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Brazil police arrest Grupo Galvão CEO in Petrobras probe

SAO PAULO (Reuters) – Brazilian police on Friday arrested the CEO of Grupo Galvão, the latest executive seized in a corruption probe focused on state-run oil firm Petroleo Brasileiro SA.

Dario Galvão, chief executive of the construction group, and Guilherme Esteves, a lobbyist who is being investigated for funneling bribe money, were taken to federal police headquarters in the southern city of Curitiba, a court spokeswoman said.

Trials are underway in Curitiba, in what has become Brazil’s biggest-ever corruption probe known as Operation Car Wash.

In December, prosecutors accused the CEO of participating in a cartel of construction executives that fixed prices on contracts at Petrobras, as the oil company is known.

Federal Judge Sergio Moro called Galvão the mastermind of the company’s criminal activity and said he posed a risk of committing more crimes. Prosecutors have proof of his crimes from 2008 until 2014, Moro wrote in a court decision.

In a statement, Grupo Galvao said Galvao’s arrest was “without legal grounding” and he had “not committed any crime.” It also said that Galvao Engenharia, its building subsidiary which filed for bankruptcy this week, rejects vehemently any accusations of being part of a corrupt cartel.

Moro also cited evidence that Esteves used secret accounts abroad to funnel large bribes to employees at Petrobras and rig producer SeteBrasil.

Two dozen of Brazil’s biggest engineering firms are being investigated for overcharging on Petrobras contracts and using the excess to bribe executives, politicians and political parties.

Esteves was not available for comment.

Galvão Engenharia was also one of 23 companies blacklisted by Petrobras in December, with the oil company cutting off payments and banning the firms from bidding on future contracts.

Nearly 100 people, including the treasurer of President Dilma Rousseff’s Workers’ Party, have been indicted in the year-old probe, and prosecutors say more criminal charges will be presented. About 20 executives and money changers are in state and federal jails in Curitiba, including the head of Galvão Engenharia, Erton Fonseca.

Eduardo Leite, vice president of another firm accused of belonging to the cartel, Camargo Correa, was transferred to house arrest this week after agreeing to a plea bargain deal to cooperate with investigators. Another executive from the firm would be released soon, the court spokeswoman said.

(Reporting by Caroline Stauffer; editing by David Gregorio and Richard Chang)

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Intel in talks to buy Altera, shares of firms surge

(Reuters) – Intel Corp (INTC.O) is in talks to buy fellow chipmaker Altera Corp (ALTR.O) in a deal likely to top $10 billion, according to a source familiar with the matter, making it Intel’s biggest purchase ever and the latest merger in the quickly consolidating semiconductor sector.

The acquisition of Altera, which makes programmable chips widely used in cellphone towers, the military and other industrial applications, would underscore Intel Chief Executive Officer Brian Krzanich’s determination to expand into new markets as the personal computer industry loses steam.

Though dominant in the market for chips used in PCs, the world’s biggest chipmaker has been slower than its rivals to adjust in recent years to the growing popularity of smartphones.

Earlier this month, Intel slashed nearly $1 billion from its first-quarter revenue forecast to $12.8 billion, plus or minus $300 million, as small businesses put off upgrading their personal computers.

Shares of Altera shot up about 28 percent after the talks were first reported by the Wall Street Journal, closing at $44.39 per share on the Nasdaq. Intel shares also gained on the news, rising 6.4 percent to $32. Shares of Xilinx, Altera’s main rival, closed up 6 percent.

“On the surface, Altera is one of the only semiconductor companies with better gross margins than Intel, and with about two-thirds of its revenue from telecom, wireless, military/aerospace, it definitely fits the bill of diversifying revenue beyond Intel’s legacy computer markets,” said Cowen Co analyst Timothy Arcuri, in a note to clients.

Intel declined to comment on the report. An Altera spokesman also declined to comment.

Any deal for Altera, valued at $10.4 billion at Thursday’s close and more than $13 billion after trading ended on Friday, would easily surpass Intel’s previous biggest deal, its $7.7 billion purchase of security software maker McAfee in 2011.

Altera’s value to Intel is its programmable chips, which are increasingly being used in data centers, where they are customized for specialized functions such as providing web-search results or updating social networks.

Intel, based in Santa Clara, California, has already been manufacturing chips on behalf of the smaller company since 2013, a major change for Intel, which traditionally has been unwilling to share its cutting-edge technology.

Demand for cheaper chips and new products to power Internet-connected gadgets is driving consolidation in the industry. Features such as WiFi or Bluetooth that once required chips sold by separate companies can now be squeezed onto single pieces of silicon.

Deals in the chip sector have been expected after NXP Semiconductors’ (NXPI.O) $12 billion purchase of Freescale Semiconductor (FSL.N) was announced earlier this month.

Worldwide semiconductor MA reached $31 billion last year, the most since 2011, Thomson Reuters data show. In the 12 months through March 2, 472 chip MA deals were made worldwide, up from 383 in the previous year.

Unlike typical semiconductors, programmable chips made by Altera can be customized after they are manufactured to suit different purposes.

(Reporting by Devika Krishna Kumar in Bengaluru, Noel Randewich in San Francisco, Liana Baker and Greg Roumeliotis in New York, writing by Bill Rigby in Seattle.; Editing by Joyjeet Das and Alan Crosby)

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Yahoo, Microsoft extend search partnership talks for 30 days

SAN FRANCISCO (Reuters) – Yahoo Inc (YHOO.O) and Microsoft Corp (MSFT.O) agreed to extend by 30 days the deadline to re-negotiate a ten year search deal, as the two Internet companies attempt to revamp a thorny partnership crafted by former chief executives.

The search partnership, which took effect in 2010, allowed the companies to negotiate changes or to terminate the arrangement entirely after five years. Under the terms of the deal, the companies had 30 days to make changes following Feb. 23.

According to a filing with the U.S. Securities and Exchange Commission on Friday, Yahoo and Microsoft mutually agreed to extend that deadline to a 60-day period following Feb. 23.

“We value our partnership with Microsoft and continue discussions about plans for the future. We have nothing further to announce at this time,” Yahoo said in a statement.

Microsoft declined to comment.

It was not immediately clear if the extension signaled progress or lack of consensus between Yahoo CEO Marissa Mayer and Microsoft CEO Satya Nadella.

The announcement to extend the talks comes a few days after Nadella’s mother passed away in Hyderabad, India, according to a report in The Economic Times.

Yahoo and Microsoft began a 10-year search partnership in 2010, in a deal crafted by former Microsoft CEO Steve Ballmer and former Yahoo CEO Carol Bartz. The two companies hoped their combined efforts could mount a more competitive challenge to Google Inc (GOOGL.O), the world’s No. 1 search engine.

The partnership has not lived up to expectations. Google still controls roughly two-thirds of the U.S. search market, while Microsoft and Yahoo’s combined share of the market is essentially unchanged at roughly 30 percent.

Yahoo’s Mayer, who joined Yahoo in 2012 and who has been critical of the deal in the past, tried to hold off on adopting Microsoft search technology in certain markets in 2013. A court ruled at the time that Yahoo must use Microsoft’s search technology.

(Reporting by Alexei Oreskovic; Editing by Chris Reese)

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Fed’s Yellen sees gradual rate hikes starting this year

SAN FRANCISCO/WASHINGTON (Reuters) – Federal Reserve Chair Janet Yellen signaled that the U.S. central bank will likely start raising borrowing costs later this year, even before inflation and wages have returned to health, but emphasized the return to normal interest rates will be gradual.

A downturn in core inflation or wage growth could force the Fed to delay the first increase to borrowing costs since 2006, the central bank’s chief said on Friday, but policymakers should not wait for inflation to near the Fed’s 2-percent goal before tightening monetary policy. The Fed has held short-term borrowing costs near zero since December 2008.

After the first rate increase, Yellen said, a further, gradual tightening in monetary policy will likely be warranted. If incoming data fails to support the Fed’s economic forecast, the path of policy will be adjusted, she said.

“With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year,” Yellen said at a monetary policy conference at the Federal Reserve Bank of San Francisco.

Yellen added that while the Fed is giving “serious consideration” to beginning to reduce its accommodative monetary policy, the timing and the path of a Fed hike would depend on the incoming economic data.

“The actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation,” Yellen said.

U.S. Treasury yields fell and held near session lows on Friday after the mildly hawkish comments and as investors bought bonds ahead of month-end rebalancing.

Still, traders of U.S. rate futures kept their bets that the Fed will wait until October to raise rates.

“It turned out to be pretty much a replay” of last week’s Fed statement, said Alfonso Esparza, senior currency Strategist at Oanda in Toronto. “They’re waiting for the data,” he said in reference to Fed policymakers.

With labor markets looking set to improve further, and one-time downward pressure on inflation likely to dissipate, a “modest” rate rise would be unlikely to put a halt to jobs growth, Yellen said. At the same time, she said, raising rates too fast could undercut an economy that has for years been laboring against lingering headwinds from the severe recession.


Yellen, returning to the regional Fed bank she used to run, is under pressure to begin tightening monetary policy without disrupting the U.S. economic recovery underway.

The Fed signaled in its March statement that it was moving a step closer toward raising rates, though the central bank cut its economic outlook and slashed its median estimate for the federal funds rate, in a sign that it was prepared to move more slowly than the market expected ahead of the meeting.

While June remains on the table for the timing of the Fed’s first rate hike, Yellen’s comments since then suggest the central bank is more likely to move later in the year.

With the unemployment rate dropping to 5.5 percent last month, and after more than six years of loose monetary policy, the Fed is eager to begin raising rates and returning to more normal policy.

Several Fed officials have said the central bank has waited too long to bump rates higher, and the delay risks stoking inflation and asset bubbles.

But inflation has remained stubbornly low, complicating the Fed’s plan to part ways with its accommodative monetary policy.

Yellen said that if economic conditions evolve how the Fed’s policy setting committee anticipates, “I would expect the level of the federal funds rate to be normalized only gradually, reflecting the gradual diminution of headwinds from the financial crisis and the balance of risks I have enumerated of moving either too slowly or too quickly.”

(Reporting by Ann Saphir and Michael Flaherty; Editing by Diane Craft)

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Wall St. rises; tech boosted by M&A report

(Reuters) – U.S. stocks rose modestly on Friday and major indexes snapped a four-day losing streak after late news of merger talks in the semiconductor space helped boost the technology sector.

The Dow Jones industrial average .DJI rose 31.96 points, or 0.18 percent, to 17,710.19, the SP 500 .SPX gained 4.68 points, or 0.23 percent, to 2,060.83 and the Nasdaq Composite .IXIC added 27.86 points, or 0.57 percent, to 4,891.22.

(Reporting By Sinead Carew; Editing by Nick Zieminski)

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Lender says will make ‘significant’ new bid for RadioShack

WILMINGTON, Del (Reuters) – A lender to bankrupt RadioShack Corp RSHCQ.PK told a U.S. judge on Friday it was prepared to present a new offer that was a “significant improvement” over a rival proposal that was selected as a winning bidder at an auction this week.

Anthony Clark, an attorney for Salus Capital Partners, said the lender was working on the bid and called it “a significant improvement over anything in front of the court right now.”

Clark’s announcement came at the end of two days of hearings to consider the sale of the company to Standard General, a hedge fund.

RadioShack’s advisers declared that Standard General had outbid Salus, RadioShack’s largest creditor, at a four-day auction that concluded Thursday morning. Salus has challenged that, arguing its bid included $271 million in cash, compared with just $16 million offered by Standard General.

The hedge fund’s proposal also included $112 million of debt forgiveness.

However, Standard General’s bid would save 7,500 jobs by keeping 1,740 RadioShack stores open, most of them in conjunction with wireless phone company Sprint Corp. (S.N) Salus planned to liquidate RadioShack by selling everything from inventory to fixtures.

“People are working on the bid right now,” Clark said.

He said Salus’ team was benefiting from two days of witness testimony about the auction and the way bids had been valued.

He also said Salus’ team would be available all weekend to meet and discuss the proposal with other parties.

The court will resume the hearing to consider the sale to Standard General on Monday. Salus has urged U.S. Bankruptcy Judge Brendan Shannon to block the sale to Standard General, calling the process a sham.

RadioShack entered Chapter 11 bankruptcy in February with more than 4,000 stores, most of which have been closed.

Founded in 1921, the chain was once the go-to retailer for electronics, but became increasingly irrelevant in the digital age.

The case is In Re: RadioShack Corp, U.S. Bankruptcy Court, District of Delaware, No. 15-10197

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Richard Chang and Dan Grebler)

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Intel in talks to buy Altera: WSJ

(Reuters) – Chipmaker Intel Corp (INTC.O) is in talks to buy Altera Corp (ALTR.O), the Wall Street Journal said, citing people familiar with the matter.

Terms of the potential deal and its timing were not known, the Journal said.

Shares of Altera, valued at $10.4 billion at Thursday’s close, were up 24.5 percent at $43.16 per share on the Nasdaq on Friday.

(Reporting by Devika Krishna Kumar in Bengaluru; Editing by Joyjeet Das)

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Fed rate hike may be warranted later this year: Yellen

SAN FRANCISCO (Reuters) – The U.S. Federal Reserve is giving “serious consideration” to beginning to reduce its accommodative monetary policy and a rate hike may be warranted later this year, although a downturn in core inflation or wage growth could force it to hold off, the central bank’s chief said on Friday.

Fed Chair Janet Yellen said that after the first rate increase a further, gradual tightening in monetary policy will likely be warranted. If incoming data fails to support the Fed’s forecast, the path of policy will be adjusted, she said.

“With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year,” Yellen said in prepared remarks at a monetary policy conference at the Federal Reserve Bank of San Francisco.

Yellen added that the timing and the path of a Fed hike would depend on the incoming economic data.

“The actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation,” Yellen said.

(Reporting by Ann Saphir and Michael Flaherty; Editing by Diane Craft)

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Oil dives 5 percent as worries about Iran talks trump Yemen

NEW YORK (Reuters) – Oil tumbled 5 percent on Friday, erasing the previous session’s gains, as Yemen’s conflict looked less likely to disrupt Middle East crude shipments and investors turned their focus to talks for a potential Iran nuclear deal that could put more supply on the market.

Oil prices still notched their second straight weekly gain, boosted by the dollar’s weakness in recent sessions. U.S. crude had its biggest weekly gain in more than a month.

U.S. crude and global benchmark Brent oil spent most of the session in a tight range, down about 2 percent. But they fell sharply in late trading.

Brent settled down $2.78 at $56.41 a barrel. U.S. crude settled $2.56 lower at $48.87. Both fell further after the market settled.

On Thursday, oil jumped 5 percent on fears that the conflict in Yemen could disrupt cargoes on the neighboring Bab el-Mandeb Strait, where 3.8 million bpd of crude and oil products flow.

Yemen’s Houthi rebels made broad gains in the country’s south and east despite a second day of Saudi-led air strikes meant to check the Iranian-backed militia’s efforts to overthrow President Abd-Rabbu Mansour Hadi.

But the oil market paid scant attention to the conflict, and focused instead on Iran. Tehran and major powers pushed each other for concessions ahead of an end-of-March deadline for a preliminary nuclear deal that could lift sanctions on the OPEC nation’s oil exports.

“The bulls caved after sensing an Iranian nuclear deal might happen by the weekend. Nobody wants to go home long oil on a Friday, with news like this,” said Tariq Zahir, fund manager at Tyche Capital Advisors in Laurel Hollow in New York.

Tehran is keen to recover market share lost under the U.S.-led sanctions that have restricted its crude exports to just 1 million barrels per day from 2.5 million bpd in 2012.

“Both sides have a lot of skin in the game in terms of the pressure to deliver something, so we’re probably going to hear noise that they have a deal or are close enough but will have to postpone to another deadline,” said John Kilduff, partner at New York energy hedge fund Again Capital.

(Additional reporting by Christopher Johnson in London and Henning Gloystein and Keith Wallis in Singapore; Editing by Marguerita Choy, Lisa Von Ahn and David Gregorio)

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