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Stock futures lower as December rate hike back on the table

U.S. stock index futures were lower on Thursday, a day after the Federal Reserve revived expectations of an increase in interest rates in December.

* The Fed, which kept rates unchanged at its policy meeting, downplayed concerns about the global economy and indicated confidence in the U.S. job market’s recovery and the economy’s capacity to absorb a rate hike.

* The Fed’s hawkish tone came as a surprise, prompting an increase in the odds of a December hike to 43 percent from the 38 percent minutes before the release of the statement, according to the CME Group’s FedWatch program.

* Wall Street closed sharply higher on Wednesday, led by the financial sector, which benefits from higher borrowing rates.

* European shares reversed course after rising earlier on Thursday, pulled down by disappointing quarterly results, while Asian shares held on to meager gains.

* U.S. economic data due on Thursday includes a survey on U.S. gross domestic product. Growth is forecast to slow to an annual rate of 1.6 percent in the third quarter, from 3.9 percent in the second quarter. The data is due at 8:30 a.m. ET (1230 GMT)

* Also due at the same time is data on jobless claims, which is estimated to have increased by 4,000 to 263,000 last week.

* Allergan’s shares (AGN.N) shot up 12.3 percent to $322.50 premarket after the Wall Street Journal reported that Pfizer (PFE.N) was in talks to buy the Botox maker. Pfizer was up 2.8 percent at $36.45.

* GoPro (GPRO.O) slumped 16.4 percent to $25.25 after the action camera maker posted disappointing results.

* Deutsche Bank’s U.S.-listed shares (DB.N) were down 5.3 percent after the German bank announced a massive overhaul of its operations that includes 35,000 job cuts.

* Teva Pharmaceuticals (TEVA.N) was up 1.5 percent after results. Mastercard (MA.N) is due to report before the bell.

* Starbucks (SBUX.O), Western Union (WU.N), LinkedIn (LNKD.N) and Electronic Arts (EA.O) report after the close.

* Atlanta Fed President Dennis Lockhart is scheduled to speak later in the day.

Futures snapshot at 6:55 a.m. ET:

* SP 500 e-minis ESc1 were down 8 points, or 0.38 percent, with 113,100 contracts traded.

* Nasdaq 100 e-minis NQc1 were down 24.25 points, or 0.52 percent, on volume of 18,833 contracts.

* Dow e-minis 1YMc1 were down 70 points, or 0.4 percent, with 12,641 contracts changing hands.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Saumyadeb Chakrabarty)

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European stocks firm, dollar rises as Fed revives Dec hike talk

LONDON European shares rose, while the U.S. dollar stood near 2 1/2 month highs against the euro on Thursday, after the Federal Reserve gave a vote of confidence to the U.S. economy and revived expectations it may raise interest rates by year-end.

The Fed, which kept its rates on hold as expected, took the unusual step of strengthening its language about timing in its statement, bringing a December rate hike back on the table.

In another hawkish tilt, the Fed also took out a warning about slowing global growth, going against earlier speculation that China’s cooling economy could delay a rate hike in the United States. As a result, money market futures 0#FF: are pricing in about a 50 percent chance of a rate hike in December, compared to around 30 percent previously.

“I think when it comes to it, the markets will be able to cope just fine with a rate hike as it will suggest that the economy is recovering well and showing strong resilience at a time when other countries are really struggling,” said Craig Erlam, senior market analyst at Oanda, London.

The pan-European FTSEurofirst 300 index .FTEU3 was up 0.3 percent at 1,489.45 points by 0811 GMT, while Japan’s Nikkei share average .N225 gained 0.2 percent to close at 18,935.71.

That came after Wall Street ended a volatile session with solid gains, underpinned by the Fed’s vote of confidence in the U.S. economy. The Fed’s relatively upbeat stance came despite recent worries about global growth due to a slowdown in China.

In overnight trade, U.S. Treasury yields and the dollar rose while shares initially sold off and then reversed, after the Fed explicitly referred in its statement at the end of its two-day policy meeting, to conditions necessary “to raise the target range at its next meeting.” Reference to a particular meeting is rare for the Fed.

“There is no doubt an earlier move may give the markets greater clarity and more confidence,” said Chris Brankin, chief executive officer of TD Ameritrade Asia in Singapore. “However, focusing on the timing is feeding uncertainty.”


Many investors are still not convinced about a lift-off given a recent run of soft U.S. data, making economic releases in coming weeks, starting with the advance reading of U.S. GDP due later on Thursday, more crucial in determining the a December move.

Economists also expect a key U.S. manufacturing index due on Monday USPMI=ECI to show the first contraction in the sector in 2-1/2 years, which would not be conducive for a rate hike.

The dollar fell 0.3 percent to 120.77 yen JPY= after spiking as high as 121.26 on Wednesday. It held its ground against the euro, though, trading at $1.0930 EUR=, having skidded to a 2-1/2 month low of $1.0826 overnight.

The Fed’s stance is in contrast to the ECB and other major central banks, a factor that will underpin the dollar.

The European Central Bank last week signaled its readiness to inject more stimulus to boost prices and the People’s Bank of China followed with its sixth interest rate cut in less than a year.

Crude oil futures fell, although they retained most of their gains after soaring more than 6 percent overnight as the U.S. government reported an inventory build-up, which triggered a short-covering rally after three days of losses. [O/R]

U.S. crude CLc1 fell 1 percent to $45.56 a barrel. Brent LCOc1 slipped 1.3 percent to $48.40.

Spot gold XAU= ticked up to $1,160.76 an ounce, after skidding more than 1 percent in the previous session in the wake of the Fed’s hawkish message.

(Additional reporting by Lisa Twaronite and Nichola Saminather; Editing by Toby Chopra)

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Time Warner Cable profit tops Street as subscriber additions rise

Time Warner Cable Inc on Thursday posted a better-than-expected adjusted profit in the third quarter as it added more high-speed data customers.

The company, which is being bought by Charter Communications Inc, added 232,000 high-speed data subscribers in the third quarter compared with 172,000 additions in the second quarter.

Wunderlich Securities analysts were expecting 191,000 subscriber additions.

Time Warner Cable also said it lost 7,000 residential video subscribers in the three months ended Sept. 30, far less than the 45,000 it lost in the second quarter.

Cable companies have been grappling with declining subscriber numbers as viewers shift to cheaper and more flexible streaming services offered by Netflix Inc, Inc, Hulu and others.

Net income attributable to Time Warner Cable shareholders fell to $437 million, or $1.53 per share, from $499 million, or $1.76 per share, a year earlier.

Excluding items, it earned $1.62 per share, beating analysts average estimate of $1.57 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 3.6 percent to $5.92 billion, slightly short of analysts average estimate of $5.96 billion.

Charter in May said it would buy Time Warner Cable in a cash-and-stock deal that values the larger rival at $78.7 billion, to compete with the Comcast Corp.

The deal is slated to close by the end of the year, but is also subject to a lot of regulatory scrutiny. Regulatory obstacles had earlier sunk Comcast’s bid for Time Warner Cable.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Savio D’Souza)

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Deutsche Bank to cut workforce by 15,000

FRANKFURT Deutsche Bank (DBKGn.DE) said it was reducing its workforce by 15,000 as new Chief Executive John Cryan seeks to improve returns at Germany’s biggest bank.

The lender said it would axe 9,000 full-time jobs and 6,000 external contractor positions.

Separately, it plans to dispose of assets with a 4-billion-euro ($4.37 billion) cost base and 20,000 jobs over the next 24 months.

People familiar with the matter told Reuters last month that as part of its revamp, Deutsche aims to cut about 23,000jobs, or roughly a quarter of its workforce, by reducing technology activities and spinning off its Postbank (DPBGn.DE)unit.

(Reporting by Arno Schuetze; Editing by Maria Sheahan)

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Shell’s profits hit by big Arctic, Canadian write-offs

LONDON Royal Dutch Shell (RDSa.L) on Thursday reported a hefty $8.2 billion charge, equivalent to around 5 percent of its market value, due to write-offs on projects in the Alaskan Arctic and Canada as Europe’s biggest oil producer grapples with weak oil prices.

The oil major’s third-quarter current cost of supplies earnings, the company’s definition of net income, came in at $1.8 billion, below analysts’ expectations of $2.74 billion and 70 percent lower than a year ago.

“In headline terms, this was a challenging quarter,” said Shell Chief Financial Officer Simon Henry in a video statement.

However, Shell’s bumper $70 billion deal to acquire smaller gas-focused rival BG Group (BG.L) remained on track for completion early next year, it said, as it awaits regulatory approvals from China and Australia.

“The underlying performance does give us confidence to capture the significant value that is available in the BG combination and over time we will deliver that value back to shareholders,” Henry said.

Shell’s $8.2 billion charge included a $2.6 billion write-off due to its withdrawal from the Alaskan Arctic, as well as an additional $2 billion charge made on the Carmon Creek oil sands project in Canada, which the company suspended on Tuesday. It also reflected other impairment charges of $3.7 billion triggered by the downward revision of the long-term oil and gas price outlook, Shell said.

Shell’s London-listed A shares were down 2 percent at 0825 GMT.

Shell’s upstream oil and gas production division, swung to a loss for the first time in years. Its downstream refining and marketing division, however, benefited from weak prices to run refineries more profitably, with its net income up 46 percent at $2.6 billion.

“It’s a rather messy set of results, but it’s what I expected given some of the portfolio steps they have taken and it cleans up the balance sheet in advance of the BG merger,” said Jason Gammel, oil and gas equity analyst at Jefferies.

Italian rival ENI (ENI.MI) also announced a huge hit from weak oil prices on Thursday, reporting a net loss in the latest quarter, while French group Total (TOTF.PA) fared better than expected and raised its production forecast.

Unlike some of its rivals, Shell made no further change to its $30 billion capital expenditure forecast for this year, which it cut earlier in the year from $35 billion.

More information on Shell’s strategy is expected at next Tuesday’s management day briefing.

(Additional reporting by Dmitry Zhdannikov; Editing by Jane Merriman and Greg Mahlich)

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Around 600 Swiss file criminal complaints over VW diesel scandal

ZURICH Around 600 people so far have filed criminal complaints in Switzerland connected to the Volkswagen (VOWG.DE) emissions cheating scandal, the Swiss Office of the Attorney General said on Thursday.

It said in a statement the cases filed with seven different cantons would be combined into one investigation led by federal prosecutors to streamline the process.

Volkswagen posted its first quarterly loss in at least 15 years on Wednesday, hit by a 6.7 billion euro ($7.32 billion) charge to cover the cost of rigging diesel emissions tests, and said the final bill was likely to be higher.

($1 = 0.9149 euros)

(Reporting by Michael Shields)

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Volkswagen India likely to recall 100,000 cars: CNBC-TV18

NEW DELHI German carmaker Volkswagen AG’s (VOWG_p.DE) Indian unit is likely to recall 100,000 cars in the country impacted by the diesel emission scandal, television channel CNBC-TV18 reported on Thursday, citing sources.

The recall in India, expected to happen before Nov. 8, would mostly affect cars fitted with engines that have been imported and would also include 20,000 diesel vehicles made in the country, the television channel reported.

This would impact Vento, Jetta and Passat sedan cars, Polo hatchback and Polo Cross crossover in India, said CNBC-TV18.

The company is still investigating the matter and any decision on a recall is yet to be made, a Volkswagen India spokesman said.

Europe’s biggest carmaker has admitted cheating in emissions tests on around 11 million diesel vehicles globally – the biggest business crisis in its 78-year history.

The scandal has pushed Volkswagen to report its first quarterly loss in at least 15 years, forced out its long-time chief executive and sent shockwaves through the global car industry.

Automotive Research Association of India (ARAI), the country’s testing agency, has been investigating whether Volkswagen cars have flouted emission norms in India.

ARAI is still working on collecting data on Volkswagen vehicles and plans to submit a report to the government by the end of this month, the agency said in an emailed statement on Wednesday.

(Reporting by Aditi Shah; Editing by Gopakumar Warrier)

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China premier suggests China needs minimum economic growth of 6.5 percent next five years: Bloomberg

SHANGHAI China’s Premier Li Keqiang said China requires annual growth of at least 6.53 percent over the next five years, Bloomberg reported, citing unidentified sources.

Chinese leaders are meeting in Beijing to decide on an economic growth target for the next five years. An official document is expected to be published later on Thursday.

Bloomberg said Li’s comments were made in a speech to Communist Party members on Oct 23. They were circulating widely on Chinese social media earlier on Thursday, but no mention of the comments has appeared in state media.

China’s most recent annual GDP target for 2015 stands at around 7 percent. The economy grew 6.9 percent in the third quarter from a year earlier.

People are waiting for the announcement of the new growth target as a sign of whether China plans to push on with aggressive reform – which would likely result in slower growth – or seek to maintain higher growth rates to guard against the risk of an economic hard landing.

Chinese financial markets did not exhibit any reaction to the rumors. Currency and stock markets were steady on Thursday.

(Reporting by Pete Sweeney; Editing by Neil Fullick)

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Mazda expects delays to U.S. diesel car launch after VW scandal

TOKYO Mazda Motor Corp (7261.T) expects delays to the launch of diesel-powered cars in the United States in the wake of the Volkswagen AG (VOWG_p.DE) emissions test-rigging scandal, but it remains committed to a rollout, a senior executive said.

Kiyoshi Fujiwara, a Mazda managing executive officer in charge of research and development and cost innovation, said media reports that Mazda had given up on diesel’s potential use in the U.S. market were untrue.

The U.S. launch of Mazda diesel cars, originally planned for 2016, will nevertheless likely be delayed because regulators there are expected to add extra steps to emissions and fuel-economy testing processes, he said.

“We’re committed to launching diesel-fueled cars in the United States,” Fujiwara told Reuters in an interview on the sidelines of the Tokyo Motor Show. “There is no doubt about that.”

But the tougher testing, he said, “will cause a delay in plans for everybody looking to sell diesel cars in the U.S. market. That’s why we cannot say when we are going to be able to launch our diesel cars in the U.S. market at this point.”

The expected delay reflects an increasingly complicated regulatory environment for diesel technology in the wake of the Volkswagen scandal.

Diesel had been seen, especially among European carmakers, as a mainstream technology to help meet tougher fuel economy and emissions regulations. But now it looks vulnerable.

“Anybody can, with certainty, guess what’s going to happen,” Nissan Motor Co (7201.T) CEO Carlos Ghosn told reporters on Wednesday.

“This scandal is not going to make diesel more popular in the United States. This scandal is not going to make diesel more popular in Japan.”

Many auto executives and engineers, however, said diesel was far from finished.

“Diesel has its merits,” Toyota Motor Corp (7203.T) President Akio Toyoda told reporters on the sidelines of the auto show on Wednesday. “It would be wrong if the ongoing scandal led to the end of diesel use.”

Mazda’s Fujiwara said U.S. regulators had not notified Mazda of any changes to their testing processes, but the company believes that they have already been toughened and that a delay to its diesel launch plans is unavoidable.

“Tests are going to be tougher,” he said. “Regulators are not telling us or anybody what additional testing steps they have added to the processes.”

“They no longer trust companies and are not telling us anything. Most likely there is a delay. We just don’t know how big a delay it is going to be.”

(Reporting By Norihiko Shirouzu and Maki Shiraki in Tokyo; Editing by Edmund Klamann)

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