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Merkel, Hollande dangle financing before Greece’s Tsipras

BRUSSELS The leaders of Germany and France offered to release billions in frozen aid on Friday in a last-minute push to talk Greek Prime Minister Alexis Tsipras into contentious pension reforms in exchange for filling Athens’ empty coffers until November.

The leftist premier’s response, according to a Greek official, was that he could not understand why his country’s creditors were seeking to impose such harsh conditions in return for money to avert imminent default and damage to the euro zone.

Chancellor Angela Merkel and President Francois Hollande, whose countries are Athens’ two biggest lenders, held a 45-minute private meeting with Tsipras before the final session of a European Union summit at which they went through details of immediate funding for Greece if it would sign the deal.

The creditors laid out terms in a document that went to Greece on Thursday and was seen by Reuters on Friday. It said Greece could have 15.5 billion euros in EU and IMF funding in four installments to see it through to the end of November, including 1.8 billion euros by Tuesday as soon as the Athens parliament approved the plan.

The total is slightly more than Greece needs to service its debts over the next six months but contains no new money.

A French source said Merkel and Hollande discussed outstanding differences on reforms Greece needs to accept – centered on pension reform, labor law and increasing value added tax – as well as an extension to Athens’ bailout program and financing.

Merkel and Hollande both said that Saturday’s emergency meeting of euro zone finance ministers would be decisive to seal a deal before Greece has to make a key IMF repayment for which the government has said it lacks the money.

“Saturday’s meeting is crucial because we are on the eve of a date, June 30, when the Greek authorities have to meet a payment obligation,” Hollande told a news conference. “It’s also crucial because there are parliaments that have to meet if there’s a deal.”

The Eurogroup ministers will meet at 5 p.m. (1500 GMT) on Saturday and Greece will be asked whether it accepts a revised offer from the European Commission, the European Central Bank and the International Monetary Fund, a euro zone official said.


If Greece refuses, the ministers will move on to discussing a “Plan B” on preparing to limit the damage from a Greek default to Greek banks and other euro zone countries and markets, the official said.

However, Merkel and Hollande have refused to talk publicly about a “Plan B”, saying their efforts are focused on getting an agreement to keep Greece in the euro zone.

In public, Berlin kept up the pressure on Athens to yield, saying it was up to the Greek government to move.

Officials said that talks to reconcile the creditors’ and Greek positions were continuing behind the scenes, even though Greece continues to denounce the lenders’ proposals.

Greek Finance Minister Yanis Varoufakis had another blast at the creditors’ approach in an interview with Irish radio on Friday, saying their demands for tax increases and pension cuts as conditions for disbursing aid were putting Greece in an impossible position.

“I am against increasing the corporate tax, but then again I am against raising the tax on hotels and against cutting the pensions of people who live below the poverty line,” Varoufakis said on Irish national radio RTE.

“These issues are putting me and my government in an impossible position, having to make a bad choice among really hard, difficult bad choices.”

But he did not rule out accepting the terms.

Dramatizing the choice facing Athens, Germany’s member of the European Commission, Guenter Oettinger, said Greece had five days left to avoid an exit from the euro zone.


Euro zone finance ministers are divided over whether a default would necessarily lead to Athens leaving the 19-nation single currency area, which would undermine the principle that membership is irrevocable.

Failure to pay the 1.6 billion IMF euro installment on Tuesday could trigger a bank run, capital controls to curb deposit flight and possibly the issuance of IOUs or a parallel currency.

China, a growing economic partner of the EU, offered a vote of confidence in the euro zone on Friday ahead of Premier Li Keqiang’s visit to Europe next week, saying it was sure Greece’s talks with creditors would go positively.

Confidential documents drawn up by Greece’s creditors and seen by Reuters showed that the country’s debt would remain sustainable, even under a worst-case scenario envisaged by the IMF, if the maturities on euro zone loans were extended and interest rates were cut, without the need for a write-down.

The calculations are regarded as crucial to persuade German lawmakers to agree to the aid disbursement.

They showed that in the most severe case, Greek debt would require substantial “reprofiling” and improved lending terms but no “haircut” nor budgetary costs for the lenders.

Tsipras and Varoufakis have insisted so far that a commitment to debt relief is essential for Greece to accept any deal, while Germany and its allies had refused up to now to discuss the issue until Athens enacts and implements the reform program to complete its current bailout.

The fact that Hollande and Merkel discussed financing issues with Tsipras on Friday may indicate a new willingness to address the issue as part of a deal.

(Additional reporting by Matthias Sobolewski in Berlin, Jan Strupczewski and Andreas Rinke in Brussels; Writing by Paul Taylor; Editing by Sophie Walker)

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Futures rise on hopes of Greece deal

U.S. stock index futures were higher on Friday after a note prepared for the Eurogroup said the euro zone could help Greece repay maturing debt if the current bailout program is extended to November.

* Euro zone finance ministers will meet at 5 p.m. on Saturday to discuss Greece, in a last-ditch effort to avert a default next week.

* Greece failed again to clinch a deal with its international creditors on Thursday.

* Wall Street continued to take cues from the ongoing crisis in Greece, with the stock market ending the session with modest losses on Thursday despite a rally in healthcare stocks after the U.S. Supreme Court upheld tax subsidies key to President Obama’s healthcare reform law.

* University of Michigan’s final reading on the overall index on consumer sentiment for June is expected to be released at 10:00 a.m. ET. The consumer sentiment is likely to remain at the preliminary reading of 94.6.

* Micron Technology (MU.O) shares were down 12 percent at $21.11 in premarket trading after the chipmaker said it expects a further decline in prices of chips used in personal computers, and forecast revenue for the current quarter well below market estimates.

* Nike (NKE.N) shares rose 3.7 percent to $109.15 after the world’s largest footwear maker reported a better-than-expected profit as it sold more high-margin shoes and apparel at higher prices.

Futures snapshot at 7:34 a.m. ET:

* SP 500 e-minis ESc1 were up 5 points, or 0.24 percent, with 112,942 contracts traded.

* Nasdaq 100 e-minis NQc1 were up 6.5 points, or 0.14 percent, on volume of 12,248 contracts.

* Dow e-minis 1YMc1 were up 45 points, or 0.25 percent, with 14,996 contracts changing hands.

(Editing by Don Sebastian)

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Ferrovial, Macquarie put up for sale concession in Chicago toll road

MADRID Spanish infrastructure group Ferrovial (FER.MC) and Australia’s Macquarie (MQG.AX) have put up for sale their concession for the Chicago Skyway toll road in the U.S., a source with knowledge of the matter said on Friday.

Ferrovial has a 55 percent stake in the concession while Macquarie holds the remaining 45 percent. They had won the concession in 2005 with a bid worth $1.83 billion.

Ferrovial said the Chicago Skyway had revenues of 62 million euros ($69.45 million) and an operating income of 54 million euros last year.

The news of the sale was first published by InfraNews website.

(Reporting by Robert Hetz; Editing by Julien Toyer and William Hardy)

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Charter lists consumer benefits to win merger approval

Charter Communications Inc (CHTR.O) formally argued for regulatory approval for its Time Warner Cable Inc (TWC.N) and Bright House Networks deals, saying consumers would benefit as Internet services would become cheaper and faster.

Charter said in a filing with the Federal Communications Commission (FCC) on Thursday that it would not block or suppress Internet traffic or prioritize content for a fee and that its broadband services would cost less than the current offerings of Time Warner (TWC) and Bright House.

In its first official argument in support of the deals, Charter also said the new company would not harm online video services providers as its success would depend on the broadband business rather than on video services.

Charter would invest at least $2.5 billion in commercial areas and deploy over 300,000 out-of-home WiFi access points, according to the filing.

The company had in May announced its offer to buy bigger rival TWC for $56 billion, prompting a statement from the FCC that the deal would be reviewed to determine whether it was in the public interest.

Charter had said in March it would buy Bright House Networks for $10.4 billion to expand its cable network.

The proposed deals mark a huge step towards industry consolidation, long advocated by cable pioneer John Malone, Charter’s biggest shareholder, as the new company would control a big swath of the cable and Internet markets.

The FCC’s concerns over risk to competition and innovation had made Comcast Corp (CMCSA.O) abandon a $45 billion acquisition of TWC in April.

Charter’s takeover agreement with TWC includes a pledge to pay Time Warner Cable a $2-billion breakup fee if the deal falls through.

(Reporting by Ismail Shakil in Bengaluru; Editing by Anupama Dwivedi)

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Oil slips as market awaits Iran, Greece talks

LONDON Oil prices slipped on Friday but remained stuck in tight trading ranges as investors awaited the outcome of Iranian nuclear talks which could lead to a big increase in Iranian crude exports.

The market also kept an eye on negotiations to try to avert a Greek debt default and avoid Greece’s exit from the euro.

A Greek default would be likely to strengthen the dollar against the euro, providing headwinds for oil and other commodities priced in dollars, economists say.

Brent crude for August was down 4 cents at $63.16 a barrel by 7.15 a.m. EDT after ending the previous session down 29 cents. U.S. crude was down 19 cents at $59.51 a barrel after finishing Thursday down 57 cents.

“We are well and truly stuck,” said Ole Hansen, senior commodity strategist at Saxo Bank.

The possibility that Iran may strike a deal with Western powers to end economic sanctions has been capping gains in oil, as a resumption of Iranian crude exports would exacerbate a global over-supply. Negotiators face a June 30 deadline for a deal.

“If they spring a deal, that would be taken as a bit of a surprise,” said Hansen. “That would probably take the market down 5-10 percent.”

Barbara Lambrecht, energy analyst at Commerzbank in Frankfurt, said the chances of an Iranian nuclear deal being concluded by the deadline were not that high: “It looks like it will be delayed.”

A glut of unsold North Sea and West African barrels in the Atlantic Basin is weighing on Brent, with the physical market struggling to find homes for crude that loaded on to tankers weeks ago.

North Sea Forties crude fell to its lowest level since the 2008 financial crisis on Thursday.

“There’s a lot of crude oil that’s trying to find a home … That limits the potential for a crude oil rally and puts pressure on the price,” said Olivier Jakob, managing director of Petromatrix.

(Additional reporting by Keith Wallis in Singapore; Editing by Christopher Johnson)

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Stocks fall before crunch weekend for Greece

LONDON European stocks fell on Friday as investors sought to cut exposure to risk after Greece and its creditors again failed to resolve their differences, paving the way for a last-ditch effort on Saturday to avert a default.

Currency and bond markets took a more cautious stance, driven by expectations that negotiators could still “pull a rabbit out of the hat”, as one strategist put it, before a Tuesday deadline when Athens has to repay 1.6 billion euros ($1.8 billion) to the International Monetary Fund.

U.S. stocks were set to open tentatively higher SPc1 after the underperformance in Europe and an earlier slump across Asian bourses.

Greek prime minister Alexis Tsipras expressed his government’s frustrations with creditors’ demands for austerity to French and German counterparts on Friday, evidence of the gulf that needs to be closed in weekend talks.

“Little appears to have come of this meeting beyond the usual disagreements and warnings, leaving the chances of a deal hanging on the success of Saturday’s ‘decisive’ Eurogroup meeting,” said Spreadex analyst Connor Campbell.

If default cannot be averted, participants at Saturday’s meeting are expected to start preparing a “Plan B” to protect the euro zone from financial market turmoil.

The pan-European FTSEurofirst 300 .FTEU3 index was down 0.3 percent at 1,568.81 points by 7 a.m. EDT. The MSCI index of world shares .MIWD00000PUS fell for a third day, down 0.2 percent at 433.35 points.

In currency markets, where the impact of news on Greece has been less clear, the euro trod water at $1.1205, stuck within a tight $1.1150-$1.1250 range for a third session.

Ten-year Bund yields, which set the standard for euro zone borrowing costs, were also broadly flat at 0.87 percent. Yields on lower-rated euro zone bonds in Italy, Spain and Portugal, the three countries seen most vulnerable to spillovers from the Greek crisis, were also stable.

“The market still thinks either the EU or Greece are going to pull a rabbit out of the hat at the last minute,” said Nick Stamenkovic, bond strategist at RIA Capital Markets. “Don’t underestimate the Europeans. Europe has always surprised and the market thinks it’s going to do it again.”


Earlier, Chinese stocks, which often march to their own drum beat, were knocked down as investors stampeded out of a market which has had an eight-month-long bull run.

The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen fell 7.9 percent – the biggest drop in seven years – while the Shanghai Composite Index .SSEC skidded 7.4 percent.

Further falls in China stocks “will send ripples throughout Asian markets,” investment advisor Rivkin said in a note.

Anxiety about Greece pressured shares elsewhere in Asia. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed down over 1 percent, recording its sixth week of losses.

Japan’s Nikkei .N225 ended down 0.3 percent. Despite household spending rising more than expected, inflation has remained flat, keeping alive expectations for more central bank stimulus later this year.

In commodities trading, Brent crude LCOc1 edged down 0.1 percent to $63.13 a barrel while U.S. crude eased, with both stuck in tight ranges as investors focused on Greece.

“Traders and investors are very much on tenterhooks on the outcome (of talks on Greece),” said Ben Le Brun, market analyst at OptionsXpress in Sydney.

(Additional reporting by Shinichi Saoshiro in Tokyo, and Alistair Smout and Marius Zaharia in London; editing by John Stonestreet/Ruth Pitchford)

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China e-commerce firm to launch credit-scoring rival to Alibaba’s

BEIJING/SHANGHAI China’s No. 2 e-commerce firm Inc (JD.O) is launching a Chinese consumer credit data system as a joint venture with U.S. credit-scoring technology company ZestFinance, taking on a rival service linked to the larger Alibaba Group Holding Ltd (BABA.N).

JD-ZestFinance Gaia, as the joint venture will be known, will use the U.S. firm’s machine learning technology to analyze’s online shoppers’ data and churn out a credit risk score, according to a joint press release on Friday.

The companies did not disclose details about the structure of the joint venture or the investments by the partners. But they said will invest an undisclosed sum in ZestFinance.

JD-ZestFinance Gaia and competitor Sesame Credit, part of Alibaba-affiliated Ant Financial Services Group, hope to use the e-commerce sites’ vast swathes of shopping data to turn out a reliable credit risk score.

Assigning people and businesses accurate credit risk scores has been difficult in China, in part due to a lack of publicly available data and little information-sharing between financial institutions.

Creating an accurate credit profiling system could potentially be lucrative, both for making safe bets on lending to customers who can then spend more on online shopping, and by selling the profiles to third parties.

“Ultimately opaque credit markets are very hard and we’re excited to try to use our technology in that space,” said Douglas Merrill, founder and CEO of ZestFinance and a former Google Inc (GOOGL.O) chief information officer, in a telephone interview.

Information, like the cost of items bought and what time of day someone is buying products, can be combined to predict qualities such as whether a person has a job, he said.

The number of credit profiles the joint venture launches with will be “close to’s total customer base” of more than 100 million, the e-commerce company said in an email.

Although will initially be the credit scorer’s first customer, it hopes to expand its clients to include various industries and lenders, including peer-to-peer lending platforms, the company said.

(Editing by Muralikumar Anantharaman)

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Honda restates earnings after booking expanded airbag recall costs

TOKYO Honda Motor Co (7267.T) on Friday restated its financial results for the business year ended March, to account for additional costs to cover an expanded recall of cars equipped with Takata Corp (7312.T) air bag parts.

Japan’s third-largest automaker revised its operating profit to 606.88 billion yen ($4.92 billion) under U.S. accounting standards, from 651.68 billion yen stated in April. The new figure represents a 19 percent decline from the previous year.

Under international accounting standards, which Honda adopted from this year, operating profit was 670.6 billion yen last year, down 19 percent from the previous year, it said, stating results under the new standards for the first time.

Honda earlier this month said it would restate its earnings as it had to book an additional cost of 44.8 billion yen after Takata, its top air bag supplier, agreed to an expanded recall in the United States last month.

Takata is at the center of the recall of millions of vehicles equipped with air bag inflators which can explode with too much force and spray metal fragments inside vehicles.

Regulators have linked eight deaths to the component, all in cars made by Honda.

(Editing by Chang-Ran Kim and Christopher Cushing)

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Decision time strikes for Greek enigma Tsipras

BRUSSELS After five months in power, Greek Prime Minister Alexis Tsipras has 48 hours to make a decision that will shape his country’s future for decades, yet his negotiating partners cannot be sure which way he will jump.

The 40-year-old leftist, elected in January on a promise to end austerity, must decide whether to swallow an unpalatable deal with international creditors to avert a default next week at the risk of losing part of his Syriza party, or refuse and risk economic chaos and ejection from the euro zone.

European Union leaders made crystal clear to Tsipras at a summit on Thursday evening that their patience is exhausted and Greece will be given a “take it or leave it” choice at a finance ministers’ meeting on Saturday.

If it rejects the cash-for-reforms proposal put together by the European Commission, the European Central Bank and the International Monetary Fund, the Eurogroup will turn to “Plan B”, preparing to cope with the fallout from a Greek default and limit the damage from ensuing financial turmoil.

Yet the firebrand premier remains an enigma to Commission President Jean-Claude Juncker, German Chancellor Angela Merkel and French President Francois Hollande, who have spent many hours talking with him in person and on the telephone since February, according to people familiar with the conversations.

“Is he a pragmatic politician or an ideologue? Is he in charge or under the control of his Syriza party? Even after all these weeks, we don’t really know,” said an EU official who has been involved in the talks.

There are many other unknowns, including whether Tsipras cares more about getting rid of international controls on Greece than about keeping his country solvent, and whether he thinks being in default would strengthen Greece’s bargaining position rather than weakening it.


Tsipras and his ministers frequently refer to “red lines” they cannot cross without betraying their electoral mandate, including cutting wages and pensions, abandoning collective bargaining rights or making it easier to lay off workers.

Juncker, who built a good personal rapport with Tsipras when both were leading candidates in last year’s European Parliament election, thought he had coaxed the Greek leader most of the way to a deal at a meeting in Brussels on June 3.

As the veteran Luxembourger tells it, Tsipras promised to send him alternative proposals on the few outstanding issues the following day, and to return to Brussels to wrap up a deal.

Instead, he ran into a backlash from Syriza activists back home, scrapped the trip to Brussels and went to parliament to denounce the creditors’ plan as cruel and “absurd”.

The normally jovial Juncker refused to take a telephone call from Tsipras after that and all but accused him of duplicity.

Merkel and Hollande had a long series of telephone calls to try to bring the Greek leader back on board.

“He was always looking for dialogue,” a French source familiar with Hollande’s thinking said of Tsipras. “He never locked himself in rejection. He always thought it could be settled politically and not by technocrats. But the Commission doesn’t talk politics much, and the IMF and ECB even less so.”

After a rocky start with Tsipras, who went out of his way to assail Germany and demand reparations for the World War Two occupation of Greece, Merkel too came to regard him as an intelligent man with whom she could do business.

Yet Tsipras’ erratic negotiating tactics this week have again raised the question of whether he would be willing to defy many in his party and whether he has a strategy to get a deal through parliament and avoid a default.

Ministers and lawmakers from Syriza go on television daily to denounce the creditors as trying to annihilate the Greek people and cast them deeper into poverty and recession.

Tsipras delayed sending Greece’s counter-proposals for a deal until it was too late for the bailout monitors to assess them in detail before a euro zone finance ministers’ meeting on Monday. He then insisted Athens had gone as far as it could.

In five hours of talks with Juncker, ECB President Mario Draghi, IMF chief Christine Lagarde and the heads of the Eurogroup of finance ministers and the euro zone rescue fund on Wednesday, Tsipras appeared to be moving closer to an accord.

“Then he went out of the room to talk to his delegation in an adjoining room and came back after a while saying everything was unacceptable,” said a person familiar with the meeting.

Those aides included Finance Minister Yanis Varoufakis, an outspoken self-declared “erratic Marxist” economics professor, State Minister Nikos Pappas, Tsipras’s right-hand man, and some of the Syriza economists who have been conducting the talks.

Euro zone leaders were relieved in late April when Tsipras shook up his negotiating team, sidelining Varoufakis, who had infuriated his euro zone peers with what they regarded as ideological lectures.

Once Tsipras had made getting a deal what Germans call a “Chefsache” (leader’s matter), they hoped the Greeks would stop barring bailout monitors from government buildings or having access to the public accounts. Cooperation improved only slightly.

A European diplomat familiar with high-level conversations said the difference between the prime minister and Varoufakis was one of style rather than substance.

“Difference is a myth they nurture,” he said.

Now some senior European officials wonder whether it will take a further escalation of the crisis such as a default on an IMF repayment due on Tuesday for Tsipras to accept a deal.

“Maybe Tsipras really needs this shock after June 30,” the diplomat said. “But we hope that he gets reasonable before.”

European diplomats who have observed the Greek leader expect him to move only at “one minute to midnight”. If he moves.

(Additional reporting by Elizabeth Pineau and Andreas Rinke; Writing by Paul Taylor; Editing by Peter Graff)

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