News Archive


Sumner Redstone urges Viacom-CBS deal, rules out others


Sumner Redstone’s National Amusements, the majority shareholder of CBS Corp (CBS.N) and Viacom Inc (VIAB.O), said a merger of the two would offer substantial savings and that it would not support the acquisition of either company by a third party.

Privately held National Amusements, which owns 80 percent of the voting shares of both media companies, also said it would not support a transaction that would cause it to surrender control of either company or a combined entity.

CBS and Viacom first separated 10 years ago.

“We believe that a combination of CBS and Viacom might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape,” said the letter signed by Redstone and his daughter Shari Redstone.

The optimal deal structure would be an all-stock transaction in which holders of each company would receive shares in the combined entity of the same class as they currently hold, National Amusements said in a letter to the companies’ boards.

Any transaction would require the approval of both boards. Sumner Redstone, Shari Redstone and David Andelman will not vote as directors on the deal and will not participate in deliberations, according to the letter.

Reuters reported on Wednesday that National Amusements, owned by Sumner and Shari Redstone, could contact CBS and Viacom as soon as this week to ask them to form independent board committees to discuss a potential merger.

(Reporting by Anya George Tharakan in Bengaluru and Anna Driver in New York; Editing by Ted Kerr and Lisa Von Ahn)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/0hTfask86es/us-viacom-m-a-cbs-corp-idUSKCN11Z1K0

Wells Fargo chief Stumpf heads to Hill as pressure mounts


Wells Fargo Co Chief Executive Officer John Stumpf returns to Capitol Hill on Thursday with his job under threat and the bank facing rising political pressure over a sales scandal that has become a major issue in Washington and on Wall Street.

Earlier this week, the bank took back $41 million in stock awarded to Stumpf, an unprecedented rebuke to a major U.S. bank CEO, but the move is unlikely to silence calls for his resignation. Investigators found that Wells Fargo’s branch staff opened as many as 2 million unauthorized credit card and deposit accounts to meet sales quotas.

The affair has triggered lawsuits, more investigations and wiped more than $20 billion from the bank’s market value.

On Wednesday, California, Wells Fargo’s home state, suspended business relationships with the bank for a year and said it would work with the state’s two giant public pension funds to change the management structure at the bank, including separating the roles of CEO and chairman.

The episode has been a stunning reversal for Stumpf, long regarded as a safe pair of hands in the industry for navigating Wells Fargo successfully through the financial crisis.

“I don’t know that he will survive this. I don’t think there’s any way to come out of this with the same leadership,” said Patricia Lenkov, CEO of Agility Executive Search.

Stumpf will appear before the House Financial Services Committee, his second congressional appearance in less than 10 days.

Thursday’s hearing may be easier on Stumpf than the bipartisan tongue-lashing he took from the Senate Banking Committee on Sept. 20, when Senator Elizabeth Warren of Massachusetts called him a “gutless leader” who should be criminally investigated.

Warren said on Wednesday that Wells Fargo’s decision to launch an internal investigation and claw back bonuses paid to Stumpf and Carrie Tolstedt, the former head of the retail division at the center of the scandal, were “important first steps,” but not enough.

“The reduced compensation represents only a fraction of the total pay and bonuses received by Mr. Stumpf and Ms. Tolstedt during the years that their compensation was based in part on inflated retail account growth and cross-selling success,” she wrote in a letter to Wells Fargo’s board of directors.

Andrew Duberstein at public relations firm Sard Verbinnen, which is representing the board, did not respond to requests for comment on the letter.

Warren, along with two other senators, called on the U.S. Securities and Exchange Commission to investigate the company, which is already under scrutiny by the Department of Justice, state Attorney General offices, and others.

Stumpf will tell lawmakers on Thursday that Wells Fargo will eliminate sales quotas for branch staff beginning Oct. 1, accelerating the plan from Jan. 1, according to prepared testimony he will deliver.

Federal regulators will also be in focus at the hearing.

House Financial Services Committee Chairman Jeb Hensarling has asked why bank executives did not act sooner, and on Thursday he said he would raise that point again.

Speaking on CNBC television, Hensarling also said that while Stumpf’s reduced compensation was “encouraging,” lawmakers are probing upper management’s role in the scandal, adding that shareholders would have to decide whether Stumpf should resign.

“We will hold him accountable for any violations of the law, civil and criminal,” the Texas Republican said.

U.S. Federal Reserve Chair Janet Yellen promised the committee on Wednesday that the central bank will scrutinize all big banks in the wake of the Wells Fargo matter. Some Democratic committee members said it showed that some banks are too big to manage and should be broken up.

The most powerful Democrat on the committee, Representative Maxine Waters of California, said she has not reached that conclusion, and wanted to hear Stumpf first. She declined to say whether steps taken by Wells Fargo, including the $41 million clawback, were sufficient.

“We will ask some of the basic questions about how this fraud took place and why did it happen and whose decision it was,” she said.

(Additional reporting by Ross Kerber in Boston; Writing by Dan Freed in New York; Editing by Carmel Crimmins and Jeffrey Benkoe)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/6-cuXrAKVP0/us-wells-fargo-accounts-ceo-idUSKCN11Z0EI

Car industry puts cooperation on show in battle against Silicon Valley firms


PARIS/FRANKFURT Alarmed by the threat posed by Silicon Valley firms to their businesses in developing autonomous driving systems, it was evident at the Paris Motor Show this week that carmakers are seeking to fight back by cooperating in areas of technology development where previously they might have tried to compete.

Three big carmakers – BMW (BMWG.DE), Daimler (DAIGn.DE) and VW’s (VOWG_p.DE) Audi – announced earlier this week they would launch new traffic monitoring services next year which give drivers a view of road conditions along their entire route, based on video data collected by their jointly-owned navigation mapping services firm HERE from sensors incorporated in other cars (reut.rs/2dabC1B).

Meanwhile HERE’s Dutch rival TomTom NV (TOM2.AS), on Thursday announced traffic data deals for truckmaker Volvo (VOLVb.ST) and carmaker Skoda, a VW subsidiary.[L8N1C50UB]

Connecting cars on the move with the Internet also needs more reliable mobile telecoms networks and towards that end Germany’s top automakers said this week they were teaming up with the telecoms network equipment makers Ericsson(ERICb.ST), Huawei[HWT.UL], Nokia (NOKIA.HE), Qualcomm (QCOM.O) and Intel(INTC.O) to help with developing the next-generation 5G networks set to debut around 2020 (reut.rs/2dcPuCy).

It’s unfamiliar territory for carmakers who are unaccustomed to cooperating as they battle for distinctive features that will help drive sales of their latest model vehicles.

“This is how the automotive industry may be able to fight off the threat that Apple (AAPL.O) and particularly Google (GOOGL.O) represent to their brands as digital services become more and more important,” technology investment analyst Richard Windsor said.

Moreover, carmakers are now racing one another to plot their paths to building self-driving vehicles over the next five years.

That’s a dramatic acceleration from the 10- to 15-year timeframes many had charted until pushed to speed up the process by the advances made by Google and Tesla (TSLA.O).

“We see the car transforming from a product into the ultimate platform,” Daimler Chairman Dieter Zetsche said.

Now General Motors (GM.N), Nissan (7201.T) and VW are also experimenting with a plan to pull video data captured by their customers’ vehicles using Israeli firm Mobileye’s (MBLY.N) camera-based sensor systems, that may soon give automakers an edge over the likes of Google in the precision-mapping required for driverless cars (reut.rs/2daj3Wr).

However, it remains to be seen whether carmakers can charge premium prices for connected car services as technology companies like Google look to develop similar offerings for free, supported by advertising or other business models.

A deal by traffic data start-up Inrix to supply Google-owned crowd-sourced mapping unit Waze with its data will help drivers find parking spots on their smartphones via a free app.

And on Thursday Renault (RENA.PA) said it was working with Waze on a Google Android Auto protoype for a navigation app that besides showing traffic conditions will also identify 13,000 electric car-charging stations across France.

CAREFUL DRIVING

Some in the industry are also warning that the move to developing fully autonomous driving should remain a very gradual one. Earlier this month pioneering electric car maker Tesla was accused by Mobileye of “pushing the envelope in terms of safety”, alleging that it had promoted its Autopilot driver assistance system as “hands-free” (reut.rs/2d5lUiG).

Other carmakers, while reluctant to address the dispute directly, are keen to emphasize the need for a cautious approach.”There can be no compromise on safety, which is absolutely crucial – that is why at PSA we’ve always believed autonomy will happen in incremental steps,” PSA Chief Executive Carlos Tavares said in an interview published earlier this month.

“This is not the case for certain competitors who have tried to produce a fully autonomous vehicle right away.”

Among car companies there are two camps: Those who are trying to develop their autonomous driving technology in-house, and those who are outsourcing it.

Fiat’s recent partnership to build self-driving vans with Google is seen by analysts as an example of outsourcing, given the Italian auto maker’s weak finances, limiting its ability to invest in its own software expertise (reut.rs/1ZatE2c).

Daimler, on the other hand, is firmly in the camp of those auto makers who want to go it alone.

Some partnerships like the deal between Chinese carmaker Geely’s (0175.HK) Swedish subsidiary Volvo Car Group’s deal to develop autonomous cars with Uber Technologies [UBER.UL], and General Motor’s partnership with Uber’s rival Lyft, are seen as hybrid approaches to such cooperation.

“The automotive industry has and will continue to become a software business in many ways,” Audi of America President Scott Keogh told Reuters.

“We are either capable of doing it in-house or we are going to all the partners that we need to go to, whether it’s Nvidia (NVDA.O), Mobileye or HERE.”

(Story refiles to remove repetitious phrasing in paragraphs 14, 15.)

(Editing by Greg Mahlich)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/rn8w7q7meNM/us-autoshow-paris-tech-idUSKCN11Z12A

Fed’s Lockhart wants to see more improvement before hiking U.S. rates


ORLANDO, Fla. A top U.S. Federal Reserve official said on Thursday he supported the U.S. central bank’s decision to leave interest rates unchanged at its policy meeting earlier this month until there was more evidence the economy is approaching the Fed’s goal of full employment and 2 percent inflation.

Atlanta Federal Reserve President Dennis Lockhart said he expected the Fed would raise interest rates “before long”.

“However, I did support the consensus view that before taking the next move, it makes sense to see a little more evidence of progress toward our statutory policy objectives,” he said in reference to the Fed’s most recent policy statement from its September meeting.

Lockhart’s comments were in a prepared speech at an event here sponsored by the Florida Chamber Foundation. He is not a voting member of the Federal Open Market Committee, the Fed’s policy-setting group, and he will retire from his position in February 2017.

The jobs market has shown further improvement with signs of a modest rise in labor participation, but Lockhart said the longer-term trend is biased toward a decline as more Americans will retire in coming years.

This view on labor participation, together with modest capital spending, would support an expected 2 percent annual growth rate for the U.S. economy, Lockhart said.

“With declining participation – even while the population is growing – and weak investment in capital goods, the country has challenges achieving strong growth,” he said.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/csNxmpzbnZw/us-usa-fed-lockhart-idUSKCN11Z1L1

Oil shares lift global stocks, crude dips on doubt over OPEC deal


LONDON An agreement by OPEC members to curb output boosted oil company shares on Thursday, lifted the currencies of crude-producing countries, and drove yields on low-risk government debt higher.

Global stocks were pulled higher by the oil company rally, although Wall Street, which rose on Wednesday after the agreement was struck, looked set to open flat.

Crude prices fell after Wednesday’s near 6 percent surge as investors questioned whether OPEC’s first deal to limit output since 2008 would restore balance to the oversupplied oil market.

But the surprise agreement boosted investors’ appetite for riskier assets and saw the safe-haven Japanese yen fall 1 percent against the dollar at one point.

“Everything you’re seeing today is a response to the move in crude and the possible coordination necessary for OPEC to do what it has announced. Even though I think the agreement is probably a bit flimsy, the amount of coordination is part of the reason for the rally in risk,” said BMO Capital Markets currency strategist Stephen Gallo.

The pan-European STOXX 600 index was up 0.8 percent, led higher by a 4.4 percent rise in the oil and gas companies sub-index .SXEP.

Among leading gainers, Tullow Oil (TLW.L) rose 9 percent, Statoil (STL.OL) and Royal Dutch Shell (RDSa.AS) rose more than n5 percent and Total (TOTF.PA) added more than 4 percent.

In Russia – a major oil producer – the dollar-denominated RTS share index .IRTS rose 2.3 percent.

Oil companies, and the weaker yen, also lifted Tokyo shares, which closed 1.4 percent higher .N225

MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS was up 0.5 percent. The main MSCI emerging market equities index .MSCIEF rose by a similar amount.

However, Indian stocks fell as much as 2 percent at one point .NSEI after New Delhi launched strikes on militants it suspects of preparing to infiltrate into the part of Kashmir it controls. The Indian rupee fell almost 1 percent against the dollar INR=. OPEC, the Organization of the Petroleum Exporting Countries, agreed to cut output to a range of 32.5-33.0 million barrels a day from the group’s current estimate of 33.24 million barrels, ministers at the talks in Algiers said.

However, each member’s output levels will be decided at the next formal OPEC meeting in Vienna in November, when non-OPEC countries such as Russia could also be invited to join the cuts.

“I’m very sceptical about whether this deal actually means a cut in output, or whether it’s trying to raise the price a bit, because OPEC’s not an effective cartel anymore, it controls less than half the world oil supply,” said Malcolm Bracken, investment manager at Redmayne-Bentley.

Goldman Sachs said the deal could add as much as $10 to oil prices in the first half of next year but, given the uncertainty of the proposal, stuck to its year-end and 2017 oil price forecasts.

Brent crude, the international benchmark, was down 25 cents at $48.4 a barrel, after hitting a high of $49.09 on Wednesday.

“We think that OPEC is running a dangerous game if the aim is to push the crude oil price higher from here in the short term as it would just activate more U.S. shale oil production,” said Bjarne Schieldrop, chief commodity analyst at SEB.

Oil-producer’s currencies, including the Canadian dollar CAD= and the Norwegian crown EURNOK= rose on the deal but gave up some of the gains on Thursday in line with oil.

However, the Japanese yen JPY, often sought when investor appetite for risk is low, fell. It was last down 0.8 percent at 101.43 per dollar, having fallen as low as 100.62.

German 10-year government bond yields DE10YT=TWEB, the euro zone benchmark, rose 3 basis points to minus 0.12 percent. U.S. 10-year yields US10YT=RR rose 1.5 bps at 1.582 percent.

An inflationary rise in oil prices would rattle investors already nervous that an era of central bank stimulus may be coming to an end.

However, given doubts about the deal, BNP Paribas European rates strategist Patrick Jacques said the upward pressure on bond yields would prove temporary.

“Even if there’s a 5 percent rise in oil prices, this will not trigger a strong rebound in inflation and at these levels, oil output is still higher than demand so we’re unlikely to see a massive rally in oil,” he said.

(Additional reporting by Saikat Chatterjee in Hong Kong, Keith Wallis in Singapore, Jemima Kelly, Dhara Ranasinghe, Sujata Rao, Kit Rees and Swetha Gopinath in London; Editing by Jeremy Gaunt)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/_tf7dx4zQSI/us-global-markets-idUSKCN11Z01H

Takata should file for bankruptcy protection, all five bidders say: sources


TOKYO All five bidders seeking to bail out Japan’s beleaguered Takata Corp (7312.T) have presented restructuring plans that require the air bag maker to file for bankruptcy protection, people with knowledge of the process told Reuters.

But some Japanese creditors have opposed such a filing as it would see them shoulder significant losses, the people said, declining to be identified as the proposals have not been made public.

Takata faces huge costs related to the global recall of millions of potentially faulty air bag inflators, and is seeking an outside investor to increase its capital. The company received proposals from five bidders last week.

The bidders include Japanese inflator maker Daicel Corp (4202.T) in partnership with U.S. buyout firm Bain Capital; U.S. private equity firm KKR Co LP (KKR.N); 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); Swedish auto safety group Autoliv Inc (ALV.N); and U.S. autoparts maker Flex-N-Gate Corp, the people said.

Takata’s creditors include Honda Motor Co Ltd (7267.T) and Toyota Motor Corp (7203.T) in Japan, as well as foreign automakers such as General Motors Co (GM.N), Volkswagen AG (VOWG_p.DE) and Fiat Chrysler Automobiles NV (FCHA.MI).

Filing for bankruptcy protection is Takata’s only option to retain the bidders’ interest because a filing will reveal the extent of its liabilities, one of the people said.

Representatives from Takata, Daicel, KKR, Carlyle and Autoliv declined to comment. Representatives at Bain Capital and Flex-N-Gate could not be immediately reached for comment.

Takata faces about 1 trillion yen ($10 billion) in recall costs, according to market estimates. There is also the prospect of legal liabilities related to the inflators, which can explode with too much force, and which have been linked to at least 15 deaths, mainly in the United States.

“It is understandable that any potential sponsors want to reset Takata’s 1 trillion yen in debt through bankruptcy but it is hard to accept that,” said a senior official at a Japanese automaker.

Takata’s steering committee this week has been briefing officials from Japanese and foreign automakers on the five bidders’ proposals, the people said.

A senior official from a different Japanese automaker said both Japanese and foreign automakers would oppose Takata filing for bankruptcy protection.

Takata, which has retained investment bank Lazard Ltd (LAZ.N) as advisor, had 109 billion yen in capital as at the end of June. Its debt would exceed capital if it had to cover most or all of the recall costs. So far, its automaker clients have covered the costs.

($1 = 101.5000 yen)

(Reporting by Maki Shiraki and Junko Fujita; Editing by Christopher Cushing)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/BGmHi-7XBy4/us-takata-restructuring-idUSKCN11Z18B

Fed, BOJ add shine to risk-parity strategy


NEW YORK The Federal Reserve and Bank of Japan’s actions last week have given a second wind to an alternative investment strategy that relies on cheap money and low market volatility to produce outsized returns.

Risk parity trades, which involve borrowing to take long positions in both stocks and bonds, have been favored by some big hedge funds and other institutional investors starved for yield by eight years of record low global interest rates.

The funds had a rough 2015 when volatility spiked because of concerns about China’s economy and tumbling oil prices, prompting investors to yank more than $2 billion from risk parity portfolios, according to Morningstar. Since January, however, they have bounced back as volatility has fallen, delivering on balance returns more than twice as high as the mid-single-digit total returns from this year’s sputtering U.S. equity and fixed-income markets.

For example, Bridgewater Associates, which pioneered risk parity investing two decades ago, has seen its $62 billion All Weather fund post a 13.1 percent return from January through end of August.

That rebound looked under threat, however, in the run-up to the Fed’s Sept. 20-21 policy meeting when several policymakers seemed to suggest that a rate rise was in the cards and markets turned choppy.

Yet the Fed not only held fire, but also lowered its forecasts for future policy rates, effectively assuring investors that borrowing costs will stay low for longer. The BOJ, on its part, both affirmed its commitment to more asset purchases and made a new pledge to keep 10-year bond yields near current levels around zero.

The central banks’ actions have stoked gains in stocks, junk bonds, emerging market debt and other risky assets that risk parity funds target. They also brought market measures of risks of big swings in the stock and bond markets to their lowest so far this year.

“So I would say if the Fed’s latest move dampens cross-asset volatility, then leverage applied via risk parity funds should increase,” Chintan Kotecha, senior equity derivatives strategist at Bank of America Merrill Lynch in New York.

WILL FLOWS FOLLOW RETURNS?

The question now is whether investors will regain confidence in the strategy that badly underperformed in 2015 and only started delivering again this year. In 2015, Bridgewater’s All Weather, for example, lost 7 percent and another, the AQR Risk Parity Fund (AQRIX.O), lost 8.1 percent compared with fractionally positive total returns for equities and bonds.

While the case to buy risk-parity funds looks solid, investors have so far remained skeptical.

Morningstar estimates that open-ended funds that employ risk parity have seen about $957 million in net outflows in the first eight months of 2016 to $8.50 billion.

Bridgewater, the world’s largest hedge fund company, declined to comment or provide data on investor flows.

The Nasdaq-listed AQR fund with around $442 million in assets is on pace for its 12th straight month of outflows.

It has bled more than $200 million since September 2015, according to Lipper data, despite a total return of 14.2 percent so far this year, including a 2.6 percent bounce last week after the Fed meeting.

A spokesman for AQR declined to comment.

ELECTION LOOMS, BUT LESS FEAR FOR NOW

One possible explanation for investor caution is the Nov. 8 U.S. presidential election, which has emerged as a source of anxiety.

Democrat Hillary Clinton and Republican Donald Trump are in a tight race and its outcome can change Washington’s course on spending, trade and taxes. The uncertainty tends to make investors nervous and cut their holdings of stocks and other riskier investments.

“That could add as much volatility as monetary policy,” said John Bredemus, vice president at Allianz Investment-U.S. in Minneapolis.

For now, though, low volatility prevails in the aftermath of the Fed and BOJ actions.

The CBOE VIX index .VIX known as Wall Street’s equity fear gauge, is anchored near its lowest level of the year, and Bank of America Merrill Lynch’s MOVE index .MERMOVE3, which tracks expected bond market volatility three months out, is at its lowest since the end of 2014.

For Bridgewater, AQR fund and their peers, that is a green light to keep betting on a range of risky assets.

“Things are moving in the right direction and that argues for low volatility,” said Jeff Kravetz, regional investment director at the Private Client Reserve at U.S. Bank in Phoenix.

(Reporting by Jennifer Ablan, Richard Leong; Editing by Dan Burns and Tomasz Janowski; Graphics by Jiachuan Wu)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/D9O5IMYeK3Q/us-usa-fed-markets-analysis-idUSKCN11Z0EC

Oil prices climb on OPEC deal, lack of detail caps gains


SINGAPORE Oil futures extended gains on Thursday after rising nearly 6 percent the day before on a surprise move by OPEC to curb crude output.

The Organization of the Petroleum Exporting Countries agreed to limit its production to a range of 32.5-33.0 million barrels per day (bpd) in talks held on the sidelines of an energy conference in Algeria.

But how much each country will produce is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.

“The decision really took market by surprise – prices took a big leap, now there’s pause for reflection,” said Ben Le Brun, markets analyst at Sydney’s OptionsXpress.

“An agreement to have an agreement – I don’t know where that leaves us,” he said.

A drop in U.S. crude stocks for the fourth straight week also supported oil prices.

U.S. West Texas Intermediate (WTI) crude had risen 28 cents to $47.33 a barrel by 0020 GMT, after closing the previous session up $2.38, or 5.3 percent.

Brent crude climbed 31 cents to $49.00 a barrel, having settled up $2.72, or 5.9 percent.

“More cynical traders have pointed out the complete lack of detail, including the potentially problematic question of which nations will curtail production,” said Michael McCarthy, chief market strategist at Sydney’s CMC Markets.

“A 6-percent jump in crude prices makes a nice headline, but is within normal bounds for the currently highly volatile energy markets. Although this rally may quickly fade, energy stocks are likely to receive a boost at this morning’s opening,” McCarthy said.

OPEC will agree to production levels for each member country at its Nov. 30 meeting in Vienna, group officials said.

That came as U.S. crude stocks fell 1.9 million barrels to 502.7 million barrels in the week to Sept. 23, against analyst expectations for a 3 million barrel increase, data from the U.S. Department of Energy’s Energy Information Administration showed. [EIA/S]

“U.S. crude oil inventories are at historically high levels for this time of year,” EIA said in a statement.

Inventories were expected to rebound after the big drop a few weeks ago, but instead stocks have continued to decline with imports.

While oil prices remained range-bound at between $40-50 a barrel, a push beyond $50 barrel could see “shale oil producers turn the taps back on”, said Le Brun at OptionsXpress.

“If this proposed (output) cut is strictly enforced and supports prices, we would expect it to prove self defeating medium term with a large drilling response around the world,” Goldman Sachs said in a note.

(Reporting by Keith Wallis; Editing by Joseph Radford)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/RbxfCUxhbAE/us-global-oil-idUSKCN11Z02J

Asia gains as crude oil surge improves risk appetite


TOKYO Asian stocks gained on Thursday in tandem with an oil price rally after OPEC members agreed to curb output – boosting investor risk appetite.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.6 percent.

Commodity-heavy Australian shares advanced 0.6 percent and South Korea’s Kospi gained 0.7 percent. Japan’s Nikkei rose 0.9 percent after losing 1.3 percent the previous day.

Overnight, European shares gained on a recovery in battered Deutsche Bank shares while the Dow rose 0.6 percent and the energy index had its best day since January in light of the OPEC agreement.

Oil prices settled up nearly 6 percent on Wednesday after OPEC struck a deal to limit crude output, seen as a surprise by the market, at its policy meeting in November. It was OPEC’s first agreement to cut production since 2008. [O/R]

“With profits being squeezed the battle for market share can’t go on and this deal ushers in a new period of cooperation between OPEC nations and specifically between Saudi Arabia and Iran,” wrote Kathy Lien, managing director of FX strategy for BK Asset Management.

“While we wouldn’t be surprised by some back-pedalling between now and November, this is a historic moment and one that should have a lasting impact on the Canadian dollar.”

The Canadian dollar, which was already on the front foot against its U.S. peer earlier this week thanks to a perceived U.S. presidential debate win by Democrat Hillary Clinton over Republican Donald Trump, soared even further.

A potential win by Trump, who has criticized trade agreements, has been a source of concern for U.S. neighbors Canada and Mexico.

The Canadian dollar traded at C$1.3051 to the dollar after gaining nearly a percent overnight. The loonie had seen a six-month low of C$1.3281 early on Tuesday amid jitters toward the U.S. presidential debate.

Other commodity-linked currencies also fared well as oil rallied, with the Norwegian crown touching a five-month high against the dollar on Wednesday. The Australian dollar hit a three-week high of $0.7696 early on Thursday.

The euro inched up 0.1 percent to $1.1223, while the dollar climbed 0.3 percent to 100.950 against the safe-haven yen as broader risk sentiment improved.

Brent crude was up 0.4 percent at $48.87 a barrel, adding to overnight gains of 5.9 percent. U.S. crude added 0.5 percent to $47.28 a barrel after rising 5.3 percent on Wednesday, when it hit its highest since Sept. 9.

(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/_tf7dx4zQSI/us-global-markets-idUSKCN11Z01H