News Archive

JPMorgan, Microsoft, Intel and others form new blockchain alliance

NEW YORK JPMorgan Chase Co (JPM.N), Microsoft Corp (MSFT.O), Intel Corp (INTC.O) and more than two dozen other companies have teamed up to develop standards and technology to make it easier for enterprises to use blockchain code Ethereum in the latest push by large firms to move toward distributed ledger systems.

The Enterprise Ethereum Alliance (EEA) will work to enhance the privacy, security and scalability of the Ethereum blockchain, making it better suited to business applications, according to the founding companies, which said they plan to announce the initiative on Tuesday.

Members of the 30-strong group also include Accenture Plc (ACN.N), Banco Santander (SAN.MC), BP Plc (BP.L), Credit Suisse Group AG (CSGN.S), UBS Group AG (UBSG.S), Banco Bilbao Vizcaya Argentaria (BBVA.MC), ING Groep NV (INGA.AS), Bank of New York Mellon Corp (BK.N) , Thomson Reuters Corp (TRI.TO) and startups ConsenSys and BlockApps.

The EEA joins a growing list of joint initiatives by large companies aiming to take advantage of blockchain, a shared digital record of transactions that is maintained by a network of computers rather than a centralized authority.

Companies in a wide range of industries are hoping that it can help them streamline some of their processes, such as the clearing and settling of financial securities.

About 70 financial firms are involved with a R3 CEV, a New York-based startup focused on developing blockchain technology for the finance industry, while technology firms such as International Business Machines Corp (IBM.N) and Hitachi Ltd (6501.T) are part of the Hyperledger Project, a group led by the Linux Foundation.

The EEA underscores the enthusiasm around the nascent technology, but also highlights some of the hurdles that companies must still overcome before they can deploy blockchain on a large scale. This includes ensuring that the technology can support the vast number of transactions processed by large corporations, while being secure enough to meet their stringent security standards.

Unlike some other collaborative efforts, members do not need to pay a fee to participate in the EEA, for now.

Ethereum, a type of blockchain that can be used to develop decentralized applications, was invented by 23-year-old programer Vitalik Buterin. Several banks have already adapted Ethereum to develop and test blockchain trading applications.

Alex Batlin, global blockchain lead at BNY Mellon, one of the companies on the EEA board, said over the past few years banks and other enterprises have increased collaboration with the Ethereum development community, facilitating the creation of the EEA.

“There is a lot more synergy in thinking than was ever possible before,” Batlin said.

The EEA will collaborate with the non-profit foundation that promotes the development of Ethereum, the companies said.

(Reporting by Anna Irrera; Editing by Bill Rigby)

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Starwood in talks on raising initial bid for Milestone: sources

TORONTO/NEW YORK Milestone Apartments Real Estate Investment Trust, which has agreed to be acquired by Starwood Capital Group for about C$1.7 billion ($1.3 billion), is in talks with the U.S. private investment firm about raising its bid, people familiar with the situation told Reuters.

The move comes days after proxy advisory firm Institutional Shareholder Services (ISS) recommended Milestone unitholders vote against the transaction.

Milestone’s units (MST_u.TO), which were unchanged before the Reuters report, rose as much as 2.7 percent to a one-month high of C$21.62, as volume jumped, crossing the current offer value of C$21.18. They closed up 2 percent at C$21.49 on Monday.

Both the broader Toronto composite stock market .GSPTSE and the Canadian REIT sector index .GSPRTRE ended in the red on Monday.

Milestone and Starwood could agree on a higher price and make an announcement early this week, the sources said on Monday. But they cautioned there was no certainty a deal would be reached at a higher price.

The sources declined to be identified as the talks are confidential. Representatives of both Milestone and Starwood declined to comment.

On Jan. 19, Milestone agreed to be bought out by Starwood for $16.15 per Milestone unit in an all-cash transaction.

Based on currency exchange rates at the time, it translated to a premium of about 9.2 percent above the units’ closing price of C$19.66 before the transaction was announced.

Manash Goswami, portfolio manager at First Asset Investment Management Inc, said he was unhappy with the current offer.

“We would like to see a bid north of $17. At $17, it is about (a) 10 percent premium to consensus net asset values out there,” Goswami said. First Asset owns Milestone units.

Dallas-based Milestone, which went public in Toronto in 2013, owns and manages apartment properties targeting blue-collar workers across the U.S. Southeast and Southwest.

With a focus on real estate, Barry Sternlicht-led Starwood Capital manages assets of about $52 billion.

Last week, proxy advisory service Glass Lewis encouraged unitholders to vote for the transaction, while ISS went the other way.

“The fact pattern in the transaction indicates speed and certainty were prioritized over price, apparently out of concerns that cyclical factors will put pressure on REIT valuations,” ISS said in its report on Feb. 22.

In a response the same day, Milestone said its “board and special committee engaged in a comprehensive process to maximize value for the REIT’s unitholders.”

The trust received some approaches in the past two years, Milestone said in a recent regulatory filing, but had not received an alternative bid since the Starwood deal.

In its report, Glass Lewis said “the purchase price represents a compelling value at which Milestone unitholders can cash out their investment in the REIT and immediately realize an assured value, in cash, at a meaningful premium.”

The deadline to vote on the existing bid is March 3.

($1 = 1.3095 Canadian dollars)

(Reporting by John Tilak and Fergal Smith in Toronto, and Carl O’Donnell in New York; Editing by Jeffrey Benkoe and Matthew Lewis)

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No AT&T-Time Warner merger review expected: U.S. regulator’s chairman

WASHINGTON The head of the U.S. Federal Communications Commission does not expect to review ATT Inc’s (T.N) planned $85.4 billion acquisition of Time Warner Inc (TWX.N), a spokesman for the agency said on Monday.

FCC Chairman Ajit Pai had told the Wall Street Journal in an interview on Monday at the Mobile World Congress in Barcelona that he did not foresee a role for the FCC on the takeover and his comments were confirmed to Reuters by FCC spokesman Neil Grace.

Last Thursday, Time Warner said it plans to sell a broadcast station in Atlanta to Meredith Corp for $70 million, which could help speed the company’s planned merger with ATT. Pai declined to say on Thursday if he would use that transfer to try to review the broader merger.

In January, ATT said it expected to be able to bypass the FCC because it would not seek to transfer any Time Warner licenses.

About a dozen U.S. senators have urged him to review the deal.

The station that Time Warner is selling, WPCH-TV in Atlanta, is its only FCC-regulated broadcast station. It has other, more minor FCC licenses. Meredith has operated WPCH-TV for Time Warner since 2011. It was previously know as WTBS.

Time Warner said last month it expected it would only need the consent of the U.S. Department of Justice.

The Justice Department, which is reviewing documents submitted on the proposed merger, has to prove a proposed deal harms competition in order to block it. The FCC has broad leeway to block a merger it deems is not in the “public interest” and can impose additional conditions.

ATT Chief Executive Randall Stephenson told CNBC earlier this month the Justice Department review was ongoing and he thought the deal would close by the end of the year. “It’s a clean transaction,” he said.

People briefed on the matter do not expect the Justice Department to act on the merger until an assistant attorney general overseeing the anti-trust division is named and confirmed by the U.S. Senate.

ATT, which repeatedly clashed with the FCC under President Barack Obama over major industry regulations, said last year one benefit to its buying Time Warner is that the programing company is “lightly regulated compared to much of ATT’s existing operations.”

(Reporting by David Shepardson; editing by Grant McCool)

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Trump seeks ‘historic increase’ in U.S. defense spending, cuts elsewhere

WASHINGTON U.S. President Donald Trump said on Monday he is seeking a “historic increase” in military spending to be funded by cuts elsewhere in government.

Trump will seek to boost Pentagon spending by $54 billion in his first budget proposal and slash the same amount from non-defense spending, including a large reduction in foreign aid, a White House budget official said.

“This budget will be a public safety and national security budget,” Trump told state governors at the White House. “It will include an historic increase in defense spending to rebuild the depleted military of the United States of America at a time we most need it,” he said.

The U.S. military is already the world’s most powerful fighting force and the United States spends far more than any other country on defense.

The White House will send Trump’s proposal to federal departments on Monday as he gears up for budget negotiations with Congress that often take months to play out. Congress, controlled by Trump’s fellow Republicans, has the final say on federal spending.

In a speech to conservative activists on Friday, Trump promised “one of the greatest military buildups in American history.”

Two officials familiar with Trump’s proposal said the planned defense spending increase would be financed partly by cuts to the State Department, Environmental Protection Agency and other non-defense programs.

One of the officials said Trump’s request for the Pentagon included more money for shipbuilding, military aircraft and establishing “a more robust presence in key international waterways and chokepoints” such as the Strait of Hormuz and South China Sea.

A second official said the State Department’s budget could be cut by as much as 30 percent, which would force a major restructuring of the department and elimination of programs.

Some defense experts have questioned the need for a large increase in U.S. military spending, which already stands at roughly $600 billion annually. By contrast, the United States spends about $50 billion annually on the State Department and foreign assistance.

Trump also said he would talk about his plans for infrastructure spending in a speech to Congress on Tuesday. “We’re going to start spending on infrastructure big,” he said.

Treasury Secretary Steven Mnuchin, speaking on Fox News on Sunday, said Trump’s budget would not seek cuts in federal social programs such as Social Security and Medicare.

(Additional reporting by Tim Ahmann and David Alexander; Writing by Alistair Bell; Editing by Frances Kerry)

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LSE scuppers Deutsche Boerse merger hopes by rejecting EU demand

LONDON/FRANKFURT The London Stock Exchange (LSE.L) has all but ended a planned merger with Deutsche Boerse (DB1Gn.DE) to create Europe’s biggest exchange, which had faced growing opposition since Britain’s vote to leave the European Union.

A demand from European antitrust regulators that it sell a trading platform in Italy was publicly ruled out by the LSE on Sunday, derailing the 29 billion euro ($31 billion) deal and knocking shares in both the LSE and Deutsche Boerse on Monday.

The LSE’s decision not to sell MTS, which had been demanded in order to beef up smaller French rival Euronext (ENX.PA), took the European Commission and Deutsche Boerse by surprise, people familiar with the matter said.

But the failure of the deal had been feared by many involved, amid growing calls from German politicians that the headquarters be shifted from London to Frankfurt because of Brexit – a concession the LSE did not want to make.

Further complicating the picture, German state prosecutors had opened an investigation into Deutsche Boerse Chief Executive Carsten Kengeter, who had been due to head the combined group, for possible insider trading. Kengeter denies any wrongdoing and no charges have been brought.

Nonetheless, the investigation strained already difficult relations, prompting the LSE to question Kengeter’s suitability to lead a combined company, two sources familiar with the matter said. LSE Chairman Donald Brydon wrote an email to Deutsche Boerse Chairman Joachim Faber in early February, shortly after prosecutors searched Kengeter’s apartment, expressing such reservations, the sources said. The LSE declined to comment.

The breakdown leaves a question mark over the strategy of the exchanges in London, Europe’s financial capital, and Frankfurt, the equivalent for Germany, the region’s biggest economy.

“Brexit changed everything,” said Bill Cash, a British Conservative lawmaker who backed Brexit and who led a parliamentary debate on the merger last week.

“It was inconceivable that after Brexit, having left the European Union, that our stock exchange would have been effectively run from Germany.”

Earlier this month, Kengeter had warned Frankfurt stood to lose out if the deal failed. “The biggest risk to Frankfurt … is doing nothing,” he said.

Ingo Speich of Union Investment, a shareholder in Deutsche Boerse, said he was disappointed by the outcome.

“I’m certain that they have a Plan B to hand,” he said. “They will have to put something on the table to keep investors on side.”

David Moss of FC Management said he expected “some of the other players initially mentioned as alternative suitors will be running the numbers again”.

Shares in Deutsche Boerse tumbled almost 5 percent, while LSE shares fell roughly 3 percent.


This is the latest in a series of doomed efforts at dealmaking by stock exchanges, highlighting the perils for any new buyer such as U.S. exchange ICE (ICE.N).

There had already been five attempts, three public and two informal, to combine the London and Frankfurt bourses during the past decade, while the EU blocked a $17 billion tie-up between what was then NYSE Euronext and Deutsche Boerse in 2012.

The latest attempt came to an end when, in a highly unusual step, the LSE pre-empted a European Commission antitrust decision, saying it was unlikely to give clearance for the merger after the London bourse had refused to sell an electronic trading platform in Italy.

A deal would now only be possible if the Commission, which declined to comment, were to change its demands – an outcome that is unlikely given its approach to ruling on other mergers.

While hopes had been high, the plan to create what Kengeter dubbed a financial bridge between continental Europe and Britain had been called into question by Brexit.

Some economists think Britain’s departure from the EU may damage London as a financial center and that turned the tables in favor of Germany, prompting its politicians to demand Frankfurt not London be the headquarters of the combined group.

“They don’t want to be the first to send a clear signal that Brexit has unavoidable disadvantages for Britain,” Thomas Schaefer, the finance minister of the state of Hesse, home to Deutsche Boerse, told Reuters earlier this month.

Such German demands had grated with some lawmakers in Britain. By effectively pulling the plug now, the discussion does not arise.

The question over where the headquarters should be, which would have arisen had EU authorities given the deal a green light, worried LSE executives, two people familiar with the matter said.

But a source close to the LSE described the sale of fixed-income trading platform MTS as a key problem because such a move was firmly opposed by Rome.

“MTS has the largest chunk of Italian government bonds which made the Italian authorities wary of a change of ownership.”

Deutsche Boerse, however, said that decision not to sell MTS had been made by the LSE, adding it expected a decision by the Commission by the end of the month.

MTS is a small part of LSE’s business. It said it was nonetheless a major platform for trading European government bonds, particularly in Italy.

(Additional reporting by Ismail Shakil in Bengaluru, Rachel Armstrong in London, Pamela Barbaglia in London, Alexander Huebner in Frankfurt and Simon Jessop in London; Writing by John O’Donnell; Editing by Alexander Smith and Mark Potter)

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Exclusive: Wal-Mart launches new front in U.S. price war, targets Aldi in grocery aisle

Wal-Mart Stores Inc (WMT.N) is running a new price-comparison test in at least 1,200 U.S. stores and squeezing packaged goods suppliers in a bid to close a pricing gap with German-based discount grocery chain Aldi ALDIEI.UL and other U.S. rivals like Kroger Co (KR.N), according to four sources familiar with the moves.

Wal-Mart launched the price test across 11 Midwest and Southeastern states such as Iowa, Illinois and Florida, focusing on price competition in the grocery business that accounts for 56 percent of the company’s revenue, said vendor sources with direct knowledge of the matter who did not wish to be identified for fear of disrupting business relations with Wal-Mart.

Wal-Mart’s tests are aimed at finding the right price point across a range of products that will attract more shoppers, and then adjusting prices as needed.

Spot checks by Reuters on a basket of grocery items sold by competing Aldi and Wal-Mart stores in five Iowa and Illinois cities showed Wal-Mart’s bid to lower prices is already taking hold. Wal-Mart consistently offered lower prices versus Aldi, an improvement over recent analyst estimates that Wal-Mart’s prices have been as much as 20 percent higher than Aldi on many grocery staples.

The competition at these stores is intense, with both competitors selling a dozen large eggs for less than a dollar. A gallon of milk at some stores was priced at around $1. 


The big box retailer also held meetings last week in Bentonville, Arkansas with food and consumer products vendors, including Procter Gamble (PG.N), Unilever PLC (ULVR.L), Conagra Brands Inc (CAG.N), and demanded they reduce the cost they charge the retailer by 15 percent, sources said.

Wal-Mart also said it expects suppliers to help the company beat rivals on head-to-head pricing 80 percent of the time, these vendor sources said. The wide-ranging meeting with suppliers – where Wal-Mart discussed other topics – was also attended by Johnson Johnson (JNJ.N) and Kraft Heinz Co (KHC.O), among others, sources told Reuters. The consumer goods companies did not respond to Reuters requests seeking comment.

These Wal-Mart moves signal a new front in the price war for U.S. shoppers, as the pioneer of everyday low pricing seeks to regain its competitive pricing advantage in traditional retailing.

For more than a year, Wal-Mart said it is investing in price while not sharing specifics. When asked by Reuters about the test and demands on grocery suppliers, Wal-Mart spokesman Lorenzo Lopez said the company is “not in a position to share our strategy for competitive reasons.”

Germany-based discount grocer Aldi is one of the relatively new rivals quickly gaining market share in the hotly competitive grocery sector, which already boasts Kroger, Albertsons Cos Inc and Publix Super Markets as stiff competitors on price. A second Germany-based discount grocer, Lidl, is planning to enter the U.S. market this year, and together the German discounters pose a serious threat to Wal-Mart’s U.S. grocery business.

The stakes are high for Wal-Mart. According to Scott Mushkin, managing director of Wolfe Research and a leading pricing analyst, the retailer would need to spend about $6 billion to regain market share from all of its grocery rivals.

Wal-Mart also needs to find ways to cut prices without further damaging its bottom line. In its latest quarter, gross margins slipped 8 basis points, while net income dropped 18 percent compared to the year-ago quarter. The company attributed the decline to factors such as price investments, which is essentially the cost of cutting prices.Vendors said Wal-Mart has told them it intends to maintain margins on average and lose money on some goods as part of its pricing plan. Wal-Mart told vendors it will absorb some of the losses so suppliers can adjust to the new pricing demand.

A supplier of consumer goods said Wal-Mart cut prices on some of his company’s products by as much as 30 percent in some stores over the past few months.

“It helped them figure out the sweet spot that drives traffic,” the person said.

Wal-Mart also said it wants vendors to make logistics improvements that would help vendors get $1 billion more in sales, though it did not specify the time period. The retailer asked vendors to work harder on shipping orders in full and on-time, which would trim delivery costs, reduce re-orders, and reduce out-of-stock problems that have vexed the retailer and hurt sales in recent years, vendor sources who attended the meeting told Reuters.

“Wal-Mart is trying to go back to where they were 10 years ago when they were absolutely the low price leader,” a large packaged food supplier told Reuters on condition of anonymity. “We understand they are willing to give up profits to a large extent in some cases, so they can invest in their own brand.”

Aldi and Kroger declined to comment on the story. Lidl and Publix did not respond to Reuters’ requests seeking comment. Albertsons said running its stores means delivering price competitiveness every day, but did not comment specifically on the tests.



Wal-Mart is eyeing both German chains based on its recent experience in the United Kingdom. Aldi and Lidl, with their no-frills stores, limited product assortment and low-cost model, have successfully upended the grocery market there, cutting into the sales of larger players like Tesco Plc (TSCO.L) and Asda, Wal-Mart’s UK arm.

A Reuters spot check of markets where Wal-Mart is running its new U.S. pricing program indicates the retailer has already taken the price battle to Aldi. The Reuters check of Wal-Mart and Aldi stores in five Midwestern cities where Wal-Mart is running its test found Wal-Mart’s prices for a basket of 15 staples averaged 8 percent less than Aldi’s products.

Reuters conducted the price comparisons in Dubuque and Davenport, Iowa, and Moline, Dixon and Galesburg, Illinois. At each, Reuters collected prices for a basket of 15 similar-sized products including private-label packages of butter and milk, along with branded items like Crest toothpaste and 2 liter-bottle of Coca-Cola.

In some cases, Wal-Mart’s prices were as much as 10 percent cheaper than at Aldi. Reuters found Wal-Mart’s prices were lower on at least eight and as many as 12 items in each of the five locations.

Wal-Mart is also conducting the price comparisons in Georgia, Indiana, Kansas, Kentucky, Michigan, North Carolina, South Carolina and Virginia, according to sources.

In the United States, Aldi is starting from a small base and Lidl has not yet opened its first store. Aldi, with roughly 1,600 U.S. stores, accounts for only about 1.5 percent of the U.S. grocery market – but it is growing at 15 percent a year. Mushkin of Wolfe Research estimated Aldi and Lidl together could grab as much as seven percent of the U.S. market over five years.

Wal-Mart currently controls about 22 percent of the U.S. grocery market, and its U.S. sales are estimated to grow about 2 percent this year, according to analysts.

Over the past few years, Aldi’s prices have been about 20 percent lower than Wal-Mart’s, said Mushkin of Wolfe Research. When Mushkin in December compared Wal-Mart and Aldi prices in Connecticut for private label goods – the retailers’ own brands, typically the lowest-priced goods in each category – he found the German chain’s prices were 24 percent lower.


(Editing by David Greising and Edward Tobin)

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Oil edges up as bullish bets on rising prices hit record high

NEW YORK Oil prices edged higher on Monday as investors showed record confidence that prices would rise further, though gains were capped by the prospect of faster growth in U.S. oil production.

On its second to last day as the front-month contract, Brent futures for April delivery were up 16 cents, or 0.3 percent, at $56.15 a barrel by 11:24 a.m. EST (1624 GMT). U.S. West Texas Intermediate crude (WTI), meanwhile, was up 21 cents, or 0.4 percent, to $54.20 per barrel.

Traders said futures pared gains from earlier on Monday after a report from energy data provider Genscape showed a build of more than 800,000 barrels of crude at the Cushing storage hub in Oklahoma, where WTI is priced.

Investors raised their bets on rising Brent crude oil prices to a new high last week, data from the InterContinental Exchange showed on Monday, breaking the 500,000-lot mark for the first time on record. [O/ICE]

Money managers also raised their bullish U.S. crude futures and options positions in the week to Feb. 21 to the highest on record, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Investors now hold 951,312 lots’ worth of U.S. and Brent crude futures and options, equivalent to nearly 1 billion barrels of oil valued at more than $52 billion, based on current Brent and WTI benchmark prices.

“With speculators increasing their bullish bets on U.S. crude to an all-time high, the risk of disappointment and subsequent downward spiral in prices has never been greater,” oil brokerage PVM’s Stephen Brennock said.

Among the risks is the level of compliance to the deal between the Organization of the Petroleum Exporting Countries (OPEC) and other producers to bring down oil output by about 1.8 million barrels per day (bpd).

OPEC’s record compliance with the deal has surprised the market, and the biggest laggards, the United Arab Emirates and Iraq, have pledged to catch up with their targets.

The International Energy Agency put OPEC’s average compliance at a record 90 percent in January. Based on a Reuters average of production surveys, compliance stands at 88 percent.

A Reuters survey of OPEC production later this week will show compliance for February.

“It would appear OPEC has done a commendable job of stabilizing the market. But we are also of the opinion that their intended stability is likely attached to a $60 price handle rather than $50,” Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch Associates, said in a note.

“The longer that values stay below prices needed to drive budget improvement amongst the membership, the greater the likelihood of cheating that could force an eventual unraveling of the OPEC agreement,” Ritterbusch said.

Also looming over the success of the OPEC deal is the reaction of U.S. shale producers to rising prices and their ability to increase output.

U.S. drillers added five oil rigs in the week to Feb. 24 to a total of 602, the most since October 2015, energy services firm Baker Hughes Inc said on Friday.

(Additional reporting by Ahmad Ghaddar in London and Naveen Thukral in Singapore; Editing by David Goodman and Paul Simao)

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S&P, Dow hit record highs on Trump’s policy comments

The SP 500 and the Dow Jones Industrial Average edged up to record intraday highs on Monday, after President Donald Trump’s said he would make a “big” statement on infrastructure on Tuesday.

In a meeting with state governors on Monday, Trump said his administration would be “moving quickly” on regulatory reforms and that his tax plan would be released after a proposal on Obamacare.

Trump’s first address to a joint session of Congress on Tuesday evening is being closely watched by investors for clues on how he planned to carry out his agenda of boosting economic growth.

“If we have a market that is willing to accept a roadmap that says we are going to repeal and replace Affordable Care Act and then have some form of tax reform by the August recess, I think the market will continue to be supportive,” said Art Hogan, chief market strategist at Wunderlich Equity Capital Markets in New York.

Trump’s promise a few weeks ago of a “phenomenal” tax announcement helped rekindle a post-election rally, driving the main U.S. markets to record highs.

But with details scant on how he planned to implement his agenda, investors have turned wary and the markets have traded range-bound.

The Dow hit its 11th straight record close on Friday, even though the index has not moved more than 1 percent in either direction since Dec. 7.

At 11:02 a.m. ET (1702 GMT) the Dow .DJI was up 6.69 points, or 0.03 percent, at 20,828.45

The SP 500 .SPX was up 0.84 points, or 0.04 percent, at 2,368.18 and the Nasdaq Composite .IXIC was up 2.56 points, or 0.04 percent, at 5,847.87.

Six of the 11 major SP 500 sectors were higher, with gains in energy .SPNY and financials .SPSY helping counter losses in consumer staples .SPLRCS.

Among stocks, electric carmaker Tesla (TSLA.O) fell nearly 4 percent to $246.42 after Goldman Sachs downgraded the company’s stock to “sell” from “neutral” and lowered its price target.

La Jolla Pharmaceutical (LJPC.O) surged 75 percent to $34.79 following the success of its lead experimental drug in a late-stage study.

Shutterstock (SSTK.N) dropped 13.4 percent to $44.73 after the stock image provider reported quarterly revenue that missed analysts’ average estimate.

Advancing issues outnumbered decliners on the NYSE by 1,785 to 1,001. On the Nasdaq, 1,623 issues rose and 1,047 fell.

The SP 500 index showed 50 new 52-week highs and one new low, while the Nasdaq recorded 91 new highs and 33 new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila)

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Airbus faces battle on two fronts over call for A400M aid

PARIS Airbus (AIR.PA) faces tough negotiations on two fronts as it seeks new relief from European governments and engine makers for losses on its troubled A400M military transporter plane.

The planemaker called last week for new talks with European governments to ease “heavy penalties” for delays to the troop and armored vehicle carrier, after taking a fresh 1.2 billion euro ($1.3 billion) charge for Europe’s largest defense project.

It has also appointed a new program manager for the A400M as part of a broader reshuffle and is set to beef up the management of its military aircraft business with a new deputy, industry sources said. Airbus declined to comment.

The 20-billion-euro project has been beset by political wrangling since its inception more than a decade ago. By citing a new ‘crisis’ and calling for ministerial talks, Airbus seems to be repeating tactics that led to a previous 3.5 billion euro bailout in 2010.

This time, analysts and people familiar with the project say it will be harder for Chief Executive Tom Enders to get a deal to refloat the project, whose customers include Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.

“I can see why Tom Enders is doing this, because they need to stop the hemorrhage,” said a person involved in past negotiations.

“However, it is going to be difficult. Governments aren’t awash with cash and can’t even fund what they have got.”

The dispute underscores problems in putting defense projects on a commercial footing, and Airbus’s difficulty in moving on from an abandoned strategy of growth in defense.

Launched in 2003, the A400M was designed to extend Europe’s reach in military operations but is up to four years late and already 50 percent overbudget.

Despite Airbus’s call for more support, the initial response from governments and engine makers has been cool.

Germany, the largest buyer, said last week it was up to Airbus to solve the problems.

Spain expressed “surprise” at Enders’ statements and invited him to attend scheduled junior ministerial talks on March 30.

Engine makers have also joined the fray, refusing to help Airbus pay existing penalties or to absorb its liabilities.

“It’s no. I’m very firm on that,” Safran Chief Executive Philippe Petitcolin said, though he did not rule out new incentives for maintaining future deliveries.


Airbus blames engine makers and political meddling for the program’s chronic problems, but has also struggled to fill gaps in parachuting or refuelling capacity as well as the defensive systems needed to take the combat aircraft to war.

It had originally picked specialists Pratt Whitney Canada (UTX.N) to build the West’s biggest turboprops, but buyer nations wanted a European consortium including Safran, Rolls-Royce (RR.L), MTU Aero Engines (MTXGn.DE) and Rolls unit ITP.

After fresh problems with a gearbox supplied by Italy’s Avio, Airbus says the A400M project is off course again.

Analysts say odds are against any quick new funding deal, leaving Airbus to burn more cash on the A440M in 2017-18.

“Airbus wants to put everything on the table and increase pressure for a deal, but the nations are aware of that,” said a person involved in the negotiations.

Airbus’s overall position has improved since its last such appeal in 2009, while governments continue to face budget problems. Back then, its shares were recovering from record lows around 10 euros; last week they touched a peak near 70 euros.

Some say the main target of Airbus’s campaign is the engine consortium, hoping to win political support for more compensation.

Its decision to go public came after private talks with engine firms broke down last summer. Engine executives say the consortium, not Airbus, paid for the fitting of new gearboxes and question how far the engines caused any new losses.

Relations between Airbus and those suppliers have long been testy. Tensions soared after four crew were killed in an A400M test flight in 2015, focusing attention on the absence of alarms when engine data was accidentally wiped.(

($1 = 0.9432 euros)

(Additional reporting by Julien Toyer; Editing by Susan Fenton)

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