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AstraZeneca to carve out antibiotic R&D into separate firm

LONDON (Reuters) – Drugmaker AstraZeneca (AZN.L) has decided to carve out its early-stage antibiotic research by creating a stand-alone subsidiary company, as it sharpens its focus on other therapy areas.

Chief Executive Pascal Soriot said last year he was looking to partner or sell its anti-infective business, which is no longer viewed as a core area for the British drugmaker.

AstraZeneca said in an emailed statement it would invest $40 million in the new antibiotic company, which will include early-stage products such as a drug in Phase II for gonorrhea. The move will impact approximately 95 employees based in Waltham, Massachusetts.

The new structure has no impact on anti-infective products already on the market, including Merrem, Zinforo, Fluenz/Flumist and Synagis. It also does not affect Avycaz, a new antibiotic approved this week from Actavis (ACT.N), which was co-developed with AstraZeneca.

Antibiotics have fallen out of favor in the past decade among many Big Pharma companies, because of their typically low margins. The industry has focused instead on more profitable areas, like cancer.

More recently some companies have started coming back to the space, given the demand for novel medicines that can fight drug-resistant superbugs, with Merck Co (MRK.N) agreeing to buy Cubist for $8.4 billion in December.

But AstraZeneca prefers to deploy its resources on its three priority areas of oncology; cardiovascular and metabolic diseases; and respiratory and inflammation.

The decision to carve-out early-stage antibiotics fits with Soriot’s aim of doing more so-called “externalization”, involving the sale of non-core drugs, both to increase the company’s focus and generate additional income to see it through a tough period of patient expiries on older drugs.

Last year it struck a partnership deal worth up to $500 million for Alzheimer’s treatment with Eli Lilly (LLY.N), which could be a model for further transactions.

(Reporting by Ben Hirschler, editing by William Hardy)

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Buffett, a cheerleader for America, takes his checkbook abroad

NEW YORK (Reuters) – Warren Buffett, in his annual letter to Berkshire Hathaway Inc shareholders last year, called America “the mother lode of opportunity.”

This year, his 50th at Berkshire’s helm, the world’s third-richest person could write something quite different.

When Buffett releases this year’s letter on Saturday, he may point to opportunities outside of the United States, after he recently decided to buy a German motorcycle accessories retailer and said he may shop more in that country.

That would mark a significant turn for Berkshire, a conglomerate with more than 80 businesses, giant stock investments and a $360 billion market value.

Buffett did not return a request for comment.

In his letter, eagerly awaited on Wall Street for Buffett’s candid thoughts on investing, business and life, the 84-year-old Buffett may detail his vision for Berkshire in the decades to come, including after he is gone.

His comparatively taciturn second-in-command, 91-year-old Charlie Munger, is also expected to express his thoughts.

“Warren Buffett recognizes that global investing is going to be an important part of the future,” said Michael Yoshikami, chief executive of Destination Wealth Management in Walnut Creek, California and a longtime Berkshire shareholder.

Buffett’s strategy of buying solid companies at low prices has gotten more difficult in the United States. In the first quarter of 2009, when the SP 500 index was barely one-third of what it is now, stocks on average cost 12.9 times projected full-year earnings.

At the end of 2014, that multiple had reached 17.4, above the long-term average of 14.8 times earnings, meaning it costs more to get the same financial pop.

By contrast, the rest of the world’s growth has been sluggish. Germany is expected to grow just 1.3 percent this year, while the U.S. economy may expand 3.6 percent, according to the International Monetary Fund.

Though Buffett said this week the falling euro was not his primary driver for buying in Europe, it was a factor. The currency has slid about 20 percent against the U.S. dollar since May.


In the last year, Berkshire has announced several purchases worth or estimated at a couple of billion dollars each.

These have included Procter Gamble Co’s Duracell battery unit, the Van Tuyl auto retailer, and SNC-Lavalin Group Inc’s AltaLink energy transmission unit in Canada.

Buffett also kicked in $3 billion toward Burger King’s purchase of Canadian doughnut chain Tim Hortons, which created Restaurant Brands International Inc.

Burger King is run by Brazil’s 3G Capital, which shares ownership with Berkshire of ketchup maker HJ Heinz Co.

Berkshire ended September with $62 billion in cash, well above the $20 billion cash cushion Buffett likes. That leaves more than $40 billion to go shopping.

That means Buffett needs big purchases, which he calls “elephants,” to soak up significant amounts of money. He has said he would team up again with a partner such as 3G Capital.

“There may be opportunities overseas that he would certainly consider,” said Cathy Seifert, an analyst with SP Capital IQ.

But even if Berkshire spreads its wings geographically, Seifert said, it will not turn its back on a good U.S. purchase.

“I definitely would not rule out the U.S.,” she said.

(Additional reporting by Caroline Valetkevitch; Editing by Jennifer Ablan and Steve Orlofsky)

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Oil’s drop chills Asian stocks, inflation data boosts dollar

TOKYO (Reuters) – Asian shares pulled further away from a five-month high on Friday as a sharp pullback in crude oil prices dampened risk appetite, though Japanese stocks crawled to a fresh 15-year peak after the dollar surged against the yen overnight.

The dollar’s strength followed upbeat U.S. data, which tilted expectations back toward an early interest rate hike by the Federal Reserve.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.3 percent after advancing to a five-month high on Wednesday.

In a mixed day for the region, South Korean shares fell after a seven-day rally and Malaysian and Thai stocks declined modestly. But shares in Australia and Hong Kong nudged higher.

Tokyo’s Nikkei .N225 was up 0.1 percent after touching a high not seen since June 2000, with strong domestic industrial output data lending support in addition to the weaker yen.

The dollar inched down 0.1 percent to 119.25 yen JPY= after rising about 0.5 percent overnight from a low of 118.68. The dollar index hovered near a one-month high of 95.357.

Dollar bulls, disappointed earlier this week by perceived dovish signals from Fed Chair Janet Yellen, took heart again after data released on Thursday showed U.S. core inflation rose more than expected.

Robust U.S. durable goods orders also helped, with both sets of data driving Treasury yields higher and supporting the dollar.

Investors are now waiting on revised fourth quarter U.S. gross domestic product data due later on Friday for another health check of the world’s largest economy.

Economists polled by Reuters expected U.S. growth in the fourth quarter to be revised down to 2.1 percent from a preliminary 2.6 percent. ECONUS

“As growth in the upper range of 2 percent is the Fed’s prerequisite for an early and sustained rate hike, a figure just around or below 2 percent is likely to hurt expectations for a June hike and weigh on the dollar,” said Masafumi Yamamoto, market strategist at Praevidential Strategy in Tokyo.

The euro was up 0.2 percent at $1.1213 EUR=, but still near the one-month low of $1.1184 plumbed overnight.

U.S. crude oil posted a modest rebound and was up 1.3 percent at $48.80 a barrel CLc1 after plunging 5.5 percent the previous day as rising U.S. inventories countered expectations for recovering demand. [O/R]

Despite the sharp overnight slide, U.S. crude was still on track for its first monthly rise in eight. North Sea supply outages and renewed fears of gas supply disruption in Europe have recently supported prices.

(Editing by Shri Navaratnam)

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Nissan says can meet U.S. sales goal with capacity in South Korea, Japan

YOKOHAMA, Japan (Reuters) – Nissan Motor Co (7201.T) will be able to meet its goal of taking 10 percent of the U.S. market in two years without any major new investments and by making use of capacity available at factories in Japan and South Korea, a top executive said on Friday.

With sales in the United States growing at nearly twice the pace of the overall market last year, Japan’s No.2 automaker has been expanding capacity at its North American plants but needs more to meet demand.

“The key word is flexibility,” Jose Munoz, executive vice president at Nissan and chairman of its North American arm, told reporters at Nissan’s headquarters in Yokohama.

“I can’t (give) you concrete numbers now but we have already started to work on how we can capitalize on the available capacity in Japan for North America.”

Earlier this month, Nissan announced plans to tap alliance partner Renault SA’s (RENA.PA) joint venture plant in South Korea to export more Rogue crossovers to the United States.

With recent and upcoming model launches in the United States such as the Murano sport-utility vehicle, Maxima sedan and Titan pickup truck, Munoz said Nissan has “never been as confident as we are today” over its prospects in the United States, its biggest market.

The Tennessee-based Spaniard also said there was no reason for Nissan to lag rival Honda Motor Co (7267.T) in the United States given its broader product range that includes a full-sized pickup truck and a bigger manufacturing footprint in North America.

Munoz noted that Nissan is closing the gap with Honda also in key product segments where the latter has traditionally dominated with Toyota Motor Corp (7203.T), thanks to brisk sales of the Altima and Sentra sedans.

“I’m confident we will overtake them,” he said, declining to estimate a time frame.

Nissan took 8.4 percent of the U.S. market in 2014, inching closer to its 10 percent goal for the business year to March 2017.

But brisk sales have been driven partly by generous discounts and low-profit deliveries to fleet customers – both of which Munoz said Nissan was successfully beginning to rein in.

Shares in Nissan have risen nearly 20 percent since the company announced third-quarter results earlier this month, partly on hopes for improved profitability in North America. The stock was down 1 percent midday on Friday, after hitting a more than seven-year high a day earlier.

(Editing by Muralikumar Anantharaman)

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Brent approaches $61, set to end seven-month losing streak

SINGAPORE (Reuters) – Crude oil futures rebounded on Friday, with Brent heading for its biggest monthly gain since May 2009, as supply outages in North Sea and renewed fears of gas supply disruption in Europe supported prices.

A reduction in rig counts and expectations for better oil demand have helped Brent prices rise by more than 14 percent so far this month from January’s close of $52.99.

U.S. crude CLc1 is also on course for its first monthly rise in eight, but with a more modest gain of about 1.3 percent.

Brent crude LCOc1 rose 68 cents to $60.73 a barrel by 2058 ET. U.S. crude CLc1 was also up 68 cents at $48.85.

Norwegian energy firm Statoil has shut its Statfjord C platform in the North Sea after discovering cracks in the platform’s flare tower. The entire Statfjord field, which includes two other platforms, produced about 81,000 barrels of oil equivalents last year.

Elsewhere in Europe, gas supply talks between the European Union, Ukraine and Russia will be held in Brussels on Monday after President Vladimir Putin warned that Russia would halt gas supplies to Ukraine if it did not receive advance payment, raising the possibility of disrupted deliveries to Europe.

In the United States, a reduction in rig counts coupled with a slump in upstream investments supported expectations that production could be trimmed going forward.

The active drilling rig count in North Dakota, the country’s No. 2 oil producing state, dropped to 119 on Feb. 26, versus 193 last year, state data showed.

While supplies from Libya increased to 100,000 barrels a day on Thursday, up from 40,000 bpd, Spain’s Repsol said the company has little hope of restarting production there in the short-term citing security problems.

Still, oversupply worries persist and could limit oil gains. An anemic refinery throughput pushed up U.S. crude inventories by 8.4 million barrels last week, a key reason behind Thursday’s hefty slide.

(Reporting By Jane Xie; Editing by Ed Davies)

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Bank of America accounting chief, two directors to step down

(Reuters) – Bank of America Corp (BAC.N) said on Thursday that two members of its board of directors and its chief accounting officer will be leaving the company in coming weeks.

Directors Charles “Chad” Holliday, who chaired the bank’s board until chief executive Brian Moynihan took on that role in October, and Clayton Rose will not stand for re-election at the company’s annual meeting this spring.

Both men recently took on added responsibilities at outside organizations. On Oct 30, Holliday was appointed chairman of Royal Dutch Shell PLC (RDSa.L), and on Jan. 26, Rose was announced as the next president of Bowdoin College in Brunswick, Maine.

Chief Accounting Officer Neil Cotty will step down, effective March 1, the bank said. He will be succeeded by Rudolf Bless, currently the deputy chief accounting officer.

Bless, previously deputy chief financial officer and chief accounting officer at Credit Suisse Group AG CSGN.VX, joined the bank last November. Cotty will assist with the transition.

(Reporting by Neha Dimri in Bengaluru and Peter Rudegeair in New York; Editing by Saumyadeb Chakrabarty and Gunna Dickson)

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Oil retreats as rising U.S. inventories continue to weigh

NEW YORK (Reuters) – Crude oil futures fell sharply on Thursday as rising inventories in the United States pressured both Brent and U.S. contracts and countered expectations for recovering demand.

While Brent losses were tempered by those expectations for improving global demand and geopolitical concerns about energy supplies from Libya and Russia, U.S. crude losses more than wiped out Wednesday’s gains.

Brent April crude LCOc1 fell $1.58, or 2.56 percent, to settle at $60.05 a barrel, off a $62.63 intraday peak. On Wednesday, Brent surged 5 percent.

U.S. April crude CLc1 fell $2.82, or 5.53 percent, to settle at $48.17, after rallying 3.47 percent on Wednesday.

Brent’s premium to U.S. crude CL-LCO1=R on Thursday increased to $12.06, the widest spread since January 2014.

Both crude contracts rallied on Wednesday after Saudi oil minister Ali al-Naimi said demand was growing. Earlier in the week, a Gulf OPEC delegate predicted stronger demand growth in the second half of 2015.

Brent prices collapsed after hitting $115 in June 2014 on global oversupply and OPEC’s subsequent decision to defend market share against rival producers rather than cut output.

Brent’s recovery from a nearly six-year low of $45.19 in January was sparked by signs that lower prices are starting to reduce investment in production in non-OPEC countries.

“But stopping production growth is not the same as lowering production,” said a Texas-based cash crude broker.

Helping limit Brent’s losses this week was President Vladimir Putin’s warning on Wednesday that Russia would halt natural gas supplies to Ukraine if it did not receive advance payment, raising the possibility of disruptions of deliveries to Europe.

Turmoil in embattled Libya has kept production and exports from the OPEC-member nation uncertain, adding lift to Brent.

“The Brent market is much more reactive to an almost daily dose of geopolitical headlines that are demanding at least some element of risk premium,” Jim Ritterbusch, president at Ritterbusch Associates, said in a research note.

Meanwhile, U.S. crude inventories kept rising, adding another 8.4 million barrels last week, according to government data. [EIA/S]

Refinery capacity use fell last week as refiners do maintenance, helping the deficit of U.S. April to May crude CLc1-CLc2 increase to more than $2 a barrel.

The anemic refinery throughput, cold weather and sliding distillate inventories have supported New York ultra-low sulfur diesel March futures HOc1. They rose 3.22 cents to settle at $2.1358 a gallon.

(Additional reporting by Alex Lawler in London and Jane Xie in Singapore; Editing by Mark Potter, David Gregorio and Lisa Von Ahn)

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Nasdaq resumes climb; S&P 500, Dow fall with energy

NEW YORK (Reuters) – The Nasdaq resumed its recent advance on Thursday after deal news in the technology sector, while the Dow and SP 500 dipped as energy shares sank with oil prices.

The day’s move put the Nasdaq within just 12 points of the 5,000 mark, which it last hit in March 2000 along with its all-time high of 5,132.52 at the height of the dot-com frenzy. The Dow broke a two-day streak of record closing highs.

Among the top boosts for the Nasdaq and SP 500 were shares of Avago Technologies (AVGO.O), which jumped 14.7 percent to $129.25. The company reached a deal to acquire Emulex (ELX.N) for $8 per share. Emulex shares surged 24.7 percent to $7.93.

Also among the day’s top performers, (CRM.N) shares climbed 11.7 percent to $70.24. The cloud software company reported quarterly earnings and raised its full-year revenue forecast.

After a sluggish start to the year, stocks have rebounded sharply in February. Both the Dow and SP 500 are on track for their best monthly performance since October 2011, while the Nasdaq is on pace for its best month since January 2012.

“After we had a difficult January and early part of February, earnings reinvigorated the rally and pushed it higher,” said Bruce Zaro, chief technical strategist at Bolton Global Asset Management in Boston. “Consumer and healthcare really surprised investors.”

Energy shares led declines in the SP 500 and Dow, with the SP 500 energy index .SPNY dropping 1.8 percent as U.S. crude oil futures fell 5.5 percent to settle at $48.17, pressured by rising inventories in the United States.

The Dow Jones industrial average .DJI fell 10.15 points, or 0.06 percent, to 18,214.42, the SP 500 .SPX lost 3.12 points, or 0.15 percent, to 2,110.74 and the Nasdaq Composite .IXIC added 20.75 points, or 0.42 percent, to 4,987.89.

The Nasdaq on Wednesday had broken a 10-day streak of gains.

SP 500 earnings rose 6.8 percent in the fourth quarter, Thomson Reuters data showed, up from a Jan. 1 estimate for growth of just 4.2 percent.

Apple shares gained 1.3 percent to $130.41. Apple sent out invitations for a March 9 event, about one month before the much-anticipated launch of the new Apple Watch.

Economic data was mixed. January U.S. consumer prices had the biggest drop since 2008 as gasoline prices tumbled, while weekly jobless claims climbed last week and durable goods orders rose last month. The deflation data could provide a cautious Federal Reserve the leeway to keep interest rates low for longer.

About 6.4 billion shares changed hands on U.S. exchanges, below the 6.8 billion average for the month to date, according to BATS Global Markets.

NYSE decliners outnumbered advancers 1,646 to 1,387, for a 1.19-to-1 ratio; on the Nasdaq, 1,522 issues rose and 1,192 fell, a 1.28-to-1 ratio favoring advancers.

The SP 500 posted 41 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 125 new highs and 20 new lows.

(Editing by Bernadette Baum and Nick Zieminski)

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Citi urges Europe’s CEOs to follow U.S. share buyback trend

LONDON (Reuters) – Citi strategists on Thursday urged European firms to use historically cheap borrowing costs to buy back their own shares, a practice embraced by U.S. companies in recent years that has also attracted criticism.

What European companies should do with their trillion-dollar cash pile in a world of rock-bottom interest rates and cheap central-bank money has become a hot topic for investors, as carrying cash on balance sheets becomes costlier while borrowing funds for everything from mergers to buybacks becomes cheaper.

“CEOs: This is an opportunity to use record cheap debt-funding to retire relatively expensive equity funding…use excess cash or debt to buy equity,” Citi’s European strategy team wrote in a note to clients, saying the cost of corporate debt funding was at record lows relative to earnings yield.

While share buybacks are often hailed by some investors as a form of capital return, reducing the company’s outstanding share count and usually inflating both share price and earnings per share, for others they look like a missed opportunity to re-invest in growth or wages; they also may fuel asset inflation.

It is a debate that has already swept the United States, where share buybacks totaled $305.2 billion in 2014 alone, compared with $38.3 billion in Europe. GMO Capital’s James Montier said in December that returning cash to shareholders had led to a squeeze on investment, while Societe Generale strategist Albert Edwards said buybacks were pushing up already high share prices.

Now that the ECB is set to follow in the U.S. Federal Reserve’s footsteps with its own quantitative easing program, investors and analysts expect European companies to pick up the pace of buybacks and dividends: Anheuser-Busch (ABI.BR), the world’s largest brewer, hiked its dividend and announced a $1 billion share buyback on Thursday.

Defenders of buybacks say enriching shareholders can still benefit the economy if the money is reinvested elsewhere. They also point to mining and energy companies as having over-invested and delivered mixed results in recent years.

But policymakers will be watching closely at a time when the specters of deflation and sluggish growth are keeping central banks on the defensive. If companies remain reluctant to reinvest in the economy, U.S. buyback critics may also find a home in Europe.

(Reporting by Lionel Laurent; Editing by Andrew Heavens)

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