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Asia stocks inch up after Wall Street’s gains, oil prices slide

TOKYO Asian stocks edged up early on Wednesday following an overnight rise for U.S. stocks, while reduced hopes that a meeting of major producers would reduce a oversupply weighed heavily on crude oil prices.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent.

Australian stocks were up 0.5 percent while South Korea’s Kospi .KS11 was flat. Japan’s Nikkei .N225 was last down 1.1 percent.

Overnight, the Dow .DJI rose 0.7 percent and Nasdaq .IXIC added 0.9 percent. A perceived win by Democrat Hillary Clinton over Republican Donald Trump at the first presidential debate gave broader support to equities, although sliding oil prices were a drag on the energy sector.

Oil fell about 3 percent on Tuesday after Saudi Arabia and Iran dashed market expectations that the two major OPEC producers would find a compromise this week at a meeting in Algiers to help ease a global glut of crude. [O/R]

U.S. crude CLc1 had crawled up 0.45 percent to $44.87 a barrel early on Wednesday, the final day of the Sept. 26-28 International Energy Forum gathering.

With oil prices having dropped to less than half of their 2014 highs, the Algiers talks are OPEC’s second attempt at an output agreement after a failed round in Qatar in April.

“The market currently does not expect any agreement at this meeting, so no agreement should have only limited negative impact on the oil price,” wrote Marshall Gittler, head of investment research at FXPRIMUS.

“Expectations are now so low though that if by some miracle they did come to even a half-hearted agreement, that would probably send prices up sharply.”

In currencies, the dollar was flat at 100.470 yen JPY=.

It had popped up to 100.990 yen on Tuesday when Clinton was seen to have emerged as the winner at the debate and removed an element of uncertainty. But the rise petered out with the market reminded that Clinton also favours a weaker dollar, and with the greenback also hurt by falling U.S. yields.

The euro was steady at $1.1217 EUR= after losing about 0.4 percent overnight on concerns over Europe’s banking sector.

Near-term market focus was on European Central Bank President Mario Draghi, who will face tough questions from German lawmakers later on Wednesday about the central bank’s monetary policy.

Federal Reserve Chair Janet Yellen will deliver semi-annual testimony before the U.S. House Financial Services Committee.

The Mexican peso, which jumped against the dollar following Clinton’s perceived debate win, held to its gains.

The currency stood little changed at 19.38 pesos to the dollar MXN=, having rallied on Tuesday from a record low of 19.92 hit earlier on worries that a Trump win would threaten Mexico’s exports to the United States.

The 10-year U.S. Treasury note yield hovered near a three-week low of 1.546 percent US10YT=RR touched overnight amid speculation that Europe’s banking woes could delay the Fed’s next interest rate hike.

(Editing by Richard Borsuk)

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Wells Fargo launches investigation into retail banking sales practices

Wells Fargo Co (WFC.N) said on Tuesday that Chief Executive John Stumpf will forfeit unvested equity awards worth about $41 million and will not get a salary during an independent investigation into the bank’s sales practices.

Former retail banking head Carrie Tolstedt has left the company, will get no severance and has forfeited unvested equity awards worth about $19 million, the bank said.

Stumpf and Tolstedt will also not receive bonuses for 2016.

Wells Fargo, the United States’ third-largest bank by assets, agreed to pay $190 million earlier this month to settle regulatory charges that some of its employees opened as many as 2 million accounts without customers’ knowledge, in order to meet sales targets.

Stumpf, a member of the board, has recused himself from the investigation, the bank said.

Lawmakers on the U.S. Senate Banking Committee grilled Stumpf about the accounts last week, with some calling on him to resign and forfeit his earnings and hold other senior executives accountable.

Stumpf is scheduled to testify at a congressional hearing on Thursday.

The San Francisco-based bank has fired 5,300 people over the matter and had said it would eliminate sales goals in its retail banking on Jan. 1, 2017.

However, the Wall Street Journal reported earlier on Tuesday that the firm was planning to eliminate the goals on Oct. 1, citing Stumpf’s prepared remarks for delivery at the hearing. (

Wells Fargo has hired law firm Shearman Sterling LLP to assist in the investigation.

Up to Tuesday’s close, shares of the company have fallen nearly 10 percent since Sept. 8 when it reached a settlement with regulators, wiping off about $24 billion of market capitalization.

(Reporting by Narottam Medhora in Bengaluru; Editing by Sandra Maler, Lisa Shumaker and Bernard Orr)

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Russia’s Rosneft plans to take final investment decision on Far East LNG in 2017-18

YUZHNO-SAKHALINSK, Russia Russia’s Rosneft plans to take a final investment decision on its Far East LNG project in 2017-2018, according to a presentation by Rosneft department head Alexander Zharov at a conference on Wednesday.

The presentation also showed that the production at the plant may start after 2023. Rosneft, which partners with ExxonMobil, Sodeco and ONGC at the project, plans to produce 5 million tonnes of LNG at the plant at the start, with possibility of rising to 10 million tonnes in the future.

(Reporting by Katya Golubkova; Editing by Sandra Maler)

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RBS to pay $1.1 billion to resolve U.S. regulator’s mortgage cases

NEW YORK Royal Bank of Scotland Group Plc will pay $1.1 billion to resolve claims that it sold toxic mortgage-backed securities to credit unions that later failed, the U.S. National Credit Union Administration (NCUA) said on Tuesday.

The settlement with RBS brings the U.S. regulator’s recoveries against various banks to $4.3 billion in lawsuits over their sale of mortgage-backed securities before the 2008 financial crisis.

NCUA Board Chairman Rick Metsger said the regulator was pleased with the settlement and plans to continue “to pursue recoveries against financial firms that we maintain contributed to the corporate crisis.”

The settlement resolves lawsuits filed in federal courts in California and Kansas in the NCUA’s role as the liquidating agent for Western Corporate Federal Credit Union and U.S. Central Federal Credit Union.

Under the settlement, RBS does not admit fault, the NCUA said in a statement. The settlement comes on top of a prior deal in 2015 in which RBS agreed to pay $129.6 million to resolve a similar federal lawsuit the NCUA filed in New York.

RBS in January said it had set aside 3.8 billion pounds ($4.95 billion) to resolve civil lawsuits over mortgage-backed securities, investment products packaged and sold before the U.S. housing meltdown and financial crisis in 2008.

RBS had said that provision did not cover ongoing investigations by the U.S. Justice Department or various state attorneys general.

The bank also continues to face a multi-billion dollar lawsuit by the U.S. Federal Housing Finance Agency, which has acted as the conservator for mortgage giants Fannie Mae and Freddie Mac since their government takeover in 2008.

Replying to a request for comment, an RBS spokesman on Tuesday pointed to comments that RBS CEO Ross McEwan made at a conference in London earlier in the day, in which he said the bank was working toward resolving various mortgage bond claims over the remainder of this year and next.

The NCUA said it continues to litigate against other banks, including Credit Suisse and UBS, over what it says was their sale of faulty mortgage-backed securities to corporate credit unions.

($1 = 0.7683 pounds)

(Reporting by Nate Raymond in New York; Editing by Bill Rigby)

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Nike orders miss estimates as competition heats up

Nike Inc’s (NKE.N) future orders missed analysts’ estimates for the third time in a row, as the world’s largest footwear maker struggles with increasing competition from Under Armour Inc (UA.N) and a resurgent Adidas (ADSGn.DE) in North America.

Shares of the company, which reported better-than-expected quarterly revenue and profit, fell 4.4 percent to $52.90 in after-market trading on Tuesday.

The stock is the worst performer on the Dow Jones Industrial Average this year, down about 11 percent to Tuesday’s close.

Nike and its Jordan brand still command the lion’s share of the U.S. footwear market, but rivals Adidas and Under Armour are chipping away at the company’s decades-long dominant position.

The company has lost basketball sales to Under Armour since the latter poached Golden State Warriors player Stephen Curry in 2013. It is also suffering from a revival at Adidas, which has scored mostly with fashion shoes promoted by celebrities such as Kanye West, who moved from Nike to Adidas the same year.

“Adidas is red-hot right now and retailers can’t get enough of it,” Edward Jones Analyst Brian Yarbrough told Reuters adding that some U.S. retailers were giving more shelf space to Nike’s competition.

Sales of Adidas’ classic shoes nearly quadrupled in August, compared with a 33 percent rise in Nike’s similar line, according to market research firm NPD.

Under Armour has also been pushing deeper into department stores. The second-biggest U.S. sportswear maker said it would sell its products at U.S. department store operator Kohl’s Corp (KSS.N) from 2017.


Nike said on a conference call that it would now issue a forecast for its future orders, a key indicator of demand, during the earnings call, moving away from a years-long tradition of announcing it in the earnings release.

The move to stop issuing future orders seems “very suspect” at a time when North America and other markets have slowed down, Yarbrough said.

The company said global orders from September 2016 through January 2017 were up 7 percent on a constant-currency basis, missing the 8 percent increase analysts’ had expected.

The forecast – keenly watched by investors – was the lowest in five quarters.

Net income rose 5.9 percent to $1.25 billion, or 73 cents per share, in the first quarter ended Aug. 31.

Revenue rose 7.7 percent to $9.06 billion, while inventories jumped 11 percent to $4.9 billion.

Analysts polled by Reuters had expected a profit of 56 cents per share and revenue of $8.87 billion.

(Reporting by Abhijith Ganapavaram in Bengaluru; editing by Sriraj Kalluvila and Alan Crosby)

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Tyson Foods recalls chicken nuggets sold at Costco stores

Tyson Foods Inc (TSN.N) said on Tuesday it is recalling about 132,520 pounds of chicken nuggets due to a possible contamination from plastic.

Tyson said it got complaints from consumers saying they had found small pieces of hard, white plastic in the nuggets, prompting the recall. (

The plastic may have originated from a rod used to connect a plastic transfer belt, the U.S. Department of Agriculture’s Food Safety and Inspection Service said, and classified it as a Class I recall. (

There have been no injuries associated with this recall, Tyson said.

A Class I recall is a health hazard situation which can cause serious, adverse health consequences or death.

The affected 5-pound bags of Panko chicken nuggets were sold at Costco Wholesale Corp (COST.O) stores. Some affected 20-pound cases of the Spare Time brand were sold to a single wholesaler in Pennsylvania.

(Reporting by Anet Josline Pinto in Bengaluru; Editing by Shounak Dasgupta)

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Oil down 3 pct as Saudi, Iran dash hopes for an Algiers deal

NEW YORK Oil fell about 3 percent on Tuesday after Saudi Arabia and Iran dashed market hopes that the two major OPEC producers would find a compromise this week at meeting in Algiers to help ease a global glut of crude.

Saudi Energy Minister Khalid al-Falih told reporters in the Algerian capital, where OPEC and other oil producers gathered for the Sept. 26-28 International Energy Forum, he did not expect an agreement to come out of the consultations on the last day of the meet.

He also said he did not think there was a need to significantly adjust or cut supply and that Iran, Libya and Nigeria should be allowed to produce at maximum levels seen in recent history.

“If you were looking for something dangerous from this meeting, this was it,” said Jim Williams, analyst at WTRG Economics in London, Arkansas. “Instead of cutting, they’re telling everybody to substantially increase supply.”

Crude oil futures ended the session giving back most of what they gained the previous day.

Brent crude settled down $1.38, or 2.9 percent, at $45.97 a barrel.

U.S. West Texas Intermediate (WTI) crude dropped $1.26, or 2.7 percent, to $44.67.

In post-settlement trade, the market pared some losses after trade group The American Petroleum Institute reported a surprise draw of 752,000 barrels last week, versus analysts’ forecasts of a build of 3 million barrels. The U.S. government will report official inventory data on Wednesday, showing if stocks indeed fell unexpectedly for a fourth straight week. [API/S] [EIA/S]

Oil prices have slid to less than half their 2014 highs, pushing the Organization of the Petroleum Exporting Countries and other producers to seek a market rebalancing that would lift the oil revenues they rely on for their national budgets.

The Algiers talks were OPEC’s second attempt at an output agreement after a failed round in Qatar in April.

Earlier in the day, Iran, trying to recapture oil exports lost to sanctions, rejected a Saudi offer to limit its output in exchange for reduced supply by Riyadh.

Like his Saudi counterpart, Iranian Oil Minister Bijan Zanganeh said the Algiers talks “is not the time for decision-making”, deferring the possibility of any agreement to OPEC’s formal policy meeting set for Nov. 30 in Vienna.

OPEC member Iraq said it has based its 2017 budget on the assumption it exports 3.75 million barrels per day at $42 a barrel.

Goldman Sachs cut its price forecast for WTI in the fourth quarter to $43, from an earlier $45-$50 range, saying it expects supply to exceed demand by 400,000 bpd.

(Additional reporting by Libby George and Swetha Gopinath in London and Keith Wallis in Singapore; Editing by Marguerita Choy and David Gregorio)

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Caesars strikes deal to end main unit’s costly bankruptcy

CHICAGO Caesars Entertainment Corp said on Tuesday it has struck a crucial $5 billion deal with most of its casino operating unit’s creditors, resolving billions of dollars in legal claims and paving the subsidiary’s way out of a costly bankruptcy.

The Las Vegas-based company’s main operating unit, Caesars Entertainment Operating Co Inc, filed in January 2015 one of the most complex U.S. bankruptcies with $18 billion of debt.

The restructuring has been embroiled in a sprawling web of litigation between some of Wall Street’s most aggressive investors.

Junior creditors led by hedge fund Appaloosa Management accused the Caesars parent and its private equity owners Apollo Global Management and TPG Capital Management [TPG.UL] of looting the operating unit of its best assets and leaving it bankrupt.

Under the agreement announced after a week of intense telephone negotiations from New York to Los Angeles, junior creditors will receive about 66 cents on the dollar, up from 27 cents under a previous plan.

The settlement needs to be formalized and approved by the U.S. Bankruptcy Court in Chicago.

“It’s important to recognize that a lot of work needs to be done in the next few weeks. Will there be bumps along the road? Yes. Is this a durable deal? Yes,” said Bruce Bennett, a lawyer for Jones Day representing junior creditors.

Apollo and TPG, which formed Caesars in 2008 through a $30 billion leveraged buyout of Harrah’s just before a U.S. economic downturn, will relinquish their stake in Caesars as part of the agreement.

The settlement came after the judge overseeing the bankruptcy pressed Caesars directors such as billionaire investors Marc Rowan of Apollo and David Bonderman of TPG to contribute to the reorganization in exchange for releases from fraud allegations.

Caesars said the funds’ contribution to the reorganization plan is worth about $950 million but did not specify whether any directors were personally pitching in.

An independent examination led by a former Watergate prosecutor found in March that Caesars and its private equity owners could be on the hook for roughly $5 billion. Junior creditors said they had claims worth up to $12.6 billion.

First-lien bank lenders will recover roughly 115 cents on the dollar, about 1 cent less than previously agreed upon, while first-lien noteholders will still recover about 109 cents on the dollar.

As part of the sweetened deal, junior and unsecured creditors will own a larger equity holding in the new group to be formed through the parent company’s merger with another affiliate, Caesars Acquisition Co.

Apollo and TPG will own about 16 percent of the group to be called “New CEC”, according to regulatory filings.

Shares of Caesars closed 19 percent lower at $7.67. The stock had risen about 45 percent since the company unveiled its settlement offer on Wednesday.

“The agreement reflects the private equity sponsors’ attempt to thread the needle between managing their fiduciary duties (…), reducing litigation risk and maintaining relationships with the creditor community,” said Nathan Flanders, a managing director at Fitch.

(Reporting by Tracy Rucinski in Chicago; Additional reporting by Subrat Patnaik in Bengaluru; Editing by Bernard Orr and Lisa Shumaker)

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OPEC set for no deal as Iran rejects Saudi oil output offer

ALGIERS Iran rejected on Tuesday an offer from Saudi Arabia to limit its oil output in exchange for Riyadh cutting supply, dashing market hopes the two major OPEC producers would find a compromise this week to help ease a global glut of crude.

“The gap (in views) between OPEC countries is narrowing. I don’t expect that an agreement will come out of the consultations tomorrow,” Saudi Energy Minister Khalid al-Falih told reporters.

Iranian Oil Minister Bijan Zanganeh said earlier: “It is not the time for decision-making.” Referring to the next formal OPEC meeting in Vienna on Nov. 30, he added: “We will try to reach agreement for November.”

The Organization of the Petroleum Exporting Countries will hold informal talks at 1400 GMT on Wednesday. Its members are also meeting non-OPEC producers on the sidelines of the International Energy Forum, which groups producers and consumers.

Oil prices LCOc1 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.

A deal has also been complicated by acute political rivalry between Iran and Saudi Arabia, which are fighting several proxy-wars in the Middle East, including in Syria and Yemen.

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.


On Tuesday, several OPEC delegates said the positions of Saudi Arabia and Iran remained too far apart. Oil prices were down more than 3 percent by 1802 GMT. [O/R]

“There is a move forward, but they (OPEC) haven’t got to the finish,” Russian Energy Minister Alexander Novak said after meeting Falih and Zanganeh. Novak and Falih said a deal was still possible later this year.

Three OPEC sources said Iran, whose production has stagnated at 3.6 million barrels per day, insisted on having the right to ramp up to around 4.1-4.2 million bpd, while OPEC Gulf members wanted its output to be frozen below 4 million.

Several OPEC sources said Iran effectively rejected the offer despite last-minute attempts by Russia, Algeria and Qatar to rescue a deal.

The Saudi and Iranian economies depend heavily on oil, but Iran is seeing the pressure easing as it emerges from years of sanctions. Riyadh, on the other hand, faces a second year of record budget deficits and is being forced to cut the salaries of government employees.


Iranian oil sources said Tehran wanted OPEC to allow it to produce 12.7 percent of the group’s output, equal to what it was extracting before 2012, when the European Union imposed additional sanctions on the country for its nuclear activities.

Sanctions were eased in January 2016.

Between 2012 and 2016, Saudi Arabia and other Gulf OPEC members have raised output to compete for market share with higher-cost producers such as the United States.

As a result, Iran believes its fair production share in OPEC should be higher than its current output, which it says should rise once Tehran agrees new investments with international oil companies. Saudi output has risen to 10.7 million bpd from 10.2 million in recent months due to local needs for summer cooling.

Gary Ross, a veteran OPEC watcher and founder of U.S.-based think tank PIRA, said Saudi output had risen too steeply in recent months and even if it were cut to pre-summer levels, Iran would see an offer to freeze its own output as unfair.

“It is a carefully calculated offer because Saudi Arabia knows it will not be acceptable to Iran … Saudi Arabia wants to put the blame of OPEC inaction in Algiers on Iran,” he said.

Bjarne Schieldrop, chief commodities analyst at SEB Markets, said: “We cannot see how Iran could possibly accept the Saudi offer. It would be like asking a long-time prisoner who was finally released from prison to go back again.”

He said the lack of a deal in Algeria would result in further downside pressure on oil as Saudi Arabia would maintain elevated output levels while Iran boosted supply too.

Falih said he saw no need for significant output cuts as the market was rebalancing itself. He added that Saudi Arabia was investing in additional spare capacity and could withstand the current trend in oil prices.

(Additional reporting by Patrick Markey and Lamine Chikhi; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

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