News Archive

U.S. pending home sales hit one-and-a-half-year high in January

WASHINGTON (Reuters) – Contracts to purchase previously owned U.S. homes rose to their highest level in 1-1/2 years in January, a hopeful sign that the sluggish housing recovery may be gaining speed.

The National Association of Realtors said its pending home sales index rose 1.7 percent last month, a gain that more than reversed a December slide.

In addition, the drop in December was much less severe than previously thought, with pending sales declining just 1.5 percent as opposed to the previously reported 3.7 percent drop.

The increase last month took contract signings, which usually turn into sales after a month or two, to their highest level since August 2013.

Economists polled by Reuters had forecast a 2 percent gain.

(Reporting by Tim Ahmann; Editing by Andrea Ricci)

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VW keeps profit outlook, raises sales target after record earnings

BERLIN (Reuters) – Volkswagen (VOWG_p.DE) stuck to its guidance for operating profit after posting record earnings last year on double-digit gains in sales of luxury Audi and Porsche models.

Europe’s largest carmaker said on Friday the group operating margin could come in a range between 5.5 percent and 6.5 percent, same as last year’s projection.

Operating profit rose 8.8 percent to 12.7 billion euros ($14.25 billion), up from 11.67 billion in 2013 and slightly above analyst projections of 12.6 billion euros.

The German group raised its forecast for revenue, saying it could exceed last year’s record 202.5 billion euros by as much as 4 percent.

(Reporting by Andreas Cremer; Editing by Maria Sheahan)

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Exclusive: Areva to cut wage bill 15 percent as prospects worsen

PARIS (Reuters) – French nuclear group Areva (AREVA.PA) plans to cut 15 percent of its wage bill to save 300 million euros ($337 million) a year within three years amid worsening sales prospects for its reactors, union sources briefed by the new management team said.

However, a complete financial turnaround plan for the group, which employs some 45,000 people, will not be ready for months, the sources said ahead of the company’s results and strategic update on March 4.

The sources said Chief Executive Philippe Knoche told staff this week that the state-controlled company was likely to sell only about a dozen EPR reactors in total in the years up to 2030, down from 25 predicted previously.

Areva is weighed down by heavy debt and suffering from an industry slowdown, a lack of orders, and legal troubles over a nuclear installation in Finland.

Knoche and Chairman Philippe Varin were appointed in January to fix the company.

A takeover of the 87 percent state-owned Areva by much larger power utility EDF (EDF.PA) – its main customer and another state-backed group – is not part of any plan, the sources said, although closer ties are a possibility.

“We won’t be merging with EDF but there will some government decisions made around the fact that our two businesses should become official partners,” said one union official.

The sources said the March 4 results would likely offer the “broad principles” of the plan but not the details, which could be forthcoming by June.

Earlier this week French Economy Minister Emmanuel Macron said a capital increase for Areva was not a priority and ruled out selling state-held shares in EDF and another utility, GDF Suez (GSZ.PA), to finance support for the group.

His intervention followed Areva’s fifth profit warning in seven months in which it said it expected to suffer a 4.9 billion euros ($5.6 billion) loss for 2015, hit by writedowns on the value of its assets.

(Reporting by Emmanuel Jarry; Writing by Andrew Callus; Editing by Mark John)

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Some staff say India’s Sahara has not paid salaries for months

MUMBAI (Reuters) – Some staff at Indian conglomerate Sahara say they haven’t been paid for several months, as the company tries to raise $1.6 billion to bail its boss Subrata Roy out of jail.

Reuters interviewed 11 employees independently contacted in separate units in Delhi, Mumbai and Lucknow this week, and found workers at what was once one of India’s highest profile firms frustrated over a lack of information about the group’s future. Business has been disrupted for a year as Sahara fights a regulator’s charge that it illegally sold bonds and did not reimburse investors.

The employees’ claims could not be independently verified, although an undated letter to staff signed by Roy and seen by Reuters asked for patience from those who hadn’t received what they were due.

“There is not much work to do and we have not received any salary┬ásince September,” said an official at Sahara’s “Command Office” headquarters in the northern Indian city of Lucknow, where founder Roy’s family lives in a gated complex.

Sahara did not respond to requests for comment on the letter to staff, which three employees said was posted in late December after workers questioned salary delays.

In response to queries from Reuters about unpaid wages, Sahara said it faced a “liquidity crunch” due to conditions imposed by the court on its use of funds and a freeze on bank accounts, creating problems in meeting some of its financial obligations. It denies having failed to pay some staff for four or five months, calling that “completely untrue”.

The letter to staff, posted on an employee notice board, said the company’s fortunes would change after March, when Sahara expected to raise funds for bail.

“If you are not receiving what you are due immediately, then wait with patience and trust,” the letter said. “After 37 years of trust, I am asking you for just four months – December, January, February, March. Please keep your faith and love in us.”

The pressure over payroll described by employees suggests the depth of trouble at Sahara, a conglomerate whose assets stretch from Formula One to property and TV. Chairman Subrata Roy has been held in a Delhi jail since last March, after he failed to comply with a court order to repay investors in a bond program that was ruled illegal.

The bail amount reflects the cost of the program, estimated by Indian regulators to be as much as $7 billion.

Sahara has told the court it has paid most of the outstanding dues directly to the bondholders. India’s markets regulator, which is seeking redress for millions of investors, disputes that.


In its statement to Reuters, Sahara blamed its battle with the regulator and said it was “releasing the salaries (from) time to time, based on fund flow, on a continuous basis. There are delays of a few months, but it is completely untrue that the company has not paid to some of our staff since 4-5 months.”

One senior official in Mumbai said there was little clarity on when back wages would be paid.

“When we call up (human resources), they simply tell us they are in the same situation,” the official said.

Several workers said they were reluctant to quit because they felt employers would be more likely to hire someone who already has a job. Some had already found other employment.

Sahara says it employs about one million salaried and “field workers” who collect payments. The company refers to itself as “the world’s largest family” under flamboyant founder Roy, known as Saharasri, or “Mr Sahara”.

Since Roy’s imprisonment, Sahara has been trying to raise bail money using its properties, including New York’s Plaza hotel and Grosvenor House in London.

Talks with U.S.-based Mirach Capital Group to raise $2 billion collapsed this month after Reuters reported that a bank letter underpinning a proposed deal was forged.

Sahara told the top court this week it was considering other proposals to raise funds, including selling a luxury development outside Pune, two hours from Mumbai.

It is unclear whether Sahara can stitch together another deal, and no potential bidders have emerged since the Mirach deal collapsed.

(Additional reporting by Sharat Pradhan in LUCKNOW; Editing by Emily Kaiser)

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Germany backs Greek extension but bailout fatigue grows

BERLIN (Reuters) – Germany’s parliament approved an extension of Greece’s bailout on Friday but a record number of dissenters from Angela Merkel’s conservatives underscored growing scepticism in Berlin about whether a new Greek government can be trusted to deliver on its reform pledges.

With Finance Minister Wolfgang Schaeuble promising not to let Greece “blackmail” its euro zone partners, 542 members of the Bundestag voted “yes” to the extension, while 32 opposed it and 13 abstained.

It was the biggest majority for a euro zone bailout since the crisis erupted five years ago, in part because Merkel’s year-old “grand coalition” enjoys a dominant position in the Bundestag lower house.

But 29 of the 32 “no” votes came from Merkel’s Christian Democrats (CDU) and their sister party, the Bavarian Christian Social Union (CSU) — more conservative rebels than any other lower house vote.

“We Germans should do everything to keep Europe together,” said Schaeuble, the 72-year-old political veteran who has clashed repeatedly with the new leftist government in Athens, notably his Greek counterpart Yanis Varoufakis.

The parliamentary debate showed widespread misgivings about Greece. The broader German population also grown more sceptical since Prime Minister Alexis Tsipras took power last month, with a poll this week showing only 21 percent of Germans back an extension for Greece.

“Look at Tsipras, look at Varoufakis: would you buy a used car from them?” CDU dissident Klaus-Peter Wilsch said in parliament. The CSU said it was Athens’ “last chance” to get its act together.


Top-selling German daily Bild had staged a front-page campaign for a “NEIN!” in the Bundestag vote, the only big parliamentary hurdle in Europe for the four-month extension to the Greek bailout programme.

“Patience and readiness to show solidarity’s with Greece is coming to an end,” read a front-page editorial in the conservative Frankfurter Allgemeine Zeitung newspaper titled “The Danger”. It said the big risk was that Greeks would misconstrue the parliament vote as a sign that all was well.

Although the extension gives the Greeks a lifeline, they face an April deadline for convincing Germany and other euro zone partners that they are serious about their reform drive. If that fails, Athens would run out of cash, likely triggering an unprecedented exit from the single currency bloc.

Schaeuble sought to reassure parliament that no new aid was at stake for the euro zone’s most heavily-indebted country. He said solidarity among members of the single currency “doesn’t mean you can blackmail each other”.

While Merkel and Schaeuble’s tough stance on Greece goes down well with German voters, the euro zone crisis has created space for a new euroskeptic party to the right of the CDU/CSU – the fast-growing Alternative for Germany (AfD).

AfD leader Bernd Lucke wants Greece to leave the euro and said extending the bailout was “a bad decision for Germany and for Greece … because economic misery in Greece will continue”.

But the European Commission’s financial affairs chief Pierre Moscovici reminded Berlin in an interview with German radio just before the debate that allowing any country to exit the euro zone would merely raise the question “who is leaving next?”.

(Additional reporting by Caroline Copley, Gernot Heller and Hans-Edzard Busemann; Writing by Stephen Brown; Editing by Noah Barkin)

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European shares at fresh seven-year high as ECB QE nears

LONDON (Reuters) – European shares held steady at seven-year highs on Friday as investor confidence stayed buoyant ahead of the European Central Bank’s monthly 60-billion-euro money-printing program set to start in March.

The FTSEurofirst 300 index of top European shares .FTEU3 has surged 14 percent this year, its strongest start to the year since regional stock market benchmarks were created in 1986.

“The market’s had a good run and it’s the end of the month so we’re going to see it drift lower today as people book some profit,” ETX Capital’s head of trading, Joe Rundle, said.

Investors have bought more higher-yielding assets, such as equities, as yields on core European government bonds have tumbled into or close to negative territory on the prospect of the ECB’s quantitative easing program.

“The rally in stocks is so strong that we could see a capitulation of the shorts at some point, which would push the market even higher. Clearly some indexes have reached frothy valuation levels, but we’re still long in the short term,” said Mirabaud Securities senior equity sales trader John Plassard.

The FTSEurofirst index was little changed at 1,557.90 points after hitting a fresh seven-year peak of 1,558.01, with support from strong Airbus (AIR.PA) result, the world’s No. 2 aerospace company, and despite weaker Asian and U.S. markets.

About two-thirds of the way into Europe’s earnings season, 55 percent of companies have met or beaten profit forecasts. Overall, fourth-quarter earnings are expected to grow by 19.5 percent, according to Thomson Reuters I/B/E/S, which would be Europe’s best season in 3-1/2 years.

The ECB is expected to give details at its meeting next week on its Jan. 22 decision to embark on a securities buying program to fend off deflation and revive Europe’s economy.

Data on Friday from some pockets of the euro zone showed inflation prospects, although still subdued, may not be as bad as previously thought, prompting yields on top-rated government bonds to bounce off record lows.


The dollar index slipped, pegged back by month-end selling, but was still on track for its eighth straight month of gains on better data and comments from Federal Reserve officials that bolstered bets for a rate rise later this year.

The index .DXY, which measures dollar performance against major currencies, was set to mark its longest streak of monthly gains since the currency’s link to gold was dropped in 1971.

“It is the data, especially core inflation and durable goods, that is catching attention. We are still calling for a June rate hike and the market is not pricing that. (The markets) are looking for a hike much later. So yes, we think the dollar will outperform,” Barclays strategist, Hamish Pepper, said.

The dollar eased 0.1 percent against the yen to 119.30 yen, but remained above Thursday’s low of 118.68 yen.

Investors are now waiting for the second reading of U.S. fourth quarter gross domestic product data at 8.30 a.m. ET. Economists polled by Reuters expected the figure to be revised down to 2.1 percent from a preliminary 2.6 percent.

The slip in the dollar helped the euro edge up 0.2 percent to $1.1220, but still near the one-month low of $1.1184 plumbed overnight.

In oil markets, crude oil futures rebounded and Brent LCOc1 was headed for its first monthly gain since July, helped by an improving demand outlook and supply outages.

(Additional reporting by Blaise Robinson in Paris and Anirban Nag in London; Editing by Louise Ireland)

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Mazda bets on diesel-only car for Japan launch of key 2015 model

TOKYO (Reuters) – Japan’s Mazda Motor Corp (7261.T) will sell only diesel-powered cars in the domestic launch of its key model for 2015, gambling it can convince the country’s army of hybrid petrol-electric drivers that the days of sooty, noisy diesels are long gone.

Masamichi Kogai, Chief Executive of Japan’s fifth-biggest auto maker, placed his diesel bet in Tokyo on Friday as he unveiled the CX-3, a compact sport-utility vehicle (SUV).

“In Japan, more and more people are choosing to drive diesels,” Kogai said. The CEO also said the greater power offered by diesel engines is a selling point for bigger cars, including compact SUVs.

Mazda has high hopes for its new entry in a small but growing segment of the global auto market. Kogai said the compact SUV segment is expected to double in size by 2020, attracting stiff competition from the likes of Nissan Motor Co’s (7201.T) Juke and Hyundai Motor Co’s (005380.KS) ix 35.

Though Mazda has aggressively promoted diesel engines in Japan, its second-biggest market after the United States, diesels still make up less than 3 percent of passenger car sales with just 79,000 sold in Japan in 2014. Mazda has advanced technology that cuts emissions and sound, but diesel engines – once dubbed a health hazard by a former Tokyo governor – have suffered a lingering image problem in Japan.

With the weak yen making its exports more profitable, Mazda has performed well lately. It expects to sell 1.4 million cars in the financial year ending March – 225,000 of them in Japan – compared with 1.33 million a year earlier.

Yet with a comparatively small line-up, the company needs every launch, including the CX-3, to be successful.

Mazda plans to build about 150,000 CX-3s a year in its home base in Hiroshima, to be sold in 120 countries starting with Japan on Friday at a base price of 2.376 million yen ($19,931).

The car hits showrooms in Australia next month, followed by Europe, North America and other markets. The CX-3 also comes with a 2.0-litre petrol engine in some markets.

To shed another negative image of the diesel engines as loud, Mazda said it has developed a brand new technology that reduces the “knocking” sound unique to diesels by installing a hollow, cylindrical pin in the piston. The technology debuts as an option on higher-end versions of the CX-3.

(Editing by Kenneth Maxwell)

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Moscovici says ‘Grexit’ would raise question

BERLIN (Reuters) – The European Union’s financial affairs chief Pierre Moscovici told German radio on Friday, just before a Bundestag vote on a bailout extension for Greece, that allowing any country to leave the euro zone would simply raise the question “who’s next?”.

“If a country, any country, leaves, the question will arise: who is leaving next?” the European Commissioner for Economic and Financial Affairs told Deutschlandfunk in an interview.

But he added that Greece had to meet its international commitments and ensure that any additional spending resulting from its economic policies were financed.

“The reforms the Greek government wants to launch must be financed. It is not time to talk about debts. We’ll talk about that at the right time. But it’s important for me to say that this is not about a reduction of debt – there’s no haircut.”

(Reporting by Stephen Brown; Editing by Noah Barkin)

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After Indonesia retreat, GM retrenches in Thailand, too

(Reuters) – A day after announcing it is to stop making GM-branded cars in Indonesia, General Motors (GM.N) said on Friday it would cease production of its Chevrolet Sonic in Thailand by the middle of this year.

While GM will still sell cars like the Cruze sedan in parts of Southeast Asia, an emerging markets battleground for global automakers, it is shifting focus to push the ‘American heritage’ of its SUVs and pickups such as the Trailblazer and Colorado.

The restructuring – under Executive Vice President┬áStefan Jacoby, who oversees markets beyond the Americas, Europe and China – marks a retrenchment in Asia by the U.S. automaker. While business grows in China, the world’s biggest autos market, GM has struggled in other parts of its international operations unit, which doesn’t include China.

The Detroit-based automaker has signaled overall restructuring charges of about $700 million this year, and said last month it expected an improved consolidated operating performance from Jacoby’s International Operations unit.

GM’s Thai plant in Rayong, an industrial city southeast of Bangkok, will be scaled down from current annual capacity of 180,000 vehicles. The company did not elaborate, but said it would initiate a “voluntary separation program” for staff. In total, GM employs around 3,200 people in Thailand.

In Indonesia, GM said on Thursday it would cease production of the Chevrolet Spin by end-June and shutter a factory at Bekasi, just outside Jakarta, which employs around 500 people.


After eight decades in Indonesia, GM’s market share is below one percent, according to LMC Automotive. It sold fewer than 11,000 vehicles there last year, while Toyota Motor (7203.T) and its Daihatsu (7262.T) affiliate shifted more than 578,000 vehicles. Toyota and other Japanese makers together control more than 90 percent of the Indonesian market.

Jacoby acknowledged GM got it wrong in going head-to-head with the Japanese in a market he dubs their “backyard”. The Spin, a strategic, small “people mover” van that has done well in Brazil, was too costly to make to be profitable in Indonesia as most of the parts had to be imported.

“We could not ramp up Spin production to boost the volume as we had expected … although the product was really good,” Jacoby told Reuters. “The logistics chain of the Spin was too complex; we had low volume so we could not localize the car accordingly, and from the cost point of view we were just not competitive.”

In Thailand, GM sold close to 26,000 vehicles last year, giving it 3 percent market share, according to LMC Automotive, which puts the combined market share of major Japanese rivals at more than 60 percent. GM said it will phase out sales of the Spin and the Sonic in Thailand by June.

While GM is broadly repositioning the Chevrolet brand in parts of Southeast Asia, it is driving into Indonesia with its Chinese partners, including SAIC Motor Corp (600104.SS). They plan to set up a manufacturing facility near Jakarta for their no-frills Wuling brand, but aren’t interested in taking over GM’s Bekasi plant, a person close to the joint venture said.

The overhaul in Indonesia and Thailand follows GM’s 2013 retreat from car production in Australia, and industry analysts now expect GM to restructure its manufacturing operations in South Korea, a big production hub for the U.S. firm.

Susquehanna Financial Group analyst Matthew Stover said South Korea has shifted from a developing-market cost structure over the last decade to being almost as expensive for car production as Japan.

“I don’t think what’s happening in Korea is even close to (being) done. It’s the biggest problem,” Stover said.

(Reporting by Norihiko Shirouzu in Beijing and Ben Klayman in Detroit; Editing by Ian Geoghegan)

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