News Archive


Goldman Sachs eyes tilt to EU if UK backs ‘Brexit’: paper


FRANKFURT Goldman Sachs (GS.N) would shift resources toward locations in continental Europe and away from Britain should the country’s voters choose to end the country’s membership of the EU, a senior executive told the Frankfurter Allgemeine Sonntagszeitung.

“We would not completely leave Britain but we would certainly strengthen our presence in other locations within the EU,” Richard Gnodde, co-chief executive officer of Goldman Sachs International and co-head of the Investment Banking Division was quoted as saying in an interview.

British Prime Minister David Cameron, who won an unexpectedly decisive victory in a general election last month, has promised to renegotiate Britain’s membership of the EU and hold a referendum on membership by the end of 2017.

Some investors, chief executives and allies have warned that a “Brexit,” or vote not to stay in the bloc, would be politically and economically costly for Britain, whose economy is the world’s fifth largest.

Gnodde said it was in everyone’s interest – and particularly the UK’s – that the country stay in the Union.

“Britain must remain part of a larger economic bloc. Anything else would damage the broader economy as well as the financial sector,” he said in an excerpt of the interview released on Saturday, ahead of publication on Sunday.

However, should the vote unexpectedly turn against the EU, Frankfurt – home of the European Central Bank – could benefit.

“I’m not revealing any secret when I say that in the unlikely event of a Brexit we would certainly put more resources into Frankfurt,” Gnodde said.

(Reporting by Jonathan Gould; Editing by Greg Mahlich)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Kccf_WgV45Q/story01.htm

Big business on winning side in U.S. top court’s major rulings


WASHINGTON Big business was on the winning side in the U.S. Supreme Court’s two major cases of the year, with hundreds of employers pushing hard in favor of gay marriage and the healthcare industry backing the insurance subsidies available under Obamacare.

The court on Thursday rejected a conservative challenge to President Barack Obama’s healthcare law on a 6-3 vote and, a day later, ruled 5-4 that gay marriage should be legal nationwide.

Both cases were largely seen through the lens of national ideological wars, with liberals backing gay marriage and Obamacare and conservatives opposing them. But the cases could also be seen as pro-business rulings by a court with a reputation as friendly to corporate interests under Chief Justice John Roberts.

Unlike in other contexts, such as a series of cases in which the court cut back on class-action lawsuits, business interests aligned themselves with liberal activists for these cases.

“This Supreme Court is unquestionably responsive to the views of corporate America. Here, in both the healthcare and marriage cases, those views aligned with a progressive outcome,” said Doug Kendall, president of the Constitutional Accountability Center, a left-leaning legal activist group.

The two major rulings mask the fact that the business-related rulings this year, with one major environmental case due to come on the court’s last day on Monday, have been a mixed bag for corporate interests.

In one of the biggest business cases, the court on Thursday dealt a blow to lenders and insurers by upholding a legal theory that allows for lawsuits under the Fair Housing Act based on discriminatory impact even when there is no evidence of intentional discrimination.

The court did hand wins to business interests in a series of lower-profile rulings, with the U.S. Chamber of Commerce, the nation’s biggest business lobby, on the winning side in 12 of 20 cases in which it filed friend-of-the-court briefs. The Chamber has a policy not to get involved in social issues and did not file briefs on the gay marriage and Obamacare cases.

That did not stop business interests from weighing in.

A total of 379 businesses and groups representing employers across various sectors signed on to a friend-of-the-court brief backing gay marriage. In the healthcare case, trade groups representing hospitals and health insurance companies filed court papers backing the Obama administration over the healthcare law.

In the marriage case, some of the nation’s biggest companies, including Procter Gamble Co(PG.N), American Airlines Group Inc(AAL.O) and Johnson Johnson(JNJ.N), joined the brief urging the court to rule in favor of gay marriage. Wall Street’s biggest names, including Goldman Sachs Group Inc(GS.N) and Morgan Stanley(MS.N), also signed on.

THE BUSINESS CASE FOR GAY MARRIAGE

The brief stressed the business case for gay marriage, saying inconsistent state laws imposed burdens on companies and that marriage bans can conflict with corporate anti-discrimination and diversity policies. Thomson Reuters Corp(TRI.TO), which owns Reuters news, also signed on to the brief.

In his majority opinion in the marriage case, Justice Anthony Kennedy, while not citing the employer brief, echoed some of the concerns raised by employers about how same-sex marriage bans meant that gay employees in committed relationships are treated differently from opposite-sex couples on issues such as workers’ compensation benefits and health insurance.

In the Obamacare ruling, in which the court upheld nationwide tax subsidies essential to the 2010 Affordable Care Act’s implementation, Chief Justice John Roberts explained in detail how the law was intended, as he said, to “improve health insurance markets, not destroy them.”

Roberts cited a brief filed by America’s Health Insurance Plans, a trade group representing companies such as Aetna Inc(AET.N) and Anthem Inc(ANTM.N).

The American Hospital Association, which represents more than 5,000 hospitals and other healthcare providers, also signed a brief backing the law. Shares in various hospital operators, including HCA Holdings Inc(HCA.N) and Community Health Systems Inc(CYH.N), surged on news of the ruling.

Aside from the housing discrimination ruling, other cases that business interests lost included one earlier in June in which the court ruled in favor of a young Muslim woman who wore a head scarf to a job interview at clothing retailer Abercrombie Fitch and sued when she did not get the job.

Among the Chamber-backed causes that prevailed was a May ruling in favor of defense contractor KBR Inc(KBR.N) in its legal fight with a former employee who filed a whistleblower suit accusing it of defrauding the U.S. government over water purification work in Iraq.

In a business case decided in December, the court ruled for employers over worker compensation, ruling that companies do not have to pay employees for the time they spend undergoing security checks at the end of their shifts in a case involving an Amazon.com Inc(AMZN.O) warehousing contractor.

(Reporting by Lawrence Hurley; Editing by Will Dunham)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/KIcKhXxVILM/story01.htm

China central bank eases policy again to support economy


BEIJING China’s central bank cut lending rates for the fourth time since November and trimmed the amount of cash that some banks must hold as reserves, stepping up efforts to support an economy that is headed for its poorest performance in a quarter century.

Saturday’s combined easing highlights Beijing’s concerns that money isn’t flowing to some of the most-needed sectors in the economy and that stubbornly high borrowing costs that could fuel bankruptcies and job losses. The last time the central bank simultaneously cut interest rates and reserve requirements was at the height of the global financial crisis in late 2008.

The latest move could also be aimed at comforting investors following a 20 percent plunge in the country’s stock markets over the last two weeks, some analysts said.

“The simultaneous cuts in interest rates and reserve requirement is a forceful move, indicating the downward pressure on the economy is very big,” said Xu Hongcai, senior economist at the China Centre for International Economic Exchanges (CCIEE), a Beijing-based think-tank.

“The monetary policy adjustment will also help curb sharp fluctuations in the stock market.”

Some government economists have been calling for interest rate cuts to help lower real borrowing costs and help local governments to swap their maturing debt, although some private sector analysts have recently pared their expectations on policy easing.

Despite the drumroll of rate cuts, the real cost of borrowing in China remains stubbornly high, due in part to cooling inflation and banks’ reluctance to pass lower rates on to their customers. That has further squeezed manufacturers struggling with tepid demand.

The People’s Bank of China (PBOC) said on its website that it was lowering the one-year benchmark bank lending rate by 25 basis points to 4.85 percent, and reducing the one-year benchmark deposit rate by 25 basis points to 2 percent.

The central bank also lowered the reserve requirement ratio (RRR) for banks that have met certain standards in lending to the farm sector and small and medium-sized enterprises by 50 basis points.

It lowered reserve requirement for finance companies by 300 basis points, which it said will help ease funding and costs pressure on state-owned enterprises. The move highlights rising concern over the SOE sector where bad debt is concentrated and profit margins are being squeezed.

The central bank has frequently made such targeted cuts in RRR to spur lending into certain sectors, but the impact has been limited since banks are often reluctant to lend to these sectors amid concerns over collateral and risk.

GROWTH SLOWDOWN

The interest rate and RRR cuts will “help stabilise growth, adjust structures and lower social financing costs”, the central bank said.

Going forward, the central bank will “continue to implement prudent monetary policy, use various policy tools to strengthen and improve marco-prudential management, optimise policy combinations and create neutral and appropriate monetary and financial environments for economic adjustments and upgrading.”

The government is due to release second-quarter GDP data on July 15 and many economists expect growth to dip below 7 percent, which would be the weakest performance since the depths of the global financial crisis.

Weighed down by a property downturn, factory overcapacity and local debt, growth in China’s economy is expected to slow to a quarter-century low of around 7 percent this year. That is down from 7.4 percent in 2014, even with expected additional stimulus measures.

China last cut interest rates on May 10. It last cut the reserve requirement ratio for all commercial banks by 100 basis points on April 19 – the deepest single reduction since the depth of the global financial crisis in 2008 – following a 50-basis-point cut in February.

The central bank has cut benchmark lending rate by a total of 115 basis points since November, on top of a total of 150 basis cut in system-wide reserve requirements.

Analysts said Saturday’s cut in the RRR to only selected highlights authorities’ concern that the easing so far has mainly fueled speculation in the stock market, and the impact on the overall economy remains limited.

“Speculation in the stock market is decreasing which has helped remove obstacles for policy loosening. The slide in stocks also forced the acceleration of policy loosening,” said Guan Qingyou, senior economist at Ginseng Securities.

(Editing by Kazunori Takada and Raju Gopalakrishnan)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/IV6DKZUNJiI/story01.htm

Greece’s Tsipras calls referendum, top-level talks still on


ATHENS/BRUSSELS Greek Prime Minister Alexis Tsipras called a referendum on austerity demands from foreign creditors on Saturday, rejecting an “ultimatum” from lenders and putting a deal that could determine Greece’s future in Europe to a popular vote.

The surprise call marked the most dramatic twist yet in five-month negotiations between Greece and its lenders, plunging the cash-strapped nation into uncharted waters and risking a default and capital controls as hopes for an agreement faded.

“Our responsibility is for the future of our country. This responsibility obliges us to respond to the ultimatum through the sovereign will of the Greek people,” Tsipras said in a televised address to the nation just after midnight.

Euro zone finance ministers were still due to meet at 1200 GMT (8.00 a.m. EDT) in Brussels to discuss the aid offer from the euro zone and the International Monetary Fund, just after the Greek parliament meets to approve the referendum decision.

Germany’s Vice Chancellor Sigmar Gabriel urged Greece to reach a deal with creditors to give Greeks something to vote on.

“We’d be well advised not to dismiss this suggestion from Herr Tsipras out of hand and say ‘that’s just a trick’,” Gabriel told Deutschlandfunk radio. “But rather if the questions are clearly framed… then that could make sense.”

Tsipras, the 40-year-old novice prime minister, said he would respect the outcome of the vote. But he argued the lenders demands “clearly violate European social rules and fundamental rights”, would asphyxiate Greece’s flailing economy and aimed at the “humiliation of the entire Greek people”.

Government ministers emerging from the cabinet meeting in Athens said they were confident Greeks would vote no and reject the bailout demands, leaving open the question as to whether the country had other options beside leaving the euro.

QUEUES AT BANKS

The referendum call puts the country’s banking system into focus, though a deputy minister said there were no plans to impose capital controls and banks would open on Monday.

Soon after the address in the early hours of the morning, lines of up to 10 people were seen forming to withdraw cash from automated teller machines in some parts of Athens. Small groups of anti-establishment protesters threw petrol bombs and stones at police in an Athens neighborhood where protests are common.

The euro zone had offered to release billions in frozen aid if Greece accepted and implemented pension and tax reforms that are anathema to its leftist government, elected in January on a promise to end austerity.

Without the bailout funds, Athens is due to default on 1.6 billion euros in repayments to the International Monetary Fund on Tuesday, pushing Greece closer to being forced out of the euro, causing chaos for its economy and financial markets.

A default would not necessarily lead to Athens leaving the 19-nation single currency area, but is expected to pave the way for it, worrying European leaders who fear it would undermine the principle that membership is irrevocable.

Tsipras said he would ask euro zone finance ministers for an extension of Greece’s bailout program that ends on Tuesday by a few days to accommodate the referendum.

He also spoke with European Central Bank President Mario Draghi to discuss the referendum, and senior government officials were due to meet the ECB chief later on Saturday.

With Greece’s stricken banking sector dependent on central bank funds to remain afloat, the ECB will play a vital role in keeping the system on its feet over the next few days.

Opposition parties attacked the government, saying the Tsipras’s hardline stance had brought Greece to its knees.

“Tsipras brought the country to a total deadlock. Between an unacceptable agreement and a euro exit,” former conservative Prime Minister Antonis Samaras said. The referendum question was effectively a “yes” or “no” to Europe, he said.

A 15.5 BLN EURO DILEMMA

This is not the first time that Greece has flirted with a referendum in recent years. Former Prime Minister George Papandreou sought one in 2011 as he struggled to impose painful cuts demands by lenders, but was ousted over the call and his administration replaced by a government of technocrats.

The latest drama came after weeks of phone calls, face-to-face-discussions and several rounds of meetings among European leaders to sort out Greece’s troubles. In the latest round, German Chancellor Angela Merkel and French President Francois Hollande met Tsipras on the sidelines of an EU summit to coax him to accept an offer to fill Athens’ empty coffers until November in return for painful reforms.

Both she and Hollande said Saturday’s meeting of euro zone finance ministers would be the decisive moment for a deal since time was running out to secure German parliamentary approval in time to release funds needed to avert a Greek default.

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

The total is barely more than what Greece needs to service its debts over the next six months and contains no new money. Further funding would require a third bailout program, which is politically impossible for the moment in Athens and Berlin.

The lenders also made a gesture towards Tsipras’ demands for debt relief by offering to reaffirm a 2012 pledge to consider stretching out loan maturities, lowering interest rates and extending an interest payment moratorium on euro zone loans to Greece, a senior EU official said.

But the demands come at the price of pension cutbacks, new reductions in public sector salaries, an increase in taxes on food, eateries and tourism, and elimination of tax breaks on tourist islands. That has sparked protests in Greece, where one in four people are out of work.

(Additional reporting by Michele Kambas,; George Georgiopoulos and Lefteris Karagiannopoulos in Athens, Erik Kirschbaum in Berlin, Robin Emmott, Alastair Macdonald and Jan Strupczewski in Brussels)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/g6GhwljZcg0/story01.htm

S&P 500 ends down week with flat session, semis fall


NEW YORK The SP 500 closed flat on Friday but ended lower for the week, with investors cautious ahead of a meeting in Europe that could decide whether Greece will default on critical loans.

The Dow closed higher, boosted by strong results from component Nike Inc (NKE.N), while the Nasdaq ended solidly lower on disappointing results from Micron Technology Inc (MU.O), which weighed on chipmakers like Intel.

In Europe, Greece rejected a five-month extension of bailouts on Friday, a day before euro zone finance ministers will meet to decide the country’s fate. Greece needs fresh funds to avoid defaulting on a $1.8 billion debt repayment to the International Monetary Fund on June 30. If it defaults, it may have to leave the euro or the European Union, potentially shaking the region’s economic foundations.

“If this issue gets resolved, then we’re set up for a fairly decent market, but it could be that everything falls apart on the 30th,” said James Meyer, chief investment officer at Tower Bridge Advisers in West Conshohocken, Pennsylvania. “Market valuation is high in an absolute sense.”

Nike (NKE.N) rose 4.3 percent to $109.71 and was the biggest boost to the Dow after reporting a better-than-expected quarterly profit, lifted as it sold more high-margin shoes and apparel at higher prices.

Micron Technology (MU.O) sank 18 percent to $19.66 a day after forecasting a further decline in prices of chips used in personal computers. It also gave a revenue outlook for the current quarter that was well below market estimates. The PHLX Semiconductor index .SOX fell 2.4 percent. Intel Corp (INTC.O) fell 3 percent to $31.02.

In the latest economic data, University of Michigan’s final reading on the overall index on consumer sentiment for June was 96.1, higher than the preliminary reading of 94.6.

Investors have been keeping a keen eye on data to see if the U.S. economy has recovered from a slow start at the beginning of the year. The Federal Reserve has said it remains data dependent and expects to raise rates when it sees a sustained rebound in the economy.

The Dow Jones industrial average .DJI rose 56.72 points, or 0.32 percent, to 17,947.08, the SP 500 .SPX lost 0.71 points, or 0.03 percent, to 2,101.6 and the Nasdaq Composite .IXIC dropped 31.69 points, or 0.62 percent, to 5,080.51.

For the week, both the Dow and SP 500 fell 0.4 percent while the Nasdaq fell 0.7 percent.

Declining issues outnumbered advancing ones on the NYSE by 1,752 to 1,334, for a 1.31-to-1 ratio on the downside; on the Nasdaq, 1,647 issues fell and 1,152 advanced for a 1.43-to-1 ratio favoring decliners.

The benchmark SP 500 index was posting 16 new 52-week highs and 21 new lows; the Nasdaq Composite was recording 137 new highs and 62 new lows.

About 6.17 billion shares traded on all U.S. platforms, according to BATS exchange data, compared with the month-to-date average of 6.09 billion.

Friday’s volume was impacted as the FTSE Russell rebalanced its indexes. As companies move from one index to another, managers of index-following funds are forced to buy or sell shares to mimic the performance of the index.

(Editing by Meredith Mazzilli)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/FCPeG6ieUjQ/story01.htm

GE to defend Alstom power unit buy at EU hearing


BRUSSELS General Electric (GE.N) will seek to convince doubtful EU antitrust regulators of the merits of its 12.4 billion euro (US$13.9 billion) bid for Alstom’s (ALSO.PA) power unit at a hearing, the U.S. conglomerate said on Saturday.

The move came after the European Commission warned the company earlier this month that the deal, its biggest ever and a key element of its expansion into industrial products and away from finance, would harm competition.

Senior officials from the EU competition authority, their counterparts from EU agencies and rivals are expected to attend the closed-door hearing.

“We have requested an oral hearing,” GE spokesman Jim Healy said. He said the hearing would be on July 2.

French Economy Minister Emmanuel Macron has said the deal should be viewed in a global perspective and take into account Chinese rivals following the EU regulator’s decision to exclude the Chinese market from its scrutiny of GE’s market power.

The Commission is concerned the takeover would leave just two gas turbine companies in Europe, with GE competing only with Germany’s Siemens (SIEGn.DE).

GE is seeking to avoid a repetition of one of its biggest setbacks, when the EU enforcer vetoed its planned $42 billion takeover of Honeywell International (HON.N) in 2001 despite the green light from U.S. authorities.

(Reporting by Foo Yun Chee; Editing by Toni Reinhold)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/bIvRr6MV9_I/story01.htm

Greece’s Tsipras calls referendum to break bailout deadlock


ATHENS/BRUSSELS Greek Prime Minister Alexis Tsipras called a referendum on bailout demands from foreign creditors on Saturday, rejecting an “ultimatum” from lenders and putting a deal that could determine Greece’s future in Europe to a risky popular vote.

After a week of acrimonious talks in Brussels, where Tsipras dismissed proposals from the lenders as “blackmail”, the 40-year-old prime minister said parliament would meet on Saturday to approve holding a referendum on July 5.

“Our responsibility is for the future of our country. This responsibility obliges us to respond to the ultimatum through the sovereign will of the Greek people,” Tsipras said in a televised address in the early hours of Saturday.

The call marked the most dramatic twist yet in long-running negotiations between Greece and its lenders that have left the cash-strapped nation to the threshold of a bankruptcy and put the country’s future in the euro in doubt.

Tsipras said the creditors’ proposals “clearly violate European social rules and fundamental rights” and would asphyxiate Greece’s flailing economy.

The euro zone had offered to release billions in frozen aid if Greece accepted and implemented pension and tax reforms that are anathema to its leftist government, elected in January on a promise to end austerity.

Without the bailout funds, Athens is set to default on 1.6 billion euros in repayments to the International Monetary Fund on Tuesday, pushing Greece closer to being forced out of the euro, causing chaos for its economy and financial markets. Tsipras said he would ask for an extension of the bailout ending June 30 by a few days to accommodate the referendum.

Soon after the televised address in the early hours of the morning, lines of up to 10 people were seen forming to withdraw cash from automated teller machines in at least three different parts of Athens. Small groups of anti-establishment protesters threw petrol bombs and stones at police in a central Athens neighborhood where protests are common.

Tsipras spoke with European Central Bank President Mario Draghi to discuss the referendum, and senior government officials were due to meet the ECB chief later on Saturday.

With Greece’s stricken banking sector dependent on central bank funds to remain afloat, the ECB will play a vital role in keeping the system on its feet over the next few days.

But despite fears of a surge in deposit outflows from banks, a deputy minister said there were no plans to impose capital controls and banks would open as normal on Monday.

“NOT OVERLY OPTIMISTIC”

Tsipras said the creditor demands appeared to be aimed at the “humiliation” of Greece, and ministers called on voters to reject the package but opposition parties attacked the government.

“Tsipras brought the country to a total deadlock. Between an unacceptable agreement and a euro exit,” former conservative Prime Minister Antonis Samaras said. The referendum question was effectively a “yes” or “no” to Europe, he said.

German Chancellor Angela Merkel and French President Francois Hollande had earlier met Tsipras on the sidelines of an EU summit to coax him to accept an offer to fill Athens’ empty coffers until November in return for painful reforms.

But after months of fruitless wrangling, the patience of European partners with the leftwing government in Athens had grown thin and officials had indicated that there was little more room to maneuver.

Merkel said she and Hollande had urged him in a 45-minute private meeting to accept the creditors’ “generous” offer.

“We have taken a step toward Greece,” she said. “Now it is up to the Greek side to take a similar step.”

Both she and Hollande said Saturday’s meeting of euro zone finance ministers would be the decisive moment for a deal since time was running out to secure German parliamentary approval in time to release funds needed to avert a Greek default.

The creditors laid out terms in a document handed to Greece on Thursday. It said Athens 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 Greek parliament approved the plan.

The total is barely more than what Greece needs to service its debts over the next six months and contains no new money. Further funding would require a third bailout program, which is politically impossible for the moment in Athens and Berlin.

The lenders also made a gesture toward Tsipras’ demands for debt relief by offering to reaffirm a 2012 pledge to consider stretching out loan maturities, lowering interest rates and extending an interest payment moratorium on euro zone loans to Greece, a senior EU official said.

“PLAN B”

Finance ministers from the euro zone had been due to meet at 2 p.m. (8:00 a.m. EDT) on Saturday to hear whether Greece accepted a revised offer from the European Commission, the European Central Bank and the International Monetary Fund.

According to one European official, if Greece did not accept the proposals, the ministers were to hold a separate meeting to discuss a “Plan B” on preparing to limit the damage from a Greek default to Greek banks and other euro zone countries and markets

Merkel and Hollande have refused to talk publicly about a “Plan B”, saying all their efforts are focused on getting an agreement to keep Greece in the euro zone. They are expected to speak to Tsipras again by telephone before Saturday’s meeting.

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.

(Additional reporting by Matthias Sobolewski in Berlin, Juline Ponthus, Alastair Macdonald, Tom Koerkemeier, Barbara Lewis, Francesco Guarasco, Adrian Croft and Andreas Rinke in Brussels; George Georgiopoulos, Lefteris Karagiannopoulos in Athens; Writing by Paul Taylor and James Mackenzie; Editing by Sophie Walker, Philippa Fletcher, Toni Reinhold)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/g6GhwljZcg0/story01.htm

Greece’s Tsipras summons cabinet as debt deadline nears


BRUSSELS/ATHENS Greek Prime Minister Alexis Tsipras summoned an urgent meeting of his cabinet on Friday after euro zone partners warned Athens it had until the weekend to accept a cash-for-reform deal or plunge toward default.

Despite angry rhetoric and accusations of “blackmail”, negotiations were continuing in Brussels to find a last-ditch compromise to keep Greece in the euro zone to avoid a political train-wreck, economic chaos and financial market disruption.

Greek Finance Minister Yanis Varoufakis expressed frustration with the stance adopted by lenders, whom he accused of toughening their demands every time Greece made a concession but said the differences could still be bridged.

He said there was no foundation for the increasing speculation in Athens that Tsipras could call snap elections if a deal cannot be reached.

“There is no reason for a referendum or elections, or a failure in the negotiation. Common sense demands a deal,” he told Greece Antenna TV.

In a carrot-and-stick approach, the euro zone offered to release billions in frozen aid if Greece accepted and implemented pension and tax reforms that are anathema to its leftist government, elected in January on a promise to end austerity.

They also made a gesture toward Tsipras’ demands for debt relief by offering to reaffirm a 2012 pledge to consider stretching out loan maturities, lowering interest rates and extending an interest payment moratorium on euro zone loans to Greece, a senior EU official said.

However, a Greek government official rejected as “totally inadequate” the creditors’ offer to extend its existing bailout program by five months, as the leftist premier flew home to Athens.

“NOT OVERLY OPTIMISTIC”

German Chancellor Angela Merkel and French President Francois Hollande met Tsipras on the sidelines of an EU summit to coax him to accept an offer to fill Athens’ empty coffers until November in return for painful reforms.

If Greece does not clinch an agreement at the weekend to unlock funds, it is set to default on an International Monetary Fund loan on Tuesday, possibly sparking a bank run, capital controls and raising doubts about its future in the euro zone.

Tsipras sounded defiant on leaving the summit, telling reporters Greece would fight for the European principles of democracy, solidarity, equality and mutual respect.

“These principles were not based on blackmail and ultimatums,” he said in English. However, he did not rule out accepting a deal.

European Council President Donald Tusk retorted: “It is not political blackmail when we repeat day after day that we are very close to this day (June 30) when the game is over.”

Merkel said she and Hollande had urged him in a 45-minute private meeting to accept the creditors’ “generous” offer.

“We have taken a step toward Greece,” she said. “Now it is up to the Greek side to take a similar step.”

Both she and Hollande said Saturday’s meeting of euro zone finance ministers would be the decisive moment for a deal since time was running out to secure German parliamentary approval in time to release funds needed to avert a Greek default.

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

The total is barely more than what Greece needs to service its debts over the next six months and contains no new money. Further funding would require a third bailout program, which is politically impossible for the moment in Athens and Berlin.

European Commission President Jean-Claude Juncker, who spent part of the night thrashing out the issues out with Tsipras, said there was no ultimatum to Greece and he was “quite optimistic but not overly optimistic” there would be a deal.

“PLAN B”

The Eurogroup ministers will meet at 2 p.m. (8:00 a.m. EDT) 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.

Two senior EU officials involved in the discussions put the chances of an agreement at just over 50 percent.

Merkel and Hollande have refused to talk publicly about a “Plan B”, saying all their efforts are focused on getting an agreement to keep Greece in the euro zone. They are expected to speak to Tsipras again by telephone before Saturday’s meeting.

Talks to reconcile the creditors’ and Greek positions were continuing behind the scenes, even though Greece continued to denounce the lenders’ proposals.

Earlier, Varoufakis had another blast at the creditors in an interview with Irish radio, 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 flatly 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.

DIVIDED

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 euro installment to the IMF 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 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.

(Additional reporting by Matthias Sobolewski in Berlin, Juline Ponthus, Alastair Macdonald, Tom Koerkemeier, Barbara Lewis, Francesco Guarasco, Adrian Croft and Andreas Rinke in Brussels; George Georgiopoulos, Lefteris Karagiannopoulos in Athens; Writing by Paul Taylor; Editing by Sophie Walker and Philippa Fletcher)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/k7mA2PSSB3Y/story01.htm

Nestle U.S. chief seeks to turn around frozen food


NEW YORK Nestle SA (NESN.VX) thinks it can turn around its U.S. frozen foods business despite recent sales declines driven by consumer perceptions that the products are not healthy, the company’s U.S. chief executive said in an interview.

Nestle remains committed to investing in its frozen food brands, which include Stouffer’s and Lean Cuisine, Paul Grimwood told Reuters on Friday.

“We’ve seen a number of people disinvest in quality in frozen because they’re trying to get their prices lower,” said Grimwood, speaking at the Consumer Goods Forum Global Summit in New York. “That’s not the way to go.”

Still, the world’s largest consumer goods company is grappling with how to counter the U.S. belief that frozen food isn’t fresh.

“Fundamentally, our product is as fresh as the product you make in your own kitchen and then freeze,” he said.

The business is Nestle’s second-largest in the U.S., behind pet care. But it estimates that the category has been declining annually at an average rate of 2 percent in recent years.

Additionally, Lean Cuisine is battling a shift away from diet foods, which Grimwood said are declining annually at a 7 percent to 9 percent rate.

The company is trying to change the product to respond to consumers’ new definition of what is healthy. In February, Nestle said it will shift Lean Cuisine frozen dinners from a diet brand to one built around “healthy lifestyles.”

The company also said earlier in June that it was launching a high-protein line geared toward men called Fit Kitchen under the Stouffer’s brand.

Still, Nestle has been trimming its portfolio in recent years, selling brands such as PowerBar and Musashi, and the bulk of its Jenny Craig business. Efforts to slim down its sprawling portfolio have prompted questions of whether the company could divest its U.S. frozen foods business.

In March, at the Consumer Analyst Group of Europe conference, Chief Financial Officer Wan Ling Martello said investors had asked her about Nestle’s plan to turn around the U.S. frozen food business. “I said, ‘look, we’re obviously giving our local team a chance to fix it, but there’s a clock on it,'” she said.

Grimwood said on Friday that “the clock is on every one of our businesses to make sure there is consumer demand, that it ticks off the right boxes for us as a health and wellness company.”

(Reporting by Anjali Athavaley; Editing by Christian Plumb)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/P1ZlJWRxHQU/story01.htm