points, or 0.12 percent, to 2,084.59, and the Nasdaq .IXIC added 5.90 points, or 0.12 percent, to 4,771.33.

Most Asian markets .MIAPJ0000PUS had edged up overnight and Europe .FTEU3 was looking to close the Christmas week up 1 percent despite a subdued day on Wednesday.

With economists pencilling in a slightly earlier date for the first post-financial crisis rise in U.S interest rates, the dollar was taking a breather having reached its highest since 2006 against a basket of major currencies .DXY. [FRX/]

The two-year U.S. Treasury (government bond) yield US2YT=RR was hovering at levels not seen in almost four years.

“As is to be expected at this time of year, trading volumes have really plummeted, but pretty much what we see is the stronger dollar trend continuing,” said Alvin Tan, an FX Strategist at Societe Generale.

FRONTLINE CONFRONTATION

Oil LCOc1 dropped over 2 percent to just above $60 a barrel following an almost 50 percent fall over the last six months. [O/R]

That is piling pressure on Russia. Standard and Poor’s warned of a credit rating cut to ‘junk’ early next year, as Moscow kept up confrontational rhetoric with the West and NATO over Ukraine.

“NATO countries pushed Kiev to this counterproductive decision, trying to turn Ukraine into a front line of confrontation with Russia,” Russia’s Deputy Defence Minister Anatoly Antonov told news agency Interfax.

The rouble plunged to an all-time low in mid-December on the back of lower oil prices and Western sanctions, which make it almost impossible for Russian firms to borrow on open markets.

It has since been shored up by informal capital control measures and was a shade lower at 54.6 to the dollar RUB=.

SP said its downgrade warning “stems from what we view as a rapid deterioration of Russia’s monetary flexibility and the impact of the weakening economy on its financial system.”

FINE CHINA

Asia’s overnight gains had been led by Tokyo’s Nikkei .N225 as it rose 1.2 percent, while MSCI’s broadest index of Asia-Pacific shares ex-Japan .MIAPJ0000PUS gained 0.2 percent.

Japanese Prime Minister Shinzo Abe was officially re-elected by parliament on Wednesday. His new cabinet is expected to keep up his aggressive stimulus push.

Shanghai SSEC bucked the regional trend, as profit taking took its toll on a 40 percent jump that had made it the best performing major market of 2014.

World stocks .MIWD00000PUS overall are up a more modest 3 percent as plunges in oil-linked markets such as Russia and drops in parts of the euro zone have offset a near 13 percent jump in benchmark U.S. markets such as the SP 500.

Commodities have struggled too. Not only has oil halved in price but growth-sensitive copper CMCU3 and gold XAU= are also down for the year.

Spot gold XAU= rose 0.2 percent to $1,178 an ounce in Europe but remained well within reach of a three-week low of $1,170.17 hit on Monday. Any dip below that level could trigger further losses, analysts say.

(Editing by Mark Potter/Ruth Pitchford)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/6DQ9_rqMD5Y/story01.htm

Leading European truckmakers operated cartel for 14 years: FT


(Reuters) – Top European truckmakers operated a cartel for 14 years to delay the progress of emissions-reducing technology, the Financial Times reported, citing leaked documents in a European Commission investigation.

The newspaper said that one of the documents states that DAF Trucks, Daimler, Iveco, Scania, Volvo and MAN “agreed the timing and price increase levels for the introduction of new emission technologies” to comply with Euro 3 rules on nitrogen oxide and other emissions in 2000. (on.ft.com/1vanmz5)

A spokeswoman for the European Commission, which announced last month it had sent charges to truckmakers it accused of a long-running and serious price-fixing cartel, said it would not comment on the leaked document. Known as a statement of objections, it lists the accusations against the firms.

Daimler, Volvo and Iveco parent CNH Industrial all confirmed receipt last month of the statements of objections, together with Volkswagen-controlled Scania and MAN.

European Union officials raided several truckmakers in 2011 to start an antitrust investigation. It had found collusion dating back to January 1997 and ending in January 2011, the Financial Times said.

“All competitors participated directly and throughout the full duration in all the constituent elements of the cartel,” the FT quoted one of the leaked documents as saying.

Companies can be fined up to 10 percent of their annual revenue if the Commission concludes that there is sufficient evidence of an infringement of EU rules barring cartels and the abuse of market dominance.

Germany’s Daimler said last week it was setting aside an additional 600 million euros ($740 million) to cover potential costs related to the antitrust investigation by the European Commission.

(Reporting by Ankush Sharma in Bangalore; additional reporting by Alastair Macdonald in Brussels; Editing by Grant McCool and Mark Potter)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/EbQE93x55rg/story01.htm

Takata says president stepping down to streamline air bag recall response


TOKYO (Reuters) – Takata Corp (7312.T), the auto supplier embroiled in a global safety crisis, said Wednesday its president, Stefan Stocker, would step down and its chairman would assume the role to unify the company’s response to the recall of millions of vehicles carrying defective air bags.

Stocker, a Swiss national, joined Takata from privately-held supplier Robert Bosch as Takata’s first foreign president and will remain with the company as a board member.

Shigehisa Takada, the grandson of the company founder, will become president and retain his title as chairman.

More than 24 million cars have been recalled worldwide since 2008 over Takata’s faulty air bags, which can erupt with too much force and spray metal shards into cars.

There have been at least five deaths related to Takata’s air bags, all in Honda Motor Co 7267.T. cars. The prolonged safety crisis has prompted its third biggest client, General Motors Co (GM.N), to develop contingency plans to shift business to other air bag makers in case recalls widen.

The air bag supplier hired Stocker last year to increase the company’s oversight of its sprawling global operations.

Takata, which is majority owned by its founding family, has come under criticism for its handling of the safety crisis and faces dozens of class action lawsuits as well as a criminal investigation in the United States.

Neither Stocker nor Takada has made a public appearance since a June shareholders meeting.

The air bag maker said Takada will take a 50 percent pay cut for four months in response to the safety crisis.

Stocker and three other senior staff will also take a pay cut for four months, the firm said.

(Reporting by Mari Saito; Editing by Chris Gallagher and Mark Potter)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Ogbbz9Qxh2g/story01.htm

South Korea indicts Uber CEO, local unit for transport law breach


SEOUL (Reuters) – South Korea has indicted the chief executive officer and local subsidiary of Uber Technologies Inc for violating a law governing public transport, becoming the latest jurisdiction to challenge the U.S. taxi service provider.

The Seoul Central District Prosecutors’ Office issued the indictment against CEO Travis Kalanick and the firm’s Korean unit for violating a law prohibiting individuals or firms without appropriate licenses from providing or facilitating transportation services, an Uber spokeswoman said.

The prosecutors’ office declined to comment.

“Uber Technologies respects the Korean legal system and will provide its full cooperation,” the company said in a statement without detailing the charges brought against it.

Uber, through its apps, charges fees to play matchmaker for passengers and drivers – some registered as taxi drivers. But a lack of regulation for the relatively new business model has brought Uber to the attention of authorities worldwide.

Taiwan and the Chinese mainland city of Chongqing on Monday separately said they were investigating Uber over concerns it and its drivers were not appropriately licensed.

SEOUL CHALLENGE

Last week, Seoul’s city legislature passed a measure to fine Uber drivers not registered as taxi drivers, and offer financial reward for those reporting such individuals.

The decision came after the city government repeatedly said Uber was engaged in illegal business activities, an accusation the company denied.

“We firmly believe that our service, which connects drivers and riders via an application, is not only legal in Korea, but that it is being welcomed and supported by consumers,” Uber said in its statement on Wednesday.

Prosecutors will not make any arrests under the indictment, South Korea’s Yonhap News Agency reported earlier on Wednesday. The penalty for breaking the law in question is a prison sentence of up to two years or a maximum fine of 20 million won ($18,121).

Uber’s spokeswoman said Uber services are functioning as normal.

($1 = 1,103.7000 won)

(Reporting by Se Young Lee; Editing by Christopher Cushing)

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

SMBC to buy Citi Japan retail business in October: sources


TOKYO (Reuters) – Sumitomo Mitsui Banking Corp (SMBC) will buy Citigroup Inc’s (C.N) Japanese retail banking operations in October for about 40 billion yen ($330 million), people with knowledge of the matter said on Wednesday.

The Sumitomo Mitsui Financial Group Inc (8316.T) unit will announce the long-awaited purchase on Thursday, the sources said.

Citi’s Japan consumer banking business has been hurt by weak loan demand and falling interest margins in a market where the U.S.-based lender has operated for over 100 years.

Spokesmen for the two banks declined to comment on the deal.

The Citi operations will be merged into SMBC Trust Bank, which will let Citi’s retail customers in Japan maintain their access to the U.S. bank’s global ATM network for at least two years after SMBC’s acquisition, the sources said.

The new business combination will focus on selling Citi-developed financial products, they said.

The third-largest U.S. bank said in October it was pulling out of consumer banking in 11 markets, including Japan and Egypt, as it looks to cut high costs.

($1 = 120.3700 yen)

(Reporting by Taro Fuse; Writing by William Mallard; Editing by Chris Gallagher and Muralikumar Anantharaman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/-eTE4VaoA4I/story01.htm

Exclusive: U.S. minimum wage hikes to impact 1,400-plus Walmart stores


CHICAGO (Reuters) – Minimum wage increases across the United States will prompt Wal-Mart Stores Inc (WMT.N) to adjust base salaries at 1,434 stores, impacting about a third of its U.S. locations, according to an internal memo reviewed by Reuters.

The memo, which was sent to store managers earlier this month, offers insight into the impact of minimum wage hikes in 21 states due to come into effect on or around Jan. 1, 2015.

These are adjustments that Wal-Mart and other employers have to make each year, but growing attention to the issue has expanded the scope of the change. Thirteen U.S. states lifted the minimum wage in 2014, up from 10 in 2013 and 8 in 2012.

Wal-Mart spokeswoman Brooke Buchanan said the company was making the changes to “ensure our stores in the 21 states comply with the law.”

For Wal-Mart, the biggest private employer in the United States with 1.3 million workers, minimum wage legislation is not a small thing. Its operating model is built on keeping costs under close control as it attracts consumers with low prices and operates on tight margins.

In recent years, it has been struggling to grow sales after many lower-income Americans lost jobs or income in the financial crisis.

The Wal-Mart memo shows that there will be changes to its pay structure, including a narrowing of the gap in the minimum premium paid to those in higher skilled positions, such as deli associates and department supervisors, over lower grade jobs.

Wal-Mart will also combine its lowest three pay grades, which include cashiers, cart pushers and maintenance, into one base rate.

The changes appear in part to be an effort to offset the anticipated upswing in labor costs, according to a manager who was implementing the changes at his store.

“Essentially that wage compression at the upper level of the hourly associate is going to help absorb that cost of the wage increase at the lower level,” said the manager, who spoke on condition of anonymity.

MORE CHANGE TO COME?

Wal-Mart’s critics – including a group of its workers backed by labor unions – say the retailer pays its hourly workers too little, forcing some to seek government assistance that effectively provides the company with an indirect taxpayer subsidy. Labor groups have been calling for Wal-Mart, other retailers and fast-food chains to pay at least $15 an hour.

Wal-Mart has indicated it may make more changes to its compensation structure in 2015. Chief Executive Doug McMillon recently said the company would improve opportunities for workers, including getting the roughly 6,000 people who make the federal minimum wage of $7.25 an hour at its stores off that rate.

“In the world there is a debate over inequity, and sometimes we get caught up in that,” he told TV presenter Charlie Rose in an interview this month. McMillon said he would take steps to ensure the company is “a meritocracy, an opportunity for people to do more.”

The state minimum wage changes range from a 17 percent increase in South Dakota to $8.50 to a modest rise of 2 percent to $8.05 in Arizona. They will also impact many of Wal-Mart’s big retail rivals, such as Target Corp (TGT.N), and fast-food chains like McDonald’s Corp (MCD.N).

A Target spokeswoman said she could not provide details on how many employees might be impacted by the changes on Jan. 1. McDonald’s could not be immediately reached for comment.

   Wal-Mart estimates its average full-time hourly wage is $12.92, and says that it pays competitive wages and offers its employees ample opportunity for advancement.

Edward Jones analyst Brian Yarbrough said it is tough to estimate the cost impact of the minimum wage changes without knowing the number of Wal-Mart employees affected. While many employees might start out at the minimum rate, they advance to higher pay rates over time, he noted.

Wal-Mart said last month that investment in wages and higher health care costs drove a 3.5 percent increase in operating expenses in its most recent quarter. Wal-Mart is unlikely to cut staff or reduce hours to keep those costs in check, given that it has made a renewed push to improve service in its stores, Yarbrough said.

(Reporting by Nathan Layne; Editing by Michele Gershberg and Martin Howell)

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

American Airlines says ‘strong’ profit to allow bigger wage hikes


(Reuters) – American Airlines Group Inc said Tuesday that it plans to pay flight attendants an additional four percentage points on top of raises already averaging 10 percent, thanks to profits that have strengthened as oil prices have collapsed.

In a letter to employees, Chief Executive Officer Doug Parker said “very strong” results for 2014 would allow the carrier to lock in substantial wage hikes for the flight attendants. Other work groups would also see improvements in their raises – once their respective contracts are ratified.

Plummeting oil prices have slashed costs at the world’s largest airline by passenger traffic, which is poised to save more than its competitors because it did not hedge against prices rising.

Unions have called on Parker to tie employee compensation to the company’s performance, but Parker has opposed profit-sharing, practiced by Delta Air Lines, United Airlines and Southwest Airlines.

“There are many ways to share success, but when it comes to compensation, we believe it is best to reward (workers) with industry leading wage rates – not lower wages supplemented by compensation that varies with airline profitability,” he wrote in the letter, obtained by Reuters.

The pay increases show how seriously American views labor relations, which have often emerged as a stumbling block in other airline merger deals, as it joins its operations with US Airways a year into the carriers’ merger.

Hourly rates for flight attendants will be seven percent higher than those at Delta or United, Parker said in the letter. A separate letter from the airline cited an hourly rate of $24.18 for first-year flight attendants.

Yet the announcement also placed American’s other workers under pressure to conclude contracts, a prerequisite for their raises. The carrier hopes to avoid the fate of other merged airlines that struggled for years to reach deals for all their workers.

Pilots are the next group up for a contract, and the company said in a third letter Tuesday that it had ended negotiations with them, leaving them to choose between a final offer or arbitration as early as February 2015.

The letter added that if pilots accept the offer prior to Jan. 3, higher pay rates would be effective retroactively as of Dec. 2, 2014, rather than after the agreement.

The company’s proposal would raise pilots’ pay about 23 percent upon signing and then three percent for the next two years, compared to smaller gains they would get under an arbitrated contract, the company said in the letter.

The airline has also proposed various changes to work rules, some of which have been sticking points in the negotiations.

The Allied Pilots Association, which represents American’s pilots, said its board will convene on Jan. 2 and 3 to decide a course of action.

(Reporting By Jeffrey Dastin; Editing by Christian Plumb)

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

UPS, FedEx cap air express deliveries: WSJ


(Reuters) – United Parcel Service Inc (UPS.N) and FedEx Corp (FDX.N) started limiting air express deliveries after a last-minute increase in shipped packages caused some retailers to exceed agreed-upon limits, the Wall Street Journal reported, citing people briefed on the situation.

This year, both UPS and FedEx held some retailers to their volume commitments during the final shopping days before Christmas, aiming to avoid a repeat of a fiasco last year, the Journal reported. (on.wsj.com/1xJrn4h)

“As we’ve moved through the peak season there have been some shifts in demand and customer needs as a result of slowdowns at the West Coast ports,” said Bonny Harrison, a spokeswoman for FedEx.

Harrison added that these changes resulted in some caps on volume.

A UPS spokeswoman said that company’s operations were going as planned.

Both UPS and FedEx had previously told Reuters that if unplanned package volumes threatened to overload their systems, they could refuse to take them.

UPS told Reuters in November that customers could end up being charged more for unplanned late surges.

A late spike in demand last year caused by last-minute online promotions plagued express delivery companies. Some 2 million express packages were left stranded by delivery companies on Christmas Eve, according to shipment-tracking software developer ShipMatrix Inc.

(Reporting By Manya Venkatesh and Narottam Medhora in Bengaluru; Editing by Ken Wills)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/BWC6G0Oe8CI/story01.htm