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U.S. approval of AT&T-DirecTV deal expected as soon as next week: sources

WASHINGTON ATT Inc’s (T.N) proposed $48.5 billion acquisition of DirecTV (DTV.O) is expected to get U.S. regulatory approval as soon as next week, according to people familiar with the matter, a decision that will combine the country’s No. 2 wireless carrier with the largest satellite-TV provider.

The Department of Justice, which assesses whether deals violate antitrust law, has completed its review of the merger and is waiting on the Federal Communications Commission to wrap up its own, according to three people familiar with the matter.

The FCC, which reviews if deals are in public interest, is poised to approve the deal with conditions as early as next week, according to three other people familiar with the matter.

All the sources asked not to be named because they were not authorized to speak with the media. An ATT spokeswoman and FCC spokesman declined comment. Justice Department representatives were not immediately available for comment.

ATT’s merger with DirecTV, announced in May 2014, would create the country’s largest pay-TV company, giving DirecTV a broadband product and ATT new avenues of growth beyond the maturing and increasingly competitive wireless service.

The deal has been expected to pass regulatory muster in contrast with the rival mega-merger between cable and Internet providers Comcast Corp (CMCSA.O) and Time Warner Cable Inc (TWC.N), which was rejected in April largely over the combined companies’ reach into the broadband market.

The FCC and ATT have been in negotiations over conditions for the merger for several weeks, the people said, adding that none of the conditions are controversial enough to break the deal. 

Those conditions are expected to include assurances that both middle-class and low-income Americans have access to affordable high-speed Internet, including an offering of broadband subscriptions as a standalone service without a TV bundle, according to two of the people.

ATT has earlier committed to expand access to broadband service in rural areas and to offer standalone Internet service at speeds of at least 6 Megabits per second to ensure consumers can access rival video services online, such as Netflix.

FCC officials are also considering ways to ensure that the conditions are properly enforced in the future, possibly through a third-party monitor, according to the two sources.

The FCC is also weighing how to ensure the merged companies abide by the so-called net neutrality rules, which regulate how Internet service providers manage traffic on their networks.

ATT has promised to abide by net neutrality principles such as no-blocking of traffic, but is challenging in court the FCC’s newest net neutrality regulations that have expanded the agency’s authority over various deals between Internet providers and content companies.

FCC reviewers are weighing what net neutrality-related conditions to apply to the merger and how to address the possibility that the court throws out the latest rules, the two sources said.

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Virgin Atlantic to cut 500 jobs: WSJ report

Virgin Atlantic Airways Ltd [VA.UL], owned by its British billionaire founder Richard Branson, is cutting about 500 jobs as it seeks to reduce costs and improve its financial resilience, the Wall Street Journal reported.

The cuts will be done through layoffs, moving staff, or not filling vacancies and will be implemented by the end of the year, the newspaper reporter. (

The 30-year-old airline is looking to boost earnings after it reported a 14.4 million pounds (US$22.62 million) profit for 2014, its first in four years.

Virgin is in the throes of a two-year turnaround plan that includes shutting its Little Red domestic airline to concentrate on long-haul flights.

The airline is increasing its transatlantic flights while cutting back on some routes elsewhere. It is also contemplating how to replace seven Boeing 747s it flies from London’s Gatwick Airport, and could expand its overall fleet in the process.

Virgin Atlantic was not immediately available to comment on the report.

(Reporting by Shivam Srivastava in Bengaluru)

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Wall St. ends up on Greek hopes ahead of debt deadline

U.S. stocks finished up after a choppy trading day as investors held out hope on Tuesday for deal to keep Greece in the euro even as it veered close to a potential debt default.

Greece, hours from missing a 1.6 billion euro ($1.8 billion) payment due to the International Monetary Fund, submitted a new aid proposal to its creditors, calling for debt restructuring in what seemed like a last-ditch effort by Athens to resolve its impasse with lenders.

The Greek government indicated that it could change its stance on a referendum it scheduled for Sunday if a new loan request could be agreed, euro zone sources told Reuters.

After starting with a rally and then turning negative along with European equities, Wall Street reversed course again in the afternoon on hopes that Greece’s Prime Minister Alexis Tsipras was showing signs of willingness to talk.

“I think (Tsipras) was a little defiant and arrogant and he overplayed his hand,” said Kenny Polcari, director of the NYSE floor division at O’Neil Securities in New York. “It could still blow up. There’s still nervousness in the market.”

U.S. corporations have limited exposure to Greece, but investors are concerned about the fallout across Europe if the country exits the euro zone.

Volatility picked up on Tuesday also due to the expiration of quarterly options. The expiry of weekly options is a day early due to U.S. Independence Day holiday observance on Friday.

On Monday, U.S. stocks had fallen sharply in heavy trading and the SP 500 and the Dow had their worst day since Oct. 9 due to worries about Greece.

The Dow Jones Industrial Average index .DJI ended Tuesday showing a decline for the first half of 2015. The SP 500 .SPX benchmark showed its first quarterly decline in ten quarters but Nasdaq .IXIC showed its 10th consecutive quarter of gains.

The SP, the Dow and Nasdaq all closed lower for the month.

Dramatic headlines out of Greece have overshadowed U.S. data so far this week. Single-family home prices rose in April from a year earlier but at a slower pace than forecast, a closely watched survey said on Tuesday.

A separate report showed the U.S. consumer confidence index rose more than expected to 101.4 in June. The consensus was for a reading of 97.3.

The Dow Jones industrial average .DJI rose 23.16 points, or 0.13 percent, to 17,619.51, the SP 500 .SPX gained 5.48 points, or 0.27 percent, to 2,063.12 and the Nasdaq Composite .IXIC added 28.40 points, or 0.57 percent, to 4,986.87.

Seven of the 10 major SP 500 sectors rose, with the telecommunications services, utilities and consumer staples sectors showing very slight declines.

Advancing issues outnumbered declining ones on the NYSE by 1,894 to 1,226, for a 1.54-to-1 ratio on the upside; on the Nasdaq, 1,742 issues rose and 1,058 fell for a 1.65-to-1 ratio favoring advancers.

The benchmark SP 500 index was posting 4 new 52-week highs and 25 new lows; the Nasdaq Composite was recording 30 new highs and 108 new lows.

About 7.5 billion shares changed hands on U.S. exchanges, compared with the 6.3 billion average for the last five sessions, according to data from BATS Global Markets.

(Additional reporting by Siddharth Cavale in Bengaluru, Ryan Vlastelica and Caroline Valetkevitch in New York; Editing by Meredith Mazzilli)

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GE Capital CEO sees asset sale pace speeding up in third quarter

The head of General Electric Co’s (GE.N) finance unit said Tuesday he expects the pace of GE Capital asset sales will accelerate in the third quarter as the U.S. conglomerate eyes unloading an even bigger chunk of assets.

“We’re going to pick up the pace in the third quarter,” GE Capital Chief Executive Keith Sherin told Reuters in an interview.

GE, which is shedding $200 billion in finance assets to focus on industrial manufacturing, earlier on Tuesday announced the $2.2 billion sale of its European private equity financing business to Japan’s Sumitomo Mitsui Banking Corp. A day earlier, GE said it had agreements to shed its fleet management arm. A deal to sell its U.S. private equity lending business was disclosed earlier in the month.

Analysts have said the finance asset sales have garnered high deal prices so far, but it remains to be seen if future sales will realize the same value and allow GE to reap more than the $35 billion in proceeds it has targeted for share buybacks.

A hefty portion of the businesses that have yet to be sold are part of GE’s North American commercial lending and leasing portfolio. Overall, GE’s North American units are “highly coveted,” Sherin said.

“Globally, we have strong businesses but they’re not as strong as some of these North American franchises,” he said.

All told, since April 10 GE Capital has announced asset sales totaling $23 billion in ending net investment, GE’s measure of assets that excludes non-interest bearing liabilities. With the most recent deals, GE hit a target of announcing $20 billion to $30 billion in asset sales during the second quarter.

“We’re going to have more announcements in the third quarter, and it will be more than we had in the second quarter,” Sherin said. Sherin confirmed that meant exceeding $23 billion in second-quarter announced deals, but did not give a specific target.

Sherin reaffirmed GE’s earlier goal to close deals for $100 billion in assets this year. The company has announced buyers for $68 billion in assets thus far.

GE had prioritized the sale of three businesses, Sherin said last month, of which only healthcare financial services remained without an announced buyer. An agreement for that business, which lends to private equity in healthcare as well as provides real estate loans to operators of assisted living facilities, is “in the near term, I hope,” Sherin said on Tuesday.

GE’s decision to sharpen focus on manufacturing of big-ticket items such as jet engines and power turbines won wide favor from investors who said the company’s finance division, and the regulatory burden that came with it, was weighing down its stock valuation.

GE Capital’s size and the potential risk from its lending portfolio has made it subject to government oversight. The company plans to apply next year to escape its designation as a systemically important financial institution, although Sherin said the path to do so was not entirely clear.

“We’re the first, there’s no specific process,” he said. “We understand why we were designated as a systemic financial institution and if we address those factors … we think we will be able to achieve that goal.”

Some analysts have worried that rising interest rates or a drop in the stock market could hurt valuations for GE Capital’s remaining assets.

Sherin said he is not particularly concerned about a slight rise in interest rates.

“A severe dislocation in financial markets of some type would slow us down, for sure,” Sherin said.

(Reporting by Lewis Krauskopf in New York; editing by Chizu Nomiyama and Phil Berlowitz)

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Emerson Electric to spin off network power business

U.S. factory automation equipment maker Emerson Electric Co (EMR.N) said it planned to spin off its network power business as part of its efforts to focus on high-growth businesses.

The network power business, which makes power systems that help keep telecommunication systems, data networks and other critical business applications operating continuously, accounted for about 20 percent of total sales in 2014.

The decision to spin off the business resulted from a roughly year-long strategic review with the company’s board.

“When we built the business over the last 10, 15 years, the marketplace has changed dramatically,” Chief Executive David Farr told Reuters.

“So the timing was right to give this network power team a chance to grow and prosper with different types of targets for growth and profitability.”

Sales at the network power unit fell 18 percent in 2014 and 9 percent in the second quarter ended March 31, as global telecommunications companies cut spending.

“We expect investors to applaud the long-awaited decision to exit this lightning rod of discontent, which we have consistently viewed as the first step in Emerson’s ambitions to return to a premier, higher-quality multi-industry name,” RBC Capital Markets analyst Deane Dray wrote in a note.

The spin-off would result in two standalone publicly traded companies, Emerson said on Tuesday. The transaction is expected to be completed by Sept. 30, 2016.

Wells Fargo Securities analyst Richard Kwas estimates the unit’s enterprise value to be in the range of $4 billion-$6 billion.

Emerson said it would also explore “strategic alternatives” for its motors and drives, power generation and remaining storage businesses.

The motors and drives and the power generation businesses are housed in the company’s industrial automation unit, which contributed 20 percent to total sales last year.

Emerson said it would focus on its remaining industrial automation businesses, along with process management, and commercial and residential heating and air conditioning businesses.

The company sold its power transmission unit to Regal Beloit Corp (RBC.N) for $1.44 billion in December.

Last month, Emerson reported second-quarter revenue and profit below analysts’ estimates. Consequently, the company accelerated its restructuring-related spending plans for 2015.

JP Morgan and Centerview Partners are the financial advisers to the company.

Emerson’s shares were marginally up at $55.70 in late morning trading on the New York Stock Exchange on Tuesday. Up to Monday’s close, the stock had fallen about 10 percent this year.

(Editing by Savio D’Souza and Maju Samuel)

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Ex-BP engineer deserves new Gulf spill trial: U.S. appeals court

A former BP Plc (BP.L) engineer deserves a new trial on an obstruction of justice charge related to the 2010 Gulf of Mexico oil spill, a federal appeals court ruled on Tuesday.

The 5th U.S. Circuit Court of Appeals in New Orleans agreed with a lower court judge’s decision last June to throw out the defendant Kurt Mix’s December 2013 conviction.

U.S. District Judge Stanwood Duval acted after learning that the jury forewoman admitted to having heard in a courthouse elevator that other BP employees were being prosecuted over the spill, and told her deadlocked fellow jurors that this made her more confident that Mix was guilty.

Tuesday’s decision is a setback for the U.S. Department of Justice’s effort to hold individuals criminally liable for the April 20, 2010 explosion of the Deepwater Horizon drilling rig and its aftermath. The disaster killed 11 workers and caused the largest U.S. offshore oil spill.

Prosecutors accused Mix of deleting hundreds of messages about how much oil was flowing from BP’s Macondo well in the weeks after the spill.

In seeking to restore that conviction, federal prosecutors called evidence of Mix’s guilt “substantial,” and said any problem with the “innocuous” elevator statement was fixed by Duval’s instructions that jurors not consider outside evidence.

Writing for a three-judge appeals court panel, however, Circuit Judge Edith Brown Clement said the forewoman “purposely exerted an extrinsic influence on the rest of the jury by telling them that she had overheard something.”

She also said the evidence against Mix was not so strong that the juror’s actions could be ignored. “This case is not that one-sided,” Clement wrote.

The Justice Department did not immediately respond to a request for comment.

Douglas Hallward-Driemeier, a partner at Ropes Gray representing Mix, said: “We’re very happy. We thought there was no question that the district judge made the right decision.”

A new trial date has not been set.

On June 5, a different New Orleans federal jury acquitted David Rainey, BP’s former vice president of exploration in the Gulf, on charges he lied to federal investigators about the spill.

Two well site supervisors, Robert Kaluza and Donald Vidrine, still face 11 manslaughter counts over the spill. They have pleaded not guilty.

The case is U.S. v. Mix, U.S. 5th U.S. Circuit Court of Appeals, No. 14-30837.

(Reporting by Jonathan Stempel in New York; Editing by Andrew Hay)

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China orders Airbus jets, factory agreement looms

PARIS China placed a landmark order on Tuesday for dozens of wide-body jets from Airbus in a multi-billion-dollar deal that paves the way for a second European aircraft plant in the world’s fastest-growing aviation market.

The deal, signed during a visit to France by Chinese Prime Minister Li Keqiang, includes a definitive purchase of 45 A330 aircraft, worth at least $11 billion at list prices, plus plans for a possible further 30 worth about $250 million each.

It was signed during a ceremony watched by business leaders and reporters at the French prime minister’s office.

If the second part of the purchase is completed, the value of the contract could rise to $18 billion.

Sources familiar with the discussions had told Reuters last week that Beijing may purchase around 50-70 of wide-body jets in a breakthrough planes-for-investment deal with China.

Airbus has been negotiating for about 18 months to establish a cabin-completion center for wide-body aircraft in China alongside its existing final assembly plant for smaller A320 jets at the northern port city of Tianjin.

Fabrice Bregier, chief executive of the planemaking unit of Airbus Group (AIR.PA), said Airbus would press ahead with the project, which is expected to cost around 150 million euros.

“We are going to launch the project. I think we have a good base. We hope to have more orders in the future, but it’s a project which makes a lot of sense and which gives us an advantage against our competition,” Bregier told Reuters.

The agreement to build a plant capable of fitting out 2 A330s a month is due to be signed during a visit to Toulouse by Li on Thursday, but that part of the Chinese premier’s visit has been overshadowed by a threatened air traffic controllers’ strike.

Industry sources have said Airbus originally hoped to sell as many as 200 A330s to China, gambling on a ‘Regional’ version of its A330 long-haul jet to help deal with domestic congestion.

The final transaction is still large enough to secure production of one of Airbus’s most profitable planes, but one which is heading towards a revamp after 20 years in the market.

Coming on top of a recent sale of 20 A330 planes to Saudi Arabia, it lifts uncertainty over Airbus’s ability to meet recently reduced production targets while it prepares for the transition to the revised A330neo model from late 2017.

“This should help us a lot to maintain a production rate of six a month that we announced for the transition,” Bregier said.

Airbus said the order for 45 jets was the largest for the A330 from China, which is projected to order a total of 5,300 jetliners over the next 20 years.

(Editing by Mark John and William Hardy)

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Emirates reveals fuel contract details in U.S. airline subsidy claim riposte

DUBAI Dubai’s Emirates airline [EMIRA.UL] on Tuesday denied claims its parent company absorbed fuel hedge losses from the carrier, giving its most detailed response yet to allegations it has violated the U.S. Open Skies agreement with the United Arab Emirates.

U.S. airlines have charged Emirates received at least $5 billion in subsidies since 2004, including hedge losses that its state-owned parent company assumed. The subsidies allegedly allowed Emirates to begin driving down prices and driving out competitors from key markets.

Peers Etihad Airways and Qatar Airways have received even greater government subsidies, the U.S. carriers say.

In a nearly 400-page report released on its website Tuesday, Emirates said its parent company, Investment Corporation of Dubai, had not paid for bad bets the airline made on fuel prices. Rather, ICD profited from the hedges. Emirates said it briefed U.S. officials on the report on Monday.

The financial disclosures mark the latest move by Emirates to deter the Obama administration from revisiting aviation agreements with the United Arab Emirates and Qatar, per requests from Delta Air Lines Inc (DAL.N), United Continental Holdings Inc (UAL.N) and American Airlines Group Inc (AAL.O).

“Emirates can submit as many pages as it wants,” said Jill Zuckman, spokeswoman for the coalition of U.S. airlines and unions known as the Partnership for Open Fair Skies. “Our investigation shows that these massive subsidies have allowed Emirates, Etihad and Qatar (Airways) to expand far beyond what market forces could ever support.”

A sharp decline in oil prices in 2008 and 2009 put many airlines in the red globally, as accounting principles required companies to report how much hedge contracts would have lost had they settled at the time.

Emirates said Tuesday ICD assumed its hedge contracts as U.S. carriers claimed. However, the hedge contracts had not yet settled, and neither ICD nor the government of Dubai was at a loss.

The airline said it voluntarily declared dividends to ICD to match any losses the contracts would have upon maturity. The result turned out to be a gain of more than $100 million for ICD, Emirates said.

In total, Emirates said it returned more than $3.3 billion to its shareholders in dividends from a capital base of $218 million in the last 20 years.

The airline also rejected claims that it received below-market terms from suppliers.

“The legacy carriers have failed to make a persuasive case,” Emirates President Tim Clark told reporters in Washington D.C.

(Additional reporting By Jeffrey Dastin in New York)

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U.S. economy nearing full employment, bounced back in second quarter: Fed’s Fischer

WASHINGTON The U.S. economy probably bounced back to an annual growth rate of around 2.5 percent in the second quarter, and the labor market is approaching full employment, Federal Reserve vice chairman Stanley Fischer said on Tuesday.

He said “tentative” signs of wage growth and continued job creation also gave him confidence that U.S. labor markets will continue improving, and gradually push inflation towards the Fed’s 2 percent target.

Speaking at a meeting of African central bankers at England’s Oxford University, Fischer did not directly address the timing of an initial Fed rate hike that is expected as early as September.

But he noted that the central bank needed to stay ahead of the curve, since monetary policy only affects the economy with a time lag.

“We should not wait until we have reached our objectives to begin adjusting policy,” Fischer said in prepared remarks.

The gathering was meant to address problems particular to central bankers in Africa, and Fisher said the Fed was carefully weighing the possibility its upcoming shift in monetary policy could have significant effects on developing nations.

Rising global interest rates, for example, could make it more difficult for countries to finance development projects and infrastructure.

“In order to minimize the likelihood of surprises and thus avoid creating unnecessary market and policy volatility, we are striving to communicate our policy strategy clearly and transparently,” Fischer said.

Since late last year the Fed has wrestled with whether a weaker global economy might throw the United States off track and force a further delay in any rate hike.

The escalating crisis in Greece could add to that uncertainty if it drags the euro zone back into recession.

Fischer did not mention the Greek crisis specifically. But he said the global situation remained a “significant headwind” for the United States.

It has hurt the country’s exports in particular, and Fischer said the impact is likely to continue.

Still, Fischer’s view of the economy remained one of steady improvement at a time when the Fed has said it would consider an interest rate hike at each upcoming meeting, and be responsive to incoming data.

Investors have steadily reduced the odds of a September rate hike, but upcoming reports – including unemployment statistics to be released Thursday – could prove central.

“Our policy will be data dependent, and the (Federal Open Market Committee) at upcoming meetings will weigh possible adjustments” to the interest rate, Fischer said.

(Reporting by Howard Schneider; Editing by Andrea Ricci)

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