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Germany, ECB play hardball with Greece


BERLIN/HELSINKI (Reuters) – German Chancellor Angela Merkel ruled out a debt writedown for Greece on Saturday, and a European Central Bank policymaker threatened to cut off funding to Greek banks if Athens does not agree to renew its bailout package.

The euro zone’s paymaster and the ECB are both taking a tough line with Greece’s new leftist government, whose leader swept to victory last Sunday promising that five years of austerity, “humiliation and suffering” were over.

Alexis Tsipras has also promised to renegotiate agreements with the European Commission, ECB and International Monetary Fund “troika” and write off much of Greece’s 320 billion euro ($360 billion) debt, which at more than 175 percent of gross domestic product is the world’s second-highest after Japan.

Merkel flatly rejected such a possibility.

“There was already a voluntary waiver by private creditors; Greece has already been exempt from billions by the banks. I don’t see a further debt haircut,” she told German daily Die Welt in an interview published in its Saturday edition.

“Europe will continue to show solidarity for Greece, as for other countries hit particularly hard by the crisis, if these countries undertake their own reforms and savings efforts,” Merkel added in a thinly veiled threat to Athens.

Without the support of international lenders, Greece would soon find itself back in an acute financial crisis.

Unable to tap the markets because of sky-high borrowing costs, Athens has enough cash to meet its funding needs for the next couple of months. But it faces around 10 billion euros of debt repayments over the summer.

“I’M WAITING,” MERKEL TELLS ATHENS

Greece’s new government opened talks on its bailout with European partners on Friday by refusing to extend the program or to cooperate with the international inspectors overseeing it.

Separately, the French finance ministry said on Saturday that Greek Finance Minister Yanis Varoufakis will meet with his French counterpart Michel Sapin in Paris on Sunday and issue a statement afterwards.

Europe’s bailout program for Greece, part of a 240 billion euro rescue package also involving the International Monetary Fund, expires on Feb. 28. A failure to renew it could leave Athens unable to meet its financing needs and cut its banks off from central bank liquidity support.

The ECB does not accept Greek sovereign bonds as collateral in its refinancing operations as they are below investment grade. However, it allows central bank financing to Greek banks as the country is in a bailout program.

Erkki Liikanen, a member of the ECB’s policymaking Governing Council, said that funding, too, could dry up if Greece does not remain in a program.

“Greece’s program extension will expire in the end of February so some kind of solution must be found, otherwise we can’t continue lending,” Liikanen, also the governor of Finland’s central bank, told public broadcaster YLE.

Merkel said the ECB’s Jan. 22 decision to pump billions of euros into the euro zone with a bond-buying program did not mean countries would end efforts to shape up their economies with structural reforms.

She put the onus on the new Greek government to present a credible economic policy.

“The goal of our policy was and is that Greece remains a permanent part of the euro-community,” Merkel said.

“To that end, Greece and the European partners make their contribution. Apart from that, I am now waiting to see what concepts the Greek government will present.”

(Writing by Paul Carrel; Editing by Hugh Lawson)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/3UZZisl5Gfc/story01.htm

Greece seeks to reassure Europe as tensions rise


ATHENS (Reuters) – New Greek Prime Minister Alexis Tsipras, striking a conciliatory note on debt talks after a turbulent start to office, has called the European Central Bank chief to assure him that Athens was seeking an agreement.

The new government in Athens made clear from its first day in power that it would not back down on its election pledges to abandon the austerity policies imposed under the bailout agreement sealed by the last government.

But facing growing disquiet from partners led by Germany, Tsipras rang European Central Bank President Mario Draghi on Friday night to assure him that Athens was seeking an accord, a government official said.

“The discussion was conducted in a good spirit and it was confirmed that there’s a willingness to find a mutually beneficial solution for Greece and for Europe,” said the official, who spoke on condition of anonymity.

He also spoke to Jeroen Disselbloem, head of the euro zone finance ministers’ group who ended a visit to Athens on Friday with a thunderous expression after an apparently scratchy exchange with Greek Finance Minister Yanis Varoufakis.

The official said Dijsselbloem had called Tsipras to reassure him that despite minor signs of tension, the negotiations would continue.

After halting some privatisations and announcing plans to reinstate thousands of public sector workers laid off under the bailout, the government confirmed on Friday it was not interested in renewing the bailout deal when it expires on Feb. 28.

With German politicians from Chancellor Angela Merkel down repeating daily that Athens must respect the bailout accord with the European Union and International Monetary Fund “troika”, Tsipras and his finance minister begin lobbying for support in other European capitals on Sunday.

Varoufakis meets his French counterpart Michel Sapin in Paris before travelling to London the next day. Tsipras, whose first foreign visit will be to Cyprus, will join him on Tuesday in Rome before meeting European Commission President Jean-Claude Juncker and French President Francois Hollande on Wednesday.

France and Italy, the two governments that have pushed hardest to loosen the strict budget austerity imposed at the start of the euro zone crisis, may offer Varoufakis and Tsipras a sympathetic ear when they visit.

But they have both said they would not accept the new leftwing government’s call for a “haircut”, writing down part of Greece’s 320 billion euro debt and potentially exposing their own Treasuries to billions of euros of losses.

Varoufakis told Dijsselbloem on Friday that Athens did not want an extension to the bailout but a new accord and would not deal with the troika mission overseeing the bailout.

On Saturday, he told the weekly Agora newspaper that Greece needs “fiscal breathing space” with a bridging deal of a few weeks while a new agreement with creditors is worked out and economic reforms including a crack down on tax evasion begin.

With both sides keen to prevent tensions during the first few days of the Tsipras government slipping out of control, he warned against “verbal fetishism” and said the differences could be overcome.

While there was resistance in Europe to a straight haircut on the face value of the debt, there was more willingness to explore other options including extending maturities or cutting interest payments that could have the same effect.

In an interview with German weekly magazine Der Spiegel,

Greek Economy Minister Georgios Stathakis said it would be better to link the country’s debt repayments to its economic growth rate as it needs a feasible solution to bring its sovereign debt under control.

Athens faces about 10 billion euros ($11 billion) in repayments this summer and is shut out of international bond markets while it waits for a final bailout tranche from international lenders of 7.2 billion.

WARNING ON ECB FUNDING TO BANKS

Highlighting the risks Athens faces if no deal is reached by the Feb. 28 deadline, European Central Bank Governing Council member Erkki Liikanen said Greek banks, already facing serious deposit outflows, would be cut off from ECB lending.

As well as ensuring continued ECB support for the banks, agreement is needed for some 7 billion euros in funds to be released. Without the funds, Greece would probably be unable to meet 10 billion euros in debt repayments that fall due between June and September.

However, Merkel repeated that further debt cancellations were unacceptable and Athens would have to respect its obligations.

Varoufakis said Greece would continue to issue new short-term T-Bills while talks proceed, even though Athens has already reached a 15 billion euro issuance limit agreed with the troika.

But that would do little to prevent the crisis that could ensue if the banks lost support from the ECB and the issue is likely to feature heavily in discussions next week. With financial markets on edge, Greek banking stocks have fallen by nearly 40 percent since Sunday’s elections.

Following his finance minister’s visit to Paris on Sunday and to London on Monday, Tsipras himself will visit Rome on Tuesday to meet Italian Prime Minister Matteo Renzi and Paris on Wednesday, where he will meet President Francois Hollande.

Notably absent from the list of destinations was Berlin or Frankfurt.

(Reporting by Renee Maltezou; writing by James Mackenzie; Editing by Dominic Evans and Stephen Powell)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/TWm_5NR3KQA/story01.htm

McDonald’s to slow Russia expansion due to fall in rouble


MOSCOW (Reuters) – McDonald’s Corp. (MCD.N) will open fewer new restaurants in Russia this year than last because a fall in the rouble has increased expansion costs and is hurting consumers, its Russian chief executive Khamzat Khasbulatov told Reuters.

The rouble, hit by a drop in oil prices and Western sanctions over Ukraine, has fallen more than 50 percent since early 2014, fuelling inflation. Russia now faces its first recession since 2009.

McDonald’s will open at least 50 new restaurants in Russia compared to 73 last year, having earmarked 6 billion rubles ($87 million) for capital expenditures, the same amount as in 2014, Khasbulatov said in an interview.

“There is a major currency component in new openings. Given the current conditions of doing business in Russia … we are pleased that the investment resources we have been allocated remained at last year’s level,” he said on Saturday.

The U.S. fast-food chain, which has been operating in Russia for 25 years, was hit by a string of snap inspections by a state regulator last year, which were widely seen as retaliation for the West’s sanctions against Moscow over its role in the Ukraine crisis.

Those inspections led to temporary closures of 12 restaurants, including the world’s busiest on the Pushkin square in Moscow.

Khasbulatov said the company had taken advantage of some of the closures to modernize the restaurants. All have reopened but their sales have yet to catch up with pre-closure levels.

The unexpected scrutiny had not led McDonald’s to changing its attitude towards the market, Khasbulatov said.

“New restaurants must meet our profitability expectations. (Fewer openings) is only a question of having a healthy business,” he said.

He added same-store sales growth could fall to zero in 2015 because of high inflation and an expected decline in spending on eating out, but new openings should help grow overall sales.

($1 = 69.0825 rubles)

(Editing by Raissa Kasolowsky)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/HNe9MVqVYCw/story01.htm

JPMorgan to pay $99.5 million to resolve currency rigging lawsuit


NEW YORK (Reuters) – JPMorgan Chase Co, the largest U.S. bank, agreed to pay $99.5 million to settle its portion of an antitrust lawsuit in which investors accuse 12 major banks of rigging prices in the $5.3 trillion-a-day foreign exchange market.

Made public on Friday night, the settlement is the first in the nationwide litigation and resolved claims over JPMorgan’s role in alleged collusion among banks since January 2003 to manipulate the WM/Reuters Closing Spot Rates, known as the Fix.

It followed the New York-based bank’s agreements last November to pay roughly $1 billion in civil penalties to resolve related claims by U.S. and European regulators.

Investors including hedge funds, pension funds and the city of Philadelphia accused the 12 banks, which controlled 84 percent of the global currency trading market, of having impeded competition by conspiring to manipulate the Fix in chat rooms, instant messages and emails.

The JPMorgan settlement could form a basis for other settlements. It followed mediation with Kenneth Feinberg, a lawyer who also oversees General Motors Co’s program to compensate drivers over faulty vehicle ignition switches.

In an affidavit, Feinberg called the JPMorgan settlement fair, reasonable and adequate.

“Although such analysis is preliminary, it does appear to be consistent with Class Lead Counsel’s evaluation of JPMorgan’s role in the FX market and JPMorgan’s market share over the class period (6%),” he said.

JPMorgan did not admit wrongdoing, and the settlement requires court approval. The bank did not immediately respond on Saturday to a request for comment.

The other bank defendants include Bank of America Corp, Barclays Plc, BNP Paribas SA, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, HSBC Holdings Plc, Morgan Stanley, Royal Bank of Scotland Group Plc and UBS AG.

On Wednesday, U.S. District Judge Lorna Schofield in Manhattan refused to dismiss currency-rigging claims against them. Five of those banks have also settled with regulators.

The $99.5 million payment includes $500,000 for notices and administration. Lawyers for the plaintiffs, led by Hausfeld LLP and Scott Scott, plan to seek legal fees of up to 30 percent of the settlement funds, court papers show.

The case is In re: Foreign Exchange Benchmark Rates Antitrust Litigation, U.S. District Court, Southern District of New York, No. 13-07789.

(Reporting by Jonathan Stempel in New York; Editing by Kevin Drawbaugh and Stephen Powell)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/6pfzYN95tPc/story01.htm

Exclusive: Treasury official among those eyed for regional U.S. Fed openings


(Reuters) – A U.S. Treasury official and a director at the New York Federal Reserve are among those who have been considered to replace two hawkish Fed policymakers, according to people familiar with the searches.

Final decisions are not imminent in the efforts to find successors to Philadelphia Fed President Charles Plosser, who steps down March 1, and Richard Fisher of the Dallas Fed, who retires on March 19.

But the clock is ticking to fill those positions, with names beginning to surface as potential candidates.

Matthew Rutherford, whose stint as Treasury’s top domestic finance official ended on Friday, was under consideration at least in early stages of the searches, according to three sources. James McAndrews, who heads up research at the neighboring New York Fed, was considered for the job in Philadelphia, where he once worked.

It was unclear whether a short list for either opening had been assembled yet.

Regular golfing partners, Plosser and Fisher are ardent inflation hawks who have repeatedly dissented against the easy money path pursued by Fed Chair Janet Yellen and her predecessor, Ben Bernanke. While most of the 12 regional Fed presidents vote on monetary policy only every three years, they always help shape the debate both behind closed doors and in public speeches.

The parallel searches have gained momentum since December. According to one person called for advice, the Philadelphia Fed is seeking someone with the academic background to take the reins from Plosser, a former professor. A person familiar with the Dallas Fed’s effort said the search committee was looking for a candidate with similar policy leanings as Fisher.

Moody’s Analytics chief economist Mark Zandi, who lives in the Philadelphia area, has also come under consideration to replace Plosser. Michael Dotsey is said to be in contention as well given he heads research at the Philadelphia Fed, though he is less known throughout the central bank.

Another Treasury official, Seth Carpenter, was seen as a long shot for the Philadelphia position, but he was expected to stay on at the agency.

All of those mentioned declined to comment, or were not available. The search committees at the regional Fed banks also declined to comment, citing the ongoing effort, as did the banks themselves.

NEW VOICES

While Rutherford’s monetary policy leanings are unclear, his expertise on financial markets is well established. A Treasury star in his mid 30s, Rutherford, as assistant secretary for financial markets, played a key role in managing the federal government’s massive borrowing operations during and following the 2007-8 financial crisis.

McAndrews is considered broadly aligned with New York Fed President William Dudley’s dovish leanings on policy, though his public comments tend to focus on the lingering threat to the financial system from too-big banks and short-term funding markets.

Zandi is a prominent economist, centrist-leaning on monetary policy, whose frequent media appearances give him a wide profile. In 2013, President Barack Obama considered picking him as the director of the regulator that controls federal home lenders Fannie Mae and Freddie Mac, but Zandi remained at Moody’s.

Governors at the Washington-based Fed Board typically interview each of three final candidates offered by the regional Fed banks. Although it’s rare, the Fed Board has in the past rejected regional Fed banks’ preferred candidate, according to former St. Louis Fed President William Poole and several others involved in past searches.

While the Fed Board could use its influence to help install policymakers who may back a more cohesive message from the central bank in years ahead, it may be loathe to exert it, said Michael Hanson, an economist at Bank of America Merrill Lynch.

“The Fed values the institutional framework that brings disparate views together,” Hanson said.

Plosser and Fisher, whose banks won’t reclaim a voting spot until 2017, cast two of three dissenting votes against the Fed’s December decision to say it could be “patient” in mulling a rate rise, the most opposition Yellen has faced since becoming chair a year ago. She faced no dissents at the latest policy meeting on Wednesday.

While the search committees in Philadelphia and Dallas are considering candidates from inside and outside the Fed, insiders could well have the upper hand: eight of the 12 current Fed presidents came from the central bank’s internal ranks.

If a suitable successor is not found before the presidents retire, the first vice presidents – Blake Prichard for Philadelphia, and Helen Holcomb for Dallas – would become acting presidents.

(Reporting by Jonathan Spicer in New York, Michael Flaherty in Washington and Ann Saphir in San Francisco; editing by Stuart Grudgings.)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/40XlQhLtwhQ/story01.htm

BMW, Bosch join Deutsche Bahn in airline cartel damages claim


FRANKFURT (Reuters) – German carmaker BMW and car supplier Bosch [ROBG.UL] said on Saturday they would join Deutsche Bahn [DBN.UL] in two claims for about 2.1 billion euros ($2.4 billion) in damages from air freight carriers who were involved in a cartel.

The air cargo cartel, which included Europe’s biggest airline Lufthansa and British Airways, was first discovered seven years ago and triggered fines in the European Union and in the United States.

Confirming a report in German magazine WirtschaftsWoche, spokespeople for BMW and Bosch said the companies had joined the lawsuits, announced by Deutsche Bahn in December.

The magazine also reported that Continental, Kuehne + Nagel and Panalpina were seeking damages from the cartel members, but the companies could not immediately be reached for comment.

Deutsche Bahn says its freight business Schenker was overcharged for air cargo services for more than six years as carriers colluded in setting fuel and security surcharges.

The firm is seeking 1.2 billion euros in damages plus 560 million euros in interest in a suit filed with a court in Cologne, plus another $370 million in the United States.

The airlines it is suing in Germany are Lufthansa, Air Canada, British Airways, Cargolux [CLUX.UL], Cathay Pacific, Japan Airlines, LAN, Qantas, SAS and Singapore Airlines.

In the United States, it is seeking damages from Air France, All Nippon Airways, Cargolux, KLM, Martinair, Qantas and SAS.

European regulators fined 11 airlines involved 800 million euros in 2010 in the price fixing case, which opened the door to private claims.

($1 = 0.8861 euros)

(Reporting by Sabine Siebold; Writing by Harro ten Wolde; Editing by Raissa Kasolowsky)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/f9uloLfTL2w/story01.htm

Exclusive: GM and China’s SAIC to push into Indonesia with no-frills vans


BEIJING (Reuters) – General Motors (GM.N) and Chinese partner SAIC Motor Corp (600104.SS) will soon announce a joint push into Indonesia, using their no-frills Wuling brand to establish a beachhead in Southeast Asia’s biggest market and from there tackle other markets in the region.

They have already made moves to purchase a property in an industrial district on the outskirts of Jakarta, according to two people familiar with the matter, and are expected to detail within days what GM China chief Matt Tsien called an important joint venture in a country of 240 million people.

In a report late Friday, officials from Indonesia’s industry ministry told state Antara news agency that GM and SAIC would invest a total of $700 million in Indonesia to set up operations to manufacture and market Wuling vehicles in the country.

GM and SAIC, according to the report, plan to start construction of the Wuling assembly plant in August 2015 with an aim to commence production in 2017. The factory will have capacity to produce 150,000 vehicles a year. The report followed a visit to the ministry on Friday by a delegation of GM and SAIC officials, according to Antara.

A GM spokeswoman in Shanghai said she could not confirm details in the report.

For GM, Indonesia will be its second non-China market in Asia, having already broken into India with SAIC, where they cooperate to market Wuling’s small multi-purpose workhorse vans.

The move points to a thaw in what industry watchers considered a creeping chill in the two companies’ partnership over recent years.

GM said SAIC-GM-Wuling, which also includes Wuling Automobile Co as a stakeholder, will own 80 percent of the new Indonesian venture. SAIC will separately own the rest.

GM owns 44 percent of SAIC-GM-Wuling, SAIC owns 51.1 percent, and Wuling owns 5.9 percent, so GM’s stake in the Indonesian venture will effectively be 35 percent.

The venture will manufacture and market low-cost “people mover” microvans, based on the same vehicles that in China, under the Wuling brand, can sell for just under 30,000 yuan ($4,800).

GM already operates a sales and manufacturing company in Indonesia with a range of Chevrolet vehicles that includes a strategic compact people mover of its own, the Chevy Spin.

Tsien said GM and SAIC saw the two brands as complementary, rather than rivals, as they will be differentiated by pricing, product quality and features.

Wuling’s focus is “great functionality, attractive styling and value for money”, Tsien said. “That’s the basic element that really works here in China, and we believe under SGMW’s leadership this will be quite successful in Indonesia as well.”

The GM China chief said Indonesia had a large and growing appetite for simple multi-purpose vans, often with three rows of seating that can accommodate seven or eight people.

He declined to say exactly what type of microvans they are planning for Indonesia or how they would market or price them.

JAPANESE COMPETITION

Stiff competition will come from Toyota (7203.T) and other Japanese brands, which control over 90 percent of the auto market in Indonesia.

“There is plenty of room to play,” Tsien said.

The GM-SAIC move largely mirrors a strategy being pursued by Japan’s Nissan Motor Co (7201.T), which has revived Datsun, a brand name it retired in the 1980s, to market cars affordable to middle-class consumers in countries such as Indonesia, India, Russia and South Africa. Nissan began selling a Datsun in Indonesia last May starting at 87.9 million rupiah ($6,968).

Daihatsu (7262.T), a small car specialist affiliated with Toyota, is scrambling to come up with $5,000 cars and is trying to compete in Indonesia with Datsun and Suzuki, which also focuses on no-frills mass-market cars.

The new GM-SAIC venture suggests their global emerging-market strategy might be picking up a head of steam.

GM’s top executives including former chief executive Dan Akerson have previously said GM and SAIC were likely to cooperate beyond India, where they have been selling Wuling-designed microvans.

Tsien said the new joint venture aims eventually to export its affordable cars out of Indonesia to neighboring markets in Southeast Asia.

The GM-SAIC partnership went global in 2010 when China’s biggest carmaker became a 50-percent partner, but SAIC nearly reversed that investment in 2012 by cutting its stake to 9 percent after the joint venture struggled.

That was widely seen as a cooling of the relationship, a view compounded later that year when SAIC formed a joint venture with a local firm in Thailand to market cars there without GM involvement.

GM officials at the time downplayed concerns over the health of their partnership and noted the two were still looking to cooperate closely in India and Southeast Asia.

“Our relationship is stronger than ever,” Tsien told Reuters.

“It’s a very … mutually respectful relationship. We understand each other’s interests. We look for opportunities to win together.”

($1 = 6.2433 Chinese yuan renminbi)

($1 = 12,615.0000 rupiah)

(Reporting By Norihiko Shirouzu in Beijing; Editing by Will Waterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/EIV6QP1UyB0/story01.htm

Germany, ECB play hard ball with Greece


BERLIN/HELSINKI (Reuters) – German Chancellor Angela Merkel ruled out a debt writedown for Greece on Saturday, and a European Central Bank policymaker threatened to cut off funding to Greek banks if Athens does not agree to renew its bailout package.

The euro zone’s paymaster and the ECB are both taking a tough line with Greece’s new leftist government, whose leader swept to victory last Sunday promising that five years of austerity, “humiliation and suffering” were over.

Alexis Tsipras has also promised to renegotiate agreements with the European Commission, ECB and International Monetary Fund “troika” and write off much of Greece’s 320 billion euro ($360 billion) debt, which at more than 175 percent of gross domestic product is the world’s second-highest after Japan.

Merkel flatly rejected such a possibility.

“There was already a voluntary waiver by private creditors; Greece has already been exempt from billions by the banks. I don’t see a further debt haircut,” she told German daily Die Welt in an interview published in its Saturday edition.

“Europe will continue to show solidarity for Greece, as for other countries hit particularly hard by the crisis, if these countries undertake their own reforms and savings efforts,” Merkel added in a thinly veiled threat to Athens.

Without the support of international lenders, Greece would soon find itself back in an acute financial crisis.

Unable to tap the markets because of sky-high borrowing costs, Athens has enough cash to meet its funding needs for the next couple of months. But it faces around 10 billion euros of debt repayments over the summer.

“I’M WAITING,” MERKEL TELLS ATHENS

Greece’s new government opened talks on its bailout with European partners on Friday by refusing to extend the program or to cooperate with the international inspectors overseeing it.

Separately, the French finance ministry said on Saturday that Greek Finance Minister Yanis Varoufakis will meet with his French counterpart Michel Sapin in Paris on Sunday and issue a statement afterwards.

Europe’s bailout program for Greece, part of a 240 billion euro rescue package also involving the International Monetary Fund, expires on Feb. 28. A failure to renew it could leave Athens unable to meet its financing needs and cut its banks off from central bank liquidity support.

The ECB does not accept Greek sovereign bonds as collateral in its refinancing operations as they are below investment grade. However, it allows central bank financing to Greek banks as the country is in a bailout program.

Erkki Liikanen, a member of the ECB’s policymaking Governing Council, said that funding, too, could dry up if Greece does not remain in a program.

“Greece’s program extension will expire in the end of February so some kind of solution must be found, otherwise we can’t continue lending,” Liikanen, also the governor of Finland’s central bank, told public broadcaster YLE.

Merkel said the ECB’s Jan. 22 decision to pump billions of euros into the euro zone with a bond-buying program did not mean countries would end efforts to shape up their economies with structural reforms.

She put the onus on the new Greek government to present a credible economic policy.

“The goal of our policy was and is that Greece remains a permanent part of the euro-community,” Merkel said.

“To that end, Greece and the European partners make their contribution. Apart from that, I am now waiting to see what concepts the Greek government will present.”

($1 = 0.8861 euros)

(Writing by Paul Carrel; Editing by Hugh Lawson)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/3UZZisl5Gfc/story01.htm

Energy may see further weakness as key names report


NEW YORK (Reuters) – Stock prices in the U.S. energy sector have been under pressure in 2015, and there could be more bad news to come when several key players report their fourth-quarter results next week.

The group has been falling alongside crude oil prices, which are down about 60 percent since June. That drop has led to not only weaker shares – the SP Energy index .SPNY is one of the worst-performing groups of 2015, and it was last year’s worst – but also sharply lower earnings estimates for both the current quarter and the full year.

To be sure, some see long-term strength in the sector, and energy names are among the most undervalued in the SP 500 per StarMine’s measurement of intrinsic value, which looks at anticipated growth over the next decade.

But in the near-term, many analysts feel the earnings revisions have not been severe enough, and that the bar, while lower, is still too high for companies to clear. Further disappointments could lead to continued weakness in the group.

Energy company earnings are seen tumbling 25 percent in the fourth quarter, according to Thomson Reuters data, a bigger decline than the drop of 19.8 percent forecast at the start of the year. For the full year, earnings are seen down almost 45 percent, nearly twice the decline of 23.3 percent forecast on Jan. 1.

Nick Sargen, chief economist at Fort Washington Investment Advisors in Cincinnati, said it was common for earnings worries to be assuaged as companies beat the lowered expectations, “but this time, we’re getting validation of those worries.”

The weakness in oil contributed to Royal Dutch Shell (RDSa.L) missing profit forecasts by more than 20 percent this week. While some companies did top adjusted earnings forecasts, including ConocoPhillips (COP.N) and Occidental Petroleum (OXY.N), both companies slashed their 2015 exploration spending plans, a bearish signal about future growth prospects.

Heavy machinery maker Caterpillar Inc (CAT.N) also reported disappointing results this week, with oil’s weakness weighing on its energy equipment division.

“In the past, we would have nervousness followed by a sigh of relief. This quarter I’m less sure we’ll get that sigh,” said Sargen, who helps oversee about $48 billion in assets.

Oil’s decline is seen as a positive for other sectors, and cheap gas prices contributed to strong recent readings of consumer sentiment. Since Jan. 1, earnings growth expectations for the SP 500 overall have risen to 4.7 percent, from 4.2 percent.

The big name reporting next week is Exxon Mobil Corp (XOM.N). Since Jan. 21, seven of the 18 analysts with an earnings forecast for Exxon have revised estimates, according to StarMine, with forecasts dropping by an average of 5.5 percent. Two of three analysts with revenue outlooks have changed their views, with estimates falling 7.3 percent on average.

Anadarko Petroleum (APC.N), which also reports next week, has seen similar cuts to forecasts, with 23 of the 29 analysts with earnings expectations revising their views, for an average drop of 9.3 percent.

“Shell was the only company we expected to show profit growth this quarter, but it missed by quite a bit, which really raises concerns,” said Brian Youngberg, senior energy analyst at Edward Jones in St. Louis. “I wouldn’t be surprised if estimates kept coming down.”

(Reporting by Ryan Vlastelica; Editing by Linda Stern and Nick Zieminski)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/wvgiQa2oBYc/story01.htm