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Oil prices up 2 percent on weaker dollar, short covering

NEW YORK Oil prices rose about 2 percent on Tuesday and hit a one-week high, boosted by a weaker dollar, short covering and expectations that crude inventories in the United States may decline for the third consecutive week.

It was the fourth straight session of gains for oil, which also got some support after the chief executive of U.S. shale oil producer Pioneer Natural Resources Co (PXD.N) said Saudi Arabia likely will move to boost oil prices to prop its own national finances.

With the end of the quarter approaching, brokers said investors were covering short positions.

Brent crude futures LCOc1, the international benchmark for oil prices, gained $1.01 or 2.2 percent to $46.84 per barrel by 11:49 a.m. EDT (1549 GMT).

U.S. crude futures CLc1 were up 92 cents, or about 2 percent, at $44.30 per barrel.

Brent touched a one week high at a session high of $47.06. U.S. crude hit its highest since June 19 at $44.44.

Tim Evans, Citi Futures’ energy futures specialist, said in a note that oil’s upswing was “a technical correction after the declines of the past five weeks” helped along by boosts from a weaker dollar and forecasts for a weekly draw in U.S. crude inventories.

Industry group American Petroleum Institute (API) was due to issue its inventory data on Tuesday afternoon. On Wednesday morning, the U.S. Energy Information Administration (EIA) will report official inventory data. Analysts estimated that crude stocks fell 2.3 million barrels in the week to June 23. [EIA/S]

The dollar fell ahead of a speech by U.S. Federal Reserve Chair Janet Yellen in London. MKTS/GLOB

Commerzbank said in a research note that long positions in Brent on ICE are “at their lowest level in a year and a half,” while short positions “have soared to a new record high, having increased more than four-fold since the beginning of the year.”

The Organization of the Petroleum Exporting Countries and other producing nations have sought to reduce a global crude glut with production cuts of 1.8 million barrels per day (bpd).

The cuts began in January and were later extended through March. Yet global crude inventories have not fallen as expected, as U.S. producers and others outside the OPEC-led regime have boosted output.

Ian Taylor, head of the world’s largest independent oil trader Vitol, told Reuters Brent prices would stay in a range of $40-$55 a barrel for the next few quarters.

OPEC delegates said the cartel will not rush into making a further cut in output or end some countries’ exemptions from output limits, although a meeting in Russia next month is likely to consider further steps.

OPEC members Nigeria and Libya are exempt from the cuts and have raised production substantially. Iran has also been allowed a small increase.

Libya’s oil production stands at about 935,000 barrels per day (bpd) this week after touching as high as 950,000 bpd last week, Libyan oil sources said.

(Additional reporting by Julia Payne in London, Naveen Thukral in Singapore; Editing by Adrian Croft and David Gregorio)

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Nestle plans $20.8 billion share buyback after Third Point pressure

ZURICH Nestle (NESN.S) plans to buy back as much as 20 billion Swiss francs ($20.79 billion) worth of shares by June 2020, the Swiss food giant said on Tuesday as it responds to pressure brought by U.S. activist shareholder Third Point LLC.

The New York-based hedge fund, controlled by billionaire investor Daniel Loeb, disclosed a $3.5 billion stake in the company on Sunday and is pushing for Nestle to more aggressively boost performance.

Nestle said it would adjust the size of its share buyback program, due to start on July 4, to reflect any big acquisitions.

(Reporting by John Miller, editing by Michael Shields)

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BlackRock makes technology deal in cash management business

BlackRock (BLK.N), the world’s biggest asset manager, on Tuesday said it would buy a software company that helps businesses invest their cash, marking its second investment in a technology firm this month.

The investment giant with oversight of $5.4 trillion in assets will buy Denver-based Cachematrix Holdings LLC in a deal slated to close next quarter, according to a statement by both companies. Terms were not disclosed.

Cachematrix builds a software tool that banks can provide to corporate treasurers managing the cash and short-term debt they hold. Investments can be made in money-market funds provided by BlackRock and rival money managers, such as Fidelity Investments, Goldman Sachs Group Inc (GS.N) and Charles Schwab Corp (SCHW.N).

Just last week, BlackRock said it would take a stake in Scalable Capital, a European digital investment manager.

The deals come two months after BlackRock Chief Executive Officer Larry Fink told Reuters he was considering up to four small acquisitions to shore up the New York-based company’s technology and investment expertise.

Fink has placed an unusual emphasis on technology for a company in his industry, including through the company’s Aladdin operating system for investment management, which it licenses to rivals.

The latest deal gives BlackRock a new stable of bank clients and pushes Aladdin further into the business of advising companies on how to invest their cash. In a statement, BlackRock said it plans to combine some of Cachematrix’s features with Aladdin.

On its website, Cachematrix lists Bank of America Corp (BAC.N), Morgan Stanley (MS.N) and HSBC (HSBA.L) among its clients and reports assisting with $200 billion of client assets.

Banks trying to meet strict requirements intended to prevent another financial crisis have been looking to shed deposits that would require them to hold more capital. Businesses have been eager to find places to put cash as ultra-easy monetary policy has pushed yields on debt to historic lows.

BlackRock in 2015 expanded its reach in the business of managing large institutions’ cash and short-term investments when it acquired the money-market fund business run by Bank of America. BlackRock’s cash business included nearly $400 billion in assets at the end of March.

(Reporting by Trevor Hunnicutt)

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With Alphabet, Google faces a daunting challenge: organizing itself

SAN FRANCISCO Google’s self-professed mission is to organize the world’s information. But a company known for engineering excellence is still trying to solve the very human problem of how to organize itself.

Nearly two years ago, Google co-founder Larry Page announced the tech giant would be remade as Alphabet, a holding company whose units would include Google and an array of unrelated pursuits in areas such as healthcare, self-driving cars and urban planning.

Wall Street cheered. Previously those riskier ventures had been lumped into Google’s overall financial results. Investors would now see Google’s performance independent of its so-called “Other Bets,” an eclectic collection of 11 ventures. They include Nest, a maker of Wi-Fi enabled thermostats; Calico, which seeks to prolong the human lifespan; and X, the company’s secretive research lab.

Alphabet’s top management also aimed to boost accountability by appointing chief executives to head each of the Other Bets. Few people in Google’s constellation of ventures had ever held the title prior to that.

But so far Alphabet has failed to show it can convert its Other Bets from experiments to businesses with the reach, impact and money-making potential of Google’s core search and advertising operations. Interviews with two dozen former Alphabet executives and employees reveal an organization grappling with how much time and resources Other Bets deserve in the pursuit of profitability.

In the first quarter, which ended March 31, the ventures lost a combined $855 million; that’s on top of a collective $3.6 billion loss for 2016. As a whole, Alphabet generated $90.3 billion in revenue in 2016. Google’s share of that revenue was $89.5 billion, while its 2016 operating income was $27.9 billion.

Alphabet’s early days have seen more pruning than expansion of its holdings.

The company has skinned back plans for Google Fiber, which delivers rapid Internet service in 10 metro areas. This month, Alphabet agreed to sell robotics company Boston Dynamics to Japanese multinational SoftBank Group Corp. It unloaded its Terra Bella satellite imaging business in February.

At one point last year, it was even looking to sell Nest, the largest of the Other Bets, three people familiar with the matter told Reuters. Google paid an eye-popping $3.2 billion for the start-up in 2014.

(For a graphic showing Alphabet’s holdings, see:

Meanwhile, a series of executives have departed since the reorganization, including the heads of Nest, an Internet operation called Access and a venture capital firm known as GV.

An Alphabet spokeswoman declined repeated requests for comment or to make executives available for interviews. Supporters of the restructuring frame the early struggles as typical growing pains.

For now, Wall Street isn’t worried: Alphabet’s stock is near an all-time high, having reached $1,000 per share in June. Ruth Porat, the no-nonsense chief financial officer who has steered the restructuring, has won rave reviews from investors for enforcing financial accountability across Alphabet.

Some Other Bets have made notable strides. Life sciences initiative Verily recently attracted $800 million in outside investment. Self-driving car project Waymo is considered among the leaders in the burgeoning industry.

Still, it’s not yet clear the structure will enable Alphabet to do what most companies cannot: conceive the next wave of innovation in-house or through the development of key acquisitions. That goal is central to both the company’s mission and investor expectations, analysts say.

“The reason Google gets to trade at a decent multiple… is because there’s a growth story beyond advertising,” said analyst James Wang of ARK Investment Management.


The Alphabet structure is Google’s stab at an age-old corporate conundrum: sustaining innovation within a giant enterprise.

Alphabet’s strategy is to give entrepreneurs the autonomy of a startup, coupled with the discipline of a traditional corporate structure.

Roughly once a quarter, Other Bets leaders meet with the Alphabet board – comprised of Porat, Page, Google co-founder Sergey Brin and David Drummond, Alphabet’s senior vice president of corporate development – to discuss funding and performance, according to two former employees.

At the same time, Alphabet is establishing separate compensation plans for the Other Bets to reward employees if their ventures succeed, mirroring startup incentives.

The formula has primed Alphabet’s emerging businesses for “global impact,” Alphabet Executive Chairman Eric Schmidt said this month at the annual stockholders meeting at the Mountain View headquarters.

“There is one solution that we know works well in capitalism, which is boards, shareholders, CEOs,” Schmidt said. “My bet is that the traditional lessons of business organization will in fact result in success at Alphabet.”

Still, Alphabet top brass continue to hold sway over key strategy and financing decisions, a dynamic that has chafed Other Bets chief executives who’ve complained they are treated more like chief operating officers than shot callers, according to people familiar with the situation.

In addition, scrutiny from Wall Street limits how generous Alphabet can be in extending Google’s resources to Other Bets, said Brian McClendon, a former vice president of engineering at Google.

“As of yet, the restructuring hasn’t provided what I think is one of the immediate benefits, which is risk-taking investment,” he said.


Some companies acquired by Google found that being part of Alphabet wasn’t what they’d bargained for.

Two former Nest employees said they were promised generous funding and time to achieve profitability following the company’s acquisition by Google in 2014. But after the restructuring, Alphabet executives were keenly focused on revenue, one former employee said.

Pricey overhead has made the path to profitability tougher. After the restructuring, Alphabet began charging Other Bets for their portion of shared services such as security and facilities, ending what had previously amounted to a subsidy, people familiar with the situation said. The units also felt pressure to maintain Google perks such as free employee meals.

“One of the pitfalls (of Alphabet) is that those companies are asked to stand on their own two feet, but they may inherit the cost structure of Google,” said Nest investor Peter Nieh, a partner at Lightspeed Venture Partners.

In early 2016, Alphabet explored selling Nest in an effort code-named Project Amalfi, according to three people familiar with the matter. No deal materialized, and Nest co-founder Tony Fadell departed last year. Fadell declined to comment.

Boston Dynamics, acquired in 2013 during a robotics shopping spree led by Android creator Andy Rubin, enjoyed generous funding at first. But it was adrift after Rubin’s departure, two former employees said. Rubin did not respond to requests for comment.


The creation of the Other Bets has also changed what it means to work for Google.

Some grumble that their role now is to subsidize innovation at their sister companies, rather than to innovate themselves.

“It did sort of send the message to people who stayed back at Google, whether in search or in ads: Your job isn’t to push the envelope,” one former Googler said.

Employee transfers to X, the illustrious “moonshot factory,” are more complicated now that it’s a separate entity, former employees say.

That’s a striking shift, especially for high-performing employees accustomed to moving about the company almost at will, said Punit Soni, a former Google employee who is now chief executive of Learning Motors, an artificial intelligence startup.

“A basic premise of Google was people could do whatever they wanted,” Soni said. “I can see why people will feel like it’s no longer the old Google.”

In the meantime, co-founder Page is pursuing yet another “moonshot”: flying cars.

He is the primary investor in Kitty Hawk, a startup in the field that is entirely outside the Alphabet umbrella.

(Editing by Marla Dickerson)

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EU fines Google record $2.7 billion in first antitrust case

BRUSSELS EU antitrust regulators hit Alphabet (GOOGL.O) unit Google with a record 2.42-billion-euro ($2.7 billion) fine on Tuesday, taking a tough line in the first of three investigations into the company’s dominance in searches and smartphones.

It is the biggest fine the EU has ever imposed on a single company in an antitrust case, exceeding a 1.06-billion-euro sanction handed down to U.S. chipmaker Intel (INTC.O) in 2009.

The European Commission said the world’s most popular internet search engine has 90 days to stop favoring its own shopping service or face a further penalty per day of up to 5 percent of Alphabet’s average daily global turnover.

The fine, equivalent to 3 percent of Alphabet’s turnover, is the biggest regulatory setback for Google, which settled with U.S. enforcers in 2013 without a penalty after agreeing to change some of its search practices.

The EU competition enforcer has also charged Google with using its Android mobile operating system to crush rivals, a case that could potentially be the most damaging for the company, with the system used in most smartphones.

The company has also been accused of blocking rivals in online search advertising.

The Commission found that Google, with a market share in searches of over 90 percent in most European countries, had systematically given prominent placement in searches to its own comparison shopping service and demoted those of rivals in search results.

“What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation,” European Competition Commissioner Margrethe Vestager said in a statement.

Google said its data showed people preferred links taking them directly to products they want and not to websites where they have to repeat their search.

“We respectfully disagree with the conclusions announced today. We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case,” Kent Walker, Google’s general counsel, said in a statement.

The action follows a seven-year investigation prompted by scores of complaints from rivals such as U.S. consumer review website Yelp (YELP.N), TripAdvisor (TRIP.O), UK price comparison site Foundem, News Corp (NWSA.O) and lobbying group FairSearch.

The penalty payment for failure to comply would amount to around $12 million a day based on Alphabet’s 2016 turnover of $90.3 billion. The Commission did not specify what changes Google had to make.

“This decision is a game-changer. The Commission confirmed that consumers do not see what is most relevant for them on the world’s most used search engine but rather what is best for Google,” said Monique Goyens, director general of EU consumer group BEUC.

Thomas Vinje, legal counsel to FairSearch, welcomed the Commission’s findings and urged it to act on Google’s Android mobile operating system following its 2013 complaint that Google restricted competition in software running on mobile devices.

(Reporting by Foo Yun Chee; editing by Philip Blenkinsop and Jason Neely)

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Wells Fargo to sell commercial insurance business

Wells Fargo Co (WFC.N) said on Tuesday it agreed to sell its commercial insurance business to private insurer USI Insurance Services, as the third-largest U.S. bank plans to focus on core banking products and services.

The financial terms of the deal, expected to close in the fourth quarter, were not disclosed by the companies.

The deal comes at a time when the bank is recovering from a sales scandal last year that damaged its reputation. Wells Fargo has doubled its cost-cutting target after expenses soared in the aftermath of the scandal.

The sales abuses in the bank’s branch banking operation led to a $190 million regulatory settlement, launches of other government probes, the firing of several bankers and the departure of CEO John Stumpf.

Wells Fargo plans to reduce expenses by another $2 billion through the end of 2019, on top of a $2 billion cost-cutting target the management previously announced.

The bank said on Tuesday its personal insurance business will report into consumer lending to serve retail customers.

(Reporting by Diptendu Lahiri in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur)

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U.S. home prices for April rise slower than expected

NEW YORK U.S. single-family home prices accelerated at a slower pace than expected in April, a survey showed on Tuesday.

The SP CoreLogic Case-Shiller composite index of 20metropolitan areas rose 5.7 percent in April on a year-over-year basis, after an unrevised 5.9 percent increase inMarch. April’s result fell short of the 5.9 percent increase forecast in a Reuters poll of economists.

Despite coming in below expectations, David M. Blitzer, managing director and chairman of the index committee at SP Dow Jones Indices, said the supply of homes has barely kept up with demand and inventory of new or existing homes for sale had diminished to a 4-month supply. That is likely to keep home prices on the rise.

“Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up,” Blitzer said.

On a monthly basis, prices in the 20 cities rose 0.3 percent in April on a seasonally adjusted basis, the survey showed, short of expectations calling for a 0.4 percent increase.

On a non-seasonally adjusted basis, prices increased 0.9percent from March.

(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama)

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Oil up for fourth day on short-covering, supply glut caps gains

SINGAPORE Crude oil futures rose for a fourth consecutive session on Tuesday as investors covered short positions, though worries over a festering supply glut kept a lid on prices.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 12 cents, or 0.3 percent, at $43.50 per barrel by 0323 GMT. Brent crude futures LCOc1 gained 14 cents, or 0.3 percent, to $45.97 per barrel.

The market is up slightly so far this week after dropping for the past five weeks.

“The market has fallen a lot as the news has been bad pretty consistently for the oil market,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

“It has moved a long way in response to that news. Maybe we are getting to a point that there is upside risk to any good news?”

The Organization of the Petroleum Exporting Countries (OPEC) and its partners have been trying to reduce a global crude glut with production cuts. OPEC states and 11 other exporters agreed in May to extend cuts of 1.8 million barrels per day (bpd) until March.

However, Nigeria and Libya, OPEC members exempt from the cuts, have raised output.

Iran was allowed a small increase to recover market share lost under Western sanctions over its nuclear programme. It said its production has surpassed 3.8 million bpd and is expected to reach 4 million bpd by March.

And U.S. shale oil output has risen around 10 percent since last year, with the number of U.S. oil rigs in operation at the highest in more than three years. RIG/U

Hedge funds and other money managers appear to have abandoned all hope that OPEC will rebalance the oil market, slashing formerly bullish bets on crude futures and options, John Kemp, a Reuters market analyst wrote in a column.

“Exchange data showed that speculators had cut their net long positions in WTI and Brent to (the) lowest level in 10 months last week,” ANZ said in a note.

“Traders are also looking ahead to the EIA Energy Conference in Washington, where U.S. shale oil producers are expected to give their view of current market conditions.”

Analysts at Bank of America-Merrill Lynch said demand had not grown quickly enough to absorb excess output.

As the global oil market frets about a stubborn supply glut, faltering demand growth in key Asian crude importers is further hampering efforts to restore market balance.

A fuel glut in China, a hangover from demonetisation in India, and an ageing, declining population in Japan are holding back crude oil demand growth in three of the world’s top four oil buyers.

(Reporting by Naveen Thukral; Editing by Richard Pullin and Joseph Radford)

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Japanese stocks edge towards two-year high, dollar supported before Yellen

TOKYO Japanese stocks edged towards two-year highs on Tuesday as exporters benefited from dollar strength, with investors expecting comments from Federal Reserve Chair Janet Yellen to support the Fed’s projection for one more interest rate rise this year.

Yellen is scheduled to take part in a discussion on global economic issues at London’s Royal Academy and a number of other top Fed officials are also due to speak later in the global day.

Japan’s benchmark Nikkei .N225 was last up 0.3 percent at 20,213.62 in subdued trading. A rise above 20,318.11, a peak scaled a week ago, would take the Nikkei to its highest since August 2015.

“The fundamental mood is not bad, but it’s hard for investors to find direction on a day where there are no other major catalysts other than a weak yen,” said Hikaru Sato, a senior technical analyst at Daiwa Securities in Tokyo.

Despite lower Treasury yields, the dollar extended overnight gains and was a shade higher at 111.960 yen JPY= after briefly rising to a one-month peak of 112.075.

Long-dated Treasury yields dropped to seven-month lows on Monday and the yield curve between five-year notes and 30-year bonds fell to its flattest level since 2007 after the weak U.S. economic data raised concerns about tepid growth and slowing inflation. [US/]

The euro was steady at $1.1186 EUR= having fallen back from an 11-day high of $1.1220 overnight after European Central Bank President Mario Draghi defended the central bank’s easy monetary policy.

Otherwise, Asian markets lacked strong direction as Wall Street provided few catalysts after the SP 500 .SPX and the Dow .DJI closed overnight effectively flat. [.N]

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS stood little changed.

Having made record highs during the past two months on expectations that exporters will post strong earnings, South Korea’s KOSPI .KS11 inched up a further 0.1 percent.

Elsewhere, Shanghai’s benchmark index .SSEC dipped 0.1 percent and Australian shares lost 0.3 percent.

There was also a general sense of caution in financial markets, analysts said, noting that commodities like crude oil, which is suffering from a glut, remained shaky though a recent selloff has stalled.

“Although iron ore and crude prices are stabilising, their recovery lacks strength. The U.S. equity market also hovers at a high level, but its performance is spotty with high-tech shares falling,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

Oil prices were largely unchanged as the market took a breather after stabilising over the past three days. [O/R]

U.S. crude futures Clc1 were up 0.1 percent at $43.43 a barrel. The contract had retreated to a 10-month low of $42.05 a barrel last week before the sharp retreat stalled, but it remained on track for a monthly loss of about 10 percent.

(Reporting by Shinichi Saoshiro; Editing by Simon Cameron-Moore)

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