News Archive

DuPont in asset deal with FMC, delays close of Dow merger

DuPont (DD.N) said on Friday it would buy a unit of FMC Corp (FMC.N) and sell its crop protection business to the company to win European Union approval for its merger with Dow Chemical (DOW.N), and delayed the deal’s closing for the third time.

FMC’s shares rose as much as 17 percent to hit a near three-year high at $72.00. DuPont’s shares dipped 1.5 percent and Dow’s shares were marginally down.

DuPont said it would sell part of its crop protection unit to FMC and buy nearly all of FMC’s health and nutrition business in a deal that will fetch DuPont about $1.6 billion because of the difference in the value of the assets.

DuPont’s crop protection unit makes herbicides for cereals and insecticides for fruit and vegetables.

The European Commission had been concerned that the $130 billion merger of two of the biggest and oldest U.S. chemical producers would leave few incentives to produce new herbicides and pesticides in the future.

The Dow-DuPont merger is still to be approved by regulators in the United States, Brazil, China, Australia and Canada, but Dow and DuPont said on Monday they were confident of clearing all remaining jurisdictions.

“We are far down the road in our conversations with the other regulators,” DuPont CEO Edward Breen told Reuters, adding that conditional approval from the European Commission was “the big hurdle to get over”.

Any further asset sales required by regulatory bodies would be “very small” compared with its crop protection divestiture, Breen said.

The Dow-DuPont deal is one of a trio of mega mergers that will reshape the industry and consolidate six companies into three.

The two other big deals being ChemChina’s CNNCC.UL $43 billion bid for Syngenta (SYNN.S) and Bayer’s (BAYGn.DE) acquisition of Monsanto (MON.N).

DuPont said its merger with Dow, which was expected to close in the first half of 2017, is now anticipated to close between Aug. 1 and Sept. 1.

The combined company will eventually be spun-off into three independent publicly traded companies, the first being called “Material Science Co”.

Dow and DuPont said on Friday the intended spin-offs are expected to occur within 18 months after merger closes.

The deal with FMC is expected to close in the fourth quarter, subject to the closing of the DuPont-Dow merger.

(Reporting by Vishaka George in Bengaluru; Editing by Martina D’Couto)

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Consumer spending posts smallest gain in six months

WASHINGTON, March 31 U.S. consumer spending barely rose in February amid delays in the payment of income tax refunds, but the biggest annual increase in inflation in nearly five years supported expectations of further interest rate hikes this year.

The Commerce Department said on Friday consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1 percent. That was the smallest gain since August and followed an unrevised 0.2 percent rise in January.

Economists had expected a 0.2 percent increase.

The government delayed the issuing of tax refunds this year as part of efforts to combat fraud. Spending last month was held back by a 0.1 percent dip in purchases of big-ticket items like automobiles. While unseasonably warm weather reduced households’ heating bills, it restricted spending last month.

Weak consumer spending suggested that economic growth slowed further in the first quarter. Gross domestic product increased at a 2.1 percent annualized rate in the fourth quarter, stepping down from the July-September quarter’s brisk 3.5 percent pace.

Despite signs of moderate growth, the Federal Reserve is expected to raise interest rates at least twice more this year.

The U.S. central bank raised its benchmark overnight interest rates by a quarter of a percentage point this month.

With consumer confidence at 16-year highs and labor market tightness pushing up wage growth, the moderation in spending is likely to be temporary. Even with economic growth slowing at the start of the year, inflation is rising.

The personal consumption expenditures (PCE) price index gained 0.1 percent last month after jumping 0.4 percent in January. That lifted the year-on-year rate of increase in the PCE price index to 2.1 percent.

That was the biggest year-on-year gain since April 2012 and followed a 1.9 percent rise in January.

Excluding food and energy, the so-called core PCE price index increased 0.2 percent last month after rising 0.3 percent in January. In the 12 months through February, the core PCE price index increased 1.8 percent after a similar gain in January.

The core PCE is the Federal Reserve’s preferred inflation measure and is running below its 2 percent target.

Rising price pressures are also eating into consumer spending. When adjusted for inflation, consumer spending fell 0.1 percent in February after declining 0.2 percent in January.

That suggests a sharp moderation in the pace of consumer spending after a robust 3.5 percent growth pace in the fourth quarter.

Personal income rose 0.4 percent last month after advancing 0.5 percent in January. Income at the disposal of households after accounting for inflation increased 0.2 percent. Savings rose to a five-month high of $808.0 billion from $770.9 billion in January.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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Germany urges EU to file WTO complaint against U.S. in steel row

BERLIN Germany urged the European Union on Friday to consider filing a complaint with the World Trade Organization (WTO) against the United States over its plan to impose duties on imports of steel plate from five EU member states.

U.S. President Donald Trump is expected to sign executive orders on Friday aimed at identifying abuses causing huge U.S. trade deficits. He is also preparing to meet Chinese President Xi next week in Florida, with contentious trade issues likely to be high on the agenda.

Global steel prices have slumped as Chinese producers, who account for about half of the worldwide steel supply, have flooded the export markets, leading to protests and anti-dumping complaints by the United States, the European Union and others.

On Thursday, the U.S. Department of Commerce issued a final finding that European and Asian producers dumped certain carbon and alloy steel cut-to-length plate in the U.S. market, allowing it to impose duties ranging from 3.62 percent to 148 percent.

Among the affected companies are firms in Germany, Austria, Belgium, France and Italy.

Gabriel said the U.S. government seemed prepared to give U.S. firms an “unfair competitive advantage” over European producers even though this violated international trade law.

“We Europeans cannot accept this. The EU must now examine whether it also files a complaint at the WTO. I strongly support this,” Gabriel said. The European Commission, the EU’s executive arm, is in charge of trade matters in the 28-member bloc.

“The WTO rules are the backbone of the international trade order. To deliberately violate them is a dangerous step,” he said. “It is the first time that the U.S. in such a case resorts to distorting practices that do not comply with the WTO rules.”

In Brussels, a spokesman for the European Commission said it regretted the U.S. move to impose anti-dumping measures, adding that the duties were “artificially inflated”.

“Our comments and notably those concerning the use by the U.S. of methodologies which artificially inflate the preliminary dumping margins have not been given expected consideration,” the spokesman said.

The final duties were in many cases higher than the preliminary duties set in November. “We will look now into the detail of the decision taken by the U.S. and consider the appropriate steps,” he said.


Gabriel said Germany had to stand up to the U.S. and fight “accounting tricks” that put Germany’s internationally competitive steel industry at a disadvantage.

“If the U.S. got through with unfair competition, other industries would also be subject to the same threat,” Gabriel warned.

Economy Minister Brigitte Zypries said Germany would, along with the European Commission, continue to campaign for Washington to stick to WTO rules.

“The signals the U.S. is sending in the steel sector really worry us,” Zypries said, adding that she would raise the issue when she visits the United States in May.

Cut-to-length steel is used in a wide range of applications, including buildings and bridgework; agricultural, construction and mining equipment; machine parts and tooling; ships, rail cars, tankers and barges; and large-diameter pipes.

The U.S. Department of Commerce’s finding is the result of a petition from Nucor Corp (NUE.N) and U.S. subsidiaries of ArcelorMittal SA (ISPA.AS) and SSAB AB (SSABa.ST).

For Austrian producers and exporters, dumping duties on the Voestalpine group (VOES.VI) and all others were set at 53.72 percent. Among French manufacturers and exporters, duty rates were set at 148.02 percent for Industeel France and 8.62 percent for Dillinger France and all others.

In Germany, duties were set at 5.38 percent for AG der Dillinger Hüttenwerke, 22.90 percent for the Salzgitter group (SZGG.DE) and 21.03 percent for all other exporters and producers.

The chief executive of Italian steel firm Marcegaglia said the U.S. risked setting off a trade war if it implemented its plans for a border tax, an issue that should be taken to the WTO.

“And when you start a war you don’t know where you will end up,” Emma Marcegaglia told reporters in Rome.

Marcegaglia said it was still possible that the issue could be resolved through trans-Atlantic negotiations.

Italy’s industry minister warned that a U.S.-EU trade dispute would hurt growth and global governance at a time when the West needs to show a unified front against unfair trade practices.

“Any trade clash between the United States and Europe would be dangerous not only for our economies, but also for the rules that govern globalization,” Carlo Calenda told reporters.

(Reporting by Michael Nienaber in Berlin; Additional reporting by Gernot Heller in Berlin, Philip Blenkinsop in Brussels and Antonella Cinelli in Rome; Editing by Hugh Lawson)

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BlackBerry’s profit beats expectations

Canada’s BlackBerry Ltd, reported better-than-expected quarterly earnings on Friday, as operating costs nearly halved, and said it expects to be profitable on an adjusted basis in 2018.

The company’s U.S.-listed shares were up nearly 5 percent at $7.29 before the bell.

BlackBerry has shifted away from making its once-iconic smartphones to building a software business, which includes mobile device management products and the QNX industrial operating system.

The company’s adjusted revenue from software and services rose 12.2 percent to $193 million in the fourth quarter ended Feb. 28, from the preceding quarter.

BlackBerry said it received more than 3,500 enterprise customer orders in the quarter.

“Looking ahead to fiscal 2018, we expect to grow at or above the overall market in our software business,” Blackberry Chief Executive John Chen said in a statement.

Chen said BlackBerry expected to be profitable on an adjusted basis and generate positive free cash flow for the year ending February 2018.

The Waterloo, Ontario-based company’s net loss narrowed to $47 million or 10 cents per share in the fourth quarter, from $238 million or 45 cents per share, a year earlier.

The prior-year quarter included a loss of $127 million related to the sale of certain assets.

Excluding one-time items, the company earned 4 cents per share. Analysts on average had expected the company to break even, according to Thomson Reuters I/B/E/S.

Operating expenses fell about 49 percent to $229 million.

Revenue fell about 38 percent to $286 million. On an adjusted basis, revenue was $297 million, beating analysts’ average expectation of $289.3 million.

(Reporting by Vishaka George and Narottam Medhora in Bengaluru; Editing by Sai Sachin Ravikumar)

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EU offers Brexit trade talks, sets tough transition terms

VALLETTA/BRUSSELS The European Union offered Britain talks this year on a future free trade pact but made clear in negotiating guidelines issued on Friday that London must first agree to EU demands on the terms of Brexit.

Those include paying tens of billions of euros and giving residence rights to some 3 million EU citizens in Britain, the proposed negotiating objectives distributed by EU summit chair Donald Tusk to Britain’s 27 EU partners showed.

The document, seen by Reuters, also sets tough conditions for any transition period, insisting Britain must accept many EU rules after any such partial withdrawal. It also spelled out EU resistance to Britain scrapping swathes of tax, environmental and labor laws if it wants to have an eventual free trade pact.

The guidelines, which may be revised before the EU27 leaders endorse them at a summit on April 29, came two days after Prime Minister Theresa May triggered a two-year countdown to Britain’s withdrawal in a letter to Tusk that included a request for a rapid start to negotiations on a post-Brexit free trade deal.

“Once, and only once we have achieved sufficient progress on the withdrawal, can we discuss the framework for our future relationship,” Tusk told reporters in Malta — a compromise between EU hardliners who want no trade talks until the full Brexit deal is agreed and British calls for an immediate start.

“Starting parallel talks on all issues at the same time, as suggested by some in the UK, will not happen,” Tusk said, while adding that the EU could assess as early as this autumn that Britain had made “sufficient progress” on the exit terms in order to open the second phase of negotiations, on future trade.

Brussels has estimated that Britain might owe it something of the order of 60 billion euros on departure, although it says the actual number cannot be calculated until it actually leaves.

What it does want is to agree the “methodology” of how to work out the “Brexit bill”, taking into account Britain’s share of EU assets and liabilities. Britain disputes the figure but May said on Wednesday that London would meet its “obligations”.

The Union’s opening gambit in what Tusk said would at times be a “confrontational” negotiation with May’s government also rammed home Brussels’ insistence that while it was open to letting Britain retain some rights in the EU during a transition after 2019, it would do so only on its own terms.

Britain would have to go on accepting EU rules, such as free migration, pay budget contributions and submit to oversight by the European Court of Justice — all things that drove last June’s referendum vote to leave and elements which May would like to show she has delivered on before an election in 2020.

“Should a time-limited prolongation of Union acquis be considered, this would require existing Union regulatory, budgetary, supervisory and enforcement instruments and structures to apply,” Tusk’s draft guidelines stated in reference to a transition period that diplomats expect could last two to five years to smooth Brexit.


It also stressed that a future trade pact, allowing for not just low or zero tariffs on goods but also regulatory alignment to promote trade in services, should not allow Britain to pick and choose which economic sectors to open up. That would prevent London giving undue subsidies or slashing taxes or regulations — “fiscal, social and environmental dumping”, in EU parlance.

The negotiations will be among the most complex diplomatic talks ever undertaken and the EU guidelines are only an opening bid. EU officials believe they have the upper hand in view of Britain’s dependence on exports to the continent, while British diplomats see possibilities to exploit EU states’ differences.

Tusk and Maltese Prime Minister Joseph Muscat, who holds the Union’s rotating presidency, warned against such efforts and insisted the EU would negotiate “as one”, through their chief negotiator, former French foreign minister Michel Barnier. He expects to start full negotiations in early June.

Tusk spelled out priorities for the withdrawal treaty, which Barnier hopes can be settled by November 2018, in time for parliamentary ratification by Brexit Day on March 29, 2019:

– the EU wants “reciprocal” and legal “enforceable” guarantees for all EU citizens who find their rights to live in Britain affected after a cutoff on the date of withdrawal

– businesses must not face a “legal vacuum” on Brexit

– Britain should settle bills, including “contingent liabilities” to the EU

– agreement on border arrangements, especially on the new EU-U.K. land border in Ireland, as well as those of British military bases on EU member Cyprus.

(Writing by Alastair Macdonald; Editing by Catherine Evans)

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Big in Japan? Hope at home for Toshiba’s nuclear arm after U.S. debacle

TOKYO The bankruptcy of Westinghouse Electric Co may be a blow to Toshiba Corp’s (6502.T) international nuclear ambitions, but the Japanese conglomerate still has a profitable business at home.

Toshiba, whose businesses range from memory chips to rail, is at the heart of Japan’s atomic industry. While this has been moribund since the 2011 Fukushima disaster, Japan still has dozens of reactors that need to be maintained and supplied with parts and fuel once operating.

Toshiba is also involved in the Fukushima clean-up. The cost of decommissioning the wrecked Fukushima Daiichi facility alone is estimated by the Japanese government at 8 trillion yen ($71 billion). Some experts have predicted the process could take as long as a century.

All but three of Japan’s 54 commercial nuclear reactors are currently shut down. Twelve are set for decommissioning, including the six at the Fukushima stations.

Even idle, they need constant maintenance and supervision.

For Toshiba, the main contractor or a major component supplier to 20 of those reactors, that’s a stable business, and one of its most profitable in terms of return on sales. Fuel and servicing make up the lion’s share of the group’s nuclear revenue.

“They can come out of this (Westinghouse bankruptcy) with a very healthy nuclear business in Japan,” said George Borovas, global head of nuclear at law firm Shearman Sterling, noting this would include servicing, maintenance and decommissioning.

“Business lines such as nuclear fuel supply and services have a significantly different risk profile to nuclear new build projects,” he added.

Toshiba was undone by its push into construction through Westinghouse, its U.S. nuclear arm that ran up billions of cost overruns as two key U.S. projects were delayed by years to meet growing safety demands post-Fukushima.

Global construction is expected to have lost money in the 2016 financial year, according to provisional forecasts by Toshiba last month, but the Japanese nuclear power business is forecast to see a return on sales of 8 percent for the year. Toshiba aims to increase that to 10 percent by 2019.


The Westinghouse collapse could also revive consolidation in Japan’s nuclear industry, which, unusually, includes two other main suppliers – Mitsubishi Heavy Industries (MHI) (7011.T) and Hitachi (6501.T).

At a fractious Toshiba shareholders meeting on Thursday, Yoshimitsu Kobayashi, an external director who heads the group’s management nomination committee, said he wanted Toshiba, Hitachi and MHI to eventually form a nuclear holding company.

The three firms were in talks last year to merge their nuclear fuel operations, but the process was delayed after the Westinghouse troubles came to light.

“It would make sense. There’s no point in having three companies chasing a dying market in Japan,” said Tom O’Sullivan, founder of independent energy consultancy Mathyos Japan.

Any move to consolidate, though, could come up against a government that wants to keep its nuclear options open in the aftermath of Fukushima, and, analysts note, the three companies employ different technologies.

A Hitachi spokesman said there are no discussions on merging the companies’ overall nuclear operations. He noted Hitachi’s nuclear business is profitable. It has forecast sales of 150 billion yen in the year ending Friday.

MHI said it had no “specific plans to deepen” its nuclear cooperation with Toshiba, highlighting its use of different reactor technology. The company does not break out its nuclear business and did not say if it makes money.


Toshiba was the main contractor for three of the Fukushima Daiichi units and supplied the reactor vessels to two others. It’s also the main contractor and equipment supplier on two units of the nearby Fukushima Daini station, which may never be restarted due to local opposition, and is lead contractor and supplier on three reactors at the Kashiwazaki Kariwa nuclear plant, the world’s biggest.

While servicing nuclear stations will continue to be profitable, Toshiba’s Senior Executive Vice President Yasuo Naruke on Thursday offered a lament to angry shareholders.

“The changes in the environment for the nuclear business, including the Fukushima disaster, were the remote cause for the Westinghouse writedown,” he said.

($1 = 112.1100 yen)

(Additional reporting by Makiko Yamazaki, Osamu Tsukimori and Yuka Obayashi; Editing by Clara Ferreira Marques and Ian Geoghegan)

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Dutch-led tax probes anger Swiss, Credit Suisse says cooperating

AMSTERDAM/ZURICH Credit Suisse (CSGN.S) has been dragged into yet another investigation into whether clients used the Swiss bank to evade taxes, after a tip-off to Dutch prosecutors about tens of thousands of suspect accounts triggered an international probe.

Coordinated raids began on Thursday in the Netherlands, Britain, Germany, France and Australia, the Dutch office for financial crimes prosecution (FIOD) said, with two arrests confirmed so far.

The Dutch are “investigating dozens of people who are suspected of tax fraud and money laundering”, the prosecutors said, adding that suspects had deposited money in a Swiss bank without disclosing that to authorities.

British tax authorities said they had also opened a criminal investigation into suspected tax evasion and money laundering by “a global financial institution” and would be focusing initially on “senior employees”, along with an unspecified number of customers.

“The international reach of this investigation sends a clear message that there is no hiding place for those seeking to evade tax,” Her Majesty’s Revenue and Customs said in a statement.

Neither the Dutch nor the British disclosed the name of the bank involved. However, Credit Suisse, Switzerland’s second-biggest bank, said local authorities had visited its offices in Amsterdam, London and Paris “concerning client tax matters” and it was cooperating.

The Dutch FIOD seized administrative records as well as the contents of bank accounts, immovable property, jewelry, a luxury car, expensive paintings and a gold bar from houses in four Dutch towns and cities. The people arrested, one in The Hague and one in the town of Hoofddorp, were not identified.

The actions angered Switzerland’s Office of the Attorney General, which said it was “disconcerted” by the way Dutch authorities had handled the matter and would demand an explanation.

FIOD spokeswoman Wietske Vissers referred questions about investigations in the other countries to their national police and to Eurojust, the European Union agency that coordinates cross-border prosecutions. Eurojust could not immediately be reached for comment.

Credit Suisse shares were down 0.8 percent at 1122 GMT, a steeper fall than the 0.2 percent drop in the wider European banking sector index .SX7P.


For Zurich-based Credit Suisse, the case reopens the thorny issue of tax evasion which has dogged Swiss banks for years after the world’s wealthy used the country’s strict bank secrecy laws to hide cash from the taxman.

Credit Suisse has paid more than 2 billion Swiss francs ($2 billion) since 2011 in the United States, Germany and Italy to settle allegations it helped clients dodge taxes. It has pushed clients in Europe, Latin America and Asia to participate in government programs facilitating the declaration of untaxed assets.

The bank said in December this process had been completed for Europe.

The Dutch FIOD said the coordinated raids were prompted by a tip-off about 55,000 suspect accounts of a Swiss bank, and it had passed information to the other countries about the accounts.

Spokeswoman Vissers said the investigation would “continue for days and weeks” across the various countries. The Netherlands is investing 3,800 Dutch leads.

Australia’s minister for revenue and financial services, Kelly O’Dwyer, said the country’s financial crime investigator was looking at 340 Australians linked to Swiss bank accounts, which she said were only identified by number.

“The fact that these accounts are unnamed,” O’Dwyer said, “means that by their very nature they are likely to have been established to hide the identity of the owner.”

(Additional reporting by Swati Pandey and Michael Holden; Editing by Mark Trevelyan)

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Mind the gap: high banker pay no guarantee of success

FRANKFURT Some of Europe’s most profitable lenders pay their chief executives the least, data from shareholder advisory group ISS shows, while loss-making banks reward their bosses more lavishly.

Despite caps on bank bonuses introduced across much of Europe after the financial crisis, pay still varies widely – sometimes independently of profit – the survey of 11 of Europe’s biggest banks, which was compiled by ISS for Reuters, reveals.

The ISS data, which compares CEO pay, pension and benefits in 2016, shows the CEOs of Credit Suisse and Deutsche Bank  received 7.3 and 4.7 million euros ($5 million) respectively. Both banks made heavy losses last year after big legal penalties relating to their investment banking activities.

At the other end of the spectrum, Jean Laurent Bonnafe, CEO of France’s BNP Paribas and Casper von Koskull of Swedish retail bank Nordea earned less than half as much although their banks recorded profit of 7.7 billion euros and 3.8 billion euros.

The ISS calculations, compiled using company data, may vary from the headline figures highlighted by the banks as is includes cash and benefits actually paid, such as toward a pension.

The contrast revealed in the data comes as Credit Suisse CEO Tidjane Thiam and Deutsche Bank chief John Cryan put their companies’ broad policy on executive pay up for approval at shareholder meetings where they face investor unrest.

“Pay tends to be explained as high risk, high reward. But the payouts can remain high, regardless of result,” Andrew Gebelin of Glass Lewis, an advisory group influential among investors, told Reuters.

“We would anticipate more controversy over pay at banks in the months ahead. There has been quite a growth in shareholder opposition. It is high on their list of concerns.”

Last year, Credit Suisse racked up a 2.7 billion Swiss franc loss, its second in a row, after a trading mishap and a $5 billion penalty for the sale of toxic mortgage debt.

CEO Thiam, who has been awarded 19 million francs worth of bank stock since joining in 2015, as agreed in his contract, increased the bonus pool as he sought to keep staff on board.

Each staff member in its investment banking and capital markets division earned 400,000 Swiss francs on average – while the business made a pretax profit equivalent to just 84,000 francs per head.

The Swiss bank, which benchmarks itself against rivals in the U.S. and Europe when setting pay, declined to comment.

Last year, Deutsche also reported a loss of 1.4 billion euros after a similar fine.

Cryan, who waived his bonus, will present a fresh pay plan for executives tied closer to performance in May after shareholders voted down the one proposed last year.

Thomas Philippon of New York University, who has studied pay among investment banks, said they had been too slow to cut.

“They reduced the wage bill mostly by cutting staff, not by cutting wages,” he said, commenting on the sector.



Cutting pay may prove critical in winning over investors, particularly for Deutsche, which is calling on shareholders for fresh funds, while Credit Suisse is considering doing the same.

However, the mood among investors is increasingly critical, with Larry Fink, head of fund giant Blackrock, a large shareholder in banks, warning in a letter to company heads that it would be willing to vote down bad pay deals. Norway’s wealth fund also told Reuters it was taking a closer look at pay.

One investor, speaking privately, was more blunt about investment banks. “Their business model is that the minute they do well, most of their employees take the gravy,” he said.

Wages have shrunk since 2010, when the former chief executive of Credit Suisse, Brady Dougan, received nearly 90 million Swiss francs. Nonetheless, some investors want them to fall further and hold the Netherlands up as an example.

“There are different cultures across companies in Europe,” said Gebelin of Glass Lewis. “The Netherlands has an extremely restrictive pay regime, as does Sweden, but that doesn’t hold for Switzerland or the UK.”

Ralph Hamers, ING’s (INGA.AS) chief executive, known for visiting bank branches and taking selfies with staff, reported a 4.7 billion euro profit last year, but even after receiving almost the maximum bonus allowed under Dutch law, he was paid 2.6 million euros.

(Additional reporting by Toby Sterling in Amsterdam and Anjuli Davies in London; editing by Alexander Smith)

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Global shares lock in bumper first quarter, dollar eyes best week of year

LONDON World stocks dipped on Friday as investors locked in some of the more than 6 percent gain that has given them their best start to a year since 2012, while the dollar inched toward what could be its strongest week of 2017 so far.

Asian and European shares saw profit-taking as traders squared up for the quarter, though there was plenty still going on, not least in South Africa where the sacking of its respected finance minister sent the rand ZAR= tumbling again.[.EU]

Wall Street ESc1 was expected to open lower having recently lost some of the swagger that had seen it set multiple all-time highs and a tidy 5.8 percent quarterly gain.

The dollar .DXY was on the rise though after U.S. growth data, talk of as many as three more Federal Reserve rate hikes this year and the best Chinese manufacturing data in nearly five years, though even that couldn’t prevent commodity markets wilting.

Oil was back under $53 a barrel, metals were down 1 percent and Europe’s Basic Resources index .SXPP, where big miners are listed, fell 1.7 percent to leave London’s FTSE .FTSE and the pan-European STOXX 600 index down 0.5-0.6 percent.

The latter was still on track for a 5 percent rise between January and March for a third straight quarterly gain, though emerging markets have been even bigger winners.

MSCI’s EM stocks index is up 12.5 percent on a dollar-adjusted basis.

Against a basket of the world’s other major currencies the .DXY dollar was up 0.1 percent and close to a 1 percent weekly gain that would be its best in an otherwise lackluster year.

Over the quarter the greenback has fallen 1.7 percent, its worst showing in a year, on doubts that U.S. President Donald Trump was not prioritizing – and did not have the necessary power to push through Congress – the economic reforms that had driven the dollar to 14-year highs at the start of the year.

“We are relatively optimistic on global growth but we think the cyclical trade has rotated away from the Trump trade and near-term U.S. fiscal stimulus,” said Schroders’ multi-asset Portfolio Manager Angus Sippe.

“We are now more optimistic on the euro zone,” he said, adding he was also marginally short the dollar.

The euro held its own at just under $1.07 EUR= as data showed inflation in the euro zone had slowed in March by far more than the economists had expected, driven down mostly by a deceleration of energy price rises.

Meanwhile the European Union laid out its Brexit negotiating terms, saying if Britain wanted to start trade deal talks this year it would first have to pay ten billions of euros and give residency rights to the 3 million EU citizens living in the UK.

There were tentative signs too that the euro zone’s weakest members would be hit the hardest by an imminent scaling back of the European Central Bank’s asset purchase program.

The yield, an indication of borrowing costs, on bonds of southern euro zone states including Portugal and Italy headed higher in the final day of trading before the ECB cuts its monthly debt purchases to 60 billion euros from 80 billion.

Top ECB policymaker Benoit Coeure emphasized the bank would tread carefully with any further policy changes.


In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS retreated 0.55 percent after its 12.5 percent charge over the quarter.

Hong Kong .HSI shares fell 0.6 percent, but were still headed for a 9.8 percent quarterly jump and China’s CSI 300 index .CSI300 added 0.4 percent, putting it on track for a 4.3 percent quarterly rise.

“Asia saw some pretty healthy profit-taking after a few sessions of solid gains,” said James Woods, global investment analyst at Rivkin Securities in Sydney.

Next week promises to be an interesting start to the second quarter.

Trump and Chinese President Xi Jinping will meet in Florida and the U.S. president has set the tone for a tense few days by tweeting that Washington could no longer tolerate massive trade deficits and job losses.

He will also sign executive orders on Friday aimed at identifying abuses that are causing the deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said.

China’s Vice Foreign Minister Zheng Zeguang said on Friday that it does not have a policy to devalue its currency to promote exports, and neither does it seek a trade surplus with the United States.

“The dialogue emanating from that is going to help set the tone of the relationship between the U.S. and China and these days it goes beyond trade. There is a lot to discuss geopolitically, not least North Korea,” said PIMCO portfolio manager Yacov Arnopolin.

In commodities, Brent oil and U.S. crude dipped to $52.91 a barrel and $50.35 a barrel, having zipped higher on Thursday after Kuwait backed an extension of OPEC production cuts.

Oil was heading for a 6.8 percent loss for the quarter, though. In contrast gold XAU= which was at $1,241.81 has gained nearly 8 percent since the start of the year.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=

(Reporting by Marc Jones; editing by Mark Heinrich and John Stonestreet)

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