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Asia shares fade, dollar pressured before Fed

SYDNEY (Reuters) – Asian share markets faded from seven-year peaks on Wednesday while investors exited crowded positions in the U.S. dollar as the Federal Reserve wraps up a two-day policy meeting.

The broad retreat in the U.S. currency came as a string of soft data seemed to push back the day when the Fed might start lifting rates, and defied a jump in Treasury yields.

Trading was thinner on Wednesday with Japanese markets on holiday and little in the way of major data due in Asian time.

That helped the dollar index .DXY stabilize at 96.103 after touching the lowest since March 5. The euro stood at $1.0972 EUR= having stopped short of resistance at $1.1000.

The dollar fared better on the yen at 118.84 JPY= as Japan’s central bank is expected to reaffirm its massive stimulus campaign at a policy meeting on Thursday.

Talk of more aggressive policy easing in China has also put a bid under many regional stock markets, though the scale of recent gains attracted profit taking on Wednesday.

Shanghai’s main index .SSEC edged back 0.8 percent, but is still up nearly 40 percent on the year so far. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.6 percent having touched their highest since early 2008.

Australian stocks .AXJO slid 1.2 percent after repeatedly shying away from a major psychological barrier at 6,000.

On Wall Street, the Dow .DJI had ended Tuesday with gains of 0.4 percent, while the SP 500 .SPX rose 0.28 percent and the Nasdaq .IXIC dipped 0.1 percent.

Aiding the Dow was a 1.9 percent gain in IBM (IBM.N) shares after the company raised its quarterly dividend by 18 percent, the biggest increase in five years.

Apple (AAPL.O) hit a record high after posting stellar results, but still ended down 1.6 percent. Shares of Twitter (TWTR.N) dropped as much as 24 percent after its results disappointed, before closing with a loss of 18.2 percent.

The Fed’s latest policy statement will come just hours after data are expected to show the U.S. economy grew at a pedestrian 1 percent annualized pace in the first quarter, partly due to bad weather and a port strike. ECONUS

The Fed has so far played down the softness in the hope of a rebound in the second quarter, and there have been hints of a much-needed upturn in wages and inflation.

“Investors are approaching FOMC with the view it will bore as much as possible. The risk is that what is neutral to the Fed may be surprisingly upbeat to the market,” said analysts at Citi.

“We would not see this as a big near-term boost to the dollar and bond yields, but more a reminder that the Fed remains hopeful that data will improve sufficiently for a lift off in September.”

Yields on 10-year U.S. Treasury bonds were near one-month highs at 2.010 percent on Wednesday US10YT=RR, having drifted up from 1.90 percent at the start of the week.

Oil prices slipped as expectations U.S. crude stockpiles have reached record highs offset security scares in the Middle East and support from a softer dollar.

Brent crude LCOc1 was quoted 21 cents lower at $64.43 a barrel, while U.S. crude CLc1 fell 23 cents to $56.83.

(Editing by Shri Navaratnam and Jacqueline Wong)

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Wal-Mart to build 115 new China stores by 2017 in push to offset slowing growth

BEIJING (Reuters) – Giant U.S. retailer Wal-Mart Stores Inc (WMT.N) plans to expand its footprint in China by nearly a third by opening 115 new stores by 2017, the firm’s chief executive said, in a renewed push to lure China’s grocery shoppers despite slowing growth.

“Our aim is to become an integral part of China’s economy,” Chief Executive Doug McMillon said at a news conference in Beijing on Wednesday. “China is a top priority.”

The development plans come as the U.S. retailer seeks to stave off slower growth in China, closing some under-performing stores and giving more emphasis to the faster-growing online grocery market through its platform.

McMillon said he was excited by e-commerce growth prospects in the country. The platform offered 8 million products at the end of 2014, up from just 18,000 items in 2011, he said.

The company said it would open the 115 new stores in cities such as Shanghai, Shenzhen and Wuhan between 2015 to 2017, creating more than 30,000 jobs, without disclosing how much it would invest in building the new outlets. It had 411 stores in China at the end of January this year, according to its annual report.

Wal-Mart also plans to invest more than 370 million yuan ($60 million) to remodel more than 50 stores this year. McMillon also said the company would ensure the highest quality suppliers, reinforcing its focus on food safety after it announced a 300 million yuan investment in food safety management last year.

The Bentonville, Arkansas-based retailer’s new push in China comes as global grocery firms face increasing challenges in the world’s second-biggest economy. Wal-Mart in February said that its China net sales declined 0.7 percent, with comparable same-store sales falling 2.3 percent, for the quarter ended Jan. 31.

Wal-Mart, France’s Carrefour SA (CARR.PA) and Britain’s Tesco PLC (TSCO.L) have all seen sales growth slip over the last five years, losing market share to local rivals, according to a report published on Tuesday from consumer analytics firm Kantar Worldpanel.

Average same-store sales dropped into negative territory last year, according to an analysis of six major grocers by consultancy OCC.

Tesco, U.S. retailer Best Buy Co Inc (BBY.N) and Britain’s Marks and Spencer Group PLC (MKS.L) have all taken a hit in China over the last couple of years, scaling back operations or exiting the country.

(Reporting by Matthew Miller and Adam Jourdan; Writing by Brenda Goh; Editing by Kazunori Takada and Kenneth Maxwell)

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Samsung Elec overtook Apple as top smartphone maker in first quarter: Strategy Analytics

SEOUL (Reuters) – Samsung Electronics Co Ltd (005930.KS) overtook Apple Inc (AAPL.O) to recapture the title of world’s top smartphone maker by volume in the first quarter of 2015, research firm Strategy Analytics said on Wednesday.

It said Samsung shipped 83.2 million smartphones worldwide and captured 24 percent market share in the quarter, down from 31 percent a year earlier but better than Apple’s 18 percent.

“Samsung continued to face challenges in Asia and elsewhere, but its global performance has stabilized sufficiently well this quarter to overtake Apple and recapture first position as the world’s largest smartphone vendor by volume,” Strategy Analytics Executive Director Neil Mawston said in a statement.

(Writing by Stephen Coates; Editing by Miral Fahmy)

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Chinese demand for Apple’s big-screen phones fuel sales growth

SAN FRANCISCO (Reuters) – Apple’s large-screen iPhones are a big hit in China, taking market share from Samsung and selling at a pace that may make China a greater source of revenue than the Americas for Apple in coming years, analysts said.

The world’s most valuable consumer electronics company reported on Monday a 71 percent increase in sales in China to $16.8 billion, driven by its new, bigger iPhone 6 and 6 Plus. In the first three months of the year, for the first time, Apple sold more iPhones in China than in the United States.

Consumer demand for the newest electronics pushed sales in China to 29 percent of total global sales for Apple in the first quarter, compared with 21 percent a year ago. By comparison, the Americas represent 37 percent of total sales, but are growing more slowly at only 19 percent last quarter.

“The bigger screens on iPhone 6 have been selling like hot cakes,” said Daniel Ives, an analyst at FBR Capital Markets in New York, who estimated that China could represent as much as 40 percent of Apple’s revenue by 2017. For Apple, China is “the golden goose,” he said.

The surge in sales, helped by Chinese New Year gift-buying, was caused by a latent build-up in demand, analysts said.

“Apple fans in China had been waiting years for bigger-screen iPhones and they are upgrading at a furious rate to the new models,” said Neil Mawston, executive director at research firm Strategy Analytics.

Samsung won over millions of Chinese mobile customers four years ago with its Galaxy Note ‘phablet’, creating a whole new category somewhere between a phone and a tablet, with screen sizes of more than five inches diagonally, compared to the previous standard of about four inches.

Apple is starting to win some of them back again.

“Apple really had no choice but to come back with a bigger screen iPhone for the 5-inch category to bring those switchers back, and that’s precisely what they’ve done,” said Mawston.


Chinese customers gravitated naturally to the bigger screen size, as it makes it easier to input Chinese characters with a finger or stylus on the screen and is more effective for video.

For many Chinese, the phone is also the first, the most important, or even the only computing device they own.

“People just use them for more, and therefore appreciate the bigger screen,” said Frank Gillett, an analyst at technology research firm Forrester. Chinese customers tend to do their computing on-the-go or at various locations, partly due to patchy broadband availability at home, and is truly a ‘mobile-first’ tech culture, said Gillett, which puts extra value on the phone.

Apple’s distribution and marketing in China has now also clicked into place, analysts said. In October, for the first time, Apple offered phones with all three major carriers, China Mobile, China Telecom and China Unicom, with attractive subsidies.

That presence may bode well as Apple looks to win new customers and entice others away from Samsung and local competitor Huawei.

“People don’t drop their brand new phones and run out and get new ones immediately,” said Gillett. “It takes a while to build up steam as people hit the replacement cycle.”

Apple is also making inroads outside of the biggest cities. Its phones are now sold in more than 40,000 places in China, Chief Executive Tim Cook said in a call with analysts on Monday.

Analysts say Apple makes higher profit margins on the iPhone 6 Plus. Apple doesn’t say what its sales or its margins are for individual phone models.

The bigger phone, with a 5.5 inch diagonal screen compared to 4.7 inches for the regular iPhone 6, sells better in China than in any other region, said Mawston, although it still lags sales of the smaller, cheaper iPhone 6.

“The 6 Plus has its lowest volumes in Latin America, Africa and the Middle East, and its highest in East Asia, while everything else is in between,” he said.

As far as many Chinese are concerned, the bigger the phone the better.

“Some consumers aspire to own the ‘full set’ of a big house, big car, big TV and big smart phone,” said Mawston at Strategy Analytics.

(Reporting by Bill Rigby. Editing by Peter Henderson and John Pickering.)

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Twitter cuts revenue forecast, shares slump

(Reuters) – Twitter Inc (TWTR.N) reported quarterly revenue that fell short of Wall Street estimates and cut its full-year forecast because of weak demand for its new direct response advertising, sending shares down as much as 24 percent on Tuesday.

User growth was off to a slow start in April, the company said, even though it hit its own target for the just-ended first quarter.

Twitter forecast 2015 revenue of $2.17 billion to $2.27 billion, down from its earlier forecast of $2.3 billion to $2.35 billion. Analysts on average had been expecting $2.37 billion.

Twitter said its new direct response ads, intended to encourage actions such as clicking on a link to an advertiser’s website, did not produce the revenue expected. Advertisers limited their spending and the click rate on Twitter’s ads fell, but the company expects improvement in the second half of 2015, Chief Financial Officer Anthony Noto said on a call with analysts.

The company, which allows users to broadcast 140-character messages, said revenue rose to $436 million in the first quarter, from $250.5 million a year earlier. This was below the average analyst estimate of $456.8 million, according to Thomson Reuters I/B/E/S. (

Concerns about Twitter were exacerbated when the results were leaked before the market closed. Market data firm Selerity tweeted the figures, saying it had found the release on Twitter’s investor relations website. Twitter blamed the Nasdaq, which it said managed its investor relations website.

“Everything looked weaker than expected,” said Arvind Bhatia, a SterneAgee CRT analyst. “This sort of loss of momentum is probably going to cause a bigger outside reaction than in normal circumstances.”

The company’s monthly active users rose 18 percent from the previous year to 302 million, in line with some analysts’ expectations.

Twitter’s net loss widened to $162.4 million, or 25 cents per share, for the quarter, from $132.4 million, or 23 cents per share, a year earlier.

Excluding items, the company earned 7 cents per share, above the 4 cents per share expected by analysts.

Selerity’s tweet about Twitter’s earnings raised questions about the social media company’s internal controls, said Brian Jacobsen, chief portfolio strategist at Wells Fargo Fund Management.

Ahead of earnings on Tuesday, Twitter said it had acquired marketing technology company TellApart to ramp up its direct response advertising.

Twitter shares closed down 18.2 percent at $42.27 on the New York Stock Exchange, and fell further to $41.89 after hours.

(Reporting by Yasmeen Abutaleb in New York and Devika Krishna Kumar in Bengaluru, editing by Peter Henderson and Richard Chang; Editing by Sriraj Kalluvila, Richard Chang and Steve Orlofsky)

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GoPro forecast beats on strong demand for action cameras

(Reuters) – Wearable camera maker GoPro Inc (GPRO.O) forecast current-quarter profit and revenue above analysts’ expectations, citing strong demand for its flagship Hero4 action cameras.

Shares of the company, which also reported better-than-expected first-quarter profit and revenue, rose 8.6 percent in extended trading on Tuesday.

GoPro, whose cameras are used by surfers, skydivers and other action junkies, said it was focusing on Japan, Korea and China markets.

The company said it planned to expand its offerings in China by the end of the second quarter. GoPro gets about half of its total revenue from markets outside the United States.

“It appears that entry in China which happened in January is off to a good start and it feels like they got fairly high expectations for that to continue in (second quarter),” Dougherty Co analyst Charles Anderson told Reuters.

GoPro, which claims to make the five top-selling camera or camcorders in the United States, has said expansion outside the U.S. market is key to its efforts to boost revenue growth.

GoPro’s success has prompted companies such as Garmin Ltd (GRMN.O), Panasonic Corp (6752.T) and Polaroid to launch their own action cameras. The market has also attracted the attention of Apple Inc (AAPL.O).

GoPro forecast earnings of 24-26 cents per share and revenue of $380 million-$400 million for the second quarter.

Analysts on average were expecting a profit of 16 cents per share and revenue of $333.7 million, according to Thomson Reuters I/B/E/S.

GoPro’s net income attributable to shareholders nearly doubled to $16.8 million, or 11 cents per share, in the first quarter.

Excluding items, the company earned 24 cents per share.

Revenue rose 54 percent to $363.1 million.

Analysts on average had expected earnings of 18 cents per share and revenue of $341 million.

GoPro said sales from markets outside the United States, including Europe and Asia Pacific, jumped 66 percent.

Separately, GoPro said it would buy Kolor, a virtual reality software maker.

“It’s very clear based on this acquisition they (GoPro) are probably going to develop a camera that can record video 360 degree, the spherical video,” Anderson said.

The San Mateo, California-based company’s shares were trading at $51.10 after the bell.

(Additional reporting by Devika Krishna Kumar in Bengaluru; Editing by Sriraj Kalluvila and Kirti Pandey)

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Kraft Foods quarterly profit falls 16 percent, but tops expectations

(Reuters) – Kraft Foods Group Inc (KRFT.O), which is merging with ketchup maker H.J. Heinz Co [HJHC.UL], on Tuesday reported profit that topped analyst estimates, driven by reduced advertising spending and overhead.

But the company missed revenue expectations amid sluggish demand for its meals and desserts. Kraft, whose brands include Velveeta and Oscar Mayer, is struggling to grow as consumers shift to brands that are perceived as healthier, including foods that are organic or less processed.

Shares fell 16 cents to $85.72 in after-hours trading on Wednesday.

“It may not matter to the stock, but the quarter wasn’t great,” said JP Morgan analyst Ken Goldman in a note. “We did not see much … that we think will send the shares higher tomorrow.”

Kraft’s net income fell 16 percent to $429 million, or 72 cents per share, in the first quarter ended March 28, from $513 million, or 85 cents per share, a year earlier. When adjusted for items such as cost cuts and a loss related to the company’s pension obligations and other retirement benefits, Kraft earned 86 cents a share.

Revenue fell slightly to $4.35 billion. Analysts had expected earnings per share of 81 cents and revenue of $4.43 billion.

Heinz, backed by Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) and Brazilian private equity firm 3G Capital, will combine with Kraft to create the third-largest North American food company, the companies said in late March.

Both companies said at the time that the deal, which is expected to close in the second half of 2015, would provide an opportunity to expand Kraft’s brands overseas. Kraft says its brands are currently in 98 percent of North American households.

In the first quarter, the company said its cheese business, which rose 1.3 percent, benefited from price hikes in the past year and changes the company made to its Philadelphia brand soft cream cheese.

Meanwhile, beverage sales were up 4.2 percent, helped by the launch of McCafe branded coffee that Kraft is selling in partnership with McDonald’s Corp (MCD.N).

(Reporting by Ramkumar Iyer in Bengaluru; Editing by Robin Paxton and Alan Crosby)

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Detroit automakers rely on U.S. truck sales for global profits

DETROIT (Reuters) – Detroit automakers have come full circle, relying as they did before the financial crisis on profits from selling trucks and sport utility vehicles in the United States to cover losses overseas.

That’s the profit formula Detroit was supposed to move beyond after the financial crisis, gas price shocks and the federal bailouts of General Motors and Chrysler. Ford Motor Co’s (F.N) first-quarter results on Tuesday highlight how reliant the Detroit Three have become once again on their biggest, least- fuel-efficient models.

Industry executives and analysts say the pattern may look familiar, but the risks aren’t the same.

Ford lost money in South American and Europe, and Chief Executive Mark Fields told analysts on Tuesday that “we are seeing slower growth” in the Chinese market.

But Ford reported $1.34 billion in pre-tax profits from North America for the quarter, down from $1.5 billion a year earlier. Higher costs for materials, manufacturing and engineering dented the results, but Ford’s North American take was more than enough to offset the $404 million in pre-tax losses from other regions. Ford also reaffirmed its full-year profit guidance.

Central to Ford’s profit forecast is continued success for the launch of the aluminum-body F-150 pickup, which is still chugging toward full speed. Company executives say demand for the new F-150 is strong.

General Motors Co (GM.N) last week reported a record $2.2 billion in first-quarter earnings before interest and taxes from its North American auto operations, but break-even results outside North America.

Fiat Chrysler Automobiles NV (FCAU.N) reports first-quarter results on Wednesday and is expected to show a similar dependence on North American sales of its Ram pickup and Jeep SUVs.

Some warning signs are popping up in the United States. The Conference Board’s latest measure of U.S. consumer confidence on Tuesday hit its lowest level since December. The stronger dollar is allowing Japanese and European rivals to cut prices or offer more features on their U.S. products.

Japanese automakers over the past two years have garnered a $4,000 per vehicle advantage due to the weaker yen, according to Morgan Stanley analyst Adam Jonas.

“To put equipment on at no price or low price is exactly what they have traditionally done over many, many years,” Ford Chief Financial Officer Bob Shanks told Reuters. “We’ll have to continue to work on our costs.”

Detroit’s automakers have cut costs substantially since the financial crisis, buying insurance against a slowdown in the U.S. truck market.

“We’re a little bit back to the future, although we kind of got there in different ways,” said Brian Johnson of Barclays. Cars are not as profitable as large trucks, he noted, but they are profitable. In the past, Detroit’s small and medium-sized cars were often losers.

Susquehanna Financial Group analyst Matthew Stover said Ford’s reliance on the F-150 is “a problem every auto company would probably love to have. They’ve got to figure out a way to make more money on everything else.”

(Editing by Joe White and Dan Grebler)

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Dow, S&P 500 end up with Merck, IBM; Nasdaq slips with Apple

(Reuters) – The Dow and SP 500 ended a volatile session higher on Tuesday, helped by strong earnings from Merck and gains in IBM after it boosted its dividend, while the Nasdaq fell with Apple.

Adding to volatility just before the close, shares of Twitter (TWTR.N) dropped as much as 24 percent after its results were published early. The stock closed down 18.2 percent at $42.27.

IBM (IBM.N) shares rose 1.9 percent to $173.92, giving the Dow its biggest boost. The company hiked its quarterly dividend by 18 percent, the biggest increase in five years. Shares also closed above their 200-day moving average, a bullish technical signal.

Apple (AAPL.O) swung between gains and losses a day after reporting results. The stock hit a record high in early trading but shares ended down 1.6 percent at $130.56, weighing on the Nasdaq.

“There continues to be the bull-bear push, even with the good numbers you saw from Merck,” and other companies, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

“Apple’s numbers were phenomenal, but yet the stock is down,” he added. “I think people were expecting a blowout quarter … so it’s kind of a sell-the-news situation.”

The Dow Jones industrial average .DJI rose 72.17 points, or 0.4 percent, to 18,110.14, the SP 500 .SPX gained 5.84 points, or 0.28 percent, to 2,114.76 and the Nasdaq Composite .IXIC dropped 4.82 points, or 0.1 percent, to 5,055.42.

Merck (MRK.N) jumped 5 percent, its biggest percentage increase since January 2014, after reporting better-than-expected results and releasing favorable data late Monday about the safety of its Januvia diabetes drug.

Whirlpool (WHR.N) fell 7.1 percent to $183.70, the biggest percentage decliner in the SP 500, after the company cut its 2015 profit and sales forecast, blaming the strong dollar and Brazil’s stagnating economy.

U.S. first-quarter earnings are now on track to post a slight gain after the mostly stronger-than-expected results, defying forecasts for the first profit decline since 2009, Thomson Reuters data showed.

Contributing to day’s volatility, Iranian Revolutionary Guards forces boarded a Marshall Islands-flagged cargo ship in the Gulf, U.S. officials said. That spurred a brief rally in oil prices.

Investors await the outcome of a two-day Federal Reserve meeting that ends on Wednesday, hoping for clues on when the central bank will hike interest rates.

Helping the market early in the session, U.S. single-family home prices rose more than expected in February from a year earlier, according to a survey.

Advancing issues outnumbered declining ones on the NYSE by 1,906 to 1,121, for a 1.70-to-1 ratio; on the Nasdaq, 1,657 issues rose and 1,065 fell, for a 1.56-to-1 ratio favoring advancers.

The SP 500 posted nine new 52-week highs and no new lows; the Nasdaq Composite recorded 63 new highs and 39 new lows.

About 6.6 billion shares changed hands on U.S. exchanges, above the 6.3 billion daily average for the month to date, according to BATS Global Markets.

(Editing by Savio D’Souza and Nick Zieminski)

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