GLOBAL MARKETS-Spanish CPI shock flags euro deflation risks

By Jamie McGeever

LONDON, March 28 Fri Mar 28, 2014 5:29am EDT

LONDON, March 28 (Reuters) - The euro and benchmark German bond yields slid to three-week lows on Friday as a surprise fall in Spanish inflation bolstered investors' bets the European Central Bank will ease policy next week to ward off the threat of deflation.

Equity markets drew support from the renewed potential for looser ECB monetary policy, as well as reports Beijing could fast-track infrastructure spending to boost the Chinese economy.

The 0.2 percent annual decline in Spanish consumer prices this month was larger than expected, the weakest figure since October 2009, and enough to push Spanish 10-year government bond yields to a new eight-year low.

Preliminary German inflation data for March later on Friday will now come under even greater scrutiny for signs that the threat of deflation is spreading from peripheral euro zone economies like Spain to the bloc's powerful core.

"The market is reacting strongly, and this really indicates that the market is nervous," said Michael Leister, rates strategist at Commerzbank in London.

"The bar is very high for further ECB easing, and we think the ECB is still going to stay on hold. But this is going to underpin these easing expectations," he said.

The euro hit a three-week low of $1.3704, falling further back from the $1.40 level many analysts think would be too strong for the fragile euro zone economy in the eyes of ECB policymakers.

Germany's 10-year Bund yield fell to 1.52 percent <EU10YT=RR?, while Spanish and Italian yields fell to eight-year troughs of 3.22 percent and 3.27 percent , respectively.

The ECB sets policy on Thursday next week, when it will have the euro zone-wide flash inflation estimate for March due on Monday. Economists expect that to slip to just 0.6 percent, well below the ECB's target of below but close to 2 percent.

Europe's main equity markets were all higher, posting early gains of up to three quarters of one percent.

The FTSE Eurofirst 300 index was up 0.7 percent at 1332 points, on for its fourth straight day of gains as investors square positions at the end of the quarter.

After the respective eight and six percent gains of the previous two quarters, equity investors have been much more cautious in the first three months of the year. The FTSE Eurofirst 300 is on track for a gain of around 1 percent.

CHINA BOOST?

Asian and emerging market shares were supported by comments from China's Premier Li Keqiang, who was quoted by state media as saying the government would roll out targeted measures step-by-step to aid the economy.

MSCI's index of Asia-Pacific shares outside Japan added 0.7 percent and Japan's Nikkei closed at a three-week high of 14,696 points ahead of the end of their financial year on March 31.

Emerging markets showed signs of recovering from a bruising few weeks, with hopes of further Chinese stimulus pushing with the military and geopolitical tensions surrounding Russia and Ukraine further into the background.

The MSCI index of emerging shares has climbed for six straight sessions to the highest since Jan. 3. The index for Latin America on Thursday boasted its biggest daily gain since July 2012 as Brazilian markets rallied.

In U.S. bond markets, Treasury yields were capped by the fall in European bond yields. Ten-year U.S. borrowing costs hovered around 2.67 percent, a single basis point above Thursday's 11-day low.

Gold looked to snap its broad losing streak this month, rebounding from Thursday's six-week low to trade up 0.4 percent on the day at $1,295.00 an ounce.

In the oil market, U.S. crude futures were almost flat on the day at $101.43 a barrel. (Editing by Toby Chopra)

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Update-Moody's: Tingyi's improved beverage business supports Baa1 rating

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

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UPDATE 2-Ukraine faces hard road to economic recovery with Moscow pushing back

Fri Mar 28, 2014 6:35am EDT

* Russia accounts for 25 pct of Ukrainian exports

* Price Ukraine pays for Russian gas to rise 80 pct

* Trade issues with Russia could spark social unrest in east (Edits)

By Alessandra Prentice

KIEV, March 28 (Reuters) - Smarting from Ukraine's U-turn towards Europe, Russia is likely to employ every weapon in its economic arsenal to ensure its neighbour's road to financial recovery is as painful as possible, even when paved with billions of dollars in Western aid.

Russia has "the right to use selective protective measures against Ukraine if it creates a free trade zone with a third government, or for example with the European Union," a Russian economy ministry spokesman said in response to a question from Reuters, citing the terms of a 2011 agreement.

He gave no details of what the measures might entail.

After months of anti-government protests and the overthrow of a government blighted by corruption and economic mismanagement, Ukraine is on the brink of bankruptcy, running wide external deficits and a current account shortfall of over 9 percent of gross domestic product.

On Thursday, the International Monetary Fund threw a financial lifeline, agreeing to stump up $14-18 billion as part of a two-year bailout package in exchange for tough economic reforms.

The deal, combined with Kiev's signing of a cooperation pact linked to closer trade ties with the European Union, represents a serious blow to Russian President Vladimir Putin's dream of Ukraine joining a Eurasian Union of former Soviet states.

Moscow will not make it easy and Ukraine is already feeling some consequences from its break with Russia.

Prime Minister Arseny Yatseniuk said on Wednesday the price the country would pay for Russian gas, which accounts for over half of Ukrainian gas imports, would soar by almost 80 percent from April 1 as the seizure of Crimea had rendered a cheaper gas deal obsolete.

Russia's Gazprom has suggested a new conflict over gas payments and supplies - like disputes in 2006 and 2009 that halted supplies to Ukraine and onward to Europe - could break out, though it added it had no interest in a resumption of such disputes.

"The better off Ukraine is under the new government, the more likely it will integrate into the West," said Nicu Popescu, senior analyst at the EU Institute for Security Studies (EUISS).

"So disrupting the Ukrainian transition in political and economic terms is probably Russia's primary foreign policy goal in the foreseeable future."

Putin's annexation of Crimea, which Kiev and the West say is illegitimate, is likely to push Ukraine's gross domestic product (GDP) down by 5 percent in 2014, according to Simon Mandel, Vice President for Emerging Europe at New York-based brokerage Auerbach Grayson.

While the tens of thousands of Russian troops thought to be massed on the border show no immediate sign of entering other parts of Ukraine, Russia has already flexed its trade muscles to upset the Western-backed Ukrainian recovery plan.

BLOOD AND SWEAT

Last year Putin showed he was prepared to wield restrictions or bans on Ukrainian exports as punishment for attempts by the country of 46 million to move out of Moscow's orbit.

With exports to Russia accounting for nearly a quarter of Ukrainian external trade and contributing around 8 percent of GDP, further moves could significantly inhibit the country's bid for economic renaissance.

It would take a lot of "blood and sweat" for many Ukrainian companies to withstand any Russian trade ban, Vice President of the European Bank for Reconstruction and Development (EBRD) Andras Simor told Reuters.

"They will need to be flexible if circumstances create a need for adjustment," he said. "We will be there to try and help them as much as possible."

Cementing Kiev's historic shift away from Russia, a bilateral free-trade agreement between Ukraine and the European Union is due to come into force later this year, and Russian trade officials have expressed concerns over closer Ukrainian association with the European bloc.

Russia's milk union has asked for a ban on Ukrainian dairy products, and while no bans are in the works, imports from Ukraine are being monitored closely, according to the assistant to the head of Russia's veterinary oversight agency Rosselkhoznadzor.

"There are no plans to impose restrictions on trade, but we must be prepared for the fact that we will impose restrictions if ... Ukraine is not able to fulfil its obligations due to the political situation in the country," Rosselkhoznadzor's Alex Alexeenko told Reuters.

Dairy products account for only a fraction of Ukraine's sales to Russia, but all Ukrainian exporters will be anxiously eyeing Russia's trade stance, particularly industrial producers in the east.

Russia accounts for 13 percent of Ukraine's iron and steel exports, and the political crisis has already hit shipments from Ukrainian steelmakers this year.

Sales of rebar - a steel bar or mesh of steel wires used in reinforced concrete - to the Commonwealth of Independent States (CIS), a bloc of former Soviet states, fell 70 percent to 45,000 tonnes in January compared with the average monthly export figure in the first half of 2013.

Russian steelmakers have aggressively lobbied their government to implement measures to defend domestic producers from Ukrainian imports.

A spokesman for Ukraine's largest steelmaker, Metinvest , which controls about half of the country's steel industry, said expanding its sales markets was a priority.

However, the steel industry has been battling low prices ST-CRU-IDX and weaker demand for the past three years, complicating potential diversification efforts.

"Tough competition on the international steel market makes the chance of (steelmakers) expanding their export market presence very low," Eavex Capital metals analyst Ivan Dzvinka said in Kiev.

SOCIAL TENSIONS

The free-trade agreement (FTA) between Ukraine and the European Union, due to be signed after a presidential election on May 25, is unlikely to help many of Ukraine's industrial producers whose output is focused on the Russian market.

Manufacturers of train carts and turbo engines, which together account for 2.5 percent of Ukraine's total exports, will be hit particularly hard.

"Re-orienting these industries to Europe would be nearly impossible without very heavy investment, which means production and exports could be lost in the short term," Nomura analysts said in a note.

However, what Ukraine stands to gain from the EU trade agreement could become apparent in the longer term as it aims to help the country create new businesses and modern industries and become a destination for European manufacture.

"The point of the FTA is not to make it possible for Ukraine to export Soviet-era tractors to Europe. That's not going to happen. But it could eventually lead to Ukraine becoming a producer of Peugeots, Volkswagens, fridges or Nokia telephones," the EUISS's Popescu said.

With most of the country's heavy industry located in eastern Ukraine, recently the focus of violent pro-Russian rallies, any trade restrictions could also have political implications.

"Social tensions could rise if businesses are forced to cut output, leaving people without salaries," said Lydia Shynkaruk of Kiev's Institute of Economic Forecasting.

At the Red October factory in the eastern city of Kharkiv, marketing manager Dmitry Laptev said the facility, which sells 70 percent of the brick factory machinery it produces to Russia, was yet to experience any trouble with exports.

"The only issue would be if they completely shut the border to all Ukrainian products, then that would hit us, of course. It would hit everyone," he said, standing among rusting machinery overshadowed by a Soviet mural with the slogan 'My factory is my honour'. (Additional reporting by Natalia Zinets in Kiev and; Andrey Kuzmin in Moscow, Editing by Timothy Heritage, Will Waterman, Janet McBride)

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RPT-Sanctions bind Russia together, for now

Sun Mar 23, 2014 5:15am EDT

(Repeats story from late Friday with no changes)

* Latest US sanctions hit 20 Russians

* Those targeted say they are fully behind Putin

* Russians united in nationalist fervour over Crimea

* Economy key to long-term mood

By Elizabeth Piper

MOSCOW, March 21 (Reuters) - Far from dividing Vladimir Putin's inner circle, U.S. sanctions are drawing them ever closer together behind the former KGB spy and his drive to create a Great Russia.

Revelling in the triumph of Russia reclaiming lost lands, many in the political and business elite seem willing to make sacrifices to give full rein to an "imperialist consciousness" and a nationalism that has long lain dormant.

But once the euphoria fades, the hardcore group may find their business allies less willing to help win over a population facing economic decline, and may face a stark decision - resort to repression or embark on another campaign to rally the troops.

As Putin deadpanned at a meeting of his security council that he would have to steer clear of those on a U.S. sanctions blacklist, many of the targeted officials and businessmen said they would wear their punishment as a badge of pride.

"It is clear they strike at those who have some worth," said Russian Railways boss Vladimir Yakunin, one of 20 officials and businessmen to be hit by visa bans and asset freezes in a second round of sanctions imposed by Washington.

"On the one hand I am in good company. I cannot hide that I felt flattered. All the people on the list are notable people, people who have done a lot for Russia," he wrote in his blog, adding he also could not understand the West's "irrationality".

His words chimed with a chorus of mockery and derision from the dozens of Russians the United States and European Union have penalised over Russia's annexation of Ukraine's Crimea region.

The bravado runs deep, tapping a well of anger over years of perceived slights and hypocrisy by Western nations happy to invade nations to protect human rights and democracy and blind to the strategic interests of others.

GREAT RUSSIA

Olga Kryshtanovskaya, an expert on the Russian elite, said while the United States saw its mission as spreading goodwill, Russia had its own mission - "for the ideology of Great Russia".

"And for that, our politicians, like yours, are ready to sacrifice a lot, our mission means so much to us," said Kryshtanovskaya, who mixes closely with the political elite despite leaving Putin's ruling United Russia party in 2012.

After the chaos of the 1990s following the Soviet Union's collapse, taking with it the country's superpower status, Putin has tried to restore some of the country's might, benefiting from high oil prices to give Russia economic clout.

But with slowing growth exposing an overwhelming dependency on energy, Putin has, by design or just driven by the momentum of events, pursued an increasingly conservative take, regularly using a dissolute West as a comparison to a moral Russia.

Kryshtanovskaya said the nationalism had wide support.

"Now there is unity. Ordinary people who really weren't that bothered about Crimea before are now supporting it, supporting the feeling of strength, the feeling that Russia is driving things, Russia is governing, that Russia is feared, that Russia is respected, that we are changing the agenda."

Not being on board could be seen as treacherous.

One member of the elite close to the Kremlin said that if he was subjected to a visa ban to the United States, he would readily sacrifice seeing his son studying there.

"He can always come back," he said.

The business elite has potentially much more to lose.

Gennady Timchenko, a longtime acquaintance of the Russian leader, sold his stake in the world's No. 4 oil trading company Gunvor a day before his name was added to the sanctions list.

For others with companies registered abroad at arm's length from the Kremlin, the patriotic fervour has also become uncomfortable. Putin told company bosses on Thursday to bring their assets home to help Russia survive any future sanctions and the economic downturn.

HANGOVER TO COME?

Some foreign officials suggest business leaders were not consulted over the hawkish turn of the past month; the result, they say, of pressure on Putin from hardline conservatives not to appear weak.

"Putin is acting together with a very small circle, all of them former KGB agents," said a senior German security source, suggesting they were dissatisfied with Putin's handling of the Ukraine crisis and his gamble on President Viktor Yanukovich, who was deposed last month.

"Within this group, Putin is under pressure - because he was unable to prevent Ukraine drifting west and because he bet on a weak Yanukovich, who should have crushed the Maidan protests immediately."

But no one doubts he is the ultimate arbiter, and at the security council meeting he offered no suggestion that he was regretting going head-to-head with the West over Ukraine.

Instead he wryly told his officials he would open a bank account with St Petersburg's sanctions-hit Bank Rossiya, which is chaired and partly-owned by media baron Yuri Kovalchuk, who Putin has known since the early 1990s.

"I will transfer my wages there," he said.

It is the kind of posture that has buoyed his popularity ratings, and cemented support among the elite. But some wonder how long the party can last.

"Such events create 'the champagne effect' - a rapid, but short-lived high. Depending on the dose, either the foam settles or you get a hangover," said Alexander Rubtsov at the Institute of Philosophy at the Russian Academy of Sciences.

"There are two simple ways out of it: either tighten the screws and so be ready to crush mass protests with repression or arrange new conquests." (Additional reporting by Maria Tsvetkova and Alexei Anishchuk in Moscow and Noah Barkin in Berlin,; Editing by Timothy Heritage and Philippa Fletcher)

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Russian bank SMP says Visa, MasterCard resume services

MOSCOW, March 23 Sun Mar 23, 2014 6:12am EDT

MOSCOW, March 23 (Reuters) - Visa Inc and MasterCard Inc have resumed services for payment transactions for clients at Russia's SMP bank, whose main shareholders were affected by U.S. sanctions, the bank said on Sunday.

Washington imposed additional sanctions on Thursday against 20 Russians for involvement in the Ukraine crisis, including Boris Rotenberg and his older brother Arkady, who received large contracts for the Sochi Winter Olympics. They are co-owners of SMP Bank.

SMP had said on Friday that Visa and MasterCard had stopped providing services for payment transactions for clients at Russia's SMP bank.

The bank said the decision to stop providing services by Visa and MasterCard was unlawful because the sanctions were imposed on shareholders, not the bank, which said it has no assets in the United States.

"We are glad that the two biggest international payment systems have heard our arguments and reversed their decision to block (SMP bank transactions)," SMP bank CEO Dmitry Kalantyrsky, said in a statement.

The bank has about 100 branches covering more than 20 Russian cities, according to its website. (Reporting by Alissa de Carbonnel and Oksana Kobzeva. Editing by Jane Merriman)

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Russia says its flag now flying over 189 Ukrainian military sites in Crimea - RIA

MOSCOW, March 23 Sun Mar 23, 2014 6:17am EDT

MOSCOW, March 23 (Reuters) - Russia said its flag is now flying over 189 Ukrainian military installations in the Crimea, the defence ministry said on Sunday, two days after President Vladimir Putin signed laws completing Russia's annexation of the Black Sea peninsula.

"The flag of the Russian Federation has been raised at 189 military units and institutions of the Ukrainian armed forces stationed on the territory of the Republic of Crimea," the ministry said in a statement, cited by news agency RIA. (Reporting by Alissa de Carbonnel)

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Moody's cuts rating outlook on Croatia's Ba1 government bond

March 21 Fri Mar 21, 2014 6:24pm EDT

March 21 (Reuters) - Moody's Investors Service cut its outlook on Croatia's "Ba1" government bond rating to "negative" from "stable," citing weak recovery from recession due to the country's flawed economic outlook.

The outlook revision is driven by "Croatia's impaired medium-term economic outlook, owing to competitiveness challenges, continued deleveraging and the growth-dampening effect of fiscal consolidation efforts," Moody's said. (r.reuters.com/wez77v)

The ratings agency affirmed Croatia's "Ba1" rating, citing the country's entry into the European Union's Excessive Deficit Procedure in 2014, which mandates policy action by the country to lower fiscal deficits and debt ratios. (Reporting by Kanika Sikka in Bangalore; Editing by Kirti Pandey)

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"Big Short" character sues SEC to stop enforcement case

By Jonathan Stempel

NEW YORK, March 21 Fri Mar 21, 2014 6:36pm EDT

NEW YORK, March 21 (Reuters) - The U.S. Securities and Exchange Commission has been sued by a money manager made famous in Michael Lewis' book "The Big Short," who claims the regulator is violating his constitutional rights in how it is pursuing an enforcement case against him.

Wing Chau and his firm Harding Advisory LLC had been charged by the SEC last October with defrauding investors in a $1.5 billion collateralized debt obligation for which Harding was collateral manager, by failing to reveal that the hedge fund Magnetar Capital LLC had a role in choosing the collateral.

The SEC has said Magnetar took an equity stake in the Octans I CDO and hedged it with a short position, meaning its interests might have conflicted with those of investors who wanted the 2006 CDO to perform well.

In recent years, the SEC has brought several cases involving alleged undisclosed roles in crafting CDOs in federal court, including cases against Goldman Sachs Group Inc, JPMorgan Chase & Co and Citigroup Inc.

But in a lawsuit made public on Friday, Chau and Harding accused the SEC of "shoehorning" their case into an in-house administrative proceeding - where it can be harder for defendants to raise objections and gather evidence - after having "repeatedly stumbled" in similar cases in federal court.

The SEC is "effectively tying the plaintiffs' hands behind their backs," violating their Fifth Amendment rights to equal protection and due process, according to the complaint filed in Manhattan federal court. "The decision to treat plaintiffs differently is causing and will cause severe prejudice."

Chau and Harding are seeking to permanently halt the administrative proceeding scheduled for March 31.

SEC spokeswoman Christina D'Amico declined to comment.

Alex Lipman, a partner at Nixon Peabody representing Chau and Harding, did not immediately respond to a request for comment.

Lipman has also represented Edward Steffelin, a defendant in the JPMorgan case. The SEC dropped its civil case against Steffelin in November 2012.

Harding is based in Boca Raton, Florida, according to the complaint, which is dated March 18.

In adopting the 2010 Dodd-Frank financial reforms, the U.S. Congress gave the SEC power to seek penalties against a wider array of defendants in administrative proceedings, which are overseen by judges on the regulator's payroll.

Critics have said this can be unfair to defendants because litigation is sped up, discovery is limited, and defense lawyers cannot generally take depositions.

Lewis' book "The Big Short" was a best seller about the recent financial crisis.

Chau sued Lewis in 2011 for defamation for allegedly portraying him and other CDO managers in the book as "villains." A federal judge dismissed that lawsuit in March 2013.

The case is Chau et al v. SEC, U.S. District Court, Southern District of New York, No. 14-01903. (Reporting by Jonathan Stempel in New York and Aruna Viswanatha in Washington, D.C.; editing by Andrew Hay)

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UPDATE 1-Dearth of lenders for Multiplan puts focus on regulation

Fri Mar 21, 2014 7:49pm EDT

(Adds comments from Starr Investment Holdings)

By Mariana Santibanez

NEW YORK, March 21 (IFR) - Healthcare company Multiplan blazed a trail in the US high-yield market last week with a USD1bn issue that priced at the tightest level ever seen for a Triple C rated leveraged buyout bond.

But many banks opted to stay well away from the trade, apparently for fear of falling afoul of regulators - and that has put unclear US lending regulations back in the spotlight.

Multiplan attracted a whopping US$6bn in demand for the Caa1/CCC+ eight-year non-call three, which priced at par with a 6.625% coupon.

That was well inside the 6.75% price talk - not to mention the Triple C index's current 8.96% level - and yet the bond still jumped three points in the aftermarket.

Yet only two banks opted to underwrite the deal: Barclays and JP Morgan.

That's an unusually small number for a US$3bn-plus debt financing that also included a US$2.2bn seven-year term loan and a US$75m revolver.

Starr Investment Holdings, who bought the business, said it was their choice to stick with just two banks.

"It was decided by the sponsor group and the company, despite significant pressure from other major underwriters to be included, to keep this a two-handed financing with JP Morgan and Barclays Capital in recognition of the value they added as advisors in the process," said Geoffrey Clark, senior managing director at Starr.

But it's clear that market participants are frustrated over what they see as a muddle created by the different guidelines set by the Federal Reserve, the FDIC and the Office of the Comptroller.

"No one knows why one bank passes on deals and others don't," said Richard Farley, leveraged finance partner at law firm Paul Hastings.

"The only thing I can conclude is that different banks are getting different feedback from regulators."

MURKY WATERS

The guidelines, aimed at stamping out reckless underwriting, focus specifically on leveraged loans but take into account the whole capital structure.

A loan can be criticized or considered "non-pass" if a company cannot amortize or repay all senior debt from free cashflow, or half of their total debt, in five to seven years.

Leverage levels exceeding six times debt to Ebitda after asset sales are also viewed as problematic.

In the case of Multiplan, it has five times leverage through senior secured debt - but 7.3 times through total debt.

"The magic number is 6x leverage, but even if you are 6x leverage you can be a 'pass'", said Farley.

Yet even Multiplan being bought out by a high-profile name - Starr, headed by former AIG boss Hank Greenberg - was not enough to lure some bankers to the trade. Swiss investment firm Partners Group is the other lead investor in the consortium acquiring Multiplan.

Those who stayed away - and turned down the lucrative fees on the deal - wanted no part of the risk of US regulators coming down on them.

But with even the ratings agencies looking favorably on Multiplan, the fact that some lenders stayed away has renewed focus on the regulatory uncertainties in the US market.

"The company has a solid historical track record of cash flow generation and debt repayment," Moody's corporate finance group analyst Daniel Goncalves told IFR.

In 2010, the company levered up substantially to over 6x following an LBO and acquisition of Viant, and subsequently delevered to the low 4.0x range by the end of 2012.

Its short term goals are now centered on reducing leverage through both earnings growth and debt reduction.

The B2 Corporate Family Rating from Moody's is predicated on the company reducing leverage to the mid-6x range by the end of 2014, with further progress to below 6x in 2015.

"It's a good proven business that's been around, and it's a repeat issuer," one investor said.

"Leverage is a bit aggressive and pricing is a bit tight, but it is a credit that the market is generally comfortable with."

Multiplan's LBO isn't the only potential "non-pass" this year; market sources suggest the buyout of Nine West is also a likely candidate with leverage exceeding 6x.

But one thing is clear: frustrated bankers want to make it known that what they see as a broadbrush approach from regulators is not the right one.

"The Fed continues to come out and say: 'Don't do levered deals,'" one leveraged finance banker told IFR. "But then we see a deal this big that blows away the market." (Reporting by Mariana Santibanez; Editing by Natalie Harrison and Marc Carnegie)

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RPT-FED FOCUS-Yellen's off-script moment may give good read on Fed policy

Fri Mar 21, 2014 7:00am EDT

(Repeats to widen distribution)

By Ann Saphir

WASHINGTON, March 20 (Reuters) - When Janet Yellen said on Wednesday that the Federal Reserve may only wait six months after ending its bond buying to raise interest rates, it was an unscripted moment that many called a rookie mistake.

But even so, it could very well provide a clearer window into the U.S. central bank's thinking.

That certainly was how markets took it, immediately swooning as traders priced in a quicker start to rates hikes than they had earlier anticipated.

And increasingly, that is how some analysts view it as well.

"I think it was an expression of an honest view ... but maybe not as tactful as it should have been," said Millan Mulraine, an analyst at TD Securities.

"It is quite conceivable that she was correctly communicating to the markets the sense of the (Fed) board itself," he said. "I think they would have discussed what this means."

Transparency is a double-edged sword for central bankers, but Yellen, who took the helm at the Fed on Feb. 1, has argued hard for more of it.

As Fed vice chair last April, she said that as time for raising rates drew near, "it will be increasingly important for the committee to clearly communicate about how the federal funds rate target will be adjusted."

But saying too much can be perilous, as her predecessor Ben Bernanke found just months into his first term as chairman.

Thinking his remarks were off the record at a private Washington function, he told a news anchor that markets were wrong to think the Fed was done raising rates. When his comments were reported two days later, bond and stock markets fell and the dollar jumped.

Yellen's seeming slip at her first news conference as Fed chair elicited a similar reaction.

The S&P 500 index fell about 0.9 percent within 10 minutes, bonds sold off and the dollar shot higher when Yellen defined what the Fed meant by saying rates would stay low for a "considerable time" after the central bank's asset purchases ended.

While many viewed it as a mistake, JPMorgan economist Michael Feroli said it was equally plausible she was "trying to faithfully discharge her duties as chair."

"If the sense at the meeting was considerable time equals six months, then she felt compelled to relay that," he said.

Indeed, Yellen's goal may have been to augment what Bernanke once called "policymaking by thesaurus", or the penchant of central bankers to choose among particular phrases to sway market expectations.

The new entry for "considerable" time might read, as Yellen characterized it: "around six months or that type of thing ... it depends."

Then-Fed Chairman Alan Greenspan had flexibility in mind when he inserted the phrase "considerable period" into the central bank's lexicon in April 2003.

He wanted to assure financial markets that rates would stay low for longer than the single meeting or two that investors were then anticipating, but he wanted to do so without boxing the Fed in too tightly.

The idea was far from a shoo-in: a transcript from the Fed's policy-setting meeting shows nearly half of those at the table were uncomfortable with the term. But then-Board Governor Bernanke fought for its inclusion, and his advice won the day.

Policymakers never defined what they meant by the phrase.

But after the Fed dropped the term in January 2004, the meaning became clearer: less than six months later, the central bank embarked on a series of 17 consecutive rate increases. (With reporting by David Gaffen in New York and Jamie McGeever in London, editing by Ross Colvin)

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Germany says not approving any defence exports to Russia

BERLIN, March 21 Fri Mar 21, 2014 7:02am EDT

BERLIN, March 21 (Reuters) - Germany has decided to suspend approval of all defence-related exports to Russia in light of the West's diplomatic showdown with Moscow over Ukraine, a spokesman for the economy ministry said on Friday.

Earlier this week, the government ordered defence contractor Rheinmetall to halt delivery of combat simulation gear to Russia. The ministry spokesman said this was a "one-off" case, but that future deals would also be blocked.

"The (Rheinmetall) case that you are talking about is a one-off case. Nevertheless it is true that given the current situation in Russia, we are not approving any exports of defence goods to this country at the moment," the spokesman said. (Reporting by Stephen Brown; Writing by Noah Barkin)

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Putin promises to protect, patronise bank hit by U.S. sanctions

MOSCOW, March 21 Fri Mar 21, 2014 7:05am EDT

MOSCOW, March 21 (Reuters) - President Vladimir Putin on Friday vowed to protect Bank Rossiya, a Russian bank subjected to U.S. sanctions over Moscow's annexation of Ukraine's Crimea region, and said he would keep his salary there.

Putin's remarks were a rebuke to the United States, which said it singled out Bank Rossiya because it is the personal bank for senior Russian officials and is controlled by an associate of Putin. He said the St. Petersburg-based bank had nothing to do with the events in Crimea. (Reporting by Alexei Anishchuk; Writing by Steve Gutterman, editing by Elizabeth Piper)

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Russia steps up customs checks on goods from Ukraine - officials

MOSCOW, March 20 Thu Mar 20, 2014 6:31am EDT

MOSCOW, March 20 (Reuters) - Russian border guards have stepped up checks on goods entering from Ukraine, officials from the customs services and an agricultural inspection service said on Thursday.

"Russian customs have increased customs checks, acting on information about possible attempts to bring contraband in from Ukraine," said Dmitry Kotikov, a customs spokesman. (Reporting by Maria Kiselyova and Tatyana Ustinova, writing by Thomas Grove)

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WRAPUP 2-China says plans to speed up investment, stabilise demand

Thu Mar 20, 2014 6:31am EDT

* Government to speed up investment, construction

* Premier says domestic demand needs to grow, too

* Slowing economy has fueled stimulus speculation (Adds economists' view on the impact on reforms)

By Koh Gui Qing and Xiaoyi Shao

BEIJING, March 20 (Reuters) - Premier Li Keqiang said China will speed up investment and construction plans to ensure domestic demand expands at a stable rate - an indication authorities are considering practical measures to support slackening economic growth.

Li said at a weekly cabinet meeting that China needs to roll out approved plans for growing domestic demand to keep growth in the economy in a "reasonable range".

No further details were given in an official statement following the meeting, and it was not clear if Li had given authorities a green light to accelerate new investment, or to start work on projects that have already been approved.

But his remarks, which came after China quietly revealed last week that it had signed off on 142 billion yuan ($23 billion) worth of railway projects this year, stoked talk among analysts that Beijing is ready to stimulate the economy.

China rattled financial markets earlier this month with data showing growth in investment, retail sales and factory output plumbing multi-year lows in January and February.

Investors, multinational companies and its major trading partners fear a sharper-than-expected slowdown in China will soon drag on activity across the world.

Ramping up state investment to shore up the economy has been par for the course in China in recent years.

In 2008/09, in the face of the global financial crisis, Beijing approved a whopping 4 trillion yuan ($645 billion) of state spending funded partly by bank loans.

That spending helped China recover quickly from the crisis, but the mountain of debt incurred fed other credit problems that the government now hopes to fix, in part by abandoning its former export- and investment-driven growth model.

Stimulus measures announced in several economic soft patches since then have been more modest and more focused, such as last year's spending on social housing, infrastructure and energy-saving industries, and tax breaks for smaller firms.

The five railway projects tipped last week were approved in January and February and will get half of their funding from bank loans, according to the country's economic planner, the National Development and Reform Commission.

Some analysts cautioned investors against taking the latest projects as an indication that China is ramping up spending again, as the construction sector usually picks up in March as the weather turns warm.

They said if China does increase investment in coming months, it would be a setback for broader economic reforms, but arguably an unavoidable one as Beijing is intent on growing the economy by around 7.5 percent this year to boost incomes and employment.

"Of course it will compromise reforms, but the starting point is that the government has to seek a compromise between growth and reforms," said Tao Wang, an economist at UBS. "It was always meant to be a balance."

At a plenum meeting of the Communist Party last November, China announced ambitious reforms that signalled the shift of the world's second-biggest economy from investment- and export-fuelled growth towards a slower, more balanced and sustained expansion.

Some changes, such as government downsizing or closures of debt-laden factories, are likely to take a back seat to avoid fuelling job losses and undermining social stability, analysts have said.

GROWTH VERSUS REFORMS

China has been showing some determination to reform and few experts believe Beijing will launch another super-sized stimulus to prop up the economy.

On Thursday, the government relaxed rules to allow more foreigners to invest in its stock markets, the latest step to free its financial markets after widening the yuan's trading band at the weekend, taking it closer to turning the yuan into a convertible, global currency.

China also has lifted a ban on equity financing for listed property developers for the first time in four years, a step that could herald less government intervention in the sector and ease funding concerns as credit grows tight and the economy slows.

The approvals come amid growing fears of defaults in the property sector after the collapse of Zhejiang Xingrun Real Estate.

But a more volatile yuan has added to global jitters about China after it fell to a one-year low on Thursday.

Some analysts believe China's central bank is engineering the recent slide in the yuan to cushion the weakening economy by making exports more competitive, and others speculate that the government may step up efforts to bolster growth in coming months.

Analysts from government-controlled think-tanks told Reuters last week that Beijing may loosen monetary policy by reducing the level of deposits commercial banks must keep at the central bank if the economic growth slips below its 7.5 percent target.

Beijing could re-energise the economy by increasing government spending, which may involve familiar themes of greater investment in railway construction, public housing and environmental projects such as water conservation.

"With the support of these investments in infrastructure, we believe the economy will stop its slowing trend by the second quarter," economists at Everbright Securities said, adding that the projects will likely be funded by the state budget. ($1 = 6.1965 Chinese yuan) (Editing by Eric Meijer & Kim Coghill)

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Putin says Russian companies must be registered in Russia

MOSCOW, March 20 Thu Mar 20, 2014 6:36am EDT

MOSCOW, March 20 (Reuters) - President Vladimir Putin said on Thursday Russian companies must be registered in Russia and have a transparent ownership structure, emphasising his message that business should be brought back home.

"Russian companies should be registered on the territory of our nation, in our country and have a transparent ownership structure," Putin told heads of Russia's largest companies at a local business conference.

"I am convinced that you are also interested in this. That is why we have set the task of de-offshorisation in this part of the economy." (Reporting by Darya Korsunskaya, editing by Elizabeth Piper; Writing by Lidia Kelly)

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MOVES- Fullerton, Allianz

March 19 Wed Mar 19, 2014 6:14am EDT

March 19 (Reuters) - The following financial services industry appointments were announced on Wednesday. To inform us of other job changes, email to moves@thomsonreuters.com.

The investment company appointed three senior investment professionals - Jason Zhu, Ian McCallum and Craig Mitchell. Ian and Craig will start new investment strategies while Jason will lead the China A equities research team.

Allianz Global Corporate & Specialty SE, the industrial and specialist risk insurer of Allianz Group, appointed Alexander Mack chief claims officer with effect from April 1, 2014.

The company, which provides information-matching solutions to increase fixed-income liquidity, appointed Grant Biggar strategic adviser, effective immediately. (Compiled by Avik Das in Bangalore)

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Crimean PM says will not allow Ukrainian ministers into region-Ifax

MOSCOW, March 19 Wed Mar 19, 2014 5:47am EDT

MOSCOW, March 19 (Reuters) - Crimean Prime Minister Sergei Aksyonov said on Wednesday that senior Ukrainian officials dispatched to the region by the government in Kiev amid tension between military forces would not be allowed to enter, Russian news agency Interfax reported.

"They are not wanted in Crimea. Nobody will let them into Crimea, they will be sent back," Interfax quoted Aksyonov as saying after Ukrainian Prime Minister Arseny Yatseniuk ordered and the acting defence minister and first deputy prime minister to fly to Crimea to "resolve the situation" in the region now controlled by Russian forces. (Reporting by Maria Kiselyova)

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Germany clears way for political part of EU-Ukraine pact

BERLIN, March 19 Wed Mar 19, 2014 6:55am EDT

BERLIN, March 19 (Reuters) - Germany's cabinet has approved EU plans for closer political cooperation with Ukraine, a government source said, clearing the way for Chancellor Angela Merkel to sign part of a so-called association agreement at an EU summit later this week.

The 28-member bloc is expected to sign a more far-reaching trade accord with Ukraine later.

Pro-Russian Ukrainian president Viktor Yanukovich's decision last November not to sign the association agreement with the EU provoked months of street protests that led to his fleeing the country.

Since then, Russian forces have occupied Ukraine's Crimea region and President Vladimir Putin has signed a treaty making the region part of Russia after a weekend referendum.

Washington and the EU have condemned the move which has prompted the worst crisis in East-West ties since the Cold War.

The EU has split the signing of the association agreement into two parts with the economic and trade aspects to come after May presidential elections in Ukraine. The European Commission has already removed duties on a range of imported goods from Ukraine in an effort to help its economy. (Reporting by Andreas Rinke; Editing by Noah Barkin)

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Kremlin scoffs at Western sanctions against Russians over Crimea

MOSCOW, March 18 Tue Mar 18, 2014 6:43am EDT

MOSCOW, March 18 (Reuters) - An aide to President Vladimir Putin scoffed at Western sanctions against Russian officials over Moscow's takeover of Ukraine's Crimea region, saying on Tuesday they provoked only "irony and sarcasm."

"We are fed up with these sanctions, they provoke only feelings of irony and sarcasm," Yuri Ushakov, Putin's senior foreign policy advisor, was quoted as saying by Russian news agencies.

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EMERGING MARKETS-Russian stocks track emerging equities higher, rouble back in red

By Sujata Rao

LONDON, March 18 Tue Mar 18, 2014 6:51am EDT

LONDON, March 18 (Reuters) - Russia's rouble fell on Tuesday from the previous session's two-week highs on fears of fresh economic sanctions and a further military standoff, though Moscow equities firmed in line with other emerging markets.

Equities were generally stronger across emerging markets, lifted by big gains in Indian and Korea, while Russian shares extended the 3.6 percent rise posted on Monday after Western sanctions were seen as milder than expected.

But Moscow's defiant move towards formally annexing the Crimea region is keeping alive tensions with the West. President Vladimir Putin is expected to back absorbing the territory into Russia when he addresses parliament later in the day.

HSBC strategist Murat Toprak said investors would scan Putin's speech for clues as to whether military intervention was likely for the rest of Ukraine. The rouble weakened 0.6 percent against the dollar.

"The Crimea election is a done deal, the market wants to know if there is any intention to go beyond Crimea. This is one of the concerns of the market," Toprak said.

Fears the West will respond with fresh, more stringent sanctions are reflected in the offshore rouble forwards, which continue to trade at a rare premium to onshore contracts on fears that future local settlements could prove difficult.

In neighbouring Ukraine, the hryvnia fell more than 4 percent to the dollar. Investors are waiting to see the result of an IMF mission to Kiev which concludes on Friday. Currency flexibility is one of the IMF's demands.

"What happens to hryvnia depends on whether the central bank is intervening and given the level of their FX reserves I'd expect that authorities would not stand in the way of the currency," said RBS analyst Tatiana Orlova.

"On the basis of fundamentals, hryvnia should move to 11 or 12 per dollar."

While broader emerging markets have been boosted by better economic data from many countries, including the so-called Fragile Five, gains were seen capped by Chinese developments.

The yuan traded almost at one-year lows to the dollar after the central bank's weekend move to widen its trading band, indicating it was willing to tolerate more currency volatility. Traders expect more weakness as the economy loses steam.

"The China backdrop is not very supportive - all these uncertainties about potential bankruptcies - this is a market concern, it's not very positive for emerging markets," Toprak said, referring to recent corporate difficulties.

Chinese stocks ended flat but MSCI's emerging markets index rose 0.2 percent, buoyed by gains in Seoul which posted the biggest one-day rise in two weeks and in Mumbai where foreign buyers pushed shares to record highs before elections.

Overseas funds have bought a net $1.6 billion worth of Indian shares in the past 20 sessions, while Goldman Sachs upped its recommendation on Indian shares to overweight.

Turkish equities were a quarter point higher but the lira fell 0.4 percent ahead of a central bank meeting that is expected to leave interest rates unchanged. The bank jacked up all its interest rates by 250-500 basis points at the end of January to protect the lira.

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see )

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German deputy fin min greets court ruling on ESM bailout fund

KARLSRUHE, Germany, March 18 Tue Mar 18, 2014 6:51am EDT

KARLSRUHE, Germany, March 18 (Reuters) - Germany's deputy finance minister welcomed a ruling on Tuesday by the Constitutional Court which upheld the legality of the euro zone's bailout fund, saying the decision backed up the government's own arguments.

"I am very happy with the outcome because what the German government has put forward here has been reflected in the ruling and the Constitutional Court has confirmed (our views)," said Werner Gatzer, one of the finance ministry's deputy ministers, after the ruling was read out in Karlsruhe.

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Crimea eyes energy firm privatisation, possible sale to Russia - report

MOSCOW, March 14 Fri Mar 14, 2014 6:14am EDT

MOSCOW, March 14 (Reuters) - Crimea may sell Ukrainian energy firm Chornomornaftohaz to a Russian company "like Gazprom" once the regional authorities take control of it, Interfax news agency quoted a Crimean official as saying on Friday.

"After nationalisation of the company we would openly take a decision - if a large investor, like Gazprom or others emerges - to carry out (privatisation)," Rustam Temirgaliev, Crimea's first deputy prime minister, said.

Earlier this week he said Crimea would take ownership of Ukrainian state companies on its territory, including the region's Black Sea natural gas fields, cementing the region's independence before a referendum on joining Russia on Sunday.

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Moscow says it has the right to protect Russians in Ukraine

MOSCOW, March 14 Fri Mar 14, 2014 6:15am EDT

MOSCOW, March 14 (Reuters) - Russia said on Friday clashes in which at least one person was killed in eastern Ukraine showed the Ukrainian authorities had lost control and that Moscow reserved the right to protect compatriots there.

"Russia is aware of its responsibility for the lives of compatriots and fellow citizens in Ukraine and reserves the right to take people under its protection," the Foreign Ministry said in a statement.

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UPDATE 3-China's central bank halts Tencent, Alibaba mobile payment process

Fri Mar 14, 2014 6:52am EDT

* Move aimed at protecting payment service market - PBOC document

* Tencent stock slides nearly 7 percent, CITIC bank suspended

* Measure marks latest spat between finance sector and Internet firms

By Hongmei Zhao and Heng Xie

HONG KONG/BEIJING, March 14 (Reuters) - China's central bank demanded on Friday that payments made by scanning a bar code with mobile devices be halted, hitting the payment arms of Internet companies Tencent Holdings Ltd and Alibaba Group Holding.

The People's Bank of China (PBOC) made its decision amid concerns about the security of verification procedures and asked both companies to provide detailed reports about their products.

The suspension affects the rollout of new virtual credit cards by Tencent and Alibaba as competition intensifies in China's e-commerce market.

Both companies announced this week they would launch cards, which can use QR bar codes scanned by smartphones to process payments, in partnership with China CITIC Bank Corp . Alibaba's card launch is planned for next week.

China's online and mobile payment transactions have been growing at a torrid pace, and consultancy McKinsey forecasts China will overtake the United States as the world's largest online retail economy this year.

Analysts say the halt of any new services is likely to be temporary, as the PBOC moves to assess how customer information is being secured.

The central bank's suspension also underscores the clash between China's finance sector and domestic Internet companies, which have pushed into the banks' territory by ramping up their own financial services, offering online payment services and wealth management products.

"This is a milestone in the innovation of China's Internet finance, said Yi Huanhuan, deputy director at Hong Yuan Securities Research. "The ways the Internet is used has already reached the 'meat' of the core business of traditional banking institutions."

SECURITY CONCERN

China's three Internet giants, which also include Baidu Inc , have invested heavily in technologies and businesses that make use of scanning QR codes with mobile devices to cash in on China's 500 million smartphone and tablet users.

China's mobile payment market last year increased by more than 700 percent, to 1.22 trillion yuan ($199 billion) in transactions.

QR codes, which can be scanned with mobile devices to transmit web addresses, payment details or other information, are expected to be a driving force in the mobile payment market this year, according to Beijing-based data firm iResearch.

But the growth of the QR code system has also sparked concern over its security, particularly for making payments.

Officials at Tencent, China's largest listed Internet company, and Alipay, the online payment arm of e-commerce firm Alibaba, confirmed to Reuters that they had received a notice from the People's Bank of China (PBOC) about the move, though they declined to be identified because they were not authorised to speak with media.

An Alipay spokeswoman declined to give official comment. A PBOC spokesman said the bank is asking the companies to submit detailed reports on their procedures.

"The notice was issued all of a sudden ... This notice had a great impact on our business," said an official from Alipay, Alibaba's online payment affiliate, who declined to be identified as they were not authorised to speak to the media.

The PBOC document was issued "in order to protect the payment service market, and prevent payment risks", a source who saw the notice told Reuters.

Shares of Tencent slid as much as 7 percent in Hong Kong before ending down 4 percent.

China CITIC Bank Corp suspended trading of its shares after the stock fell more than 8 percent in Shanghai and nearly 7 percent in Hong Kong. China CITIC Bank said on Thursday it will operate virtual credit cards with Tencent and Alibaba.

These virtual credit cards can also be used to make payments without a QR code on websites that support CITIC credit card payment and on Tencent's and Alibaba's own platforms.

China CITIC Bank told Reuters it had not received any document from the PBOC.

Analysts said other new offerings or technology could also be at risk.

"It is a negative sign to the market. The central government steps in to control a supposedly very free and innovative area of business. That means even if it is an innovative segment, it is not as free as we have anticipated," said Alex Wong, a director at Hong Kong-based brokerage Ample Finance Group.

MARKET JITTERS

In February, Alipay said it handled 900 billion yuan in mobile payment transactions from more than 100 million users last year, completing more mobile payments than U.S.-based PayPal and Square Inc combined. [ID:nL3N0LD07H}

The PBOC said in December it would closely monitor the development of online financial services to ensure companies do not cross any legal red lines.

"If the government is pushing back on the QR code thing, it's probably a temporary thing until the government figures out what is going on," said Michael Clendenin, managing director of Shanghai-based RedTech Advisors.

China's Internet companies have repeatedly clashed with entrenched interests in the finance sector, as companies such as Tencent, Alibaba and Baidu Inc push further into their territory.

In August, Chinese media reported that Alipay halted its offline point of sales service for small companies.

The move came after state-owned China UnionPay, the country's monopolistic credit card provider, put pressure on Alipay to route the service through UnionPay's system so it could increase its commission earnings on transactions.

Tencent and Alibaba said this week they are also applying for licences from the bank regulator to participate in a trial plan for privately-owned banks.

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Russia, Gazprom should take care of Crimea's oil, gas production - RIA

MOSCOW, March 13 Thu Mar 13, 2014 6:25am EDT

MOSCOW, March 13 (Reuters) - Russian companies such as Gazprom should be involved in Crimea's oil and gas production, the speaker of Crimea's Moscow-backed parliament told Russia's RIA news agency on Thursday.

Vladimir Konstantinov also said the Ukrainian region, which wants to join Russia, was guarding oilfields and rigs.

"Russia, and Gazprom, should take care of the oil and gas production. It's not our issue," Konstantinov said.

On Wednesday, Crimea's first deputy prime minister said the region would take ownership of Ukrainian state companies on its territory, including the region's Black Sea natural gas fields.

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EMERGING MARKETS-Russian, Turkish currencies buck firmer emerging market trend

By Sujata Rao

LONDON, March 13 Thu Mar 13, 2014 6:26am EDT

LONDON, March 13 (Reuters) - Emerging market shares and currencies were broadly firmer on Thursday, shrugging off weak Chinese economic data and focusing on a stronger yuan and more stability on commodity markets.

The Russian and Turkish currencies were flat, however, remaining under pressure as the former looked set to be hit by Western sanctions and the latter was weighed on by escalating domestic tensions before March 30 local elections.

Chinese mainland shares rose 1 percent but parted gains after below-forecast industrial output and retail sales data that continued a run of sluggish data from the world's second-largest economy.

But a stronger yuan mid-point rate was seen for the first time in four days, boosting spot yuan prices and regional currencies, while gains on Asian bourses helped the benchmark equity index eke out a quarter percent gain.

The momentum filtered through to emerging Europe, but politics and their economic impact were seen curbing gains.

"We had weaker EM performance earlier this week on the back of increasing Russian and Ukrainian tensions, new political noises in Turkey and weak Chinese data. We're seeing some investors use that as better entry levels," Abbas Ameli-Renani, a strategist at RBS in London, said.

But, he said, markets appeared complacent about the risks ahead of this weekend's referendum that could see Crimea vote for independence from Ukraine. Kiev and its Western allies see the vote, supported by Russia, as illegal.

"We've had a massive liquidity squeeze in January and a Chinese economic slowdown, but a lot of that has not been translated into currency weakness," Ameli-Renani warned.

Russian shares pared early gains of up to 1 percent but were 0.4 percent higher by 0900 GMT as crude prices held above $108 a barrel after the previous session's 2-percent plunge caused by the release of oil from U.S. strategic reserves.

Prices for copper too steadied above multi-year lows.

Turkish stocks jumped 1 percent as the broader momentum lifted them off one-week lows but the market is facing big headwinds amid spreading anti-government rallies. A protester and a police officer were killed during Wednesday's protests, the worst such violence since last summer.

CURRENCY, DEBT PRESSURES

Currencies and local debt markets stayed under pressure however.

The lira was just off five-week lows after the central bank sold $50 million on Wednesday.

The rouble was flat too against the dollar, with the central bank moving the currency's target exchange rate corridor by 10 kopecks after interventions to the tune of $1.5 billion . The rouble has lost almost 10 percent this year.

Potential Western sanctions also raised serious risks to the economy which is already slowing down, but analysts say the central bank, which meets on Friday, cannot afford to support it with rate cuts because of the rouble's steady weakening.

"This sort of currency depreciation pressure, triggered by geo-political uncertainty, risks increasing domestic demand for hard currency," Unicredit analysts said in a note.

"2008 last provided evidence of a sharp shift in the deposit base. With this in mind, it seems very likely (the central bank) will maintain its policy rate at 7 percent tomorrow."

Russian 5-year rouble bond yields were just off 4-1/2-year highs, having spiked 50 basis points on Wednesday. Turkish 2-year yields are near 14-month highs.

On the dollar bond front, Russia's 2043 bond has been trading at the lowest prices since its September 2013 launch, though it enjoyed a one cent bounce on Thursday.

Ukraine's sovereign and quasi-sovereign dollar bonds maturing 2014 stayed near record lows as markets continued to await details of a financing package for the country.

But in a clear sign of how investors are distinguishing between emerging economies, Mexico, which was recently upgraded by ratings agencies, sold 1 billion pounds ($1.66 billion) worth of 100-year bonds on Tuesday at a 5.75 percent yield.

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see )

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MOVES- Cantor Fitzgerald Europe, AXA IM, WH IRELAND

March 13 Thu Mar 13, 2014 6:30am EDT

March 13 (Reuters) - The following financial services industry appointments were announced on Thursday. To inform us of other job changes, email to moves@thomsonreuters.com.

CANTOR FITZGERALD EUROPE

The division of New York-based financial services group Cantor Fitzgerald LP appointed Tobias Woerner and Howard Prince Wright as senior advisers, with a particular focus on the building and construction sector.

AXA INVESTMENT MANAGERS (AXA IM)

The asset management unit of France-based AXA Group appointed Tim Gardener as global head of the firm's new institutional client group, where he will lead the development of the firm's offering and approach to institutional clients, including insurance companies, pension funds, and sovereign wealth funds. Gardener joined the company in 2010 as global head of consultant relations, following a 24-year career at Mercer Investment Consulting.

WH IRELAND GROUP PLC

The UK-based investment bank and brokerage appointed Dan Cowland as finance director to its board and senior management team, based in London. Cowland most recently served as finance director at Shore Capital Stockbrokers, a unit of Shore Capital Group Ltd.

ASHCOURT ROWAN ASSET MANAGEMENT

The division of UK-based wealth management firm Ashcourt Rowan Plc appointed Chris Legge as head of intermediary services. Legge joins the company from Brewin Dolphin Holdings Plc, where he served as intermediary business development manager for eight years.

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CORRECTED-Bank of England's Carney faces grilling over foreign exchange scandal

Mon Mar 10, 2014 5:46am EDT

(Corrects first paragraph in Sunday story to indicate questioning is this week, not next week, on Tuesday)

By William Schomberg and William James

LONDON, March 9 (Reuters) - Mark Carney faces probably his toughest questioning so far as Bank of England governor on Tuesday when lawmakers will seize on a foreign exchange scandal to press their demands for tighter oversight of the central bank.

Carney arrived from Canada last July as an outsider with a mandate to shake up the 320 year-old institution, from monetary policy to its relationship with the powerful banks of the City of London.

A group of influential members of parliament wants Carney to change the way the BoE polices itself too.

Their long-standing frustrations with what they say is the Bank's outdated governance system broke out again last week when the BoE suspended an official amid an internal review into whether Bank staff turned a blind eye to possible manipulation of key rates by foreign exchange traders.

The meetings at which the BoE and traders discussed possible problems in the market took place as far back as 2006, seven years before Carney's arrival in London.

But lawmakers are angry that the Bank's Court of Directors - its governing board - only asked its oversight committee to investigate last week. Carney may also be asked to show how quickly he responded to the first signs of the case last year.

Mark Garnier, a member of the Treasury Committee which will hear Carney on Tuesday, said any perceptions that the BoE was not tough enough on tackling problems could damage London's reputation as a financial centre, potentially weakening Britain's hand in European Union talks over financial reforms.

"We will be asking the governor what steps he is taking to bring management arrangements and committee structure up to the standards of the 21st century," Andrew Love, another member of the Treasury Committee, said.

Former finance minister Alistair Darling said in 2011 that the governance arrangements were antiquated. "It is all to do with the governor being some sort of Sun King around which the Court revolves," he said.

The Court has since gained new oversight powers. But critics say it still lacks clout. Its chairman David Lees acknowledges he plays second fiddle to the BoE governor.

"It's lower down the pecking order than you would be used to in the corporate sector," he told the Evening Standard newspaper last month.

The Sunday Telegraph newspaper reported the Court's oversight committee may name a judge, academic or senior financial industry executive to run its investigation.

There could also be tough questions for another BoE policymaker official due to attend Tuesday's hearing.

Paul Fisher, a member of the Monetary Policy Committee, was previously BoE's head of foreign exchange and he chaired the Foreign Exchange Joint Standing Committee, a forum for Bank officials and market players to discuss market issues.

It was at a sub-group of that committee that dealers raised concerns with BoE officials as early as July 2006 over attempts to move the market around the time of daily benchmark fixings.

Last week, when it announced the suspension of the unnamed official, the BoE stressed the importance of staff keeping records and flagging concerns to managers. It also said it had found no evidence that its staff colluded in any manipulation.

Tuesday's meeting was originally scheduled as a regular hearing on monetary policy. Carney is likely to face some criticism over the way the BoE scrambled to revamp its policy of signalling the likely path of interest rates last month, after it misjudged the speed of the labour market's recovery, leading to questions about the value of the policy that Carney introduced.

MORE CHANGE COMING?

The Canadian has already made his mark on the BoE in ways beyond the forward guidance revamp of monetary policy. He has established a less hostile tone towards bankers than his predecessor Mervyn King and created the new post of chief operating officer to oversee an internal Bank shake-up.

Consultants McKinsey are working on ways to pursue that modernisation drive and its findings are expected soon.

Lawmakers hope that on the list will be the BoE's Court.

John van Reenen, director of the Centre for Economic Performance at the London School of Economics, said a natural extension of Carney's push to improve transparency at the Bank would be to bring more clarity to its internal supervision.

"He's not as respectful of venerable British institutions as many people are, and from time to time you want to take a cold, hard look at whether the existing set of institutions really is fit for purpose in a modern age," he said.

"He seems to be a person who is prepared to make those kind of changes." (Additional reporting by Jamie McGeever and David Milliken; Editing by Louise Ireland)

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U.S. jobs growth last month hit by weather -Fed's Plosser

PARIS, March 10 Mon Mar 10, 2014 6:15am EDT

PARIS, March 10 (Reuters) - Severe winter weather likely affected U.S. jobs growth in February, a top Federal Reserve official said on Monday, the latest U.S. central banker to suggest a bit of weakness in the labor market is only temporary.

In a speech at the Bank of France, Philadelphia Fed President Charles Plosser pointed to U.S. payroll gains in December, January and February. "All three of these numbers most likely reflected in part the effect of the unusually severe winter weather," he said according to prepared remarks.

A government report on Friday showed U.S. employers added 175,000 jobs last month after creating 129,000 new positions in January. The unemployment rate, meanwhile, rose to 6.7 percent from a five-year low of 6.6 percent as Americans flooded into the labor market to search for work.

Plosser is a long-time critic of the Fed's aggressive bond-buying program, which is meant to spur hiring and economic growth, but which policymakers have trimmed in measured steps despite some weak growth in jobs, manufacturing and retail sales in the world's largest economy so far this year.

Aside from the reference to the jobs report, Plosser's speech was largely the same as a speech he gave in London on March 6.

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Bad loan triggers key feature in ECB bank test announcement- sources

By Laura Noonan

DUBLIN, March 10 Mon Mar 10, 2014 6:35am EDT

DUBLIN, March 10 (Reuters) - The European Central Bank's stance how bad loans are defined will be one of the biggest revelations in an announcement on Tuesday on how it will test the balance sheets of the euro zone's largest banks, three sources with knowledge of the tests told Reuters.

The details will give the 128 banks being tested their most explicit insight to date on how their books will be examined by inspectors deciding whether they need billions of euros of extra capital.

The tests are being done to restore investor confidence and clean up any lingering problems in the euro zone's banks before the ECB becomes their supervisor in November.

The methods some euro zone banks use to decide if a loan has turned sour will fall short of those in the ECB's review of banks' loan books, a source with knowledge of the matter said.

The rules will require that new valuations must be done for any collateral that had not been valued within a year of January 2014, two of the sources said, and will also set the banks estimates of loan losses against 'challenger models' created by external auditors.

The ECB declined to comment.

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WRAPUP 6-Warning shots fired to turn monitors back from Crimea

Sat Mar 8, 2014 3:41pm EST

* Crimea vote to join Russia raises tension

* Crisis still bloodless

* Hackers attack Ukraine authorities and news agency

By Peter Graff and Andrew Osborn

KIEV/SEVASTOPOL, Ukraine, March 8 (Reuters) - Shots were fired in Crimea to warn off an unarmed international team of monitors and at a Ukrainian observation plane, as the standoff between occupying Russian forces and besieged Ukrainian troops intensified.

Russia's seizure of the Black Sea peninsula, which began 10 days ago, has so far been bloodless, but its forces have become increasingly aggressive towards Ukrainian troops, who are trapped in bases and have offered no resistance.

President Vladimir Putin declared a week ago that Russia had the right to invade Ukraine to protect Russian citizens, and his parliament has voted to change the law to make it easier to annex territory inhabited by Russian speakers.

Tempers have grown hotter in the last two days, since the region's pro-Moscow leadership declared it part of Russia and announced a March 16 referendum to confirm it.

The worst face-off with Moscow since the Cold War has left the West scrambling for a response. U.S. Secretary of State John Kerry, speaking to Russia's foreign minister for the fourth day in a row, told Sergei Lavrov that annexing Crimea "would close any available space for diplomacy," a U.S. official said.

President Barack Obama spoke by phone to the leaders of France, Britain and Italy and three ex-Soviet Baltic states that have joined NATO. He assured Latvia, Lithuania and Estonia, which have their own ethnic Russian populations, that the Western military alliance would protect them if necessary.

A spokeswoman for the Organization for Security and Cooperation in Europe said no one was hurt when shots were fired to turn back its mission of more than 40 unarmed observers, who have been invited by Kiev but lack permission from Crimea's pro-Russian authorities to cross the isthmus to the peninsula.

They had been turned back twice before, but this was the first time shots were fired.

Ukraine's border guards said an unarmed observation plane took rifle fire flying 1,000 metres over the regional border.

Hackers targeted Kiev's security council with a denial of service attack designed to cripple its computers, the council said. The national news agency was also hit. Russia used similar cyber tactics during its war against Georgia in 2008.

Crimea's pro-Moscow authorities have ordered all remaining Ukrainian troop detachments in the province to disarm and surrender, but at several locations they have refused to yield.

Moscow denies that the Russian-speaking troops in Crimea are under its command, an assertion Washington dismisses as "Putin's fiction". Although they wear no insignia, the troops drive vehicles with Russian military plates.

A Reuters reporting team filmed a convoy of hundreds of Russian troops in about 50 troop trucks, accompanied by armoured vehicles and ambulances, which pulled into a military base north of Simferopol in broad daylight on Saturday.

"SITUATION HAS CHANGED"

The military standoff has remained bloodless, but troops on both sides spoke of increased agitation.

"The situation is changed. Tensions are much higher now. You have to go. You can't film here," said a Russian soldier carrying a heavy machinegun, his face covered except for his eyes, at a Ukrainian navy base in Novoozernoye.

About 100 armed Russians are keeping watch over the Ukrainians at the base, where a Russian ship has been scuttled at the harbour's entrance to keep the Ukrainians from sailing out with three ships of their navy.

"Things are difficult and the atmosphere has got worse. The Russians threaten us when we go and get food supplies and point their guns at us," said Vadim Filipenko, the Ukrainian deputy commander at the base.

A source in Ukraine's defence ministry said it was mobilising some of its military hardware for a planned exercise, Interfax news agency reported. Ukraine's military, with barely 130,000 troops, would be no match for Russia's. So far Kiev has held back from any action that might provoke a response.

Overnight, Russian troops drove a truck into a missile defence post in Sevastopol, the home of both their Black Sea Fleet and the Ukrainian navy, and took control of it. A Reuters reporting team at the scene said no one was hurt.

Ukraine's border service said Russian troops had also seized a border guard outpost in the east of the peninsula overnight, kicking the Ukrainian officers and their families out of their apartments in the middle of the night.

Polish Foreign Minister Radoslaw Sikorski said on Saturday Poland had evacuated its consulate in Sevastopol due to "continuing disturbances by Russian forces".

The United States has announced sanctions against individuals it accuses of interfering with Ukrainian territorial integrity, although it has yet to publish the list. Washington has threatened wider action to isolate the Russian economy.

The European Union is also considering sanctions, but has so far been more cautious. Any action would be much harder to organise for a 28-nation bloc that takes decisions unanimously, many of whose members depend on Russian natural gas.

Ukraine's ambassador to Russia held a "frank" meeting with a deputy Russian foreign minister, Moscow said, giving no details.

Pro-Moscow Crimea leader Sergei Aksyonov said the referendum on union with Russia - due in a week - would not be stopped. It had been called so quickly to avert "provocation", he said.

"MANY HOTHEADS"

"There are many hotheads who are trying to create a destabilised situation in the autonomous republic of Crimea, and because the life and safety of our citizens is the most valuable thing, we have decided to curtail the duration of the referendum and hold it as soon as possible," he told Russian television.

Aksyonov, whose openly separatist Russian Unity party received just four percent of the vote in Crimea's last parliamentary election, declared himself provincial leader 10 days ago after armed Russians seized the parliament building.

Crimean opposition parliamentarians say most lawmakers were barred from the besieged building, both for the vote that installed Aksyonov and another a week later that declared Crimea part of Russia, and the results were falsified. Both votes took place behind closed doors.

Crimea has a narrow ethnic Russian majority, but it is far from clear that most residents want to be ruled from Moscow. When last asked in 1991, they voted narrowly for independence along with the rest of Ukraine. Western countries dismiss the upcoming referendum as illegal and likely to be falsified.

Many in the region do feel deep hostility to Kiev, and since Aksyonov took power supporters of union with Moscow have controlled the streets, waving Russian flags and chanting "Rossiya! Rossiya!"

Nevertheless, many still quietly speak of their alarm at the Russian takeover: "With all these soldiers here, it is like we are living in a zoo," said Tatyana, 41, an ethnic Russian. "Everyone fully understands this is an occupation."

The region's 2 million population includes more than 250,000 indigenous Tatars, who have returned only since the 1980s after being deported en masse to distant Uzbekistan by Stalin. They are fiercely opposed to Russian annexation.

The referendum is "completely illegitimate. It has no legal basis", Crimean Tatar leader Refat Chubarev told Germany's Suddeutsche Zeitung newspaper.

As tempers have hardened, journalists have been beaten by hostile pro-Russian crowds. The Associated Press said armed men had confiscated TV equipment from one of its crews.

In addition to the Russian troops, the province is prowled by roving bands of "self-defence" forces and Cossacks in fur hats armed with whips, bused in from southern Russia.

In Crimea, Russian television and the provincial channel controlled by Aksyonov broadcast wildly exaggerated accounts of "fascists" in control of the streets in Kiev and of plans by Ukraine to ban the Russian language. Ukrainian television and the region's only independent station have been switched off.

Putin launched the operation to seize Crimea within days of Ukraine's pro-Russian President Viktor Yanukovich's flight from the country. Yanukovich was toppled after three months of demonstrations against a decision to spurn a free trade deal with the European Union for closer ties with Russia.

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peHUB-JP Morgan Chase's sale of private equity arm stalls

Sat Mar 8, 2014 11:29am EST

* Buyers and seller at odds on price

* Bank sees business as non-core

* Auction could be revived

By Chris Witkowsky

NEW YORK, March 8 (Reuters-peHUB) - The auction of JP Morgan Chase's private equity business, One Equity Partners, in the market since at least November, has hit an impasse, according to three people with knowledge of the situation.

Two people close to potential buyers said the bank "pulled" the business off the market. Another source, active in the secondary market but not directly involved with the process, described the auction as stalled after the bank increased its asking price.

"The bid/ask spread has widened dramatically," the secondary professional said. "It's hard to imagine someone stretching to that level. There's a lot of disappointed buyers."

Sources said the bank could revive an auction of One Equity at any time. "The question is, do they try and come back six months from now, or never?" one source said.

A spokesperson for JP Morgan Chase declined to comment.

The bank announced last July it was spinning off One Equity, its last remaining private equity operation, because the unit was not core. JP Morgan Chase was not under regulatory pressure to sell: One Equity would not be affected by the Dodd-Frank financial reform law, which restricts the ability of bank holding companies to own and operate private equity groups, sister news service Reuters reported last year.

Potential buyers were bidding for a portfolio of buyout and growth equity investments valued at more than $4 billion, according to sources. The winning bidder was also expected to contribute to a new fund the team would raise as an independent firm.

As part of the deal, One Equity, which has been investing off the bank's balance sheet, wanted $1.5 billion to $2 billion in funding for new deals, Dow Jones reported in November.

Without a deal in place, One Equity team would likely have to move forward without any new capital from the bank. One Equity is drawing from "outstanding capital commitments" from the bank until starting its next fund, which would be raised from external investors, according to One Equity's website.

The group is led by Dick Cashin, who founded the group in 2001. Since then, One Equity has managed $14 billion in total investments and committed capital for JP Morgan Chase.

The bank has shed its other private equity groups over the years. JP Morgan Partners spun out into independent firm CCMP Capital Partners, and Corsair Capital, which the bank formed in 1993 to invest into opportunities created by the savings and loan crisis, spun out in 2006.

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