News Archive


VW scandal could kill U.S. diesel car market, Continental CEO says


FRANKFURT Volkswagen’s (VOWG_p.DE) emissions test-cheating scandal could kill nascent markets for diesel cars in North America, Japan and China, the chief executive of automotive supplier Continental (CONG.DE) has told a German newspaper.

“The diesel passenger car could sooner or later disappear from these markets,” Elmar Degenhart said in an interview with markets daily Boersen-Zeitung published on Thursday.

He added that diesel had a market share of only 1-3 percent in these countries, compared with 53 percent in Europe.

Last month, Continental’s finance chief said the scandal was having little effect on diesel markets in the United States or Europe.

Volkswagen, Europe’s biggest carmaker, had been promoting diesel as a clean alternative to gasoline in the United States, a market where it was struggling for a breakthrough, before the cheating came to light in September.

Degenhart said Continental had not supplied any software to manipulate emissions tests to any of its clients, reiterating what a company spokesman told media in October.

“We developed and supplied the engine controllers in line with VW’s specifications. The installation and tuning of the software, the so-called calibration, was done by VW,” he said.

He added that Continental was not aware of any legal investigations against it in connection with the scandal.

Staff at Continental’s arch-rival Bosch [ROBG.UL], the world’s biggest automotive supplier, are being investigated by public prosecutors in the German city of Stuttgart to find out whether they were involved in VW’s test-rigging.

Continental is striving to build up its software, electronics and sensors business, which is already bigger than its core tyres business, as carmakers demand services such as mapping and traffic information for Internet-connected cars.

“The likelihood that we will begin to support the building of this new business with acquisitions is relatively high,” Degenhart said, adding that large acquisitions were possible but unlikely in this area and not currently planned.

He added that Continental had not given up on the development of electric car batteries despite a joint venture with South Korea’s SK Innovation (096770.KS) ending last year.

“We are convinced that it is only a matter of time before electromobility, and there I include hydrogen power in the long term, prevails,” Degenhart said.

But he said the price would have to fall below 100 euros ($109) per kilowatt hour of storage capacity from 250-300 euros currently for electric cars to succeed.

Asked what he would do to keep shareholders happy, Degenhart said he did not rule out raising Continental’s dividend payout ratio in coming years from 15-30 percent of net profit currently.

(Reporting by Georgina Prodhan; editing by Jason Neely)

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Jobless claims rise sharply during holiday week


WASHINGTON The number of Americans filing new claims for unemployment benefits rose sharply last week, a potential signal the job market was losing steam although some of the increase might be attributed to temporary holiday factors.

Initial claims for state unemployment benefits rose 20,000to a seasonally adjusted 287,000 for the week ended Dec.26, the U.S. Labor Department said on Thursday.

That was the highest since July, although in recent months the weekly readings for claims have held near a 42-year low.

Economists polled by Reuters had forecast claims rising to 270,000 in the latest week.

Futures for U.S. stock prices were largely unchanged following the report. [.N]

The U.S. labor market heated up in 2015, enough for the Federal Reserve to raise interest rates on Dec. 16 for the first time in a decade, a milestone in the U.S. recovery from the 2007-09 recession.

Many economists expect a slower pace of job market improvement in 2016 even as the unemployment rate falls further from its current 5 percent. After dropping sharply for years, jobless claims have appeared to stabilize since the middle of 2015.

Last week’s data may have been distorted by the holiday period, although the Labor Department said there were no special

factors influencing the numbers. The four-week moving average, which analysts follow closely because it smoothes out volatility, rose 4,500 to 277,000.

Still, claims have been below 300,000, a threshold associated with a buoyant labor market, for 43 consecutive weeks, the longest stretch since the early 1970s.

The claims report showed the number of people still receiving benefits after an initial week of aid rose 3,000 to 2.20 million in the week ended Dec. 19.

(Reporting by Jason Lange; Editing by Chizu Nomiyama and Jeffrey Benkoe)

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Facebook fights for free Internet in India, global test-case


MUMBAI/NEW DELHI India has become a battleground over the right to unrestricted Internet access, with local tech start-ups joining the front line against Facebook Inc founder Mark Zuckerberg and his plan to roll out free Internet to the country’s masses.

The Indian government has ordered Facebook’s Free Basics plan to be put on hold while it decides what to do.

The program, launched in around three dozen developing countries, offers pared-down web services on mobile phones, along with access to Facebook’s own social network and messaging services, without charge.

But critics say the program, launched 10 months ago in India in collaboration with operator Reliance Communications, violates principles of net neutrality, the concept that all websites on the internet are treated equally. It would put small content providers and start-ups that don’t participate in it at a disadvantage, they say.

“India is a test case for a company like Facebook and what happens here will affect the roll out of this service in other smaller countries where perhaps there is not so much awareness at present,” said Mishi Choudhary, a New York-based lawyer who works on technology and Internet advocacy issues.

Also at stake is Facebook’s ambition to expand in its largest market outside the United States. Only 252 million of India’s 1.3 billion people have Internet access, making it a growth market for firms including Google and Facebook.

RECORD SUBMISSIONS

The Telecom Regulatory Authority of India (TRAI) said on Thursday it had received record submissions for a public consultation that precedes the rule-making process.

But more than three quarters of the 1.8 million comments submitted by users via Facebook will be disregarded as they did not follow the proper format, TRAI Chairman Ram Sevak Sharma told a news conference.

In the past week, Facebook has urged users in India to send a response to the TRAI both through its social networking platform and through mobiles by dialling a number that automatically generates a response on the users’ behalf.

However, the social media giant faces stiff resistance.

In a letter seen by Reuters, the heads of nine start-ups including Alibaba-backed Paytm and dining app Zomato have written to the TRAI urging it to ensure Internet access was allowed without differential pricing.

The executives said in the letter, dated Tuesday, that differential pricing for Internet access would lead to a “few players like Facebook with its Free Basics platform acting as gate-keepers.”

“There is no reason to create a digital divide by offering a walled garden of limited services in the name of providing access to the poor,” they wrote.

Zuckerberg has got personally involved.

“We know that for every 10 people connected to the Internet, roughly one is lifted out of poverty,” he wrote in The Times of India newspaper this week. “We know that for India to make progress, more than 1 billion people need to be connected to the Internet.

“What reason is there for denying people free access to vital services for communication, education, healthcare, employment, farming and women’s rights?”

BOTH SIDES

A Facebook spokesman said the aim of the Free Basics initiative was to give people a taste of what the internet can offer. And Facebook has issued a series of full-page newspaper advertisements and billboard banners in an aggressive campaign to counter the protests.

“Free Basics is at risk of being banned, slowing progress towards digital equality in India,” said an advertisement published in Mumbai newspapers on Wednesday, urging Internet users to support the initiative.

Launched last year in Zambia, Free Basics, earlier known as internet.org, has run in to trouble elsewhere on grounds that it infringes the principle of net neutrality. Authorities in Egypt effectively suspended the service when a required permit was not renewed after it lapsed on Wednesday.

The TRAI has asked Facebook and Reliance Communications to suspend Free Basics until a final policy decision is made next month.

“In a democracy you have both sides – you have Facebook spending so much on the campaign and on the other side you have internet activists making their own efforts,” the TRAI’s Sharma told Reuters on Wednesday.

“Our job is to make a policy that is in the interest of telecom operators and end users in India.”

(Reporting by Himank Sharm and Douglas Busvine; Writing by Sumeet Chatterjee; Editing by Raju Gopalakrishnan and Ian Geoghegan)

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India to tighten rules for credit cooperatives to protect investors


NEW DELHI India will crack down on errant financial firms that raise funds, mainly from millions of rural poor customers, through loosely regulated credit cooperative societies, a senior official in the agriculture ministry said.

This follows a Reuters investigation that revealed an expansion in fund-raising by embattled conglomerate Sahara India Pariwar using four credit cooperatives in different parts of the country.

Reuters spoke to dozens of savers who said Sahara had not given them their money when their deposits matured. Instead, they complained, Sahara’s agents and branch officials tried to persuade them to switch their matured savings deposits to new schemes offered through credit cooperatives run by Sahara.

Sahara has not responded to requests for comment by Reuters.

The federal government plans to penalize cooperatives that fail to repay investors when deposits come due or engage in other violations of regulations, a senior official from the Ministry of Agriculture’s credit cooperatives division told Reuters.

The official, who has direct knowledge of the matter, did not want to be named as he was not authorized to speak to the media. Agriculture Minister Radha Mohan Singh and Secretary Siraj Hussain, the top bureaucrats in the ministry, did not immediately respond to emails seeking comment.

One measure under discussion is to either have an independent regulator supervise credit cooperatives or bring them under the purview of an existing regulator, such as the Securities and Exchange Board of India, which oversees India’s stock markets, the official said.

Credit cooperatives are widely used by the rural poor. A lack of banking services in India – nearly two-fifths of its 1.27 billion people have no bank accounts – has helped shadow banks such as the credit cooperatives thrive for decades in Asia’s third-largest economy.

“The idea is to make it more stringent by giving more teeth so that we are able to effectively protect investors’ interest,” the cooperatives division official said. “Various suggestions have been made and the top brass is very serious about this.”

CENTRAL BANK REGULATION

Under Indian law, credit cooperatives must be owned by their members, who are also the main customers. Cooperatives operating across state lines are registered not with the central bank, but with the cooperatives division of the Ministry of Agriculture.

Multi-state credit cooperatives would be better regulated under India’s central bank, the Reserve Bank of India (RBI), said Bindu Ananth, head of the IFMR Finance Foundation, a non-profit group that seeks to broaden access to financial services.

“It’s an anomaly that you have a class of deposit-taking institutions that is outside the ambit of the RBI,” Ananth said.

The proposed regulatory changes from the credit cooperatives division in the farm ministry would come after Prime Minister Narendra Modi launched an ambitious project to widen banking services in India called the Jan Dhan Yojana, or People’s Wealth Scheme. Since August of last year, it has opened 200 million new bank accounts.

The program seeks to curb the use of cash, limit corruption and rein in the informal, and often illegal, shadow banking activities conducted by some firms mostly in rural areas.

Sahara founder Subrata Roy, whose business empire includes hotels such as the New York Plaza and a Formula 1 racing team, has spent the last 21 months in jail for not complying with a Supreme Court order to return $5.4 billion to investors who put money in a 2008-11 time deposit plan. The markets regulator SEBI said it was illegal because it did not conform to India’s market disclosure requirements.

(Editing by Douglas Busvine and Bill Tarrant.)

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BP orders complete evacuation of Valhall field in North Sea


OSLO BP (BP.L) said it ordered a total evacuation of its Valhall platform in the North Sea on Thursday after a barge broke its anchor and was drifting towards the installation following a storm.

“The barge has changed direction and BP has decided to shut production (at Valhall) and there will be a total demanning of the platform. There are 71 people left on the platform and they are being evacuated as we speak,” a BP spokesman told Reuters.


(Reporting by Nerijus Adomaitis, writing by Gwladys Fouche; Editing by Susan Fenton)

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Oil ends 2015 in downbeat mood; hangover to be long, painful


SINGAPORE Oil prices remained in a downbeat mood during their final Asian-hours trading session of 2015 after record U.S. crude inventories reinforced concerns about a global supply glut that has pulled down prices by a third over the past year.

Crude inventories in the United States rose 2.6 million barrels last week, the U.S. Energy Information Administration said. Analysts polled by Reuters had expected a draw of 2.5 million barrels. [EIA/S]

Crude prices held losses after falling more than 3 percent in the previous session, with U.S. West Texas Intermediate (WTI) crude futures trading around $36.70 per barrel at 0300 GMT on Thursday and Brent around $36.60 per barrel. Both benchmarks are down by around a third over 2015.

The immediate outlook for oil prices remains bleak, with some analysts like Goldman Sachs saying prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.

U.S. bank Morgan Stanley said in its outlook for next year that “headwinds (are) growing for 2016 oil.” The bank cites ongoing increases in available global supplies, despite some cuts by U.S. shale drillers in particular, as well as a slowdown in demand as the main reasons.

“The imbalance in the global oil market has been diminishing in 2H15, but the hope for a rebalancing in 2016 continues to suffer serious setbacks,” the bank said, reflecting a market consensus that meaningfully higher prices are not expected before late 2016. [L8N14J03J]

Traders expect some U.S. oil to be taken out of America and supplied into global markets, following the surprise lifting of a decades-old U.S. crude export ban in December, which ended a years-old discount in U.S. crude prices to international Brent.

“At a time when U.S. shale is facing headwinds due to the collapse in crude oil prices… U.S. crude oil exports are likely to help reduce congestion concerns in the U.S.,” ING bank said.

INDUSTRY PAIN

Oil prices began falling in mid-2014 as ballooning output from the Organization of the Petroleum Exporting Countries (OPEC), Russia and U.S. shale drillers started to outpace demand. The downturn gained pace at the end of 2014 after a Saudi-led OPEC decided to keep production high to defend global market share rather than cut output to prop up prices.

A year on and the oil downturn has turned into a rout with Brent prices briefly falling below $36 per barrel to levels last seen in over a decade, effectively wiping out the gains from a decade-long commodity super-cycle sparked by China’s unprecedented energy demand boom.

The downturn has caused pain across the energy supply chain, including shippers, private oil drillers and oil-dependent countries from Venezuela and Russia to the Middle East.

Analysts estimate global crude production exceeds demand by anywhere between half a million and 2 million barrels every day. This means that even the most aggressive estimates of expected U.S. production cuts of 500,000 bpd for 2016 would be unlikely to fully rebalance the market.

Russia and OPEC are so far showing few signs of reining in production, leading traders to establish record high active short positions in the market that would profit from further crude price falls.

(Editing by Christian Schmollinger and Richard Pullin)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/o_klj-I1IAc/story01.htm

Oil, Asia shares see subdued end to year dominated by Fed, China


SINGAPORE/SYDNEY Asian share markets looked set to end a rough, volatile year on a subdued note on Thursday as a renewed slide in oil prices sapped sentiment, a baleful trend that shows every sign of lingering into 2016.

The relentless decline in oil prices, which have slumped as much as 35 percent this year, has hit currencies of commodity-rich countries including the Russian rouble, Canadian dollar, Norwegian crown, Brazilian real and Mexican peso.

While cheaper fuel is a boost to consumer spending power in much of the developed world, it is also a disinflationary force that reinforces bets on loose monetary policy in Europe, Japan and China, even as the Federal Reserve proceeds with glacial tightening.

Oil prices are ending the year how they began – under pressure. Brent crude skidded toward 11-year lows after an unusual build in U.S. stockpiles and signs Saudi Arabia will keep adding to the global oil glut.

“Ever get the feeling that you’ve been here before?” wondered analysts at National Australia Bank in a note to clients.

“It is the end of another year with oil prices very weak – having fallen by around a third again since the summer – China fears are at the fore and everyone is still talking about the Fed.”

U.S. crude futures CLc1 gave up gains in early Asian trade to stand flat at $36.58 a barrel, after a drop of 3 percent the previous session. They are on track for a 27 percent loss this year.

Brent crude LCOc1 also erased earlier gains to trade up 0.1 percent at $36.55, after a 3.5 percent drop in the previous session. It’s set for a slump of 35 percent for 2015.

That was bad news for most commodity currencies. The dollar hit a more than one-year high against the Russian rouble RUB=, and its highest in at least 13 years against the Norwegian crown NOK=.

The five worst-performing currencies this year have been the Argentinian peso ARS= and Brazilian real BRL=, with losses of more than 30 percent versus the dollar, the South African rand ZAR=, Turkish lira TRY= and the Russian rouble, which have tumbled more than 18 percent.

The Australian and New Zealand dollars have had the biggest losses among Asia Pacific currencies. The Aussie AUD=D4 slipped about 0.1 percent to $0.7296, extending losses this year to almost 11 percent. The kiwi NZD=D4 held steady at $0.6845, on track for a 12.3 percent decline in 2015.

Moves between the majors were much more limited.

Against a basket of currencies, the dollar was flat at 98.247 .DXY. It was also steady on the yen at 120.455 JPY=D4, while the euro marked time at $1.0925 EUR=D4.

Holidays limited the damage in Asian markets on Thursday with many either closed or shutting early. Japan was one of the markets off on Thursday, though it was also one of the better performers this year with gains of almost 10 percent for the TOPIX .TOPX.

Others have not fared so well. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was little changed but set to end the year 12 percent lower.

Australia’s main index slipped 0.3 percent, widening losses for 2015 to 1.7 percent.

China’s Shanghai Composite index .SSEC and CSI300 .CSI300 were both little changed on Thursday. Despite a savage summer rout which rocked global markets, China had the region’s best performing emerging market indexes in 2015, with the former set for a gain of 10.5 percent and the latter 6.6 percent.

Thailand .SETI and Indonesia .JKSE, both of which were closed Thursday, were the worst performing Asian emerging markets this year, with losses of 14 percent and 12.1 percent, respectively.

New Zealand .NZ50 was the best-performing Asia-Pacific developed market, with gains of 13.5 percent, and Singapore .STI was the worst, with a 14 percent loss.

The next major Asian event will be official readings on Chinese manufacturing and services in December, due on Jan. 1. Activity in China’s manufacturing sector is expected to have contracted for a fifth straight month, a Reuters poll showed, likely consigning the world’s second-largest economy to its slowest annual growth rate in 25 years.

Losses in energy stocks weighed on Wall Street on Wednesday, where the Dow .DJI ended down 0.66 percent. The SP 500 .SPX fell 0.72 percent and the Nasdaq .IXIC 0.82 percent.

Apple (AAPL.O) was the single biggest drag, falling 1.31 percent on fears of potentially soft iPhone sales.

(Editing by Richard Borsuk and Kim Coghill)

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Malaysia’s 1MDB to sell property project stake for $1.7 billion


KUALA LUMPUR Malaysia’s troubled state fund 1MDB said it would sell its 60 percent stake in a Kuala Lumpur development project to Iskandar Waterfront Holdings and its partner, state-run China Railway Engineering Corp, for 7.41 billion ringgit ($1.7 billion).

Malaysia’s Iskandar Waterfront Holdings will be responsible for 60 percent of purchase while China Railway Engineering will buy the rest, 1MDB said in a statement on Thursday.

The sale should be completed by the end of June, 1MDB said.

(Reporting by Rozanna Latiff; Writing by Simon Webb; Editing by Edwina Gibbs)

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U.S. hedge fund founder is denied early release in insider case


NEW YORK A federal judge on Wednesday rejected hedge fund manager Doug Whitman’s request to end his two-year sentence for insider trading early while he pursues his latest appeal of his 2012 conviction.

U.S. District Judge Jed Rakoff said it would be unfair to release the Whitman Capital LLC founder from the Sacramento, California, halfway house where he was moved this month just because he is only five months away from possible freedom.

Whitman, 58, was convicted of trading and conspiring to trade on confidential tips from two people who were tipped by insiders at publicly traded technology companies.

An earlier appeal failed in February 2014.

Whitman said he now has “substantial” legal claims after the federal appeals court in Manhattan ruled in December in a different case that insider trading required knowledge of a meaningful “personal benefit” being passed in exchange for tips.

Whitman also said “extraordinary” circumstances, including the short time left in his sentence and the “great difficulty” affecting some family members, justified his being released now.

Rakoff, however, wrote that while “not unsympathetic to Whitman’s request, it is quite clear that he does not meet the requirements for such release, so that granting him such relief would inequitably prefer him to others similarly situated.”

The judge also said it did not matter that Whitman’s incarceration might end before his latest appeal was resolved, or else “every prisoner nearing the end of a term could bring a successful bail motion” in a similar case.

Whitman is eligible for release on May 29, 2016.

His lawyer, Dennis Riordan, said he will likely ask the appeals court to free Whitman during the latest appeal, “but the principal objective remains the overturning of Mr. Whitman’s conviction.”

Whitman has argued that the new, narrower definition of insider trading tainted the outcome of his 2012 trial and deprived him of his right to counsel during the earlier appeal because another lawyer had failed to raise the issue.

Whitman Capital was based in Menlo Park, California.

The case is U.S. v. Whitman, U.S. District Court, Southern District of New York, No. 12-cr-00125.

(Reporting by Jonathan Stempel in New York; Editing by Dan Grebler)

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