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Deutsche Bank co-CEO Fitschen goes on trial in Kirch case

MUNICH (Reuters) – Deutsche Bank (DBKGn.DE) co-CEO Juergen Fitschen went on trial on Tuesday accused of giving misleading evidence in connection with the 2002 collapse of the Kirch media empire, a case that could prove a distraction for the bank just as it undergoes a strategic overhaul.

Fitschen, 66, has vowed to fight the criminal allegations, which follow a civil suit brought by heirs of late media magnate Leo Kirch. He faces a maximum sentence of 10 years in prison.

The trial started a day after Fitschen and co-CEO Anshu Jain unveiled a long-awaited revamp that foresees a paring back of Deutsche’s investment bank and the sale of its Postbank retail division via a stock market listing.

Fitschen and his co-defendants, including former CEOs Josef Ackermann and Rolf Breuer, are obliged to attend weekly hearings scheduled through September. “It’s very difficult and highly unfortunate timing for the bank,” said Christopher Wheeler, a banking analyst at Atlantic Equities.

At the start of the trial, in the same Munich court where Formula One boss Bernie Ecclestone and a neo-Nazi murder cell were tried in recent years, prosecutor Christiane Serini said Fitschen and his co-defendants had misled an appeals court to avoid paying damages sought by Kirch.

All five have denied the charges.

“Fitschen offered vague and inconclusive evidence at his hearing,” Serini told the court, packed with five judges, a phalanx of lawyers and dozens of reporters.

Fitschen leafed through documents as the charges were read out. To his right sat attorney Hanns Feigen, who has defended other high-profile figures including Bayern Munich president Uli Hoeness and Porsche boss Wendelin Wiedeking.

After 12 years of legal wrangling, Deutsche Bank settled the Kirch suit in February 2014 in a deal that cost the bank about 925 million euros ($1 billion).

Fitschen has rejected an offer from the prosecutor to settle his case out of court with a fine, sources say. On Monday he said: “I don’t know why I’m being charged”.


Deutsche Bank shares fell over 4 percent on Monday and were down the same amount on Tuesday as investors questioned the lack of ambition and detail in the bank’s overhaul.

Fitschen is not only co-CEO of Germany’s flagship bank but is head of the banking lobby BdB, a high-profile position that puts him in close contact with regulators and policymakers.

In addition to Fitschen, Ackermann and Breuer, two former management board members of Deutsche, Clemens Boersig and Tessen von Heydebreck, are on trial.

Fitschen and Jain took over as co-CEOs in 2012 and their tenure has been marked by weak returns and a share price that has trailed rivals. The bank has been dogged by legal woes, including investigations into possible manipulation of benchmark currency rates and dealings with Iran.

After initially sticking with an expensive universal banking model, the duo have reined in their ambitions and worked to trim Deutsche’s operations.

In the dual-CEO structure, Fitschen would normally take the lead in selling the new strategy to a skeptical audience. But the trial could put pressure on Jain to take a more active role.

“The trial adds another layer of pressure on the current management who are already under pressure from the restructuring plan,” said a European equity analyst who declined to be named. “They have zero scope for failure.”

Leo Kirch, who died in 2011, blamed Breuer for triggering his group’s downfall by questioning its creditworthiness in a 2002 television interview. For years, Kirch sought to recoup about 2 billion euros ($2.7 billion) in damages

Deutsche Bank said on Tuesday it was “convinced that any suspicion against Juergen Fitschen will be shown to be unfounded.”

(Additional reporting by Joern Poltz; Writing by Carmel Crimmins and Noah Barkin; Editing by David Holmes)

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Tsipras presses for May debt deal, says referendum possible

ATHENS (Reuters) – Greek Prime Minister Alexis Tsipras said on Tuesday he was confident of an outline deal with international creditors within two weeks, after shaking up his negotiating team and sidelining his finance minister who has infuriated euro zone partners.

Tsipras also said he would have to resort to a referendum if lenders insisted on demands deemed unacceptable by his leftist government, elected to scrap austerity.

Athens is weeks away from running out of cash, and talks with EU and IMF lenders on more aid have been deadlocked over their demands for Greece to implement reform measures, including pension cuts and labor market liberalization.

In his first major television interview since being elected in January, Tsipras said he expected a deal with creditors by May 9, three days before a debt payment to the IMF of about 750 million euros ($815.5 million) falls due. He ruled out a default but stressed the priority was to pay wages and pensions.

Greek financial markets and the euro rallied on Monday on hopes that the relegation of Finance Minister Yanis Varoufakis, a Marxist academic prone to lecturing his euro zone peers, would improve prospects for an early deal to avoid a default that might lead to a Greek exit from the currency area.

Yet around half of investors expect Greece to leave the euro zone within the next 12 months, a survey published by German research group Sentix showed on Tuesday, highlighting market scepticism about politicians’ pledges.

The European Commission said talks on a cash-for-reform deal were making progress but gave no details of the substance.

Pressed on the options if no deal were found, Tsipras ruled out snap elections. But he said the government did not have the right to accept demands “outside our mandate”, and a deal that required such terms would have to be put to Greeks in a referendum.

“But I am certain we will not reach that point. Despite the difficulties, the possibilities to win in the negotiations are large. We should not give in to panic moves. Whoever gets scared in this game loses.”

Tsipras said Greece was in the final stretch of negotiations despite differences on key issues like labor reform, pension cuts and a proposed value-added tax hike on tourist islands.

He said asset sales would be part of the concessions offered, including two major items – the sale of Piraeus port and the leasing of 14 regional airports.

He also said Greece was hoping for a 3 billion to 5 billion euro pre-payment of future profits if it struck a deal with Russia on Turkish Stream, a gas pipeline project.


On Monday, Tsipras appointed Deputy Foreign Minister Euclid Tsakalotos – one of his close allies and a soft-spoken economist liked by officials representing creditors – to head a new group handling negotiations with Greece’s lenders.

He also put economist George Chouliarakis, a close aide to Deputy Prime Minister Yannis Dragasakis, in charge of talks with the so-called Brussels group of the European Commission, the European Central Bank and the International Monetary Fund.

In an effort to show that Athens is serious about giving lenders access to data, a new team was also set up to support EU and IMF officials gathering information in the Greek capital.

The moves effectively took the talks out of the hands of Varoufakis, although Tsipras defended the flamboyant intellectual, while acknowledging that the mood toward Greece among euro zone finance ministers was sour.

“There is a negative climate but I believe that this part of the negotiating game,” Tsipras said. “Part of the negotiating game is to deconstruct the person who sits opposite you at the negotiation table.”

A senior European Central Bank policymaker, Bank of France governor Christian Noyer, said sidelining Varoufakis from the talks could be productive, but Athens still faced hard choices.

“He’s creating a number of tensions so that can certainly help the negotiations – but it doesn’t change the substance at all. The Greek government … must finally decide on serious reforms to put the economy back on track,” Noyer said.

In Brussels, a European Commission spokeswoman said the talks had gained pace since a confrontational meeting between Varoufakis and his euro zone peers in Riga last Friday.

“Contacts have intensified and allowed further progress,” spokeswoman Annika Breidthardt told a daily news briefing. “Talks are being made more productive and efficient.”

Tsipras accused the previous conservative-led Greek government and unnamed forces in Europe of laying a “trap” for his government when it took power.

“They derive pleasure from the prospect of a failure in the talks,” Tsipras said. “We received a country that was in a situation of financial asphyxiation.”

He called the ECB’s limit on the amount of Treasury bills Greek banks can purchase – preventing them from financing the government – a “politically and ethically unorthodox” decision.

The ECB barred banks from posting Greek government bonds as collateral to obtain funds in its regular monetary tenders in February, since Tsipras’ government had vowed not to complete its international bailout program. The banks are kept afloat on emergency lending assistance from the Greek central bank, but the ECB caps the amount weekly and limits its use for T-bill purchases to avoid indirect monetary funding of the state.

Tsipras said his government made a mistake by accepting a verbal rather than written commitment that the ECB decision would be reversed once Greece got a deal to extend its bailout.

He offered praise for German Chancellor Angela Merkel – a frequent target of his criticism before he was elected – saying she was diligent and organized.

“She has the German culture of wanting – and I think this is good in our relationship – the other person to tell the truth, to not lie,” he said. “And that’s what I try to do; I don’t lie.”

(Writing by Paul Taylor; Editing by Peter Graff)

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‘Flash crash’ accused trader due back in court after failing to raise bail

LONDON (Reuters) – Navinder Sarao, the British trader accused of helping provoke the 2010 Wall Street “flash crash”, is due to appear in a London court on Wednesday after failing to raise the bail needed to secure his release from custody, a court official said.

Sarao, 36, who traded from his parents’ modest home in west London, has been charged by the Justice Department with wire fraud, commodities fraud and market manipulation over a period of several years but told a hearing last week he would fight extradition.

He was granted bail provided he produced a surety of just over 5 million pounds and met other conditions, but an official at London’s Westminster Magistrates’ court said on Tuesday he had been unable to raise the cash and would return for a “lack of surety hearing”.

“If they haven’t paid they come back every week,” the official said. “He’s not paid as yet.”

(Reporting by Michael Holden; editing by Stephen Addison)

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U.S. home prices rise in February: S&P/Case-Shiller

NEW YORK (Reuters) – U.S. single-family home prices rose in February from a year earlier, led by strong increases in the western half of the United States, a closely watched survey said on Tuesday.

The SP/Case Shiller composite index of 20 metropolitan areas gained 5 percent in February on a year-over-year basis, besting January’s downwardly revised gain of 4.5 percent. This was also above a Reuters poll of economists that forecast a rise of 4.7 percent.

Denver and San Francisco reported the highest year-over-year gains, with prices increasing by 10 percent and 9.8 percent, respectively, over the last 12 months.

“Home prices continue to rise and outpace both inflation and wage gains,” said David Blitzer, chairman of the Index Committee for SP Dow Jones Indices.

“While nationally, prices are recovering, new construction of single family homes remains very weak despite low vacancy rates among both renters and owner-occupied homes.”

(Reporting by Chuck Mikolajczak; Editing by Meredith Mazzilli)

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Wall Street fall as earnings disappoint

(Reuters) – U.S. stocks fell in volatile early trading on Tuesday as strong results from Merck and better-than-expected housing data helped offset disappointing earnings and profit-taking in Apple.

Investors were also awaiting the results of a two-day Federal Reserve meeting that ends on Wednesday for clues on when the central bank will hike interest rates.

Apple (AAPL.O) hit a record high before falling as much as 1.7 percent to $130.33 despite beating Wall Street’s revenue and profit forecasts. Up to Monday’s close, Apple’s stock had risen about 62 percent in the past 12 months.

Merck (MRK.N) rose 4.8 percent to $59.85, on track for its best day since January 2014, after its diabetes drug, Januvia, achieved the main goal in a safety study. The company also reported better-than-expected quarterly sales and earnings.

Coach (COH.N) shares slumped 7.4 percent to $39.11, putting it on track for its steepest fall since June, after the handbag and accessories maker’s quarterly sales fell short of estimates.

“Most of the big corporations are missing on revenue and eventually that’s going to hurt the markets as valuations stay high,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

U.S. single-family home prices rose more than expected in February from a year earlier, led by strong increases in the western half of the United States, a closely watched survey said on Tuesday.

At 10:06 a.m. EDT (1406 GMT) the Dow Jones industrial average .DJI was down 43.11 points, or 0.24 percent, at 17,994.86, the SP 500 .SPX was down 6.69 points, or 0.32 percent, at 2,102.23 and the Nasdaq Composite .IXIC was down 38.08 points, or 0.75 percent, at 5,022.17.

Of the SP 500 companies that reported results up to Monday, only 44.3 percent beat on revenue, below the 61 percent that beat in a typical quarter, according to Thomson Reuters data.

Dow component Pfizer (PFE.N) and home appliances maker Whirlpool (WHR.N) both cut forecasts, blaming the strong dollar. Whirlpool fell 6.4 percent to $185.32 while Pfizer slipped 0.1 percent to $34.55.

The dollar .DXY gained about 23 percent against a basket of major currencies over the financial year ended March 31, hurting companies with large overseas operations.

United Parcel Service (UPS.N) rose 2.1 percent to $99.53 after it reported higher first-quarter net profit due to price increases and productivity improvements, and reaffirmed its earnings outlook for 2015.

Declining issues outnumbered advancing ones on the NYSE by 1,465 to 1,287, for a 1.14-to-1 ratio on the downside; on the Nasdaq, 1,446 issues fell and 957 advanced for a 1.51-to-1 ratio favoring decliners.

(Editing by Savio D’Souza)

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U.S. consumer confidence sinks in April

NEW YORK (Reuters) – U.S. consumer confidence unexpectedly slumped in April, according to a private sector report released on Tuesday.

The Conference Board, an industry group, said its index of consumer attitudes fell to 95.2 from an upwardly revised 101.4 in March. Economists were looking for a reading of 102.5, according to a Reuters poll.

The March figure was originally reported as 101.3.

(Reporting By Michael Connor in New York; Editing by Meredith Mazzilli)

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Tyson Foods plans to cut human antibiotics in U.S. chicken flocks by 2017

CHICAGO (Reuters) – Tyson Foods Inc (TSN.N), the largest U.S. poultry producer, plans to eliminate the use of human antibiotics in its chicken flocks by September 2017 – one of the most aggressive timelines yet set by an American poultry company.

The Arkansas-based chicken and meat giant also said it is working on ways to curtail such on-farm drug practices at its other protein businesses, which include pork and beef.

    The move marks the latest push by the livestock and food industries to reduce the use of antibiotics crucial to human health in meat production.

Authorities are concerned that the routine feeding of antibiotics to animals could spur the creation of antibiotic resistant superbugs in humans, creating a health hazard.

    Tyson’s move, announced on Tuesday morning, aims to help the company meet a deadline recently outlined by McDonald’s Corp. (MCD.N) to have its U.S. restaurants gradually stop buying chicken raised with human antibiotics over the next two years.

    But the company, a key chicken supplier to McDonald’s, said in a statement to Reuters that its plans are part of an ongoing effort and “go beyond one customer.”

Tyson said it is also forming working groups with independent farmers, company suppliers, veterinarians and others to talk about how to develop ideas to cut the use of antibiotics vital to fighting human infections in its U.S. beef, pork and turkey supply chains.

    The working groups will begin meeting this summer.

While veterinary use of antibiotics is legal, controversy has grown over the routine feeding of antibiotics that are important to humans to otherwise healthy chicken, cattle and pigs in a bid to stave off disease and help the animals grow more quickly. [ID:nL1N0RC1S1]

    Tyson said it has already stopped using all antibiotics in its 35 broiler hatcheries and has cut human antibiotics used to treat its broiler chickens by more than 80 percent since 2011. The company said it requires a veterinary prescription when antibiotics are used on its broiler farms.

    “Given the progress we’ve already made reducing antibiotics in our broilers, we believe it’s realistic to shoot for zero by the end of our 2017 fiscal year,” Donnie Smith, president and chief executive of Tyson Foods, said in a statement.


Earlier this month, the Wall Street Journal reported that Pilgrim’s Pride Corp. (PPC.O), the nation’s second-largest U.S. poultry processor, would cut all antibiotics from a quarter of its chicken production by 2019.

Rival poultry processor Perdue Farms Inc. told Reuters more than 95 percent of the chickens it produces are raised without antibiotics approved for human use, and more than half are raised with no antibiotics of any kind.

    Sandwich chain Chick-fil-A in 2014 gave its producers five years to meet its commitment to go antibiotic-free for chicken. Perdue is a major supplier to Chick-fil-A.

    Tyson has been working with livestock drug companies and others to test a variety of alternatives to antibiotics to protect birds, ranging from probiotics to essential oils derived from plant extracts, the company told Reuters.

    However, alternatives to human antibiotics are also needed for treating ill birds, the company said. It is providing funds to help accelerate research into disease prevention and antibiotic alternatives to be used on farms.

    Tyson declined to say how much the company will spend to back such funding of livestock pharmaceuticals and alternatives.

    Some poultry industry experts say the options for non-human drugs to treat certain diseases in broiler chickens can be limited, and say animal pharmaceutical firms have been slow to invest for the development of new chicken-only antibiotics.

    Tyson said it plans to meet its 2017 antibiotic-withdrawal timeline, but there could be some exceptions.

    “We won’t jeopardize animal well-being just to get there,” Smith said. “We’ll use the best available treatments to keep our chickens healthy, under veterinary supervision.”

(In 11th paragraph, corrects fiscal year in quote to 2017 from 2016.)

(Reporting By P.J. Huffstutter in Chicago; Editing by Jo Winterbottom and Richard Pullin)

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Boeing looks to car industry expert for jet production savings

(Reuters) – Boeing (BA.N) plans to use newer and more standardised manufacturing techniques for its new 777X jetliner, paving the way for “significant” savings as it gradually feeds the changes back into existing assembly lines, a senior executive said.

The approach will draw increasingly on lessons learned from outside the aerospace industry and comes as the focus of the intense rivalry between Boeing and Airbus (AIR.PA) shifts toward production strategies after a record boom in orders.

“I think the 777X will be our first opportunity to show the ideas that we have to date,” said Walter Odisho, Boeing’s vice president of manufacturing and safety, referring to the world’s largest twin-engined jet that is due to enter service in 2020.

“However, we also have the capability to affect the other programs that we have in place … In many cases we’re looking to standardize our approach,” he told Reuters.

Odisho, 52, was speaking in his first interview since joining Boeing in December 2013 from Toyota (7203.T), where he oversaw manufacturing at the carmaker’s $6 billion plant in Kentucky.

While standardised production is common in the auto industry it is rarer in aerospace, where volumes are lower and airlines demand more customization but where output is rising fast.

Odisho said planemakers need to make production “more repeatable and predictable”.

He declined to estimate cost savings from the shift toward “Advanced Manufacturing,” an innovative set of production tools that can include robotics, but called them significant.

“The idea of achieving significant savings in a single action is a fallacy. We’ll take the opportunities and when you add them all up together, I think they will amount to quite significant improvements,” Odisho said.

Boeing has long relied on Toyota-inspired “lean” production methods to improve efficiency, but Odisho has been hired to help push car industry thinking deeper into its manufacturing plants.

That matches an approach taken at Airbus, where car industry executives in senior positions are more evident. [ID:nL6N0T619C]

“If you look at aerospace with market demand rising, we need to start thinking differently and move efficiencies from the auto industry into this arena,” Odisho said.

Last month Boeing started automating the assembly of 737 wing panels and is introducing robots on the 777 [ID:nL1N0WG02Y].

“I think we are beginning the journey,” Odisho said. “There are areas … such as drilling where we have a lot of repetitive motion.”


It is not just about automation, however.

Odisho observes the factory like a choreographer, with an eye on the overall shape of the performance.

“Think of it as a robot. Because robots are automated they can go through many types of motion that are wasteful. But in order to utilize robots correctly we need to be thoughtful about the movements that their arms make,” he said.

“If we can apply the same thinking (to the factory) … then we can affect the process to a high degree,” he said.

For example, Odisho is urging a fresh look at the flow of parts.

“If we can develop a system where we have direct deliveries to our lines and in an orientation which our operators will use to simply secure instead of handling parts, we have tremendous opportunities,” he said.

Improving the sequencing of parts reduces inventory and eases cashflow, a recent focus for investors. And it means less space is needed to store them, lowering overheads.

Boeing’s planemaking chief Ray Conner has challenged engineers to think about “build quality” when designing aircraft so they can be produced more affordably.

Odisho says a clean-sheet design for a 21st-century aircraft plant would weave a single thread from the drawing board to the parts cart on the factory floor.

“I would look at material flow, I would look at processes, I would look at the design of the airplane with people in mind – how the work would be performed. I would design the airplane with specific areas of automation in mind,” Odisho said.

Could the buffer of several days for holding parts in aircraft plants ever hit auto-industry levels of as low as two hours ?

“Ultimately I think we will see that day,” Odisho said.

(Writing by Tim Hepher in Paris and Alwyn Scott in New York; Editing by Greg Mahlich)

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T-Mobile first-quarter revenue rises, beats estimates

(Reuters) – T-Mobile US Inc (TMUS.N) reported first quarter results that slightly beat expectations as the wireless company added 1.8 million net customers and users defected to other networks at a lower rate.

T-mobile shares, which have soared 25 percent year to date, were relatively unchanged in morning trade at $34.01 on the New York Stock Exchange.

The fourth-largest wireless carrier in the United States has turned around years of subscriber losses with aggressive deals, savvy marketing and well-publicized wireless plans in recent quarters.

Among the big four U.S. wireless companies including Verizon Communications (VZ.N), ATT Inc (T.N) and Sprint Corp (S.N), T-Mobile now has a 16.5 percent market share, up from 11.5 percent two years ago, Chief Executive John Legere said on an earnings call.

There is “long room to grow,” Legere said.

The company, which bills itself as the “Uncarrier”, has launched a series of wireless plans over the last two years, including offering to pay the early termination fees for customers switching from other carriers and letting users roll over unused wireless data each month.

While these initiatives have led to customer gains, they have come at a cost. The company reported a first-quarter loss of 9 cents per share, versus a loss of 19 cents a year earlier, narrowly beating analysts’ expectations of a loss of 10 cents per share.

In the latest quarter, it added 1.1 million postpaid customers who pay for service after use. It said postpaid churn, the rate at which users switch to other networks, was at a record low of 1.3 percent, down from 1.7 percent in the previous quarter.

While ATT and Verizon said they lost postpaid phone users in the first quarter, T-Mobile said it added 991,000 postpaid users.

For 2015, the company said it expects to add postpaid users in the range of 3 million to 3.5 million, up from its previous guidance in the range of 2.2 million to 3.2 million.

T-Mobile revenue rose 13.1 percent to $7.8 billion. This beat analysts’ estimates of $7.7 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Malathi Nayak in New York; Editing by Jeffrey Benkoe and Chris Reese)

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