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Update-Moody's: Transaction amendments do not have a negative impact on Trafigura Securitisation Finance plc ratings

Written By Unknown on Jumat, 31 Januari 2014 | 18.12

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Euro falls, German yields tumble on below-forecast inflation

LONDON Fri Jan 31, 2014 5:20am EST

LONDON Jan 31 (Reuters) - The euro fell against the yen and the dollar, while benchmark 10-year German Bund yields plunged to six-month lows on Friday after euro zone inflation dropped unexpectedly in January.

The fall in inflation is likely to increase speculation the European Central Bank, which meets next week, may ease policy further.

Consumer prices in the 18 countries sharing the euro fell to 0.7 percent year-on-year in the first month of 2014, down from 0.8 percent in December and compared with a 0.9 percent forecast in a Reuters poll.

The euro fell to a 10-day low of $1.35175 after the inflation data from around $1.3540 beforehand. The single currency fell more sharply against the yen, dropping to a two-month low of 138.53 yen, down from 138.88 earlier.

German 10-year Bund yields fell 4 basis points to a six-month low of 1.574 percent, while two-year yields hit two-month lows of 0.079 percent. Money market rates also fell


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Buyout groups bid for public finance specialist Depfa - sources

FRANKFURT Fri Jan 31, 2014 5:33am EST

FRANKFURT Jan 31 (Reuters) - Public finance specialist Depfa, which state-rescued German bank Hypo Real Estate has put on the block, has attracted binding offers from several private equity groups and hedge funds, several people familiar with the transaction said.

A consortium of hedge funds including Third Point, which approached Hypo Real Estate over Depfa in February 2012, is among the final bidders, one of the people said.

Separately, a consortium of hedge fund Och-Ziff and Blackstone bid, as did J.C. Flowers and Apollo, three other people familiar with the transaction said.

Former UBS Chief Executive Oswald Gruebel with backing from a sovereign wealth fund has also handed in a bid, two of them added.

The offers value Depfa at 200-300 million euros ($271.27-406.91 million), the sources said, adding Hypo Real Estate is planning for a final round of bids in several weeks.

"We are currently evaluating the offers but presently cannot comment on the number of bidders and the bids," a spokesman for Hypo Real Estate said.

The bidders declined to comment, except for Och-Ziff and Blackstone, which were not immediately available for comment.

Hypo Real Estate has to sell Depfa by the end of 2014 and its Deutsche Pfandbriefbank arm by 2015 as a condition of the European Commission's approval of its state bailout.

Germany nationalised the stricken real estate lender, which collapsed in the aftermath of the Lehman Bros bankruptcy. Hypo Real Estate received a 10 billion euro capital injection in the wake of the financial crisis as well as 145 billion euros in liquidity guarantees.

Sector bankers have said in the past that Hypo Real estate could end up winding down Depfa itself, as that may prove easier than a sale to a private equity investor, which would have to shoulder relatively high refinancing costs as they usually do not have cheap access to bond markets.

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Ukraine PM Azarov offers to resign 'to help end conflict'

Written By Unknown on Selasa, 28 Januari 2014 | 18.13

Tue Jan 28, 2014 5:16am EST

* Azarov has been loyal lieutenant since Yanukovich elected

* But Yanukovich, beset by crisis, offered his job to opposition

* Azarov move came as parliament held emergency meeting on crisis

* Ukraine convulsed by street protests for two months

By Richard Balmforth and Natalia Zinets

KIEV, Jan 28 (Reuters) - Ukrainian Prime Minister Mykola Azarov offered his resignation to President Viktor Yanukovich on Tuesday, saying he hoped his departure would help towards a peaceful settlement to two months of unrest which has convulsed the former Soviet republic.

The 66-year-old Azarov announced his decision as parliament met for an emergency session to work out possible concessions to the opposition to end street protests in the capital Kiev and in other cities in which six people have been killed.

Azarov, a loyal lieutenant of Yanukovich since the latter was elected to power in February 2010, said he was offering to step down "with the aim of creating extra means for finding a social-political compromise, for the sake of a peaceful settlement of the conflict."

But in reality he has been publicly humiliated by Yanukovich's offer at the weekend to give his job to former economy minister Arseny Yatsenyuk, one of the opposition leaders, in an effort to stem the rising protests against his rule.

The opposition has been calling consistently for the resignation of the Azarov government since the onset of the crisis. But opposition leaders have shied away from the offer of top government posts by Yanukovich, seeing it as a trap intended to compromise them in front of their supporters on the streets.

Yatsenyuk, one of a "troika" of opposition leaders, formally turned down the offer of the top government job on Monday night and the question now was whether Yanukovich would accept Azarov's departure or not.

Azarov has steered the heavily indebted economy through hard times over four years, keeping the national currency tightly pegged to the dollar and refusing International Monetary Fund pressure to raise gas prices at home.

He backed the decision in November to walk away from a free trade agreement with the European Union - the move which sparked the mass street protests - and it was Azarov who took the heat in parliament, defending the need for closer economic ties with Russia in a stormy debate with the opposition.

EMERGENCY SESSION

Parliament went into emergency session on Tuesday with ministers loyal to Yanukovich saying they would press for a state of emergency to be declared if the opposition leaders did not rein in protesters and end occupation of municipal and government buildings across the country.

Opposition leaders, who include boxer-turned-politician Vitaly Klitschko and nationalist Oleh Tyahnibok, are also pressing for the repeal of sweeping anti-protest laws rammed through parliament by Yanukovich loyalists on January 16.

A government reshuffle had also been slated for discussion at the emergency session but it was not clear now how this would proceed given Azarov's resignation offer.

Another battle lies ahead over protesters detained during the unrest. The Yanukovich side said these would be pardoned, but only once protesters had ended their occupation of public buildings and blockade of roads.

The parliamentary session observed a moment of silence in respect of those who had been killed in the wave of unrest and parliament speaker Volodymyr Rybak then announced a recess.

Talk of a state of emergency being declared in the former Soviet republic of 46 million made the European Union's foreign policy chief, Catherine Ashton, hastily move up a visit to Kiev on Tuesday.

U.S. Vice President Joe Biden called Yanukovich on Monday to urge the government not to declare a state of emergency and to work with the opposition to bring a peaceful end to unrest.

"(Biden) underscored that the U.S. condemns the use of violence by any side, and warned that declaring a State of Emergency or enacting other harsh security measures would further inflame the situation and close the space for a peaceful resolution," the White House said.

Though the protest movement began because of Yanukovich's U-turn on policy towards Europe, it has since turned into a mass demonstration, punctuated by clashes with police, against perceived misrule and corruption under Yanukovich's leadership.

Several hundred people camp round-the-clock on Kiev's Independence Square and along an adjoining thoroughfare, while more radical protesters confront police lines at Dynamo football stadium some distance away.

Yanukovich's Party of the Regions and its allies hold a majority in the Ukrainian parliament but in reality pressure from the president and his aides behind the scenes can easily swing a vote the way he wants it to go.

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EMERGING MARKETS-Emerging currencies, stocks stabilise on c.bank hopes

By Natsuko Waki

LONDON Tue Jan 28, 2014 5:33am EST

LONDON Jan 28 (Reuters) - Turkey's lira extended gains on Tuesday, supported by the possibility of an aggressive interest rate hike, while other emerging currencies and stocks rose on growing expectations more developing countries would tighten policy.

The benchmark MSCI emerging equity index rose half a percent, having fallen for three straight days to hit a 4-1/2 month low on Monday, while emerging sovereign dollar bond spreads tightened by 3 basis points.

The lira rose almost 1 percent to trade about 7 percent off Monday's record lows, thanks to expectations that Turkey's central bank will raise its benchmark rates at its first extraordinary monetary policy meeting since Aug 2011.

It is expected to raise rates by 225 basis points to 10 percent, according to a Reuters poll of analysts, in what would effectively mark the end of its so-called unorthodox monetary policy.

Expectations are growing that more emerging central banks will tighten monetary policy after India unexpectedly raised its policy rate by 25 bps to counter inflation.

Brazil, South Africa and Indonesia - part of what has been dubbed the Fragile Five economies which have a strong reliance on external capital - may follow suit.

"The trigger for stability is emerging central bank action. If Turkey does something it will help," said Sebastien Barbe, head of emerging market strategy at Credit Agricole in Paris.

"We expect the Turkish central bank to hike rates by 150-200 bps. If they do that it will allow stabilisation in the lira at least in the short term."

Barbe however, like most analysts, does not expect any action from South Africa when the central bank meets later this week. The rand was up 0.3 percent at 11.03 per dollar, off its five-year low hit on Monday.

Tradition Analytics said no rate hike from South Africa would leave the country's assets more exposed.

"The rand and bonds will be increasingly exposed to the current offshore dump of emerging market assets without an adequate interest rate buffer," it said.

Following the rate hike, the Indian rupee rose 0.7 percent to 62.65 to the dollar. The benchmark 10-year bond gained slightly on the day while shares lost 0.2 percent.

New cash injections from China's central bank and a deal from a trust firm that averted a possible default for a wealth-management product also helped stabilise China, which many emerging economies are geared to.

"The 'managed default' successfully staves off a potentially disruptive default during the Chinese New Year period and the hope is that it limits any systemic ripple effects," Deutsche Bank said in a note to clients.

In the long term however, investors are concerned about the effects of China's economic slowdown and the Federal Reserve's plan to scale back its monetary stimulus.

The Fed is expected to announce a further $10 billion cut in its bond buying at a meeting this week.

Ukraine's hryvnia rose 0.3 percent from four-year lows against the dollar after the central bank offered to sell dollars at 8.40.

The currency has been under pressure as concerns intensified about the damage to the heavily indebted economy from two months of unrest.

Prime Minister Mykola Azarov offered his resignation on Tuesday. A faithful lieutenant of President Viktor Yanukovich, Azarov backed the decision in November to walk away from a free trade agreement with the European Union, defending the need for closer economic ties with Russia.

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see )

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RPT UPDATE 2-Turkish central bank, under rate hike pressure, vows decisive action

Tue Jan 28, 2014 5:35am EST

* Basci vows lasting tightening if needed

* Says bank free of political interference

* Lira firms from lows, cost of insuring Turkish debt drops

By Nevzat Devranoglu

ANKARA, Jan 28 (Reuters) - Turkey's central bank governor raised expectations for an emergency interest rate hike on Tuesday, denying he was hostage to political pressures and vowing decisive action to fight rising inflation and a tumbling lira.

Erdem Basci said the bank would not hesitate to tighten monetary policy in a "lasting way" if needed and asserted the bank's independence amid investor concern that it has shied away from rate hikes under pressure from the government.

He also ruled out any imposition of capital controls, saying such moves were "not in our dictionary."

Prime Minister Tayyip Erdogan, keen to maintain economic growth ahead of an election cycle starting in two months, has been a vociferous opponent of the higher borrowing costs sometimes needed to bolster currencies, railing against what he describes as an 'interest rate lobby' of speculators seeking to stifle growth and undermine the economy.

That has left the central bank struggling to contain the lira's precipitous slide. Investor confidence has been damaged by a corruption scandal shaking the government, fears about a power struggle and the global impact of a cut in U.S. monetary stimulus.

"In Turkey, politicians publicly criticise or praise central bank decisions ... I don't think it threatens the bank's independence," Basci told a news conference to announce the bank's quarterly inflation report.

"Nobody should have any hesitation that the central bank will use all available tools. The bank will not hesitate to take steps to make lasting tightening in monetary policy if deemed necessary," he said.

The lira firmed on his comments to 2.2601 against the dollar from 2.3120 late on Monday, having touched a record low of 2.3900 on Monday morning.

The cost of insuring Turkish debt meanwhile eased from Monday's 19-month highs, according to data from Markit.

The bank sharply raised its inflation forecast for the end of the year to 6.6 percent, heightening market expectations that it will hike rates at its first extraordinary monetary policy meeting since August 2011, the height of the euro zone crisis.

It is expected to raise its lending rate - the cost of its overnight loans to Turkish lenders - by 225 basis points to 10 percent, according to the median forecast in a Reuters poll of 31 economists taken on Monday.

The bank will announce the outcome of the meeting at midnight locally (2200 GMT).

WILL IT BE ENOUGH?

Erdogan congratulated the central bank last week after it left interest rates on hold, despite the lira's precipitous decline, while his new economy minister came out a day before the meeting saying the bank should not hike.

"Stand firm, don't raise," the pro-government Yeni Safak newspaper said in its main front page headline on Tuesday, alongside a picture of Basci.

"The interest rate lobby based in London and New York virtually blackmailed the central bank yesterday, pushing the lira has high as 2.39 against the dollar," the paper said.

Thirty respondents in the Reuters poll, a wide sample of Turkish and international banks, forecast a rate hike, with estimates ranging from a rise of 125 basis points to 425. Only one forecast the bank would leave rates unchanged.

There was less consensus over whether such a move would be enough to stabilise the lira and tame inflation, with 12 economists saying yes and seven saying no, citing the need for structural reforms and political stability.

The graft scandal, which triggered the resignation of three ministers and detention of businessmen close to Erdogan, has grown into one of the biggest challenges of his 11 years at the helm.

His reaction, purging the police force of thousands of officers and seeking tighter government control over courts, has been criticised by the European Union and raised investor concern over the rule of law and independence of state institutions.

Reluctant up to now to make an outright rate hike, the central bank has struggled to defend the lira instead by burning through its forex reserves and trying to squeeze up borrowing costs on the margins - a battle it has clearly been losing.

The bank raised its mid-point forecast for year-end inflation to 6.6 percent from a previous forecast of 5.3 percent, well above its target rate of 5 percent.

Basci said inflation would slow from the second half of 2014 and forecast the 2015 inflation mid-point at 5 percent.

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PRESS DIGEST-Canada-Jan 27

Written By Unknown on Senin, 27 Januari 2014 | 18.13

Mon Jan 27, 2014 5:18am EST

Jan 27 (Reuters) - The following are the top stories from selected Canadian newspapers. Reuters has not verified these stories and does not vouch for their accuracy.

THE GLOBE AND MAIL

* More than a million people across Canada worked for minimum wages or less last year, the fourth year in a row that number has been above the one million mark, according to Statistics Canada data. Since 2000, their numbers have nearly doubled. ()

* Worried Canadian pork producers are stepping up measures to fend off a potentially devastating virus that has cut a deadly swath across the United States and is showing its first signs of life across the border. ()

Reports in the business section:

* Cash offers have been skyrocketing, as much as seven-fold, for holdout Nebraska landowners who are willing to sign quickly to allow the Keystone XL pipeline onto their property. ()

NATIONAL POST

* As the world outside sought to identify who or what is to blame for the fire that claimed the lives of 32 nursing-home residents, people of the village took refuge in their 158-year-old church Sunday for a remarkable display of solidarity and compassion. ()

* A California company is claiming a world first with a Canadian-invented product that pumps contaminated hospital rooms full of antiseptic vapour, theoretically reaching every nook and cranny and letting no bacteria live. The product is a possible solution for "terminal clean," the exhaustive disinfection of a hospital room tainted by drug-resistant superbugs or other dangerous microbes. ()

FINANCIAL POST

* A weak January doesn't necessarily mean tech stocks are bound to underperform this year, and analysts and fund managers think they are well positioned to benefit from a rebounding global economy. But following a year of outsized returns, valuations, a perennial concern in the tech sector, have once again become a source of worry. ()

* A majority of Canadian investors don't realize how damaging rising interest rates can be to their retirement portfolios, a new poll from CIBC Asset Management has found. ()

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UPDATE 1-Liberty goes all-loan route for Ziggo acquisition debt

Mon Jan 27, 2014 5:28am EST

By Robert Smith

LONDON, Jan 27 (IFR) - Ziggo launched the debt financing for its long-anticipated acquisition by Liberty Global (LGI) on Monday, opting for an all-loan debt package against the backdrop of a softening bond market.

Ziggo has mandated banks for a new EUR3.735bn-equivalent term loan B, according to a banker on the deal. The loan will be split into euro and dollar tranches, both maturing in January 2022, with 0.75% Euribor and Libor floors.

The proceeds will be used to refinance existing Ziggo debt as well as financing the acquisition of Ziggo by LGI.

LGI is a frequent issuer in both the high-yield bond and leveraged loan markets, but has opted for an all-loan deal in this instance, in contrast to its approach on previous acquisitions. When LGI acquired German cable firm Kabel BW in March 2011, for example, it financed the acquisition with a EUR2.25bn high-yield bond.

The fact the European high-yield bond market has softened in recent days could have influenced LGI's decision. The iTraxx Crossover, a synthetic index often used to gauge market sentiment, was bid as tight as 280bp on Wednesday, but has widened out to 312bp on Monday morning.

"In the current market this capital structure is one that works for Liberty," said a banker on the deal.

Ziggo has EUR3.114bn of total debt, according to its latest financial results presentation. Some EUR1.905bn is senior secured, split into a EUR405m senior credit facility, a EUR750m 6.125% 2017 bond, and a EUR750m 3.625% 2020 bond. The remaining EUR1.209bn is accounted for by an 8% senior unsecured 2018 bond.

Ziggo has launched a tender offer to purchase any and all of the outstanding 3.625% 2020 notes, and has also announced its intention to redeem any and all of the 6.125% 2017 notes.

Ziggo has also announced an exchange offer on the 8% 2018 notes, under which up to EUR934m will be swapped for an equal amount of new 8% 2018 paper.

The new Ziggo acquisition debt will "more or less" take out all of its outstanding debt "over a staged period of time", according to a source close to the deal, however.

The new loans will not be fully covenant-lite, but will have just two maintenance covenants covering net senior leverage and total financial leverage.

The loans are expected to be rated Ba3/BB-. Ziggo's expected corporate rating is B1/BB-.

Global coordinators are Credit Suisse and Bank of America Merrill Lynch. Joint bookrunners and mandated lead arrangers are Credit Suisse, Bank of America Merrill Lynch, ABN Amro, Credit Agricole, Deutsche Bank, HSBC, ING, JP Morgan, Morgan Stanley Nomura, Rabobank, Scotiabank and Societe Generale.

Bank meetings in London and New York will be held on Tuesday, with a February 4 commitment deadline.

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TABLE-Economists cut Brazil growth estimates, raise inflation view

Mon Jan 27, 2014 5:33am EST

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  BRASILIA, Jan 27 (Reuters) - Economists slashed their  forecasts for Brazil's economic growth in 2014 and 2015 to 1.91  and 2.20 percent respectively, from 2.00 and 2.50 percent  previously, a weekly central bank survey showed on Monday.      Economists also raised their forecasts for interest rates   and inflation. The poll, conducted by the central bank, provides  the median forecasts of economists at about 100 financial  institutions.               (pct)                2014                  2015                        previous   new        previous  new                        forecast   forecast   forecast  forecast   Consumer inflation   6.01       6.02       5.60      5.70   Exchange rate        2.45       2.45       2.50      2.50     Interest rate        10.75      11.00      11.50     11.50     GDP growth           2.00       1.91       2.50      2.20   Industrial output    2.20       2.20       2.89      2.95  
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UPDATE 3-Ukraine opposition seek more after offer of top government posts

Written By Unknown on Minggu, 26 Januari 2014 | 18.12

Sat Jan 25, 2014 6:33pm EST

* Yanukovich offers prime minister's post to opposition

* Wants end to street violence and occupations

* Opposition presses for early elections, repeal of anti-protest law

By Richard Balmforth and Jack Stubbs

KIEV, Jan 25 (Reuters) - Ukrainian President Viktor Yanukovich offered the opposition several top government posts on Saturday, hoping to coax his opponents into ending protests that threaten to bring the country to a standstill.

But opposition leaders, whose power base is among thousands of protesters massing in Kiev's city centre, continued to press for further concessions, including early elections and the repeal of an anti-protest law.

After meeting opposition leaders, Yanukovich offered former economy minister Arseny Yatsenyuk the post of prime minister to replace Mykola Azarov, whose government would be expected to resign, the presidential website said.

Vitaly Klitschko, a former international boxing champion, would be appointed deputy prime minister responsible for humanitarian issues, it added.

The presidency linked its offer to the opposition reining in violent protesters and quoted Yanukovich as promising that those detained during the unrest would be dealt with leniently.

It said Yatsenyuk could be given the job of heading the government of Mykola Azarov. Yatsenyuk, meanwhile, was quoted as saying the opposition was ready to "lead the country."

But Klitschko later told German newspaper Bild am Sonntag: "This was a poisoned offer by Yanukovich to divide our protest movement. We will keep on negotiating and continue to demand early elections.

"The protest by Ukrainians against the corrupt president must not have been in vain," Klitschko was quoted as saying.

The opposition has been calling for the dismissal of Mykola Azarov's government since unrest broke out two months ago after Yanukovich rejected a trade deal with the European Union in favour of closer ties with Russia.

Thousands were massed on Saturday night on Kiev's Independence Square to report on their discussions with Yanukovich.

In the past week, more radical protesters have violently clashed with police about a half mile away (1 km) in front of the Dynamo Kiev football stadium.

The presidential website said Yanukovich had promised that those detained during the unrest would be dealt with leniently if the opposition reined in the radical protesters and if they persuade those who have been occupying public buildings to leave.

Ukraine's interior minister had said that all those who occupied public buildings and stayed on Independence Square - the crucible of the protest where hundreds camp overnight - would be considered by police to be "extremist groups."

Police would use force against those who went over to the side of the radical protesters, who have clashed with police in front of the football stadium since last Sunday, the minister, Vitaly Zakharchenko, said in a statement.

DRUMBEAT

The overnight violence near the stadium left fires burning and smoke billowing. Protesters kept up a drumbeat of sticks on corrugated metal.

Though the violence petered out early on Saturday morning after a negotiated truce, protesters nearby stormed into the Energy Ministry.

"There was an attempt to seize the building. About 100 people came, armed. I went to them and said that if they did not peacefully leave the building, then the whole energy system of Ukraine could collapse," Energy Minister Eduard Stavytsky told Reuters by telephone.

Stavytsky, who was shown on television angrily remonstrating with a black-helmeted activist, added: "What is taking place is a direct threat to the whole Ukrainian energy system."

Hundreds of activists had already occupied City Hall and the Agricultural Ministry.

Though the protest movement - known as the "EuroMaidan" - is largely peaceful, a hard core of radicals have been fighting pitched battles with police away from the main protest on Independence Square.

The United States has warned Yanukovich that failure to ease the standoff could have "consequences" for its relationship with Ukraine. Germany, France and other Western governments have also urged him to talk to the opposition.

Russia on Saturday stepped up its warnings against international interference in Ukraine, telling European Union officials to prevent outside meddling and cautioning the United States against inflammatory statements.

"I told (U.S. Secretary of State) John Kerry that it is very important now not to interfere in the process and to avoid any statements that will only heat up the situation," said Foreign Minister Sergei Lavrov.

"I hoped he heard me," he said, in an interview with the Vesti v Subbotu state television news programme.

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Ukraine opposition says ready to lead country

KIEV Sat Jan 25, 2014 4:25pm EST

KIEV Jan 25 (Reuters) - A Ukrainian opposition leader who was offered the post of prime minister by embattled President Viktor Yanukovich on Saturday said the opposition was ready to lead the country.

"We are ready to take on this responsibility and take the country into the European Union," Arseny Yatsenyuk told crowds on Kiev's Independence Square after emerging from talks with Yanukovich.

But he added that this would entail the freeing of former prime minister Yulia Tymoshenko who was jailed in 2011.

Earlier on Saturday, Yanukovich, whose government is facing violent street protests against his rule, offered Yatsenyuk the post of head of government and proposed that another opposition leader, Vitaly Klitschko, be made a deputy prime minister for humanitarian issues.


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Police, protesters clash after Ukraine's president offers foes posts

Sun Jan 26, 2014 4:56am EST

* Confrontation follows offer of top posts to opposition

* Opposition says will keep up demands for early election

* Ukraine's U-turn away from Europe has divided country

By Pavel Polityuk

KIEV, Jan 26 (Reuters) - Police clashed with protesters who blockaded a building in central Kiev on Sunday and the fate of Ukraine's government was up in the air after embattled President Viktor Yanukovich offered opposition leaders key posts.

One of the president's main foes called his offer a "poisoned" attempt to kill off a protest movement in a country plunged into political unrest by Yanukovich's U-turn away from the European Union and toward Russia.

In the latest violence, a few thousand protesters tried to storm an ornate cultural centre where hundreds of security forces were gathered in central Kiev, a few hundred metres from the hub of weeks of opposition protests on Independence Square.

Demonstrators threw stones and smoke bombs while police fired stun grenades and sprayed water into the crowd.

The police and security forces later left the building, its windows shattered, and streamed out through a corridor created by the crowd after an opposition leader, Vitaly Klitschko, arrived at the scene and helped negotiate a solution.

The two-hour, pre-dawn confrontation came after Yanukovich made his biggest concession yet in a two-month-old standoff that has cast Ukraine into crisis, killed at least three people and deepened tension between Russia and the West.

Yanukovich abruptly abandoned plans to sign political association and free trade deals with the European Union in November, pledging instead to improve ties with former Soviet master Russia and angering millions who dream of being in Europe.

Hoping to end protests that threaten to bring the country to a standstill, Yanukovich on Saturday offered former economy minister Arseny Yatsenyuk the post of prime minister. Klitschko, a former international boxing champion, was offered the post of deputy prime minister responsible for humanitarian issues, a statement on the presidential website said.

The presidency linked its offer to the opposition reining in violent protesters. Though the protest movement is largely peaceful, a hard core of radicals have been fighting pitched battles with police away from Independence Square.

EARLY ELECTION

Opposition leaders, whose power base is among protesters massing in the square whose name evokes the independence Ukraine gained in 1991, continued to press for concessions including early elections and the repeal of an anti-protest law.

"We are ready to take on this responsibility and take the country into the European Union," Yatsenyuk was quoted as telling crowds on Independence Square after emerging from talks with Yanukovich. But he added this would entail the freeing of former prime minister Yulia Tymoshenko, who was jailed in 2011.

Klitschko told German newspaper Bild am Sonntag: "This was a poisoned offer by Yanukovich to divide our protest movement. We will keep on negotiating and continue to demand early elections. The protest by Ukrainians against the corrupt president must not have been in vain."

Opposition leaders say Yanukovich has betrayed Ukraine and are calling for a presidential election long before the next one is due in spring 2015. Klitschko said it must be held this year.

The United States has warned Yanukovich that failure to ease the standoff could have "consequences" for its relationship with Ukraine. Germany, France and other Western governments have also urged him to talk to the opposition.

Russia on Saturday stepped up its warnings against international interference in Ukraine, telling European Union officials to prevent outside meddling and cautioning the United States against inflammatory statements.

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UPDATE 1-KKR, BlackRock, funds in talks to buy stake in China Huarong -sources

Written By Unknown on Jumat, 24 Januari 2014 | 18.12

Fri Jan 24, 2014 4:33am EST

* Blackstone, Bain, sovereign wealth funds also in talks

* Huarong seeks to raise more than $2 bln -sources

* Bad debt manager eyes 15-20 pct stake sale before IPO

* Huarong 2013 net profit rose 45 pct on year to $1.67 bln

By Stephen Aldred and Denny Thomas

HONG KONG, Jan 24 (Reuters) - KKR & Co and BlackRock Inc are among leading global investors in talks to buy a stake in China Huarong Asset Management Co Ltd as the bad debt manager seeks to raise more than $2 billion, people familiar with the matter told Reuters.

Other investors in the hunt include rival private equity firms Blackstone Group and Bain Capital, the people familiar with the matter said. Sovereign wealth funds from Asia and the Middle East are also in a group of 20 or so investors preparing to submit first-round offers by mid-February, they said.

Reuters previously reported that Huarong was planning to sell a stake of between 15-20 percent to strategic investors ahead of an eventual initial public offering. Overseeing total assets of 400.9 billion yuan ($66 billion), Huarong is the largest of China's four bad loan managers.

Huarong's planned stock offering will allow the company to raise money to expand its business - acquiring bad loans and forfeited assets from companies unable to repay their lenders. Huarong turns a profit by repackaging the loans and assets and selling them on.

As China's economy slows, a wave of loans is expected to turn sour. That will boost prospects for Huarong and the three other asset managers set up by the Chinese government in 1999 to remove an estimated 1.4 trillion yuan ($230 billion) worth of bad loans from the country's top four state lenders.

"NPLs (non-performing loans) will keep rising in absolute terms and relative to the loan base (in ratio terms) from less than 1 percent, which is low and unsustainable," said Grace Wu, a Daiwa Capital markets analyst.

"China has a large enough buffer to absorb a three-four times increase in NPLs. Some will argue that a lot of loans are rolled over in what is called 'evergreen loans' but that's the nature of lending in China," she added.

CINDA APPEAL

Huarong's fund-raising plans come on the heels of China Cinda Asset Management Co Ltd's $2.9 billion Hong Kong IPO in December. Cinda's stock has risen 43 percent above the offer price.

In an emailed statement late on Thursday, Huarong reported a slower, but still strong increase in net profit in 2013. It said it would be focusing its efforts this year on its planned share listing.

The company, which has said it wants to list by 2016 at the latest, said its net profit rose 45 percent to 10.07 billion yuan ($1.67 billion) in 2013. A year earlier, it grew 65 percent.

Huarong was set up in 1999 to manage the non-performing loans of Industrial and Commercial Bank of China Ltd , the world's biggest bank by market value.

Controlled by China's finance ministry, Huarong was restructured into a joint stock financial holding group in 2012 in preparation for its own listing. China Life Insurance Co Ltd , the world's biggest insurer by market value, owns 1.6 percent of Huarong.

Cinda's IPO attracted some of the biggest names in global investing as cornerstone investors to provide a solid structure for its IPO. They included Oaktree Capital Management Ltd , the world's biggest distressed debt trader, and Och-Ziff Capital Management Group LLC, who were among the 10 cornerstone investors to jointly plough $1.1 billion into the offer.

Before the IPO, Cinda had raised $1.6 billion through a stake sale to investors including China's National Social Security Fund, Standard Chartered and UBS.

Blackstone, BlackRock, Bain and KKR declined to comment. A Huarong official said the company has been talking with investors, but has not selected any.

The sources declined to be identified as the process was private.

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REFILE-GLOBAL MARKETS-Emerging markets' sell-off accelerates on China, Fed worries

Fri Jan 24, 2014 4:48am EST

* Sell-off in emerging market currencies accelerates

* Investors fret about Chinese growth, Fed tightening

* Global stocks on track for worst weekly loss since mid-December

By Francesco Canepa

LONDON, Jan 24 (Reuters) - A sharp sell-off in emerging market currencies accelerated on Friday, setting global stocks on track for their worst week this year with worries mounting over an economic slowdown in China, U.S. monetary policy and domestic political issues from Turkey to Argentina.

Investors fled markets in Asia and Latin America, fearing the impact of slower growth in China, as highlighted by a weak factory activity report on Thursday, and expectations the Federal Reserve will cut further its bond-buying stimulus at a policy meeting next week.

A flight to safety lifted currencies backed by a current account surplus, such as the Japanese yen, and highly rated government bonds, pushing up German Bund futures and sending 10-year U.S. Treasury yields to an eight-week low.

In the last week, investors withdrew some $2.5 billion from emerging stocks. Investments in Latin American alone dropped by $398 million, or 1 percent, analysts said, citing EPFR data.

"I think you've got a bit further to go in terms of outflows from emerging markets," Mark Tinker, head of AXA Framlington Asia, said.

A decline in the flash Markit/HSBC Purchasing Managers' Index for China, the world's second-largest economy, reinforced concerns about global growth, especially in commodity-sensitive emerging markets.

On top of that, the Fed is expected to continue to dial back its bond buying when it meets next week after U.S. jobless claims data suggested further improvement in the labour market - heaping more pressure on emerging currencies.

European shares tracked global stocks lower, with emerging-markets exposed stocks among the worst hit.

The Spanish IBEX, which has high exposure to Latin America, lagged the other regional bourses, down 1.8 percent.

Asian shares had hit a 4-1/2 month low and MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.1 percent, adding to the previous session's 1.3 percent decline following the Chinese factory activity report.

The broader MSCI world equity index, which tracks shares in 45 countries, was down 0.3 percent at 1,645.09 points, taking its losses for the week to 0.7 percent.

Emerging currencies were battered overnight, with Argentina's peso suffering its steepest daily decline since the country's 2002 financial crisis, as the central bank gave up its fight against the unit's decline.

The Turkish lira TRY= hit a new record low against the dollar, even after the central bank spent at least $2 billion trying to prop it up on Thursday.

The Indian rupee and the Indonesian rupiah hit two-week lows against the dollar, though both steadied in European trading.

The Aussie dollar fell to a 3-1/2 year low of $0.8681 after Reserve Bank of Australia board member Heather Ridout was reported saying the Aussie had not fallen enough.

As the yen strengthened against the dollar, Japan's Nikkei stumbled 1.9 percent to a one-month closing low in relatively active, extending Thursday's 0.8 percent drop.

"Sentiment was already poor because of the poor U.S. jobs data released early this month, and it was exacerbated by the Chinese figures," said Naoki Kamiyama, head of Japan equity strategy at Bank Of America Merrill Lynch in Tokyo.

The U.S. dollar steadied after slipping 0.9 percent against a basket of major currencies, including the euro, yen, Swiss franc and sterling, on Thursday. That was its worst one-day performance in three months.

"When investors avoid risk, they buy currencies backed by a current account surplus," said Sho Aoyama, senior market analyst at Mizuho Securities in Tokyo. Data published on Thursday showed the euro zone current account surplus hit a record high in November.

WALL STREET

U.S. stock futures suggested a sell-off on Wall Street was likely to continue on Friday, with March contracts on the S&P 500 down 0.3 percent.

On Thursday, the Standard & Poor's 500 fell 0.9 percent and the Dow Jones industrial average 1.1 percent to record its third consecutive day of losses.

As investors cut their positions in risky assets, safe-haven gold and highly-rated government bonds were in demand.

The Bund future was last 36 ticks up at 142.40 compared with 142.04 at Thursday's close.

Gold was trading close its highest in seven weeks, poised for a fifth straight weekly climb as weaker equities burnished its safe-haven appeal.

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UPDATE 1-China securities regulator "regrets" U.S. ruling in audit case

Fri Jan 24, 2014 4:57am EST

BEIJING Jan 24 (Reuters) - China's securities regulator chided its U.S. counterpart on Friday over the latest ruling in a long-running and thorny dispute over access to documents that has snagged the world's top four accounting firms.

At a regular news briefing, China Securities Regulatory Commission (CSRC) spokesman Deng Ge expressed "deep regret" over a ruling that the Chinese units of the four companies should be suspended from auditing U.S.-listed companies for six months.

"The SEC would bear all the responsibility for the consequences of its action," Deng said.

In a ruling earlier this week, SEC Administrative Law Judge Cameron Elliot censured the Chinese affiliates of KPMG , Deloitte & Touche, PricewaterhouseCoopers and Ernst and Young, for failing to give U.S. regulators audit documents of certain Chinese companies under investigation for accounting fraud.

The SEC for years has been trying to get its hands on the documents, saying it needs them for investigations into a rash of accounting scandals that have plagued many Chinese companies listed in the United States.

The firms have said that handing over the documents could lay them open to criminal prosecution in China for breaching that country's secrecy laws.

U.S. officials have tried to address the dispute both through diplomatic channels and by threatening the firms with enforcement action.

The four companies have said they will appeal the ruling, and they have the backing of the U.S. Chamber of Commerce, which said on Thursday it plans to lobby U.S. officials to reach a diplomatic deal with China.

The judge's ruling is not expected to be disruptive to U.S.-listed Chinese companies relying on these firms to review their 2013 books as it will not go into immediate effect. The appeal process may last years.

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Spanish bond yields edge up, some take profit on flood of supply

Written By Unknown on Kamis, 23 Januari 2014 | 18.12

By Marius Zaharia

LONDON Thu Jan 23, 2014 4:12am EST

LONDON Jan 23 (Reuters) - Spanish bond yields rose further above recent eight-year lows on Thursday as investors sold some of the lower-rated euro zone paper they have been flooded with since the start of the year.

Traders said some investors had sold portions of the 10 billion euros of new Spanish 10-year bonds issued on Wednesday as secondary market yields traded below the yield at which the bonds were placed.

Investors who had not been able to get their hands on as many of the bonds as they wanted on Wednesday were the main buyers in the market on Thursday, suggesting Spanish yields were likely to resume their falling trend.

Spain's sale via a syndicate of banks drew demand of almost 40 billion - a record for European governments.

On the back of an improving euro zone growth outlook, Madrid has sold larger-than-expected amounts of bonds every week since the start of the year, completing 16.6 percent of this year's 133.3 billion euros funding target.

This follows strong sales in Ireland, Portugal and Italy, with Rome due to sell bonds next week as well.

The large amounts of bonds hitting the market may see this year's strong rally in lower-rated bonds pause for a while, especially with the amount of debt to be sold exceeding scheduled repayments in February.

"We've seen a lot of supply but the Spanish deal yesterday showed there is still a lot of demand out there," said Mathias van der Jeugt, rate strategist at KBC.

Spanish 10-year yields were less than one basis point up at 3.75 percent, having risen in the second part of Wednesday's session after the sale to push further away from Monday's eight-year low of 3.65 percent.

Yields of other lower-rated bonds were also unchanged or slightly higher.

"People are fairly long of this stuff (peripheral bonds) so there might be some supply indigestion," one trader said. "But the Spanish deal had incredible demand so there seem to be plenty of buyers out there."

German 10-year Bund yields, the euro zone benchmark, were flat at 1.75 percent.

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CORRECTED-UPDATE 1-Spain's unemployment rate inches up, checking talk of recovery

Thu Jan 23, 2014 4:05am EST

(Corrects size of workforce in second paragraph)

MADRID Jan 23 (Reuters) - Spain's already high unemployment rate inched up in the fourth quarter in a bleak reminder of the challenges the country faces as it seeks to cement a fragile economic recovery.

Even though 8,400 fewer people were out of work in the October to December compared with the previous quarter, the unemployment rate rose to 26.03 percent of the workforce, which shrank by 73,400 people to 22.65 million.

The length and depth of Spain's economic crisis has prompted many long-term unemployed to leave the workforce altogether, and the official population fell for the first time in 2012 as immigrants and nationals left the country.

Thursday's fourth quarter statistics office data, compared with analysts' expectations of a rate of 26 percent, confirmed Spain's position as the country with the second highest unemployment rate in the European Union after Greece.

Spain's economy has been in a slump since 2008 when a burst property bubble put thousands of labourers out of work, and the resulting aftershock claimed millions more jobs across the country.

The economy emerged from a two-year recession in the third quarter of 2013 and recent data suggested overall output would expand more than the government's forecast of 0.7 percent this year, fuelling market appetite for the country's debt and listed shares.

Investors have charged back in to Spain's sovereign debt over the last year after pushing it close to taking a sovereign bailout on concerns Madrid could not control its finances. Debt yields fell to near eight-year lows on Wednesday as the sale of a new bond drew bumper demand.

However, the turnaround is leaving many Spaniards in its wake, as the unemployment rate is not expected to fall significantly for years and tighter public debt targets have led to deep austerity measures.

Researchers at the Carlos III University in Madrid expect the unemployment rate to hold above 25 percent this year before inching down to 24.4 percent by the end of 2015.

"The estimates highlight that the reduction of the unemployment rate will be slow, despite any possible consolidation in the economic recovery," Carlos III University researchers said in a note.

While the government has forecast net job creation in 2014, economists at the university were more cautious, saying only that job destruction would practically cease this year while new jobs would be slow to emerge. (Reporting by Paul Day; Editing by Tracy Rucinski, John Stonestreet)

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Bank of Spain says GDP grew by 0.3 pct in Q4 2013

MADRID Thu Jan 23, 2014 4:14am EST

MADRID Jan 23 (Reuters) - The Spanish economy grew by 0.3 percent in the fourth quarter from a quarter earlier, the Bank of Spain said on Thursday, the second quarter of expansion after over two years of recession.

The central bank also said Gross Domestic Product shrank 1.2 percent in 2013 from a year earlier. Both figures are in line with government estimates made public last week.

Official preliminary data from the National Statistics Institute is due January 30 while the final figure will be published February 27.


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BRIEF-North Atlantic Drilling launches $600 mln bond

Written By Unknown on Senin, 20 Januari 2014 | 18.12

OSLO Mon Jan 20, 2014 4:57am EST

OSLO Jan 20 (Reuters) - North Atlantic Drilling Ltd says: * Announces proposed offering of $600 million of unsecured senior notes due 2019 * Intends to use the net proceeds of this offering for the prepayment of existing indebtedness, including a premium on early settlement, transaction expenses and general corporate purposes.


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BRIEF-North Atlantic Drilling launches $600 mln bond -Seadrill

OSLO Mon Jan 20, 2014 5:06am EST

* Its spin-off North Atlantic Drilling, in which it is a major shareholder, announces a proposed offering of $600 million of unsecured senior notes due 2019

* Intends to use the net proceeds of this offering for the prepayment of existing indebtedness, including a premium on early settlement, transaction expenses and general corporate purposes. Source text for Eikon: Further company coverage:


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UPDATE 1-China c.bank offers emergency funds to small banks as rates rise - sources

Mon Jan 20, 2014 5:22am EST

* PBOC offers up to 120 bln yuan to small banks

* Banks can apply when cash rates exceed key levels

* Offer is for one-to-14 day funds

* C.bank aims to promote de-leveraging, curb shadow banking

HONG KONG/SHANGHAI, Jan 20 (Reuters) - China's central bank is offering emergency funding support to commercial banks amid a spike in cash rates, sources with direct knowledge of the move told Reuters on Monday.

The People's Bank of China (PBOC) will offer up to 120 billion yuan ($19.8 billion) in 1-14 day funds to smaller banks via its Standing Lending Facility (SLF), the three sources said.

The move by PBOC comes after the interest rate that banks charge each other for short-term loans spiked in recent days. Traders attributed the higher rates to elevated cash demand in the run-up to the Chinese Lunar New Year holiday, which begins on Jan. 31.

A PBOC spokesman declined to comment.

The sources said banks incorporated at the regional or local level can apply to the PBOC for fund injections when the interest rate on the overnight bond repurchase rate exceeds 5 percent, the seven-day repo rate exceeds 7 percent, or the 14-day repo rate exceeds 8 percent.

The overnight rate closed at 4.30 percent on a weighted-average basis on Monday but individual trades occurred as high as 9 percent.

The seven- and 14-day rates peaked on Monday at 10 percent and 7.8 percent, respectively, according to data from the National Interbank Funding Center.

The central bank typically uses its SLF to provide one- to three-month loans to commercial banks. In this case, however, the cash injections will range from one to 14 days.

The PBOC typically provides this type of short-term cash via reverse repos at its twice-weekly open market operations. But the central bank has skipped open market operations for the last three weeks.

The relaunch of initial public offerings of stock is also boosting cash demand this week. IPOs, restarted last week after a 14-month freeze, drive demand for short-term funding as investors need to deposit funds with underwriters in order to subscribe to new listings.

Eight companies said on Monday that they would list on the Shenzhen Stock Exchange on Tuesday, the first listings on China's smaller bourse since the freeze ended.

Traders had previously predicted funding conditions would tighten in late January. The latest funding squeeze follows severe cash crunches in late June and late December.

The seven-day rate peaked at 28 percent on June 20, the highest trade on record, and soared again to 10 percent on Dec. 20 and 23.

Bankers and analysts say the PBOC is attempting to strike a balance by guiding interbank interest rates higher without provoking a severe credit crunch that would spark panic.

Bankers say the central bank is using higher money market rates as a tool to curb the explosive growth in economy-wide debt since 2008, especially off-balance sheet debt that is often funded through interbank borrowing.

The PBOC and the banking regulator have repeatedly urged banks to improve liquidity management and reduce reliance on short-term funding markets.

Analysts say smaller banks rely the most on money-market funding because their smaller branch networks provide them less access to customer deposits.

Following the December cash crunch, the central bank pledged to improve communication with the market, after some bankers criticised authorities for appearing to stand passive as panic gripped the market and rumours swirled about interbank defaults.

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U.S. FTC approves Kroger purchase of Harris Teeter -companies

Written By Unknown on Sabtu, 18 Januari 2014 | 18.13

WASHINGTON Fri Jan 17, 2014 7:41pm EST

WASHINGTON Jan 17 (Reuters) - The U.S. Federal Trade Commission has approved the $2.5 billion purchase of regional grocer Harris Teeter Supermarkets Inc by Kroger Co , deciding the transaction does not violate anti-trust law, the companies said on Friday.

The two supermarket chains said in a statement that they expected the acquisition to be completed before the end of January. The FTC gave its approval without requiring the companies to divest any stores, a law firm that represented Harris Teeter said in a statement.

The FTC was not immediately available for comment.

The deal, approved by the boards of both companies in July, will boost Kroger's presence in the U.S. southeast. Competitors there include privately held Publix and discounter Wal-Mart Stores Inc, the largest U.S. food retailer.

Cincinnati-based Kroger, the largest mainstream U.S. grocer, will also get a bigger presence in the mid-Atlantic region, slightly more upscale stores that do a strong business in fresh food and access to fast-growing markets.

As the supermarket industry has consolidated, chains such as Harris Teeter, based in Matthews, North Carolina, have struggled to maintain market share against rivals such as Wal-Mart, Costco Wholesale Corp and Whole Foods Market Inc.

Harris Teeter currently operates 212 supermarkets in North Carolina, Virginia, South Carolina, Maryland, Tennessee, Delaware, Florida, Georgia and the District of Columbia.

The combined business will operate 2,631 supermarkets in 34 states and the District of Columbia, with over 368,300 employees. Harris Teeter has a non-union workforce, while Kroger largely operates with unionized staff.

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UPDATE 1-YRC Worldwide reaches tentative deal with Teamsters union

Fri Jan 17, 2014 6:35pm EST

Jan 17 (Reuters) - Trucking company YRC Worldwide Inc and the Teamsters union reached a tentative deal for a new labor contract that sets the stage for the struggling company to push ahead with a refinancing plan.

YRC shares rose 22 percent in extended trading.

The revised proposal would be reviewed at a meeting of local union officials on Jan. 21 and would have to be ratified by union members, the International Brotherhood of Teamsters said in a statement.

The 26,000 YRC members represented by the union had last week voted down a proposal by the company to extend their labor contract.

That vote put in jeopardy efforts to refinance the company's debt, more than $1 billion of which will start coming due in February.

YRC said on Friday that the tentative agreement, which comes a day after the company restarted talks with the Teamsters, addresses concerns raised by the union and contains a number of revisions to the earlier proposal.

"The outcome of this week's discussions is critical to the future of the company, YRC Chief Executive James Welch said in a statement.

Welch said the deal to extend a collective bargaining agreement to March 2019 was "the best - and only remaining - path forward."

Shares of the company were trading at $18.94 after the bell. They closed at $15.82 on Friday on the Nasdaq.

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UPDATE 4-California governor declares drought emergency

Fri Jan 17, 2014 8:25pm EST

By Sarah McBride

SAN FRANCISCO Jan 17 (Reuters) - California Governor Jerry Brown declared a drought emergency on Friday, a move that will allow the parched state to seek federal aid as it grapples with what could turn out to be the driest year in recorded state history for many areas.

The dry year California experienced in 2013 has left fresh water reservoirs with a fraction of their normal reserves and slowed the normally full American River so dramatically that brush and dry riverbed are showing through in areas normally teeming with fish.

"We can't make it rain, but we can be much better prepared for the terrible consequences that California's drought now threatens, including dramatically less water for our farms and communities and increased fires in both urban and rural areas," Brown, a Democrat, said in a statement.

"I've declared this emergency and I'm calling all Californians to conserve water in every way possible," he said, in a move that will allow him to call for conservation measures and provide flexibility in deciding state water priorities.

Speaking at a news conference in San Francisco, he said the drought threatens to leave farms and communities with dramatically less water and increases the risk of fires in both urban and rural areas. On Friday, a fire burned out of control in the dry brush of the Angeles National Forest in Los Angeles County. And last year, the Rim Fire burned 402 square miles in and around Yosemite National Park, causing $127 million in damage as of late October, according to the most recent data available from the U.S. Forest Service.

He appealed to residents to keep a lid on water use with the aim of reducing overall consumption by 20 percent, telling them that "this takes everybody pitching in." He warned that mandatory conservation programs may be initiated down the road.

In a sign of the severity of the drought, some of the state's reservoirs are at their lowest levels in years. The Folsom Reservoir near Sacramento is so low that the remains of a Gold Rush-era ghost town - flooded to create the lake in the 1950s - are visible for the first time in years.

The state's mountain ranges, where runoff from melting snow provides much of the water for California's thirsty cities and farms, have just 20 percent of the snow they normally have at this time of year, officials noted.

Lake Shasta, the largest reservoir in California, is down from its historical average by nearly half.

Other sources of water, including the massive Sacramento-San Joaquin Delta, are also affected, prompting cities to dip into reserves and forcing farmers to scramble. Some public agencies may be able to purchase just 5 percent of the water that they contracted to buy from the state.

Adding to concerns, January and February are usually the wettest months in much of the state, but 2014 has so far been mostly dry, with little precipitation expected, according to the National Weather Service.

FEDERAL FUNDS SOUGHT

In declaring a drought emergency, Brown said he did not know if he would be successful in persuading the federal government to free up funds for drought relief but he would try his best.

"It's important, first of all, to awaken all Californians to the serious matter of drought," he said, also warning of upcoming "conflicts and different perceptions on how water is to be allocated."

Water has long been a contentious issue in California, where it has been diverted from mountain lakes and streams to irrigate farms and slake the thirst of metropolitan areas.

Many of the state's efforts to deal with the problem are controversial, including a $25 billion plan to divert water from above the delta by sending it through a pair of huge tunnels.

For many in the state's $44.7 billion agriculture business, water scarcity is a problem made worse by a recent switch to orchard-style crops such as almonds and olives. Unlike vegetables or cotton, which grow in fields that can be left fallow in dry years, the trees need water every year.

The state's wine-growing regions have had just 23 percent of the rainfall they normally get by this time of year, said Patsy McGaughy, communications director for the wine industry group Napa Valley Vintners, which represents about 500 wineries.

Last year brought enough water that grape-growers were not yet feeling the pinch, she said, but a prolonged drought could affect future crops, if only by making the water scarce that growers use during cold snaps to warm up their plants.

Already, there were signs of competing priorities among groups that contend for water and will be closely watching how state officials use their new flexibility in allocating it.

Assemblywoman Connie Conway, the leader of the Republican minority in the state Assembly who represents a heavily agricultural area in central California, expressed hope that with the declaration more water could go toward "Valley farmers and workers who depend on water to feed the world."

John McManus, executive director of the Golden Gate Salmon Association, said his group's concern was for the health of salmon and a fishing industry that supports tens of thousands of jobs in California and Oregon.

"If the drought declaration results in more attention to saving the salmon that are in the Sacramento Valley rivers, and which are in dire need of attention, then that is good thing," he said.

Opponents of the water-intensive practice known as fracking, used to extract oil and gas from rock formations deep in the earth, have seized on California's dry conditions, hoping it will put pressure to halt the controversial practice.

"As we see other sectors, like agriculture, struggling, what water rights do oil companies have to engage in fracking? The case can be made to place a moratorium on fracking just in the interests of conserving water," said California Assembly member Mark Levine.

"Water is our most precious commodity, not oil," he said.

There is also concern among power companies that use dams and other technology to create hydroelectric power from churning rivers.

The Sacramento Municipal Utility District, which provides power to the Sacramento area, relies on hydroelectric resources for about a quarter of the electricity it supplies, said Jim Tracy, the utility's chief financial officer.

The utility can purchase power from other sources if hydroelectric power is not available, but if dry conditions persist for several years, consumers' bills may increase, he said.

Doug Obegi, an attorney at the Natural Resources Defense Council, said California has a complex system that allocates water to areas that laid claim to it first - often over 100 years ago - and which many view the system as unfair.

"Because it's so contentious, there are times when it's hard to make progress," Obegi said.

But in some ways the state has done well. Over the last 40 years, the state's agriculture industry has doubled the revenue per drop of water used, largely from improved efficiency and changes in the plants grown, Obegi said.

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S&P lowers Uganda sovereign credit rating to B from B+

Written By Unknown on Jumat, 17 Januari 2014 | 18.12

SYDNEY Fri Jan 17, 2014 1:11am EST

SYDNEY Jan 17 (Reuters) - Credit ratings agency Standard & Poor's on Friday downgraded Uganda's sovereign credit rating to B from B+, with a stable outlook.

S&P also affirmed its 'B' short-term and local currency sovereign credit ratings.

The downgrade reflects S&P's view that Uganda's fiscal position has weakened relative to previous forecasts.

"We now forecast a higher fiscal deficit of 6.9 percent in the 2013-2014 fiscal year. Revenue increases have been lower than we expected, donors have suspended general budget support, and expenditure is rising," S&P said in a statement.


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UPDATE 1-Market Chatter-Corporate finance press digest

Fri Jan 17, 2014 1:14am EST

Jan 17 (Reuters) - The following corporate finance-related stories were reported by media:

* China-focused private equity firm Boyu Capital, whose partners include former TPG Capital executive Mary Ma and the grandson of former Chinese president Jiang Zemin, has raised $1.5 billion for its second buyout fund, according to people with knowledge of the matter.

* The strategic path Volvo Car Corp plans to follow is in question because of discord at the board level between new Chinese ownership and traditional European ways, according to two sources familiar with the situation.

* The U.S. Senate Committee on Energy and Natural Resources will hold a hearing on Jan. 30 on the implications of lifting the country's crude oil export ban, sources said on Thursday.

* Dubai Group has signed a $10 billion debt restructuring deal, two sources with knowledge of the matter told Reuters, marking the end of a perilous period which saw the emirate risk collapse under a mountain of debt obligations.

* Tyson Foods Inc is exploring a bid for Michael Foods Group Inc, a deal that would combine one of the world's largest chicken processors with a large distributor of egg and dairy products, according to three people familiar with the matter.

* Deutsche Lufthansa, Germany's largest airline, will appoint management board member Carsten Spohr, currently in charge of its passenger airline business, as chief executive officer, a German newspaper reported Friday, citing company sources.

* India's Bharti Airtel is in talks to buy out Mumbai-based Loop Mobile in a deal that will give the telecom major about 3 million customers, the Press Trust of India reported in the Economic Times, citing sources privy to the negotiations. ()

For the Morning News Call-EMEA newsletter click on

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Spain's bad loans ratio reaches new record high at 13.08 pct in Nov

MADRID Fri Jan 17, 2014 4:18am EST

MADRID Jan 17 (Reuters) - Spanish banks' bad loans as a percentage of total lending reached a fresh record high of 13.08 percent in November, up from 12.99 pct in October, Bank of Spain data showed on Monday.

The ratio has been steadily climbing as households and small companies struggle with debts and as banks, fighting to improve their own capital quality ahead of Europe-wide stress tests, rein in lending.

Bad debts rose month on month by 1.5 billion euros ($2.04 billion) to 192.5 billion euros in November. Total credit, meanwhile, rose slightly by 2.6 billion euros to 1.47 trillion euros, the data showed.


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RPT-Fitch: Taper, regulation to weigh on US repos again in 2014

Written By Unknown on Selasa, 14 Januari 2014 | 18.12

Tue Jan 14, 2014 5:33am EST

Jan 14 (Reuters) - (The following statement was released by the rating agency)

Developments in US Federal Reserve tapering and financial regulation will weigh on the US tri-party repo market again in 2014, Fitch Ratings says. The US tri-party repo market dropped USD257bn or 14% in 2013, largely as interest rate rises and regulation influenced volumes. Much will depend on how interest rates move and how banks adjust to the Basel III leverage ratio finalised on Sunday.

The US tri-party repo market as a whole declined to USD1.61trn at end-2013 according to Federal Reserve Bank of New York data published last week. Agency MBS repo and to a lesser extent, Treasury, were the drivers of the fall. Agency MBS repo fell by USD226bn or 28%, while Treasury repo fell 10%.

The interest rate sensitivity of the collateral means agency MBS and Treasury repos were more affected as rates started to rise in May 2013 on the expectation of tapering of quantitative easing. Valuation losses, amplified by the use of leverage in repos, and resulting market volatility are likely to have contributed to lower volumes. Agency MBS repo supply could also have been affected by the precipitous drop in mortgage refinancing following the rate pick-up, which adversely affected mortgage origination across the industry. The interest rate environment will remain a source of uncertainty in 2014 affecting incentives for repo market participants and the supply of repo collateral.

Tougher financial market regulations and deleveraging in the financial sector as institutions adjust to Basel III rules being phased in from 2014, have also hit US tri-party repo volumes. Regulatory constraints on banks' trading activities, including the Volcker Rule and more conservative Basel 2.5 market-risk capital charges, may reduce their repo funding needs and their repo intermediation services.

The Basel Committee's recently-proposed recognition of limited bilateral netting within the leverage ratio could ease some of the regulatory capital pressures on banks that participate actively in the repo market. However, the impact on repo depends on how these changes are implemented. Minimum leverage ratio standards have yet to be finalised by national regulators and could therefore vary across jurisdiction. At the same time, systemic risk regulators have been focused on curbing potential "fire sale" risks, in which repo funding disruptions could have cascading effects across financial markets more broadly. This policy uncertainty could shift the competitive landscape for repo activities. Volumes could also migrate to the shadow banking sector and financial institutions not subject to these rules.

In 2013 the decline in agency MBS and Treasury repo has been partially offset by moderate increases in equity, structured finance, and corporate repo collateral. These lower quality forms of collateral increased by 18% or USD45bn in aggregate, as these products make up a smaller part of the overall tri-party market. Repo lenders may have been attracted by higher yields on these products compared to MBS and Treasury because of the continuing low-yield environment. For more details on the U.S. tri-party repo market see our report "Repos: Market Decline Amid Policy Risk" published 20 December 2013.

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Russia's Yandex to get access to Facebook content

The Gallery, Motown's luxury kick-off to the North American International Auto Show, boasts the newest models from Porsche, Rolls Royce, Falcon, Lamborghini, Aston Martin and more.  Video 

Daimler AG CEO and head of Mercedes Dieter Zetsche says a slow recovery has begun in Europe and he expects Mercedes sales to grow in 2014.  Video 

Ford's executive chairman Bill Ford says that sales of Ford's Mustang and other vehicles are growing in Europe and the automaker should return to profitability there by 2015.  Video 

Head of Mercedes-Benz, Dieter Zetsche, along with pop star Kelly Rowland unveil the new Mercedes-Benz C-Class sedan at the Detroit Auto Show. Rough Cut (no reporter narration).  Video 

General Motors' President of North America Mark Reuss says that winning both 2014 North American car and truck awards is a reflection of the turnaround and growth happening at GM.  Video 

It would be GM's first dividend since 2008. Separately, GM's CEO-elect Mary Barra unveiled its redesigned midsize pickup, GMC Canyon, at the Detroit Auto Show. Fred Katayama reports.  Video 

Two of Germany's top automakers are looking to the U.S. for sales and in a bid to ramp up global production as the European car market continues to struggle.  Video 

Stifel's auto analyst James Albertine says the cars likely to garner the most attention at the Detroit Auto Show will be Ford's F-150 truck, Lincoln's MKC utility vehicle and Tesla's Model X.  Video 


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UPDATE 1-Hollande bids to deflect glare from private life to reforms

Tue Jan 14, 2014 5:38am EST

* First appearance after allegations of affair with actress

* French president will try to set out new reform agenda

* Questions over status of official partner Trierweiler

By Mark John

PARIS, Jan 14 (Reuters) - President Francois Hollande aims to discuss the French economy on Tuesday but a news conference is likely to be dominated by talk of his private life, after his partner went into a hospital to recover from the shock of reports he had an affair.

His New Year's encounter with journalists in his Elysee Palace will be the French leader's first public appearance since a celebrity magazine on Friday published photos it said showed Hollande making a nocturnal visit to an actress.

His office complained of breach of privacy but did not deny the affair. The saga took a surprise new turn on Sunday when it emerged that his long-term partner, Valerie Trierweiler, had been admitted to hospital in a state of shock.

The scandal threatens to undermine the authority of Hollande, a Socialist who has already become the least popular French president in modern times, even as he aims to revive a stalled economy by cutting taxes on business, a lurch to the political centre that has irked unions and left-wing allies.

"This major political event must remain a major political event," David Assouline, spokesman for Hollande's Socialist party, said of the 1530 GMT news conference, an annual setpiece which could last as long as two hours.

Rivals also said the scandal should not take the president's focus off of policy announcements: "This is not a soap opera," Jean-Louis Borloo, leader of the centrist UDI party, told BFM television.

"With nearly a third of his mandate gone, it's about time he seriously laid out how he plans to turn the country around - even if it's not exactly going to be rock 'n' roll."

Hollande plans to use the event to detail a proposed "responsibility pact" with business in which firms will be offered tax cuts and less red tape in return for hiring commitments aimed at reducing 12 percent unemployment.

But the reports of the affair are likely to hijack the agenda. A similar event staged by predecessor Nicolas Sarkozy after his 2007 divorce was dominated by curiosity over his romance with singer Carla Bruni, whom he subsequently wed.

While a poll at the weekend showed four-fifths of French voters considered the matter a private affair for Hollande and his family, the news of former journalist Trierweiler's admission to hospital prompted critics to break their silence.

"This has been disastrous for the image of the institution of the presidency," said Jean-Francois Cope, head of the opposition UMP conservatives.

REFORM WINDOW TIGHT

Although France does not have an official First Lady title, Trierweiler has her own office in the Elysee, a chauffeur and adviser, and accompanies Hollande on visits. Many pundits say it is legitimate now to question what her actual status is.

"She knows it must be cleared up because the debate has turned political," Frederic Gerschel, a reporter for daily Le Parisien, told RTL radio after speaking to Trierweiler.

Her office said she would remain in hospital for the time being.

"She needs to recover after the shock she suffered. She needs peace and quiet," an aide said.

Worries are growing in the euro zone that France, its second-largest economy, will hold back a nascent recovery - fears borne out by December manufacturing data that showed a strong pick-up in most countries except France.

"It's not enough. The president's message in his New Year's address is to accelerate, because 2014 must be the year of results in terms of overall economic policies," Trade Minister Nicole Bricq said.

France's blue-chip CAC 40 stock index - home of bellwethers such as drugmaker Sanofi, cosmetics group L'Oreal and oil major Total - is down 0.8 percent, the worst performance among European bourses in 2014.

Philippe Varin, chief executive of troubled carmaker PSA Peugeot Citroen, urged Hollande to cut taxes on companies and to follow countries such as Canada and Sweden in making welfare spending more efficient.

"(For growth) you need improved competitiveness, which is only possible with better corporate margins which in turn are crucial for investment and therefore job creation," Varin told Le Figaro newspaper.

Analysts are for now sceptical about whether Hollande is really ready to act on his acknowledgement that France's high public spending and taxation are restraining the economy and the creation of new jobs.

They point to local French elections in May and European Parliament polls two months later as limiting his room for manoeuvre on painful measures to cut public spending, currently around 57 percent of output.

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GLOBAL MARKETS--Stocks rise, dollar falls as Fed rate path reassessed

Written By Unknown on Senin, 13 Januari 2014 | 18.12

By Natsuko Waki

LONDON Mon Jan 13, 2014 4:14am EST

LONDON Jan 13 (Reuters) - World stocks rose towards a six-year high on Monday and the dollar and bond yields slipped as last week's weak U.S. jobs data strengthened the case for the Federal Reserve to keep interest rates low for longer.

Emerging markets were one of the biggest beneficiaries, having previously been under pressure as investors took funds away from those economies most reliant on external funding back into the recovering developed world.

Friday's data showed the U.S. economy had its weakest monthly job growth in three years in December. This triggered a slide in U.S. Treasuries, where benchmark yields posted their biggest one-day drop since October.

The report did not change expectations that the Fed would wind down its bond-buying programme by year-end, but interest rate futures markets pushed back the timing of the first rate hike towards late-2015 from mid-2015 .

"The market is taking its leads from U.S. Treasury markets, which are generally weighing on the dollar across the board," said Adam Cole, global head of FX strategy at RBC Capital Markets.

MSCI world equity index gained 0.2 percent, approaching a six-year high set last month, buoyed by a 0.7 percent gain in emerging stocks.

European stocks followed Asia higher to rise 0.3 percent, staying hear a 5-1/2 year peak. Japan was closed for a public holiday.

European banking stocks rose 1.2 percent after global banking regulators agreed on Sunday to ease a new rule on how banks' leverage ratios are calculated to try to avoid crimping financing for the world economy.

"This is a good news because it will give banks some breathing space. There have been concerns that high ratios would hit banks' profitability," said Global Equities' head of quantitative sales trading David Thebault.

"The fact that euro zone assets lead the gains so far this year is a positive sign. It means that things have greatly stabilised and that the region is not a pariah for global investors as it used to be."

Investors will keep an eye on the fourth-quarter earnings season, with major U.S. banks including JPMorgan, Citigroup and Goldman Sachs announcing results this week. European earnings will gather pace in the last week of the month.

Benchmark 10-year euro zone bond yields were slightly lower on the day while Bund futures prices rose 3 ticks.

The 10-year U.S. yield was stable at 2.8635 percent, slightly above Friday's lows.

The dollar fell 0.7 percent to 103.24 yen, its lowest level in nearly a month, pulling further away from a five-year high of 105.45 yen set earlier this month.

In commodity markets, gold extended its rally to a one-month peak at $1,254.05 an ounce having climbed 1.5 percent on Friday.

Oil prices retreated after nations struck a six-month deal with Iran to curb its nuclear programme and U.S. President Barack Obama urged Congress not to impose additional sanctions on the country. Nymex oil futures lost 0.6 percent Brent crude fell below $107 a barrel.

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