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Dollar General says COO Vasos to replace Dreiling as CEO

Discount retailer Dollar General Stores Inc (DG.N) said Chief Operating Officer Todd Vasos would replace Rick Dreiling as chief executive, effective June 3.

Dreiling, 61, will remain senior adviser and chairman until his retirement on Jan. 29, the company said on Thursday.

Vasos was widely expected to be named the company’s CEO and his candidature was supported by investors, Stifel, Nicolaus Co analysts wrote in a note.

Dreiling, who joined Dollar General as CEO in January 2008, has been credited with making the company the top U.S. deep-discount retailer.

He spearheaded Dollar General’s return to the public market in 2009, after KKR Co [KOHLB.UL] took the company private in 2007 for $7.2 billion.

“Vasos certainly has big shoes to fill… we have confidence in his selection and expect the transition will be smooth,” Stifel analysts said.

Dreiling announced his retirement in June last year, soon after a proposal by activist investor Carl Icahn to merge the company with Family Dollar Stores Inc (FDO.N).

Dollar General later made a bid for Family Dollar, which had already agreed to be bought by smaller rival Dollar Tree Inc (DLTR.O), sparking off a months-long tussle for the No.2 U.S. discount retailer.

Family Dollar’s shareholders voted in favor of Dollar Tree’s $8.5 billion offer in January, rejecting Dollar General’s $9.1 billion bid.

The combined entity will overtake Dollar General as the largest discount retailer in the United States.

Vasos, 53, joined Dollar General in December 2008 as executive vice president and chief merchandising officer. He was promoted to chief operating officer in November 2013.

Before Dollar General, Vasos was with retail drugstore chain Longs Drug Stores Corp, where Dreiling has also worked earlier.

Dollar General’s shares were little changed at $73.19 in morning trading on the New York Stock Exchange.

(Editing by Kirti Pandey)

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Oil steadies ahead of U.S. inventory data

NEW YORK Oil prices rose in choppy trade on Thursday, snapping two days of sharp losses, after data showed a fourth weekly drawdown in U.S. crude stocks.

The U.S. Energy Information Administration (EIA) said crude oil inventories fell by 2.8 million barrels last week, ahead of Monday’s Memorial Day holiday, which unofficially kicked off the peak summer driving season in the United States.

Going by EIA data, it was a fourth straight week of declines in domestic crude stocks.

The draw was well above the decline of 857,000 barrels forecast in a Reuters survey. Industry group American Petroleum Institute, meanwhile, estimated a build of around 1.3 million barrels last week.

Despite that, oil bulls could barely push the market higher right after the EIA data. U.S. crude was down most of the day and Brent was only up slightly, both rallying just minutes before the close.

U.S. crude CLc1 settled up 17 cents, or 0.3 percent, at $57.68 a barrel, after plumbing a one-month low of $56.51 earlier.

Brent LCOc1 settled at $62.58, up 52 cents, or nearly 1 percent. It had fallen to a six-week low of $61.24 during the session.

Oil prices had fallen about 3 percent in the past two sessions on the strength of the dollar.

“My feeling is that demand for oil is growing as expected as we head into the summer, and if we can manage the headwinds posed by the strong dollar, we should be able to maintain an upward trajectory for prices,” said Phil Flynn, an analyst at the Price Futures Group in Chicago.

Some attributed the price weakness earlier in the day to doubts that big weekly drawdowns in U.S. crude would continue for long. They cited the slowing pace in U.S. oil rig declines, which signaled more imminent supply that would add to the global oil glut.

“To me, I need to see more of these draws each week,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. “Otherwise it could be just the case of higher demand ahead of a holiday weekend that goes away once that period is over.”

Aside from U.S. crude, data showed price differentials for UK-traded crude also weakening from a supply glut. Prompt cargo for North Sea Forties traded on Thursday at the lowest level since December 2008, a sign of a market struggling to absorb surplus barrels.

(Additional reporting by Christopher Johnson in London and Henning Gloystein and Florence Tan in Singapore; Editing by Bernadette Baum and Jonathan Oatis)

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EU regulators tell 11 countries to adopt bank bail-in rules

BRUSSELS The European Commission on Thursday gave France, Italy and nine other EU countries two months to adopt new EU rules on propping up failed banks or face legal action.

The rules, known as the bank recovery and resolution directive (BRRD), seek to shield taxpayers from having to bail out troubled lenders, forcing creditors and shareholders to contribute to the rescue in a process known as “bail-in”.

The Commission drafted the rules in response to the financial crisis which started in 2008, giving the 28 countries in the European Union until the end of last year to apply them.

It said Bulgaria, the Czech Republic, France, Italy, Lithuania, Luxembourg, the Netherlands, Malta, Poland, Romania and Sweden had yet to fall in line.

“If they don’t comply within two months, the Commission may decide to refer them to the EU Court of Justice,” the EU executive said in a statement, referring to Europe’s highest court based in Luxembourg.

(Reporting by Foo Yun Chee; editing by Adrian Croft)

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China markets plunge in record turnover as margin traders take fright

SHANGHAI China’s stock markets plunged on Thursday, with indexes dropping over 6 percent in record high turnover as investors rushed to sell after more brokers tightened margin trading requirements for clients and the central bank drained money market liquidity.

The CSI300 index .CSI300 and the Shanghai Composite Index .SSEC both slumped in late afternoon trade, ending down and 6.5 pct, respectively, their worst day since January 19 when markets fell over 7 percent on an earlier crackdown on margin trading. In terms of points shed, the two indexes suffered their heaviest single day loss since 2008.

The Shanghai Stock Exchange saw A share turnover hit 1.2 trillion yuan ($193.57 billion), an all time record high, on the selloff.

In Hong Kong, the Hang Seng Index .HSI closed 2.2 percent down, and the China Enterprises Index .HSCE lost 3.5 percent, and some some major mainland shares were trading at a discount to their Hong Kong counterparts.

China’s stock market has surged over 140 percent over the past 12 months despite a flagging economy, as retail investors, including university students, barbers and janitors piled into the world’s best performing market, though economists have warned that, based on economic fundamentals, the rally was unjustified.

Official data shows the surge has been accelerated by cheap credit, with the outstanding value of margin finance hitting a record 2 trillion yuan on Tuesday.

On Thursday morning at least three Chinese brokerages, including Guosen Securities Co (002736.SZ), Southwest Securities Co (600369.SS) and Changjiang Securities Co (000783.SZ) said they would tighten margin requirements.

“The brokerages are front running what the regulator wants to do,” said Bernard Aw, an analyst at ING Markets in Singapore.

Haitong Securities (600837.SS) and GF Securities (000776.SZ) had made similar moves earlier in the week.

“This is no longer an individual case, but an industry-wide campaign,” said Zhang Chen, analyst at Shanghai-based hedge fund Hongyi Investment. “Clearly, they got guidance from regulators, and this shows a change of government’s attitude toward the margin trading business.”


Key mainland sub indexes including property .SSEP, energy .CSI300EN and financial services .CSI300FS plunged more sharply, with both energy and property slumping over 7 percent.

Shares in several Chinese brokers fell by between 6-8 percent.

Tian Weidong, analyst at Kaiyuan Securities in Xi’an, said that the sharp drop in financials was partly due to news that Central Huijin Holdings, an asset management company controlled by Beijing, had reduced its holdings in major state-owned banks China Construction Bank (601939.SS) and ICBC (601398.SS), both of which are index heavyweights.

The news was published on Wednesday by the Hong Kong Stock Exchange in a daily disclosure report.

But he added that many investors were already looking for a reason to sell, and the changes to margin financing sparked the stampede.

“Many investors have become very cautious and are looking for a reason to take the profits they have already earned,” he said.

The central bank’s move to mop up excess liquidity in the interbank market was a contributory factor in the sell off.

While there was no information on how much money was drained, and money traders warned the adjustment could be minor, any suggestion of a squeeze was seen as negative for stocks.

Analysts warned of the risk of volatility intensifying.

“If the stock market suddenly reverses and investors default on their margin debts, the contagion effect will be much greater than in previous cycles, since the banking system is now more exposed to the brokerage industry,” wrote Chen Long of Gavekal Dragonomics in a research note.

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(Additional reporting by the Shanghai Newsroom, Nate Taplin, and Nichola Saminather in SINGAPORE; Editing by Simon Cameron-Moore)

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Fed’s Williams says U.S. rate rise likely this year, economy to bounce back

SINGAPORE San Francisco Fed President John Williams said on Thursday the Fed was likely to raise interest rates later this year, adding that he expects above-trend U.S. growth for the rest of 2015 after a weak first quarter.

Asked by reporters in Singapore about the possible timing of a U.S. rate hike, Williams said the subject is “on the table” at every meeting of the Federal Open Market Committee, whether the next one at June 16-17 or later ones.

“We’re going to be…likely raising interest rates later this year, raising them gradually over the next few years,” Williams said during a QA session with the audience after delivering a speech at a symposium.

The Fed’s post-meeting policy statement in April had put in place a meeting-by-meeting approach on the timing of its first rate hike since June 2006, making such a decision solely dependent on incoming economic data.

“I have an FOMC meeting coming up in several weeks. I don’t need to make decisions today. Collect some more data, get some more information, have discussions and analysis,” Williams said.

“Data-dependent means nothing is baked in the cake or locked in,” he added.


Williams, a voter this year on the Fed’s policy panel whose views are seen as closely aligned with Fed Chair Janet Yellen, said weak economic growth in the first quarter was an “anomaly” affected by factors such as the weather.

The U.S. economy should grow about 2 percent and unemployment should drift down below 5 percent this year, Williams said.

Williams was in Singapore for a symposium on Asian banking and finance co-hosted by the Monetary Authority of Singapore and the Federal Reserve Bank of San Francisco.

In a speech at the symposium, Wiliams dove into a simmering global debate over how best to protect against future financial crises, arguing that interest rate hikes are not the answer, even as a last resort.

“Despite the clear need to consider all potential tools to avoid a financial crisis, I am unconvinced that monetary policy is one of them,” he said.

“While the costs of using monetary policy to address financial stability risks are clear and sizable, the potential benefits of such actions are much harder to pin down.”

(Reporting by Masayuki Kitano and Saeed Azhar; Editing by Richard Borsuk)

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Airbus exec says jet market could absorb over 60 A320s a month

TOULOUSE Planemaker Airbus (AIR.PA) hinted at further production increases in its popular A320 series on Thursday, saying market demand would justify a leap to “more than 60 aircraft” a month.

Sales chief John Leahy said anticipated demand already exceeded the planemaker’s existing production goal of 50 planes a month and that Airbus was studying further increases.

Airbus currently produces 42 of the medium-haul planes a month and has already set an output goal of 50 a month by the first quarter of 2017.

Rival Boeing (BA.N) is looking at producing 52 of its competing 737 model a month by 2018.

Speaking at a media briefing, Leahy said he expected a decision on A320 production before the end of the year, adding the issue being examined was the status of the supply chain.

“You have the opinion of John Leahy about what we ought to do going forward, but we aren’t committed to anything yet,” he said.

Fabrice Bregier, head of the planemaking unit of Airbus Group, said in January there was a debate between sales and production staff about how quickly to increase production of the single-aisle A320, which is also in the midst of being upgraded.

He also said it may have to reduce production of its wide-body A330 further than previously anticipated, amid waning demand for the current version of the jet which faces competition from Boeing’s newer 787 Dreamliner.

On Thursday, Leahy said he was confident of avoiding a further reduction below the latest target of 6 A330s a month if current sales prospects in the pipeline came to fruition.

He said he expected an order announcement on a recently launched A330 Regional version, which offers a cap on range at a lower price for airlines operating relatively short routes, by the June 15-21 Paris Airshow.

But he said Airbus would not produce ‘white tails,’ or jets without customers lined up in advance of delivery, and would adjust production higher or lower as needed to reflect sales.

Airbus shares were down 0.2 percent at 0900 GMT, while the CAC index of leading French shares was down 0.4 percent.

(Reporting by Tim Hepher; Editing by Victoria Bryan)

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Dollar momentum wanes, China stocks take heavy tumble

NEW YORK The U.S. dollar on Thursday hit its highest against the yen since 2002 while stocks fell after Chinese brokerages tightened margin rules and the IMF head played down talk of an imminent deal to keep Greece afloat.

U.S. crude oil futures edged up but were on track for a weekly decline following 10 weeks of gains.

A Greek government official had sparked speculation late on Wednesday that a deal to aid Athens had been drawn up. But a string of denials by top European officials was followed by one from the head of the International Monetary Fund, Christine Lagarde, as G7 leaders met in Germany.

“We are all in the process of working towards a solution for Greece, and I would not say that we already have reached substantial results,” she said in an interview on German television.

“Things have moved, but there is still a lot of work to do,” Lagarde said, adding she believed Greece would fulfill its commitments.

Stocks fell on Wall Street, tracking declines in Europe on worries over Greece, though they were off the session lows. In China, indexes plummeted 6 percent after more brokerages tightened margin trading requirements in a move seen aimed at curbing risks in a red-hot equity market.

“Greece is playing a major role in our markets at this point,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

He said he expects increased volatility in the short term but “whether we are going to move in any direction remains to be seen.”

The Dow Jones industrial average .DJI fell 43.94 points, or 0.24 percent, to 18,119.05, the SP 500 .SPX lost 3.23 points, or 0.15 percent, to 2,120.25 and the Nasdaq Composite .IXIC dropped 9.91 points, or 0.19 percent, to 5,096.68.

The pan-European FTSEurofirst 300 index .FTEU3 fell 0.5 percent.

Japan’s Nikkei .N225 bucked the trend, rising for a 10th session on the back of a weaker yen.


The Japanese currency touched its weakest since 2002 against the U.S. dollar, at 124.46 yen. It was last down 0.3 percent on the day just under 124. The euro gained 0.3 percent to $1.0931 and the dollar index .DXY fell 0.4 percent after rising 1.4 percent in the previous two sessions.

“I see the dollar trade probably continuing at this point since we’re the only ones moving toward a tightening bias,” said Windham Financial’s Mendelsohn.

“Greece is the wild card in terms of what will happen to the euro.”

In government debt markets, U.S. 30-year Treasury bonds prices were last down 10/32 in price to yield 2.8903 percent, from 2.875 percent late on Wednesday.

U.S. three-year notes were last up 3/32 in price to yield 0.9517 percent, from 0.989 percent late Wednesday. Benchmark 10-year notes were flat, their yield at 2.135 percent.

Front-month Brent LCOc1 rose 0.9 percent to $62.59 a barrel and U.S. crude futures CLc1 rose 0.4 percent to $57.75.

Gold was little changed near $1,188 an ounce, spot silver dipped 0.2 percent on the day and copper CMCU3 rose 0.45 percent.

(Reporting by Rodrigo Campos; Editing by James Dalgleish)

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Fed’s Williams expects above trend U.S. growth rest of the year

SINGAPORE San Francisco Fed President John Williams said on Thursday he expects above-trend economic growth in the United States for the rest of the year after a weak first quarter.

Williams told reporters in Singapore that the weak economic growth in the first quarter was an “anomaly” affected by factors such as the weather.

The U.S. economy should grow about 2 percent and unemployment should drift down below 5 percent this year, Williams said, but cautioned that more economic data needs to be collected before a decision on interest rates is made.

Williams is a voter this year on the Fed’s policy panel and his views are seen as closely aligned with Chair Janet Yellen.

He was speaking to reporters on the sidelines of a symposium on Asian banking and finance co-hosted by the Monetary Authority of Singapore and the Federal Reserve Bank of San Francisco.

He said earlier in the day that the central bank is likely to start raising interest rates later this year, and will move them to more normal levels over the next few years.

(Reporting by Kitano Mayasuki and Saeed Azhar; Editing by Kim Coghill)

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Honda expands air bag recall after Takata complies with U.S. order

TOKYO Honda Motor Co (7267.T) called back about 690,000 cars in Japan and the United States to replace air bag inflators made by Takata Corp (7312.T) after the Tokyo-based parts supplier last week agreed to comply with U.S. orders to expand some of its previous recalls.

Honda, Japan’s third-biggest automaker, disclosed the recall in filings in Tokyo and Washington.

Of the recalls announced on Thursday, about 350,000 are of vehicles registered in the United States and 340,000 are in Japan, Honda said.

Honda had just expanded its Takata-related recalls by nearly 5 million cars earlier this month to about 20 million vehicles worldwide since 2008. The move came after its own investigations found two new problems with inflators it had retrieved for sampling. The root cause of those defects is unknown.

In Canada, Honda did not widen previous recalls involving just over 700,000 vehicles, but will issue fresh correspondence reminding consumers of the safety issue, the company’s Canadian branch said on Thursday.

Takata is at the center of a global recall of tens of millions of cars for potentially deadly air bag inflators that could deploy with too much force and spray metal fragments inside vehicles. Regulators have linked six deaths to the component so far, all on Honda’s cars.

After months of resisting, Takata last week agreed with the National Highway Traffic Safety Administration to roughly double its U.S.-based recall to 34 million vehicles spanning 11 automakers, including more models and years of production.

Honda said the latest recall in Japan includes about 80,000 cars fitted with driver-side air bag inflators that had been part of a previous recall, but which had not yet been collected.

Another 260,000 cars would be added to replace passenger-side air bag inflators in Japan, with more to follow overseas, Honda said.

The automaker will source replacement inflators for the additional recalls from Takata, as well as rivals Autoliv Inc (ALV.N), TRW Automotive [TRWTA.UL], and Daicel Corp (4202.T), it said. Earlier this year, Michigan-based TRW was acquired by Germany’s ZF Friedrichshafen.

(Additional reporting by Bernie Woodall in Detroit; Editing by Kenneth Maxwell and Matthew Lewis)

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