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U.S. new home sales fall in August but trend still positive

WASHINGTON New U.S. single-family home sales posted their biggest decline in nearly a year in August after soaring to nine-year highs the month before, with analysts saying the trend in sales remains positive.

The Commerce Department said on Monday new home sales fell 7.6 percent to a seasonally adjusted annual rate of 609,000 units last month. Sales were up 20.6 percent from a year ago.

Economists polled by Reuters had forecast single-family home sales falling to an annualized rate of 600,000 units last month.

July’s sales pace was revised up 5,000 units to 659,000 units. That level of annualized sales was the highest since October 2007, and even with the decline, the sales pace in August was the second highest since 2008.

Analysts said the level of sales generally supported their view of a strong underlying trend in new home sales and of a quickening pace of overall economic growth in the second half of the year.

“New home sales moved lower in August, but sales were at an expansion high in July and the longer-term trend remains positive due to strong homebuyer demand,” said David Berson, chief economist at Nationwide and former chief economist at Fannie Mae.

Following the new home sales release, analysts at Macroeconomic Advisers kept their estimate of third-quarter economic growth at 3 percent, a marked pickup from the first half of the year.

Though new home sales make up just 10 percent of all home sales, evidence that the economy continues to hold up will add to the likelihood that the Federal Reserve follows through on an interest rate hike expected in December.

Evidence in particular that households remain willing to spend – whether on new homes or meals at restaurants – will support the Fed’s view that growth in jobs and wages is helping support overall recovery even though other contributors to gross domestic product remain weak.

“There are good reasons to expect GDP growth to rebound,” analysts at Capital Economics said in a research note, pointing to a rise in household disposable income and household net worth that is “close to a record high.”

Major U.S. stock indices were down by about three quarters of a percent at midday. Homebuilder shares performed slightly better.

Shares in the nation’s largest homebuilder D.R. Horton Inc (DHI.N) were down 0.66 percent and Lennar Corp (LEN.N) shares fell 0.02 percent. Toll Brothers (TOL.N) was down 0.59 percent.

The broader PHLX housing index .HGX, which includes builders, building products and mortgage companies, was trading up 0.10 percent.

Another housing report last week showed a solid increase in permits for single-family dwellings as the housing market continues to strengthen overall amid a tightening labor market that is pushing up wages.

New home sales have also benefited from a dearth of previously owned houses available for sale.

Last month, the inventory of new homes on the market rose 1.7 percent to 235,000 units.

New single-family home sales fell 34.3 percent in the Northeast to the lowest level since September 2015. Sales were down 2.4 percent in the Midwest and 12.3 percent in the South but rose 8.0 percent in the West to the highest level since September 2007.

At August’s sales pace it would take 4.6 months to clear the supply of houses on the market, up from 4.2 months in July.

The median price for a new home fell 5.4 percent from a year ago to $284,000.

(Reporting by Howard Schneider; Editing by Andrea Ricci)

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Iran downplays chances of oil deal, UAE keen on freeze

ALGIERS Iran downplayed on Monday the chances of OPEC and non-OPEC oil producers clinching an output-restraint deal in Algeria this week even though several other members of the group said they still hoped for steps to tackle a price-eroding glut of crude.

Oil prices have more than halved from 2014 levels due to oversupply, prompting OPEC producers and rival Russia to seek a market rebalancing that would boost revenues from oil exports and help their crippled budgets.

The predominant idea since early 2016 among producers has been to agree to freeze output levels, although market watchers have said such a move would fail to reduce unwanted barrels.

Sources told Reuters last week that Saudi Arabia had offered to reduce its output if Iran agreed to freeze production, a shift in Riyadh’s position as the kingdom had previously refused to discuss output cuts.

As delegations gathered in Algiers, Iranian Oil Minister Bijan Zanganeh said expectations should be modest.

“This is an advisory meeting and that’s all we should expect from it,” he was quoted as saying by oil ministry news service SHANA before he left Tehran. “The talks among OPEC members can be used for the OPEC summit in Vienna in November.”

Crude prices rose by 3.5 percent on Monday, recouping most of the losses sustained on Friday, when hopes for an output deal in Algeria faded.

One OPEC delegate said the focus was now firmly on trying to persuade Iran to freeze output at levels acceptable for the rest of the producer group.

Iran’s output has been stagnant at 3.6 million barrels per day (bpd) in the past three months, close to what the country produced before the imposition of European sanctions in 2012.

The sanctions were eased in January 2016, and Iran has said it wants to achieve output of more than 4 million bpd.

On Monday, an OPEC source said Iran was still insisting on being allowed to reach 4.1-4.2 million bpd before freezing production.


Some ministers and officials expressed hope that a deal could emerge this week.

“For us in the UAE, we are for a decision. We think a freeze will help if it is agreed. We hope that all are going to agree,” the United Arab Emirates’ energy minister, Suhail bin Mohammed al-Mazroui, told Reuters.

Algerian Energy Minister Noureddine Bouterfa said everyone in the Organization of the Petroleum Exporting Countries agreed that the market was badly oversupplied and the situation had worsened since the last OPEC meeting in June.

“Credible and significant action is needed to help the market rebalance … One fundamental aspect is that OPEC production should be significantly below the level of August. The second is that the effort must be shared out.”

“Third is that any agreement be limited to the time it takes to reabsorb oil stocks. And the fourth is that the action should be credible in the eyes of the market and verifiable,” Bouterfa told French-language Algerian daily Liberte.

Members of OPEC will meet on the sidelines of the International Energy Forum, which groups producers and consumers, from Sept. 26-28.

Russia is also attending but there is no evidence the country is preparing to participate in any production action.

(Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

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Bank of America set to cut about two dozen Asia investment banking jobs: sources

SINGAPORE/HONG KONG Bank of America (BAC.N) is set to cut about two dozen investment banking (IB) jobs in Asia, including some top dealmakers starting this week, according to people familiar with the matter.

Some bankers handling clients coverage and deals will be let go, with cuts expected in Hong Kong, Singapore and Japan, BofA’s big centers in Asia, the people said, adding that the total number of jobs cuts hasn’t been finalised.

A Hong Kong-based spokesman for Bank of America declined to comment. Sources declined to be identified as the information is not public.

Bank of America’s job cut plans comes after Reuters reported on Friday that Goldman Sachs (GS.N) is planning to cut almost 30 percent of its 300 investment banking jobs in Asia outside Japan in response to a slowdown in activity in the region.

(Reporting by Saeed Azhar, Anshuman Daga and Sumeet Chatterjee; Editing by Denny Thomas and Louise Heavens)

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Oil rises as OPEC meets, volatility hits post-Doha high

LONDON Oil rallied on Monday as the world’s largest producers gathered in Algeria to discuss ways to support the market, with nervous trade driving volatility to its highest since exporters met in April.

Scepticism about any deal being reached has prompted money managers to cut their bullish bets to a one-month low last week, when prices fell by nearly 5 percent, dented by signs Saudi Arabia and Iran were making little progress in achieving a preliminary agreement to freeze production.

Members of the Organization of the Petroleum Exporting Countries are meeting informally on the sidelines of the International Energy Forum in Algeria from Sept. 26-28, where they will discuss a possible deal to limit output.

Brent crude futures LCOc1 rose 73 cents to $46.62 a barrel by 1052 GMT, having rallied from a session low of $45.74, while U.S. crude prices CLc1 rose 54 cents to $45.02 a barrel.

Implied volatility, one gauge of how much the oil price moves, rose to its highest since April 18, when a meeting in Doha among OPEC members to discuss an output freeze ended in an impasse and the price hit a low just above $40 a barrel.

Unplanned outages across OPEC countries still amount to around 2 million barrels per day, according to SEB commodities strategist Bjarne Schieldrop, which will make it difficult for members that are pumping close to capacity to make way for the potential return of that shuttered output.

“They will come away with nothing, because it is too difficult. How can they decide a freeze when Libya is on the doorstep of returning production, or Nigeria for that matter?” Schieldrop said.

Data from the U.S. Commodity Futures Trading Commission on Friday showed hedge fund managers cut their net long position in crude oil to its lowest in a month, having made the largest weekly addition to their short positions on record. [CFTC/]

Sources told Reuters on Friday that Saudi Arabia did not expect a decision to be made in Algeria, while Saudi Arabia had offered to reduce production if Iran caps its own output this year, an offer to which Tehran had yet to respond.

“The fact countries like Algeria are still talking about a deal means it’s still on the table regardless of others’ views about what might be happening,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.

“I expect Algeria and Venezuela to keep pushing for a deal – it’s imperative for them to keep the price up,” Barratt said.

(Additional reporting by Keith Wallis in Singapore; editing by Jason Neely and Louise Heavens)

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Pfizer says not to split into two

U.S. drugmaker Pfizer Inc (PFE.N) said on Monday it had decided not to separate into two publicly traded companies at this time.

Pfizer has for several years weighed whether a split makes sense, largely because its patent-protected medicines routinely enjoy sales growth, while its portfolio of generics usually post declines.

Investors shifted their focus to whether Pfizer would split after the company terminated a $160 billion deal to acquire Irish drugmaker Allergan Plc (AGN.N) in April due to new U.S. tax inversion rules.

The company said on Monday the decision would not impact its 2016 forecast, and that it preserved the option to split in the future.

(Reporting by Natalie Grover in Bengaluru; Editing by Sriraj Kalluvila)

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IMF welcomes BOJ new policy framework, sees 2 percent inflation elusive

TOKYO The International Monetary Fund said on Monday that a new monetary policy framework adopted by the Bank of Japan marked “progress”, but stuck to its view that the central bank won’t be able to hit its ambitious 2 percent inflation goal anytime soon.

IMF Japan mission chief Luc Everaert made the remarks after the BOJ last week switched to targeting short- and long-term interest rates, and dropped its previous target of increasing base money at an annual pace of 80 trillion yen ($792 billion).

“We think that what happened on Sept. 21 is a good thing and welcomed that very much,” Everaert told a seminar in Tokyo, referring to the BOJ’s decision, which he said has removed a strict time horizon of achieving the inflation target.

“This new framework is a progress but that does not mean that the inflation target is going to be achieved much sooner than it otherwise would have,” he added.

With Japan struggling to break free of a long, debilitating phase of deflation despite the ultra-easy monetary policy adopted in April 2013, many economists have said that 2 percent inflation was an overly ambitious goal.

A senior BOJ official said the central bank’s new monetary policy framework should not be taken as a message that the BOJ feels it is done with easing, as it is aimed at strengthening the BOJ’s commitment to meeting its 2 percent inflation target.

“Our policy framework is more sustainable, but it doesn’t mean it will take longer to achieve 2 percent inflation,” Tomoyuki Shimoda, deputy director-general at the BOJ’s Monetary Affairs Department, told the seminar.

“There is no change to our strong commitment to achieve 2 percent inflation at the earliest possible time,” he added, echoing Governor Haruhiko Kuroda’s resolve to hit the price goal quickly.

Everaert urged the BOJ to continue to clarify its policy guidance and to strengthen its communication while being careful to preserve stability in the Japanese government bond market.

Many market players think the BOJ will eventually need to taper its bond buying to keep bond yields around its new target.

Kuroda said on Monday that the pace of its government bond buying may fluctuate under its new yield curve control, but said the fluctuations would not carry policy implications.

(Reporting by Tetsushi Kajimoto and Stanley White; Editing by Simon Cameron-Moore)

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Deutsche Bank says to solve problems without help from Berlin

FRANKFURT Deutsche Bank (DBKGn.DE) will solve its problems without relying on help from Berlin, Germany’s flagship lender said on Monday.

“(Chief Executive) John Cryan at no point asked the German Chancellor for the government to intervene in the U.S. Justice Department’s mortgages case,” a Deutsche Bank spokesman said on Monday.

Shares in Germany’s biggest bank hit a record low of 10.62 euros on Monday after a German magazine reported over the weekend that German Chancellor Angela Merkel had ruled out aiding the lender in it talks with U.S. justice officials.

“Deutsche Bank is determined to resolve its challenges on its own,” the spokesman said.

“There is currently no question of a capital increase. We are meeting all regulatory requirements,” the spokesman added.

Cryan and Merkel met in July to discuss Brexit repercussions but did not touch on the matter of potential help with U.S. legal proceedings, a person close to the matter said.

Deutsche Bank said in mid-September it would fight a $14 billion demand from the DoJ to settle a mortgage mis-selling case.

Analysts at Mediobanca said that a rights issue looked inevitable.

“John Cryan always said that a rights issue would only be triggered by a larger-than expected litigation charge and it appears increasingly likely that Deutsche Bank investors will be asked to post bail for Deutsche’s past crimes,” they said in note on Monday.

(Reporting by Kathrin Jones; Writing by Arno Schuetze; Editing by Jonathan Gould)

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ChemChina seeks EU okay for Syngenta deal, decision due October 28

BRUSSELS China National Chemical Corp (ChemChina) [CNNCC.UL] has sought antitrust approval for its $43 billion bid for Swiss pesticides and seeds group Syngenta (SYNN.S) from the European Union and a decision is expected by Oct. 28.

State-owned ChemChina filed its request on Sept. 23, the European Commission’s website showed on Monday.

The EU competition enforcer can either clear the deal, with or without concessions, or it can open a full investigation if it has serious concerns that ChemChina’s takeover of the world’s largest pesticides maker could harm customers and rivals.

ChemChina cleared one of the biggest hurdles last month when a U.S. national security panel approved what would be the largest foreign acquisition by a Chinese company.

The deal is one of several in the agrochemicals sector, including the planned $130 billion merger of Dow Chemical (DOW.N) and DuPont (DD.N), Bayer’s (BAYGn.DE) $66 billion bid for Monsanto (MON.N) and Potash Corp of Saskatchewan’s (POT.TO) proposed merger with Agrium (AGU.TO).

(Reporting by Foo Yun Chee; editing by David Clarke)

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Takata’s search for a savior could drag into next year: sources

TOKYO The plan to sell beleaguered Takata Corp (7312.T) to a rescuer, slated by year-end, is likely to extend into next year as some bidders want to drag the air bag maker through bankruptcy to wipe out most of its debt, people with knowledge of the matter said.

But creditors such as Honda Motor Co Ltd (7267.T) are likely to resist any bailout that includes bankruptcy because they would have to swallow significant losses, the people said.

The ensuing tussle could take months to resolve, the people said, declining to be identified due to the sensitivity of the matter.

Takata faces about 1 trillion yen ($10 billion) in costs to recall potentially faulty air bag inflators worldwide, according to market estimates. There is also the prospect of legal liabilities related to the inflators which have been linked to at least 14 deaths, mainly in the United States.

The firm received bailout bids from five groups last week. Its steering committee hopes to name a sponsor next month and complete restructuring plans by December, the people said.

But that timeline is overly ambitious, they said, given the need to agree on how to share the losses among Takata’s many stakeholders, which include creditors and both Japanese and foreign automakers.

A spokesman representing Takata’s steering committee declined to comment.

Moreover, an investor is unlikely to be confirmed unless Takata files for bankruptcy, which would establish the extent of liabilities, one of the people said.

Bidders include Japanese inflator maker Daicel Corp (4202.T) in partnership with U.S. buyout firm Bain Capital, and U.S. air bag maker Key Safety Systems which is likely to team up with U.S. private equity firm Carlyle Group LP (CG.O), the people said. U.S. buyout firm KKR Co LP (KKR.N) has also bid, they said.

Automakers including Honda and Volkswagen AG (VOWG_p.DE) have recalled vehicles containing more than 100 million Takata inflators after it was discovered that a chemical compound in their propellant can explode.

Takata needs an investor to help overhaul its business and shoulder ballooning costs related to the recall. Its stock has tumbled nearly 90 percent since early 2014, when the problems first spread.

Takata’s steering committee has retained investment bank Lazard Ltd (LAZ.N) as advisor in its search for an investor.

The people with knowledge of the matter said one means of securing an investor would be to wipe out current shareholders by devaluing equities to zero and allowing the sponsor to control 100 percent of Takata.

Lawyers specializing in corporate restructuring, who are not involved in the Takata deal, said such a scenario would be easier if the company seeks bankruptcy.

(Reporting by Junko Fujita and Taro Fuse; Additional reporting by Naomi Tajitsu; Editing by Christopher Cushing)

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