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Greek emergency funding would be a decision for ECB council: Constancio

CAMBRIDGE, England (Reuters) – ECB Vice-President Vitor Constancio said on Saturday that a decision on whether to give Greece emergency funding would be up to the central bank’s Governing Council.

He was commenting on options available for Greek banks if the country’s new anti-bailout government quits its EU/IMF program.

Constancio said that the central bank’s emergency liquidity assistance (ELA) facility — designed as a stop gap for banks facing temporary problems — was an alternative to its regular funding, but its provision would need to be approved by the European Central Bank’s 25-member Governing Council.

“There is the possibility of so-called ELA. In any case that will be ultimately a decision of the Governing Council, which I don’t want to predict at this stage,” Constancio said during a question and answer session at Cambridge University.

Greek bank stocks (BOPr.AT)(NBGr.AT)(ACBr.AT) have plunged this week in the wake of the election victory of the anti-bailout party Syriza, with some like Bank of Piraeus (BOPr.AT), which is heavily reliant on ECB funding, down almost 50 percent.

The victory of Syriza has sparked worries about the country’s future in the euro zone if it ends its rescue program and dovetailed with reports of individuals and firms pulling their money out of Greek bank accounts as a precaution.

If the Greek government does pull out of its program, its banks would no longer be able to use the ECB’s normal funding operations in any meaningful way, leaving ELA, which is more expensive and requires regular reappraisal, as the only option.

The ECB currently allows them to swap junk-rate Greek government bonds for standard funding only because the country is in a repair program.

Constancio’s comments differed slightly from others on Saturday from Finland’s ECB member Erkki Liikanen.

Speaking on Finnish TV, Liikanen said the ECB would have to stop providing Greek banks with funding if Greece’s bailout deal, due to end at the end of February, was not extended.

“We (ECB) have our own legislation and we will act according to that… Now, 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 said.

“I don’t believe that one can hide from the realities in the economy.”

(Editing by Hugh Lawson and Stephen Powell)

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Honda says fatal crash involved Takata air bag inflator rupture

DETROIT (Reuters) – Honda Motor Co Ltd (7267.T) on Friday said it has confirmed that a Takata Corp (7312.T) air bag inflator ruptured in a Jan. 18 crash in Texas that killed the driver.

Prior to the incident that took place near Houston, Takata air bags had been linked to at least five deaths.

On Thursday, Honda issued a statement about the fatal crash involving a 2002 Honda Accord with a Takata air bag but had not yet confirmed that the inflator had ruptured. A preliminary report from the medical examiner, however, said the driver died of “blunt force injuries to the neck.”

U.S. safety regulators have said defective Takata air bag inflators in certain vehicles can rupture and spray metal fragments inside the vehicle.

“The incident cited involved a vehicle that had been previously recalled, and we are working in close collaboration with Honda to determine the facts and circumstances surrounding the vehicle’s status at the time of the incident,” a Takata spokesman said on Friday.

Honda said on Thursday that the 2002 Accord was included in a 2011 recall, but had not been repaired.

On Friday, a Honda spokesman said that the company had sent “multiple” recall notices by mail to the former owner of the Accord, but that the current owner was not notified after he purchased the car in April 2014.

A top Honda executive last November endorsed a proposal that the new owner of a used vehicle not be allowed to register the vehicle if there was an outstanding recall associated with it and the parts were available for it to be repaired.

(Reporting by Bernie Woodall; Editing by Alan Crosby)

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Wall St. closes down for January, Shake Shack rallies in debut

NEW YORK (Reuters) – U.S. stocks closed down on Friday after a volatile session as investors worried at the end of a rough month for the market about weak U.S. growth data and whether instability in Europe could hurt corporate earnings in the United States.

U.S. economic growth slowed sharply in the fourth quarter as weak business spending and a wider trade deficit offset the fastest pace of consumer spending since 2006.

This came after Greece’s finance minister said the government would not cooperate with the European Union and International Monetary Fund mission.

A brief afternoon rally from rising oil prices failed to stick as investors, nervous about U.S. and global economies, fled to bonds from equities and even sold off utilities stocks, the worst performing sector on the day.

“It feels like a flight-to-safety trade on a month-end. People are putting money into assets that have done well this month,” said Peter Coleman, head trader at ConvergEx Group in New York, who said Friday was a good reflection of the month.

The Dow Jones industrial average .DJI fell 251.9 points, or 1.45 percent, to 17,164.95, the SP 500 .SPX lost 26.26 points, or 1.3 percent, to 1,994.99 and the Nasdaq Composite .IXIC dropped 48.17 points, or 1.03 percent, to 4,635.24.

The SP energy sector was the only one to finish up on Friday with a 0.74 percent increase after falling as much as 1.5 percent earlier in the session. It rebounded when crude futures rose 8 percent after a survey showed the biggest decline since 1987 in the number of rigs drilling for U.S. oil.

For the week, the Dow and SP were each down 2.8 percent, and the Nasdaq fell 2.6 percent. For January, the Dow was down 3.6 percent and the Nasdaq was off 2.1 percent.

The SP fell 3.1 percent in January, which was its biggest monthly loss since January 2014 and its first back-to-back monthly decline since April-May 2012.

Consumer spending was a bright spot as data showed U.S. consumer sentiment rose in January to its highest in 11 years on better job and wage prospects.

That confidence appeared to be reflected in some corporate results. Amazon AMZN.O shares jumped 13.7 percent after earnings beat Wall Street expectations on strong holiday season sales.

“Winners are being rewarded, whereas the market has really no tolerance for anything that comes up short,” said Randy Bateman, chief investment officer of Huntington Asset Management in Columbus, Ohio.

In contrast to the broader market, shares of burger restaurant Shake Shack SHAK.N rose more than 118.6 percent in their market debut.

About 8.5 billion shares changed hands on U.S. exchanges, well above the almost 7 billion average for the last five sessions, according to BATS Global Markets.

NYSE declining issues outnumbered advancers 2,107 to 991, for a 2.13-to-1 ratio; on the Nasdaq, 2,040 issues fell and 691 advanced, for a 2.95-to-1 ratio.

The SP 500 posted 18 new 52-week highs and 15 lows; the Nasdaq Composite recorded 43 new highs and 86 new lows.

(Additional reporting by Rodrigo Campos and Ryan Vlastelica; Editing by Bernadette Baum and Nick Zieminski)

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Exclusive: Sysco, US Foods offer to divest 11 facilities to win FTC deal approval

WASHINGTON (Reuters) – Food distributor Sysco Corp (SYY.N) and its biggest rival, US Foods Inc USFOO.UL, have offered to sell a smaller competitor 11 facilities in order to convince skeptical antitrust regulators to approve their $3.5 billion merger, a source briefed on the matter told Reuters.

The deal, proposed in December 2013, is seen as problematic because Sysco and US Foods are the only companies with the geographic reach to offer nationwide contracts to deliver a wide range of goods to customers ranging from hotel chains to hospitals to fast food chains and fine restaurants.

To overcome Federal Trade Commission concerns, the companies have offered to sell 11 distribution centers with $5 billion in sales in hopes of building Performance Food Group into a national competitor, essentially replacing US Foods, according to the source, who spoke on condition of anonymity.

Sysco executives and FTC officials are scheduled to meet over the next two weeks to discuss whether the offer would be enough to win regulatory approval.

Performance Food Group is strong in the eastern United States, Texas and California but has few distribution centers in the rest of the West, according to its company website.

Most of the distribution centers to be sold are in the western United States and one is in California, according to two sources knowledgeable about the talks.

Sysco is the biggest U.S. food distributor with annual revenue of about $44 billion. US Foods, which is owned by private equity companies including KKR Co (KKR.N), is No. 2.

Performance is owned by Blackstone Group (BX.N).

The FTC can approve the deal outright, approve the transaction on condition of divestitures or file a lawsuit to stop it.

Sysco said that it remained “committed to finalizing this transaction.”

“Over the past year, we’ve met repeatedly with the FTC staff to help them understand the highly fragmented and competitive food service distribution business and the significant benefits of our proposed merger with US Foods,” said spokesman Charley Wilson in an email.

The FTC declined comment.

Sysco has said the combined company would be able to maintain fewer warehouses and run fuller trucks, thus driving down costs for customers.

A group of about 25 state attorneys general, including those in Florida and Indiana, are also reviewing the deal. Minnesota’s attorney general wrote a letter to the FTC in December saying it was questionable whether any divestiture could restore competition lost in the transaction.

(Reporting by Diane Bartz; Editing by Will Dunham)

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AT&T top buyer at U.S. airwaves auction; Dish spends big

WASHINGTON/SAN FRANCISCO (Reuters) – ATT Inc (T.N) spent close to half the total in the record-setting U.S. sale of airwaves for mobile data, with Dish Network Corp (DISH.O) spending heavily to manage a surprise win at No.2 ahead of Verizon, results showed on Friday.

ATT bid a total of $18.2 billion to win licenses of so-called AWS-3 spectrum. Dish itself did not win any licenses, but had invested in bidding partners SNR Wireless LicenseCo LLC and Northstar Wireless LLC, which bid a total of $13.3 billion.

The two companies, backed also by financial firms including BlackRock Inc (BLK.N) but with little to no revenue, had applied to receive a discount as small-business entities, bringing their net bid amount to $10 billion.

Verizon and T-Mobile (TMUS.N) bids were $10.4 billion and $1.8 billion, respectively, according to the results of the Federal Communications Commission’s largest ever auction.

“Dish was the one that surprised most, spending a couple of billion more than anticipated,” said Jefferies Co analyst Mike McCormack.

Dish’s larger-than-expected bid for over 700 licenses put a damper on the investors’ hypothesis that the satellite company had expected to turn around and sell the newly acquired airwaves to Verizon or another buyer. However, Dish’s plans remain unclear.

Shares of Dish fell 4.3 percent to close at $70.35 on Thursday.

Verizon made slightly lower-than-expected bids but the company had hinted to investors that it would do so in December, McCormack added.

The record $44.9 billion auction, which ended on Thursday, demonstrated the voracious appetite of wireless carriers and other companies for spectrum to satisfy the growing consumer demand to stream video and other data-guzzling content.

ATT, Dish’s partners and Verizon snapped up airwaves in some of the most coveted and expensive markets, such as New York and California.

Verizon and ATT shares were relatively unchanged before closing at $45.71 and $32.92, respectively.

Dish acknowledged in a statement it had invested in two entities that participated in the auction but did not further explain its plans, citing FCC anti-collusion rules.

Verizon said in a statement it bought a total of 181 licenses that cover markets reaching 61 percent of the United States.

ATT was awarded 251 licenses, while T-Mobile bagged 151 licenses. ATT’s debt leverage may rise given its AWS-3 spectrum investment, it said in a statement.

“The company will use excess cash — after paying its dividend — over the next three years to pay down debt, and expects to return to historical debt ratios,” it added.

Sprint, the third-largest U.S. carrier, skipped the AWS-3 auction.

(Reporting by Alina Selyukh and Malathi Nayak; Editing by G Crosse, Dan Grebler and Bernard Orr)

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Shake Shack IPO vaults shares into ‘nosebleed’ territory

(Reuters) – Shares of Shake Shack Inc (SHAK.N) more than doubled on Friday, putting a nearly $2 billion price tag on the small cult hamburger chain, in a huge bet that its growth can match top performers in the crowded “fast-casual” dining space.

Shake Shack’s debut is the latest in a string of blockbuster IPOs from trendy restaurant chains that cater to younger and more affluent diners willing to pay a bit more for fresher and higher quality food. Growth-hungry investors are hoping to replicate the red-hot run of industry darling Chipotle Mexican Grill (CMG.N).

But Shake Shack’s own CEO Randy Garutti cast doubt on whether it will do so, calling the chain known for decadent milkshakes and hormone- and antibiotic-free burgers a “very measured growth company.”

Its IPO followed the successful listing two months ago of fellow premium burger seller Habit Restaurants (HABT.O). Other hot restaurant debuts have been followed by stock swoons, including Noodles Co (NDLS.O) and sandwich maker Potbelly Corp (PBPB.O).

Based on 2013 earnings, the company that grew out of a hotdog cart in New York’s Madison Square Park is trading at an eye-popping price-to-earnings ratio of about 325, with each restaurant valued at about $27 million.

“Seems like a nosebleed valuation,” said Bob Goldin, an executive vice president at foodservice consultancy Technomic. Shake Shack would need “explosive growth for years and years” to justify its stock price, he said.

Its shares hit a session high of $52.50, a gain of 150 percent from its IPO price of $21, raising questions about whether the stock was overvalued. The stock trimmed gains slightly to close at $45.90.

“This is a valuation hurdle that is well … shaky,” said Douglas Kass, president of hedge fund Seabreeze Partners Management Inc, describing the rally as indicative of “silly season.”

While the 63-unit chain boasts some of the industry’s highest average annual restaurant sales, it only plans to add 10 domestic restaurants per year. Many of those new restaurants will be in lower-profit-margin markets outside New York City.

The company, which had revenue of $83.8 million in the 39 weeks to Sept. 24, eventually plans to have 450 U.S. locations. Shake Shack will also slowly expand overseas, with a store set to open in London later this year and others likely to follow, Garutti said, without providing a specific forecast.

When Chipotle went public in 2006, it had almost 500 U.S. restaurants. Shares in the chain, which now has roughly 1,700 U.S. restaurants and is known for its uncanny ability to profitably increase sales, debuted at $22 and trade at more than $710.

“We’re at a point where investors are willing to give ‘story’ stocks the benefit of a doubt,” said James Angel, associate professor of finance at Georgetown University’s McDonough School of Business.

Repeating Chipotle’s success has proven elusive for most restaurant operators, and it could be even harder to do in the crowded and competitive high-quality burger segment.

“If it were easy to replicate, plenty of other people would have already done it,” said Angel.

Shake Shack raised $105 million from its initial public offering.

Its IPO has been bonanza for founder Daniel Meyer, whose 21 percent stake was worth about $390 million based on the stock’s intraday high.

Meyer, the chef-owner of popular New York restaurants Blue Smoke, Gramercy Tavern and Union Square Cafe, opened the first Shake Shack in 2004.

J.P. Morgan and Morgan Stanley were lead underwriters for the IPO.

Shake Shack’s customers spend roughly $30 for a meal for two, considerably more than diners spend at struggling fast-food giant McDonald’s Inc (MCD.N), which this week replaced its CEO after a dismal 2014.

Sales at premium burger chains, which also include Five Guys Burgers and Fries, the Counter and Smashburger, rose 9 percent in 2013, according to Technomic, while overall sales at all burger chains including McDonald’s fell 1 percent.

Some old-school operators are also riding the wave. Shares in mall-based chain Red Robin Gourmet Burgers, which went public over a decade ago, have more than doubled in the last two years.

(Additional reporting by Lisa Baertlein and David Gaffen in New York; Editing by Ted Kerr and Christian Plumb)

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Oil surges 8 percent as U.S. rig count plunges, shorts scramble

NEW YORK (Reuters) – Oil prices roared back from six-year lows on Friday, rocketing more than 8 percent as a record weekly decline in U.S. oil drilling fueled a frenzy of short-covering.

In a rally that may spur speculation that a seven-month price collapse has ended, global benchmark Brent crude shot up to more than $53 per barrel, its highest in more than three weeks in its biggest one-day gain since 2009.

The late-session surge was primed by Baker Hughes data showing the number of rigs drilling for oil in the United States fell by 94 – or 7 percent – this week. Earlier gains were fueled by reports of Islamic State militants striking at Kurdish forces southwest of the oil-rich city of Kirkuk.

Brent LCOc1 settled up $3.86 at $52.99 a barrel, after running to as high as $53.08.

U.S. CLc1 oil futures finished up $3.71 at $48.24, soaring by nearly $3 in a final frenzied hour and ending a two-week stretch of relatively steady prices, the longest break since a seven-month rout kicked off last summer. On Thursday prices had touched a six-year low under $44 a barrel.

Poised for a bounce many thought was overdue, short traders raced to cover their positions on fears that the rout, sparked by massive U.S. shale crude supplies, was nearing its end.

“The rig count drop was a lot more than people expected and it really got the market going,” said Phil Flynn, analyst at Price Futures Group in Chicago.

According to Baker Hughes, the decline in oil drilling rigs was the most since it began keeping records in 1987. With drillers having idled about 24 percent of their oil drilling rigs since the summer, some traders may be betting that an anticipated slowdown in U.S. oil production is nearer than expected.


Some are not convinced that the sell-off in oil is over. The rout began in June when Brent peaked at over $115 a barrel and accelerated in November after OPEC refused to cut its production.

“There was a lot of short-covering before the month end from people wanting to take profit from the $40-odd lows, so it’s not surprising that we rallied,” said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York. But it will take a while for production to respond to lower drilling.

“This doesn’t change the fundamental outlook in oil. We are still about 2 million barrels oversupplied.”

Production from OPEC, or the Organization of the Petroleum Exporting Countries, rose in January to 30.37 million barrels per day (bpd), a Reuters poll showed, a sign that key members of the group were resolute about defending their market share.

A Reuters poll shows oil prices may post only a mild recovery in the second half of the year, with prices still averaging less in 2015 than during the global financial crisis. OILPOLL

Joseph Posillico, senior vice president of energy futures at Jefferies in New York, also warned of a short-term, short-covering rally that could be quickly reversed.

“This is just the market being the market and we could give these all back in the next few sessions.”

(Additional reporting by Ron Bousso in London and Henning Gloystein in Singapore; Editing by Jason Neely, John Stonestreet, Bernadette Baum, Gunna Dickson and Lisa Shumaker)

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Exxon adds discrimination protections in U.S. for LGBT workers

HOUSTON (Reuters) – Exxon Mobil Corp (XOM.N), the world’s largest publicly traded oil company, has changed its U.S. employment policies to prohibit discrimination based on sexual orientation and gender identity as now required by federal law.

Exxon spokesman Alan Jeffers said Friday the company’s board approved the policy change at a meeting on Wednesday and noted that the oil company “always updates its policies to comply with the laws where we work.”

Investors had pressed for the change for years, filing shareholder proposals for Exxon to guarantee protections against discrimination based on sexual orientation since 1999.

Exxon has previously resisted making the change, saying it already prohibited all forms of discrimination at its offices anywhere in the world.

But lesbians, gays, bisexuals and transgender (LGBT) people now are federally protected classes. In July, President Barack Obama signed an executive order banning federal contractors from discriminating against LGBT workers.

The U.S. government relies on supply contracts for fuels from many oil companies, which also have lease agreements to work on federal lands or offshore.

An organization that monitors companies’ LGBT policies suggested Exxon’s policy change was a calculated one while New York State Comptroller Thomas DiNapoli, who pushed for the move, welcomed it.

“To articulate its policy through the lens of legal conformance is not an affirmative changing of course and full adoption of equality, but instead a calibrated response to retain government contracts,” said Deena Fidas of The Human Rights Campaign Foundation.

DiNapoli, who oversees 12 million Exxon shares, said: “We commend Exxon for joining its many Fortune 500 peers and investors in the 21st Century where LGBT rights are synonymous with civil rights.”

In September 2013, Exxon said it would extend benefits to spouses of its U.S workers in same-sex marriages. At the time, it was a sweeping reversal by one the world’s top companies following a landmark ruling by the U.S. Supreme Court that led to same-sex couple eligibility for federal benefits.

Exxon’s peers including Chevron Corp (CVX.N) and Royal Dutch Shell (RDSa.L) and BP Plc (BP.N) are known for their more liberal policies for gay and transgender workers.

(Editing by Terry Wade and Grant McCool)

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Chevron’s profit beats as chemical sales offset cheap oil

WILLISTON, N.D. (Reuters) – Chevron Corp (CVX.N), the second-largest U.S. oil producer, reported a higher-than-expected quarterly profit on Friday as sales of chemicals, lubricants and other refined products helped offset plunging crude prices CLc1.

That drop in crude prices, about 60 percent since June, has eroded margins across the oil industry and forced scores of companies to slash spending budgets. Royal Dutch Shell (RDSa.L), a so-called international oil company like Chevron, said on Thursday it would cut its spending over the next three years by $15 billion.

Taking similar steps, Chevron executives slashed the company’s 2015 capital budget by 13 percent to $35 billion.

“We enter 2015 with the financial strength to meet the challenges of a volatile crude price environment and with significant efforts under way to manage to a lower cost structure,” Chief Executive Officer John Watson said in a statement.

Indeed, the strength of the company’s downstream operation, which sells those refined products, proved to be the main bright spot for Chevron this quarter, with profit in the division spiking nearly fourfold.

Earnings in Chevron’s upstream unit, which finds and produces oil and gas, dropped 45 percent.

In total, Chevron posted fourth-quarter net income of $3.47 billion, or $1.85 per share, compared with $4.93 billion, or $2.57 per share, a year earlier.

Analysts on average had expected earnings of $1.63 per share, according to Thomson Reuters I/B/E/S.

Foreign currency conversion charges dented earnings by $432 million, Chevron said.

Production between the quarters held steady at 2.58 million barrels of oil equivalent per day.

Shares of the San Ramon, California-based company fell about 1 percent to $102 in premarket trading on Friday.

(Reporting by Ernest Scheyder; Editing by Franklin Paul and Lisa Von Ahn)

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