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UPDATE 1-Illinois budget with income tax revenue hole passes

Written By Unknown on Sabtu, 31 Mei 2014 | 18.12

Fri May 30, 2014 7:56pm EDT

(Adds statements from governor, Senate president; in paragraphs 4-5, 9-10)

By Karl Plume

SPRINGFIELD, Ill. May 30 (Reuters) - The Illinois Senate gave final approval to the state's $35.7 billion fiscal 2015 budget on Friday, sending the governor a spending plan that offsets a big tax revenue hole with one-time measures.

Temporary income-tax rate increases, passed in 2011 in the midst of one of the state's budget pinches, are set to partially expire on Jan. 1, causing an estimated $2 billion revenue decline in the fiscal year that begins on July 1. The budget bills, which were passed by the Democratic-controlled House on Tuesday, keep most spending flat despite the projected revenue decline.

Governor Pat Quinn had proposed making the temporary tax rates permanent, but House Democrats could not muster enough votes to pass the extension, which Republicans in both chambers opposed. The House also refused to enact spending cuts to account for the revenue loss.

The Democratic governor said lawmakers sent him an "incomplete" budget that postpones tough decisions.

"I will work to minimize the impact of cuts in vital services while continuing to cut waste and maintain our hard-won fiscal gains," Quinn said in a statement.

The revenue decline will occur in the second half of fiscal 2015 as the personal income tax rate falls to 3.75 percent from 5 percent and the corporate rate drops to 5.25 percent from 7 percent.

Lawmakers said the budget is expected to add $2 billion to Illinois' big backlog of unpaid bills, while it would allow the governor to borrow up to $650 million from a variety of dedicated state funds to boost general fund cash flow. These kinds of one-time revenue measures have contributed to past downgrades of Illinois' bond ratings, which are at the lowest level among states.

The state has shrunk its bill pile to $4.17 billion as of last month from $5.3 billion in April 2013, according to the governor's budget office.

Senate President John Cullerton acknowledged that the budget will reverse fiscal progress Illinois has made in recent years and said lawmakers will have to revisit income tax rates.

"In order to return to this path of fiscal progress, we will have to bring revenues in line with our growing liabilities," Cullerton said in a statement. "While a vote on our tax rates has been deferred, rising costs and pressures will force the issue at a later date."

Ahead of the budget vote in the Democratic-controlled Senate, Republican senators held a news conference to push a resolution to prevent a post-November general election vote on making the income tax rates permanent.

"Lame-duck action is not something that needs to be occurring on very controversial and important issues," said Senate Republican leader Christine Radogno. "Those should be reserved for the regular session of the general assembly." (Additional reporting by Karen Pierog in Chicago; Editing by Matthew Lewis and Mohammad Zargham)

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Argentina says no plan to evade U.S. courts in creditor case

By Nate Raymond

NEW YORK Fri May 30, 2014 8:25pm EDT

NEW YORK May 30 (Reuters) - Argentina's lawyers sought Friday to assure a U.S. judge it would not evade orders to pay $1.33 billion to bondholders who refused to accept its debt-restructuring offers if the U.S. Supreme Court declines the case.

U.S. District Judge Thomas Griesa in New York questioned lawyers for Argentina about a leaked memo described as advising on a plan for how to restructure its bonds outside the reach of U.S. courts if the Supreme Court does not take the case.

Carmine Boccuzzi, a lawyer for Argentina at Cleary Gottlieb Steen & Hamilton, acknowledged the memo was real. He said while it did address whether Argentina may need to restructure in a way consistant with U.S. court orders, that was "not the upshort of the memo."

"There is no secret plan to evade," he said.

Boccuzzi added there "likely would be a default" if the lower court rulings remained in place, saying "there would be a cataclysmic result from an affirmance of the order."

The U.S. Supreme Court is scheduled on June 12 to consider whether to hear Argentina's appeal of rulings requiring it to pay the holdout bondholders back in full.

The holdouts' case is the last hurdle to the country putting its 2002 default on $100 billion in debt behind it and regaining full access to international credit markets.

Argentina on Thursday clinched a landmark deal with the Paris Club of wealthy creditor nations to repay its overdue debt worth nearly $10 billion.

After the default, creditors holding about 93 percent of Argentina's bonds agreed to participate in the swaps, in 2005 and 2010, accepting between 25 cents and 29 cents on the dollar.

But bondholders including NML Capital Ltd, a unit of billionaire Paul Singer's Elliott Management Corp, and Aurelius Capital Management went to court seeking payment in full.

The hearing Friday stemmed from the publication in an Argentine blog of portions of a May 2 memo by Cleary Gottlieb that advised the country on options if the Supreme Court did not take the case.

The memo posted online said the "best option" for Argentina would be to let the Supreme Court force a default and then restructure its bonds so the payment mechanism was outside U.S. court jurisdiction.

Robert Cohen, a lawyer for NML, argued the memo "requires the immediate attention of the court."

He argued the judge should rule it was not protected by attorney-client privilege, find the county violated the court's orders and force Argentina to disclose its plans.

Boccuzzi, while not confirming many details of the memo, said it also laid out "possible settlement scenarios," adding there was no plan to evade the U.S. courts' jurisdiction.

But Judge Griesa noted another lawyer at Boccuzzi's firm had previously told a U.S. appeals court Argentina "would not voluntarily obey" his injunctions even if upheld.

"All that's ever been done by Argentina is to refuse to pay its just obligations," he said.

The case is NML Capital et al v. Republic of Argentina, U.S. District Court, Southern District of New York, No. 08-6978. (Reporting by Nate Raymond in New York; Editing by Lisa Shumaker)

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Minority creditors of Brazil's Oleo e Gas sue Deutsche Bank

SAO PAULO Fri May 30, 2014 9:26pm EDT

SAO PAULO May 30 (Reuters) - Minority bondholders of bankrupt Brazilian oil company Oleo e Gas Participações SA filed suit in New York state court on Friday against Deutsche Bank AG, which is the trustee for $3.6 billion of principal of defaulted notes.

The bonds were issued by an Austrian subsidiary of Oleo e Gas, a company formerly known as OGX that filed for Latin America's largest-ever bankruptcy in October.

The minority bondholder plaintiffs allege that Deutsche Bank and affiliates "have made or will make grossly disproportionate distributions" to majority bondholders, according to a statement from the plaintiff's firm, Brown Rudnick LLP on Friday.

The plaintiffs believe majority bondholders will receive recovery at a rate 3.5 times over those of minority bondholders, in violation of Deutsche Bank's duty as trustee to "ensure that all holders of the notes are treated equally," the statement said.

Plaintiffs include Capital Ventures International of the Cayman Islands, GLG Partners LP of London, Brennus Asset Management and VR Global Partners L.P. (Reporting by Caroline Stauffer; Editing by Lisa Shumaker)


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GLOBAL MARKETS-Shares steady after hitting record high; all eyes on ECB

Written By Unknown on Jumat, 30 Mei 2014 | 18.12

Fri May 30, 2014 5:15am EDT

* Global shares steady after setting high

* Focus on next week's ECB policy meeting

* The euro steady against the dollar

By Atul Prakash

LONDON, May 30 (Reuters) - Global shares steadied on Friday after hitting record highs as investors positioned cautiously on the last trading day of the month, with the market's focus on next week's European Central Bank policy meeting.

The MSCI world equity index, which tracks shares in 45 countries, was down 0.04 percent after scaling a new lifetime high earlier in the session as investors positioned to shield themselves from any disappointment from the ECB, which is widely expected to ease policy significantly on June 5.

"The market will hold at current levels until the ECB meeting next week. Should the ECB disappoint the market, then I expect a negative reaction and equities will run into a consolidation that could hold in the summer months," Christian Stocker, equity strategist at UniCredit in Munich, said.

The pan-European FTSEurofirst 300 was down 0.1 percent, with BNP Paribas leading the index lower after a report saying the U.S. Justice Department was pushing the French bank to pay more than $10 billion to resolve a criminal probe. BNP shares fell 4.9 percent.

Germany's DAX slightly outpaced the broader market after figures showed on Friday that German year-on-year retail sales grew at their strongest rate in April since June 2012 as Easter fell later this year than last.

In the European bond market, benchmark Bunds were slightly lower, tracking Treasuries. Ten-year U.S. debt yielded 2.477 percent, up from the U.S. close of 2.447 percent but still close to its lowest levels since last June, touched this week as markets increased bets that the Federal Reserve will not begin raising interest rates any time soon.

The euro was steady at $1.3605, not far from Thursday's three-month low of $1.3586. The dollar index, which tracks the currency against a basket of six major rivals, eased slightly to 80.462. (editing by John Stonestreet)

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UPDATE 1-Japan's public pension fund to adopt government's shareholder code

Fri May 30, 2014 5:42am EDT

* Code designed to improve corporate governance, returns

* World's biggest public pension fund owns $218 bln of Japan stocks

* GPIF's adoption likely to encourage others to follow suit (Adds GPIF's stock holding, comments from officials, context)

By Chikafumi Hodo

TOKYO, May 30 (Reuters) - Japan's Government Pension Investment Fund (GPIF) plans to adopt new government guidelines for institutional investors designed to improve corporate governance and investment returns.

The $1.26 trillion fund in a statement on Friday said it is important to adopt the Japanese Stewardship Code, which calls on shareholders to disclose how they vote at annual general meetings and engage more actively with company management.

The ultimate aim of the code is to stoke economic growth.

The world's largest public pension fund had been widely expected to adopt the code after the recommendation of a government advisory panel appointed in November.

The fund had 22.15 trillion yen ($218 billion) invested in Japanese equities as of the end of December, accounting for almost 17 percent of its total portfolio.

With GPIF adopting the code, other institutional investors could follow suit, government officials familiar with the matter told Reuters.

The code was compiled as a part of Prime Minister Shinzo Abe's drive to stimulate the economy, and was inspired by the U.K. Stewardship Code of 2010.

That code was conceived after the global financial crisis of 2008 when institutional investors were widely criticised for not monitoring more closely the management of companies they owned.

($1 = 101.5450 Japanese Yen) (Editing by Chang-Ran Kim and Christopher Cushing)

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RPT-Fitch Downgrades Swire Pacific's IDR to 'A-'; Outlook to Stable

Fri May 30, 2014 5:54am EDT

(Repeat for additional subscribers)

May 30 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has downgraded Hong Kong-based Swire Pacific Limited's (Swire Pacific) Long-Term Foreign-Currency Issuer Default Rating (IDR) and foreign-currency senior unsecured rating to 'A-' from 'A'. The Outlook has been revised to Stable from Negative. Fitch has also downgraded Swire Pacific's foreign-currency senior unsecured rating and the rating of Swire Pacific MTN Financing Limited to 'A-' from 'A'.

The downgrade reflects the increase in direct debt funding by Swire Properties Limited (Swire Properties; A/Stable), its 82%-owned subsidiary. This increases Swire Pacific's structural subordination to Swire Properties' operating cash flows. The current rating reflects continued stable performances in Swire Pacific's beverages and trading & industrial divisions, and improved performances in its aviation and marine services divisions. It also continues to maintain a prudent financial profile with good access to funding.

KEY RATING DRIVERS

Increased Structural Subordination: At end-2013, 61% of Swire Properties' borrowings were sourced externally instead of from Swire Pacific, up from 51% at end-2012 and 26% at end-2011. This trend increases Swire Pacific's structural subordination to the stable operating cash flows of Swire Properties, which come from its investment properties portfolio.

Strong Rental Income from Swire Properties: Fitch has affirmed Swire Properties' rating of 'A' with Stable Outlook, reflecting its well-established Grade A office portfolio in both the central business district and non-central areas in Hong Kong. The gross rental income from Swire Properties' investment properties in Hong Kong has posted 2.9% CAGR since 2009. It reached HKD8bn in 2013 and has been consistently above HKD7bn in the past five years. The investment property portfolio provided a strong and stable investment property EBITDA to gross interest expense ratio of 4.5x-4.8x for Swire Properties and of 3.4x-4.5x for Swire Pacific for 2010-2013.

Higher Capex for Marine Services: Swire Pacific has made capex of HKD12.9bn in the marine services division since 2011 to revitalise its ageing fleet and to shift to deep-sea marine services. The company budgeted a further HKD7.2bn capex for the next three years. This has weakened Swire Pacific's free cash flows and increased its non-property-related debt to HKD27.0bn at end-2013 from HKD19.8bn and HKD10.8bn at end-2012 and end-2011 respectively.

However, with a younger fleet focusing deep-sea marine services, Swire Pacific has been able to charge higher charter rates with an increase of USD6,275/day in 2013 compared with an increase of USD1,773/day in 2012. The fleet's utilisation rate also improved and stabilised around 89%-90% in 2012-2013 versus 80%-86% in 2010-2011. These factors increased the segment's EBITDA to HKD2.4bn in 2013, a 54% increase from HKD1.6bn in 2012.

Benefits from Diversification: There is a negative correlation between the airline and marine service businesses. Higher oil prices support the marine business but dampen Cathay Pacific Airways' business, and vice versa. Other businesses add to its diversification while the trading and beverages businesses have stable performance and require predictable minimal capex.

Strong Liquidity; Healthy Debt Maturity Profile: Swire Pacific has an ample amount of undrawn credit facilities, which are more than enough to cover its short-term debt maturity. At end-2013, Swire Pacific has HKD11.3bn cash and HKD19.5bn committed undrawn facilities, compared with HKD7.1bn in short-term debt. Swire Properties' debt maturity profile is spread out, with less than 30% of debt falling due in the next two years. Currently, none of its debt is secured, which gives it flexibility for different financing options.

RATING SENSITIVITIES

Negative: Future developments that may, individually or collectively, lead to negative rating action include:

- Material decline of Swire Pacific's shareholding in Swire Properties

- There is negative rating action on Swire Properties

- Weakening of Swire Pacific's non-property businesses, especially if it provides material financial support to Cathay Pacific Airways

Positive: No positive rating action is envisaged over the next 18-24 months until the company's financial metrics improve to the levels of similarly rated peers.

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GLOBAL MARKETS-Shares flirt with record highs on ECB easing bets

Written By Unknown on Kamis, 29 Mei 2014 | 18.12

Thu May 29, 2014 6:40am EDT

* Global shares near all-time high on ECB easing bets

* German bond yields at lowest levels in a year

* Euro consolidates just above 3-month low

By Francesco Canepa

LONDON, May 29 (Reuters) - Global shares flirted with an all-time peak on Thursday while German bond yields held at the lowest levels in a year on bets the European Central Bank would unveil new stimulus measures next week.

ECB policymakers have opened the door to a rate cut, effectively charging banks to hold cash at the central bank overnight, and to a refinancing operation aimed at supporting businesses when its board meets on June 5.

Expectations of lower rates pushed German yields at the lowest levels in a year and on course to record a fifth consecutive month of declines.

The MSCI World Index, which tracks stocks from developed economies and has gained 1.4 percent since the last ECB policy meeting, was up 0.1 percent, a whisker away from an all-time high set on Wednesday.

The euro, which had fallen around 2 percent against the dollar over the same period, consolidated just above a three-month low of $1.3584.

"At least a rate cut is in the price (of the euro and stocks)," said Joost van Leenders, investment specialist for allocation and strategy at BNP-Paribas Investment Partners.

"I think markets expect a bit more, something directed at bank lending, such as purchases of asset-backed securities, and I don't think that is fully discounted."

Of 48 economists polled by Reuters this week 31 said the expected combination of a cut in the ECB's deposit rate below zero and new long-term cash for banks to lend on to small and medium-sized firms would help boost lending in the euro zone.

European shares held firm near multi-year highs, with the pan-European FTSEurofirst 300 index hovering close to a near six-year peak reached earlier this week.

U.S. futures pointed to a slightly higher open on Wall Street .

"The trend is up, the trend's your friend, but I wouldn't buy up at these levels," said Darren Courtney-Cook, head of trading at Central Markets Investment Management.

Gold extended losses to a third straight session to fresh 16-week lows, reflecting recent gains in the dollar and weak physical demand in top buyer China also weighed.

Brent crude rose back above $110 a barrel on signs of stronger demand from top oil consumer the United States, with a sharp drop in its gasoline stocks adding to recent data showing a strengthening economy. (Additional reporting by Sudip Kar-Gupta; Editing by Toby Chopra)

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MOVES- Lloyds Banking Group, HSBC Global Asset Management, Alvarez & Marsal

Thu May 29, 2014 6:21am EDT

May 29 (Reuters) - The following financial services industry appointments were announced on Thursday. To inform us of other job changes, email to moves@thomsonreuters.com.

LLOYDS BANKING GROUP

The company hired a female partner from KPMG to head its audit operations as part of its drive to increase the number of senior female executives at the state-backed group. Mary Hall will be the second-most senior woman at the banking group when she takes up the role of group audit director in September, a spokeswoman for Lloyds said.

HSBC GLOBAL ASSET MANAGEMENT

The asset management division of HSBC Holdings Plc said Pedro Bastos would succeed Joanna Munro to become chief executive officer, Hong Kong, and regional head of Asia Pacific. Currently chief executive of HSBC Global Asset Management Brazil and regional head of Latin America, Bastos will relocate to Hong Kong to take up the new role.

ALVAREZ & MARSAL (A&M)

The UK-based professional services firm appointed Kleon Phili as a managing director to launch its European valuation services practice, based in London. Prior to joining A&M, Phili served as executive vice president, global segment leader of financial advisory and executive committee member at Duff & Phelps, a valuation and corporate advisory firm.

ALLIANZ GLOBAL INVESTORS

The investment manager appointed Mark Guirey as director of UK institutional business development, based in London. Most recently, Guirey was at BlackRock Inc, where he spent 13 years, latterly as a sales director within the UK institutional business.

SQUARE MILE INVESTMENT CONSULTING & RESEARCH

The investment consulting company appointed Amaya Assan as a senior investment research analyst, where she will focus on European, Asian, Emerging Markets and Japanese equity funds. Before joining Square Mile, Assan served as a senior investment research analyst for Morningstar OBSR, helping lead the firm's coverage of long-only equity funds in the European, global emerging-markets, Asian and Japanese sectors. (Compiled by Natalie Grover)

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UPDATE 2-Argentina clinches landmark debt repayment deal with Paris Club

Thu May 29, 2014 6:25am EDT

* Will allow country to clear arrears of $9.7 billion over 5 years

* To make first payment to creditor nations within a year

* Deal clears the way for resumption of international financing

* Paris Club dispute is legacy of country's 2001/02 default (Adds details, quotes, background)

By Leigh Thomas

PARIS, May 29 (Reuters) - Argentina reached an agreement on Thursday with creditor nations on repaying overdue debts, in a landmark deal that should open up much-needed international financing for the country.

The Paris Club of creditors said the agreement will allow Argentina to clear over five years arrears that stood at $9.7 billion at the end of April.

Negotiations over the deal - whose terms one analyst said looked favourable for Buenos Aires - had dragged into the early hours.

The dispute was the legacy of Argentina's 2001/2002 default on roughly $100 billion, which left it starved of foreign capital.

The country's resistance to settling with its creditors until now had made it a pariah of international capital markets but a hero in the eyes of many Latin American leftists.

"Paris Club creditors welcomed progress made by the Argentine Republic towards the normalisation of its relations with creditors, the international financial community and institutions," the group said in a statement.

"Realisation of initial payment under a formal commitment of Argentina to fully clear its arrears is a necessary and important step for (this)...normalisation."

Argentina's refusal hitherto to bow to its creditors has also created a mountain of litigation and helped fuel inflation that has eroded living standards.

The main challenge now to it regaining full access to markets is a long-running battle with "holdout" sovereign bondholders who have declined to participate in its debt restructurings.

The U.S. Supreme Court is expected to decide in coming weeks whether to take on the case. If it does not, Argentine officials have said the country may be forced into a technical default.

Offering the country some breathing room, the Paris Club agreement calls for a first instalment of at least $1.15 billion due by May 2015, followed by another payment within a year.

The group said the deal cleared the way for export credit agencies of its members to resume doing business with Argentina, which should ease making foreign investment in the country.

Foreign investment could prompt a revival in Latin America's No. 3 economy, which faces a decline in output this year, not least in helping develop its vast Vaca Muerta shale field.

PARIAH NO MORE?

With its dollar reserves dwindling, Buenos Aires has been eager to secure a deal that does not put too much strain on its balance of payments. Argentine central bank reserves stood at $28.6 billion as of Monday evening.

"It seems a good deal for Argentina, both in terms of the seemingly generous repayment profile and the fact that they seem to have reached an agreement much sooner than I expected," said Stuart Culverhouse, head of research at Exotix, a frontier markets broker in London.

"The hit to reserves appears light in the near term, which will reassure exchange bondholders."

Argentina and Paris Club members came close to striking a deal in 2008 but the government pulled out at the last moment, concerned about its falling foreign exchange reserves in the midst of the global financial crisis.

Germany is Argentina's biggest Paris Club creditor with about 30 percent of the debt, followed by Japan with about 25 percent. Smaller holders include the Netherlands, Spain, Italy, the United States and Switzerland.

Argentina wrung a major concession from the Paris Club by avoiding any International Monetary Fund involvement in the deal, which the creditor group usually requires.

President Cristina Fernandez' government has publicly lambasted the institution and would have lost credibility if it had had to accept an IMF programme or audit.

Though a major agricultural producer and endowed with shale oil and gas reserves, Argentina's development has fallen behind many other emerging economies, stunted by a history of economic mismanagement.

The country's history with the informal group of mostly Western nations goes back to the Paris Club's origins in 1956, when Argentina agreed to meet its public creditors in Paris. (Reporting by Leigh Thomas, Additional reporting by Sarah Marsh in Buenoes Aires and Sujata Rao-Coverley; Editing by John Stonestreet)

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British government tells Scots staying in UK is worth 1,400 pounds each

Written By Unknown on Rabu, 28 Mei 2014 | 18.12

EDINBURGH Wed May 28, 2014 6:10am EDT

EDINBURGH May 28 (Reuters) - Scots will each be 1,400 pounds ($2,400) a year better off if they vote to remain part of the United Kingdom, Britain's deputy finance minister Danny Alexander said on Wednesday.

Alexander put his case for Scots to oppose independence in a referendum of Sept. 18, shortly after Scotland's First Minister Alex Salmond said an independent Scotland's public finances would be at least as strong as the rest of the United Kingdom's.

"By staying together, Scotland's future will be safer, with stronger finances and a more progressive society," Alexander said. "It means a UK dividend of 1,400 pounds a year for every man, woman and child in Scotland."

Salmond said that if Scotland had full powers to run its economy without interference from London, it would be 5 billion pounds a year richer by 2030 - something Alexander dismissed as a "bogus bonus".

"They're desperately trying to distract attention from that fundamental question ... that there simply wouldn't be the same level of resources available for public services if Scotland were independent," Alexander said.

Scottish nationalists differ sharply with anti-independence campaigners on likely future tax revenue from North Sea oil, as well as whether an independent Scotland would be able to boost producitivty and slow the ageing of Scotland's population. ($1 = 0.5952 British Pounds) (Reporting by Alistair Smout, additional reporting by William James, writing by David Milliken)

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Update-Moody's affirms Macquarie's ratings and stable outlook

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.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.


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MOVES- Eastspring Investments, Exotix, Sberbank Investment Research

Wed May 28, 2014 6:20am EDT

May 28 (Reuters) - The following financial services industry appointments were announced on Wednesday. To inform us of other job changes, email to moves@thomsonreuters.com.

The asset management company, part of Prudential Plc , appointed Andy Yang as head of insurance relationships, where he will oversee all aspects of the firm's relationship with Prudential's insurance businesses across Asia. Most recently, Yang was group head of investments and asset liability management at FWD Group, with responsibility for investment teams across four countries.

The London-based specialist merchant bank said Hasnain Malik would join as head of frontier markets strategy. Malik comes from Frontier Alpha, an independent research provider specializing in emerging and frontier markets, that he founded in 2013.

The research division of Sberbank CIB appointed Tom Levinson as FX (forex) & rates chief strategist, based in Moscow. Levinson comes to Sberbank Investment Research from ING Financial Markets in London, where he spent the past 13 years. (Compiled by Natalie Grover)


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EMERGING MARKETS-Russia leads emerging markets lower after fighting in east Ukraine

Written By Unknown on Selasa, 27 Mei 2014 | 18.13

By Sujata Rao

LONDON Tue May 27, 2014 6:03am EDT

LONDON May 27 (Reuters) - Russian stocks slumped 2 percent on Tuesday and the rouble fell from four-month highs, leading broad-based emerging market losses as flaring violence in eastern Ukraine took the edge off optimism fuelled by smooth weekend elections.

The Ukraine vote yielded a clear win for confectionary magnate Petro Poroshenko who has promised to seek a meeting with Putin to establish stability in eastern Ukraine. The smooth election also averts the immediate threat of fresh Western sanctions against Russia.

But pro-Russia rebels have captured Donetsk airport in eastern Ukraine, with up to 40 separatists said to have been killed so far in nearly 24 hours of fighting with Ukrainian forces.

Russian stocks fell 2 percent to one-week lows after posting 0.7 percent gains on Monday. The rouble slipped 0.3 percent, hit by heavy selling of stocks and local bonds.

Regis Chatellier, a strategist at Societe Generale, attributed the falls to foreign investors taking advantage of recent gains to shed their holdings.

"Some funds are trying to move out of Russia and they are selling on strength. People have been waiting to get rid of Russia exposure," Chatellier added.

The stock market was also pressured by Russia's second-largest bank VTB, which reported a 98 percent fall in first-quarter net profit, citing a deterioration in the Ukrainian and Russian economies. VTB shares fell 3.7 percent.

But Ukraine's dollar bonds, mostly traded offshore, rallied to six-week highs. London and New York were closed for a holiday on Monday, which meant traders had to wait until Tuesday to price the victory.

"The tail risk - that elections would not go smoothly - is behind us now. The good news is (Russian President Vladimir) Putin seems to be ready to work with the new president ... but in eastern Ukraine we are far from any solution and down the road we cannot rule out a split of the country," Chatellier said.

Elsewhere, the Hungarian forint slipped 0.25 percent to the euro ahead of a central bank meeting that is expected to result in an interest rate cut of around 10 basis points.

Bond yields have fallen to record lows since central bank governor Gyorgy Matolcsy flagged more rate cuts. Inflation was at a record low of -0.1 percent in April.

"There is a high probability of an even further reduction in inflation in May as the effect of the 6.5 percent reduction in household gas prices will be seen," SEB analysts said in a note. "In addition, the forint has strengthened ... since the middle of March. This provides the central bank with manoeuvrability."

Earlier, most Asian markets slipped after weeks of gains.

Investors took profits from the Indian rupee's 5 percent gain this month and Chinese shares slipped as hoped-for policy steps to boost the economy have not yet materialised. Indian stocks also pulled back from record highs as investors booked profits.

All that helped pull MSCI's emerging equity index down half a percent, retreating from last week's 6-1/2 month highs.

But most analysts saw the weakness as a pause given ultra-low interest rates in developed countries and the likelihood of more policy easing in Europe has given a fresh impetus to the carry trade - buying higher-yield overseas assets.

European Central Bank President Mario Draghi hinted on Monday at steps to avert deflation.

"We expect the environment for emerging markets to be constructive. We expect inflows of portfolio investment into EM equities and bonds, boosting local currency asset prices. There are so far no hindrances in sight to dampen the carry trade theme," Credit Agricole said in a note.

For GRAPHIC on emerging market FX performance 2014, see link.reuters.com/jus35t

For GRAPHIC on MSCI emerging index performance 2014, see link.reuters.com/weh36s

For GRAPHIC on MSCI emerging Europe performance 2014, see link.reuters.com/jun28s

For GRAPHIC on MSCI frontier index performance 2014, see link.reuters.com/zyh97s

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see ) (Editing by Jane Merrman)

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UPDATE 1-Putin says Kiev must stop military operation in east Ukraine

Tue May 27, 2014 6:48am EDT

(Adds quotes, context)

MOSCOW May 27 (Reuters) - Russian President Vladimir Putin called on Tuesday for an immediate halt to Ukraine's military operation against pro-Russian separatists in the east of the country.

In his first reported comments on Ukraine since its presidential election on Sunday, Putin also stepped up pressure on Kiev to start a dialogue with the rebel leaders as fighting raged in east Ukraine.

The Kremlin said Putin had spoken to Italian Prime Minister Matteo Renzi by telephone and "underscored the need for an immediate halt to the punitive military operation in the southeastern regions and the establishment of peaceful dialogue between Kiev and representatives of the regions."

Moscow has amassed troops on the frontier with Ukraine during the crisis, in which Ukraine's Moscow-basked president was ousted and Russia annexed the Crimea region from Ukraine, but said last week they had started to withdraw.

NATO has noted, however, that many still remain.

Foreign Minister Sergei Lavrov said separately that halting bloodshed was "the No. 1 task for the Kiev authorities and a test of their durability" after billionaire businessman Petro Poroshenko's election success.

"The election has taken place, and we respect the results of the expression of the people's will, but we believe it is absolutely imperative to ... stop all violence," Itar-Tass news agency quoted him as telling a news conference.

Lavrov said Poroshenko would find Russia a reliable partner if he established dialogue with eastern Ukraine, but said that no visit by Poroshenko to Russia was being considered.

He also warned the government that efforts to put down the separatists could backfire.

"If they are counting on ... suppressing resistance in the southeast before Poroshenko's expected inauguration and enabling him to go there as a victor, I don't think this will create good conditions for a warm welcome in the Donetsk region (in eastern Ukraine)," Itar-Tass quoted Lavrov as saying.

(Writing by Steve Gutterman, Editing by Timothy Heritage)

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UPDATE 1-Scotiabank profit rises 14 percent on retail lending, wealth

Tue May 27, 2014 6:54am EDT

(Adds details on unit performance, background on M&A moves)

TORONTO May 27 (Reuters) - Bank of Nova Scotia said on Tuesday its second-quarter profit rose 14 percent, beating estimates, as higher income at its domestic banking and global wealth units offset a flat performance in international retail banking.

Scotiabank, Canada's No. 3 bank, earned a net C$1.80 billion ($1.66 billion), or C$1.39 a share, in the quarter ended April 30, compared with C$1.58 billion, or C$1.22 a share, a year earlier.

The result follows reports from Royal Bank of Canada and Toronto-Dominion Bank last week that highlighted strong domestic banking and wealth management profit growth, despite signs that heavily indebted Canadian consumers are slowing their borrowing. )

Excluding an amortization charge, the bank earned C$1.40 a share, ahead of analysts' expectations of a profit of C$1.31 a share.

The bank said it would buy back up to 1 percent of its outstanding shares.

Canadian personal and commercial banking income rose 12 percent to C$565 million, helped by growth in assets in deposits and an increase in interest margins.

Global wealth and insurance profit climbed 11 percent to C$345 million, while the global banking and markets division, Scotiabank's wholesale banking unit, earned C$385 million, up 9 percent.

Income at Scotiabank's international banking division rose by C$1 million to C$416 million, as the impact of loan and deposit growth was offset by higher provisions for credit losses and lower tax recoveries, the bank said.

Overall, loan-loss provisions rose 9 percent to C$375 million.

Scotiabank is best known for its large international footprint that spans Latin America and includes a sizable presence in Asia, but the bank's latest merger and acquisition moves have been domestic.

In early May, the bank said it was buying 20 percent of retailer Canadian Tire Corp Ltd's financial services business, and two weeks ago Scotiabank said it would explore options to sell some or all of its 37 percent stake in asset manager CI Financial.

($1 = 1.0854 Canadian Dollars) (Reporting by Cameron French; Editing by Sofina Mirza-Reid and Bernadette Baum)

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Renzi's triumph in EU vote gives mandate for Italian reform

Written By Unknown on Senin, 26 Mei 2014 | 18.12

Mon May 26, 2014 5:20am EDT

* Historic result for prime minister with over 41 percent of vote

* PM Renzi says he has mandate to "change Europe"

* Grillo challenge fades after bitter campaign

* Berlusconi struggles, in third place after legal problems

By James Mackenzie and Steve Scherer

ROME, May 26 (Reuters) - Strengthened by a landslide victory in Sunday's European election, Italian Prime Minister Matteo Renzi has a clear mandate to push economic and institutional reforms in Rome and promote his pro-growth agenda in Brussels.

More than 40.8 percent of Italy's 27.3 million voters cast ballots for the centre-left Democratic Party, almost double the 21.2 percent who chose the anti-establishment 5-Star Movement, the second-biggest party, according to official figures.

Former premier Silvio Berlusconi's Forza Italia party scored a low 16.8 percent of the vote.

It was the best ever electoral victory by an Italian centre-left party. Europe's youngest leader, 39, was also one of the few across the continent not to lose against Eurosceptic parties that swept to victory in elections for the European Parliament.

"A historic result," Renzi commented on Twitter after facing what was his first nationwide election. "I'm moved and determined now to work for an Italy that can change Europe."

The scale of the victory in a country struggling to emerge from a three-year economic downturn gives Renzi legitimacy to tackle an ambitious programme of reforms laid out earlier this year after he staged a dramatic political coup that gave him control of an unwieldy coalition government.

Some observers say Sunday's success would allow Renzi to call snap national elections and consolidate his power in parliament, but that didn't seem on the cards as of Monday.

"You could be tempted to go to a vote seeing this result, but I think it's more important to work in the interests of citizens," Maria Elena Boschi, minister for constitutional reform, said.

Renzi is also likely to emerge stronger in Europe. Italy's Democratic Party could become the second-largest party in the Strasbourg-based legislature, second to German Chancellor Merkel's centre-right Cristian Democratic Union.

Shares in Italian banks rallied and the FTSE MIB outperformed other European equities markets in early trade on Monday after Renzi's triumph over the Eurosceptic 5-Star. Italian bond yields fell 9 basis points.

EU PRESIDENCY

Italy's premier has pledged to respect commitments to its European Union partners to keep the country's public finances in check. But Renzi also wants Europe to focus more on policies that encourage growth and jobs, rather than austerity measures that have marked the continent's southern European economies for the past three years.

Given the slap in the face delivered to mainstream parties across Europe, he may find his peers more receptive.

Italy's rotating, six-month presidency of the EU, which begins in July, gives Renzi a good platform to promote his agenda. But he faces an uphill challenge convincing Merkel, the only other major European leader to emerge stronger from the elections, to agree.

The fast-talking and telegenic Renzi, the former mayor of Florence, took power three months ago by forcing out his low-key predecessor Enrico Letta in a party coup.

In the run-up to the European election, Renzi cut income taxes for 10 million low earners and eased hiring rules for temporary workers in a bid to boost the economy, the euro zone's third-biggest, and lower high unemployment.

He has promised further tax cuts for businesses and households while cutting the country's 2-trillion-euro debt, and sweeping reforms of Italy's institutions, including a new electoral law and the abolition of the Senate to streamline Italy's often slow lawmaking process.

"If the political forces in parliament know how to interpret this election, it will bolster support for Renzi's reforms," Davide Faraone, a PD lawmaker close to the premier, said.

Renzi heads a right-left coalition stitched together after the deadlocked 2013 national election. The New Centre Right (NCD), Renzi's coalition partner, won 4.4 percent of the vote, enough to stand on its own in the European Parliament after breaking away from Forza Italia last year.

The 77-year-old Berlusconi is serving a tax fraud sentence doing public service at an old people's home. Politicians from his party said on Monday that his inability to campaign was the reason for his party's disappointing showing.

GRILLO FADES

With unemployment at just under 13 percent and the economy struggling to emerge from more than two years of recession, the election had been expected to see a strong rise in support for the 5-Star Movement of stand-up comic Beppe Grillo.

For Grillo, who fought tirelessly during a bitter campaign and who declared that he would win or give up politics, the result was a stinging defeat as he lost more than four percentage points compared with last year's national ballot.

As the projections came in, there was a conspicuous silence from his camp with his popular blog flooded with messages from opponents mocking his confident predictions of victory.

Grillo has yet to comment on the result. Still, his rowdy and unconventional movement is likely to remain a force in Italian politics. (Editing by Mike Peacock)

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Italy's Renzi says will push for change in Europe after triumph

ROME Mon May 26, 2014 6:13am EDT

ROME May 26 (Reuters) - Italian Prime Minister Matteo Renzi promised on Monday to push for an overhaul of EU policy towards more emphasis on jobs and growth following his sweeping victory in European parliamentary elections at the weekend.

"Italy is in a position to put a decisive mark on the process that is now opening in Europe," he told a news conference in Rome.

"I consider this as a vote of extraordinary hope for a country that has all the conditions to be able to change and that can invite Europe to change," he said.

Renzi's centre-left Democratic Party (PD) won more than 40 percent of the vote in the election on Sunday, the strongest result ever achieved by the party. (Reporting By James Mackenzie, Editing by Alessandra Galloni)


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UPDATE 2-Russia says ready for dialogue with Ukraine's Poroshenko

Mon May 26, 2014 6:35am EDT

* Lavrov warns Kiev over "anti-terrorist" operation

* Sees chance to ease tension in Ukraine

* Criticises vote but does not call it illegitimate (Adds quotes on armed operation, chance for dialogue)

By Steve Gutterman

MOSCOW, May 26 (Reuters) - Russia said on Monday it was ready for dialogue with Petro Poroshenko, Ukraine's next president, but warned the Kiev authorities not to step up armed operations against separatists in the east.

Echoing remarks by President Vladimir Putin in the past few days, Foreign Minister Sergei Lavrov said the key to resolving Ukraine's crisis was genuine dialogue between Kiev and the east - where pro-Russian separatists have rebelled against the national leadership.

"As the president (Putin) has said more than once, we are ready for dialogue with representatives of Kiev, we are ready for dialogue with Petro Poroshenko," he told a news conference when asked about Sunday's presidential election in Ukraine.

Lavrov's remarks signalled that the Kremlin believes acceptance of the election, at least for now, represents Russia's best chance of a role in influencing Ukraine's future.

Poroshenko, a billionaire chocolate manufacturer, won more than 50 percent of votes cast in Sunday's election, preliminary results showed. He had to cross the 50 percent barrier to avoid a two-candidate second-round runoff.

Russian officials for weeks questioned whether the election would be legitimate while the army was being deployed against civilians, and massed troops on the frontier with Ukraine, prompting concern in the West that Moscow would invade a country it regards as the cradle of Russian civilisation.

The crisis, in which Kiev's Moscow-leaning president was ousted and Russia annexed the Crimea peninsula from Ukraine, has become the worst East-West standoff since the Cold War.

But Putin softened Russia's stance before the vote, indicating it would work with whomever becomes president of Ukraine, and analysts in Moscow said he sees Poroshenko as the candidate with whom he was most likely to be able to business.

NO NEED OF MIDDLEMEN

"Taking into account the expression of will that has taken place, which we respect, we will be prepared to establish pragmatic, equitable dialogue on the existing foundation - by which I mean the fulfilment of all existing agreements, including in trade and the gas sector," Lavrov said.

Lavrov did not directly question the legitimacy of the election, in which millions of potential voters in the east were unable to cast ballots, but left the door open for such criticism by saying the campaign was "not without problems".

"Far from all candidates were able to go the distance ... Many had to quit the race, in some cases physically fearing for their lives in the face of threats," Lavrov said.

Lavrov also suggested the vote was marred by the Kiev government's security operation against the separatists, who control buildings in several towns and cities.

"When we speak of how voting went and the election results, we cannot close our eyes to the fact that the so-called counter-terrorist operation was not halted," Lavrov said, adding that stepping up the operation would be a "colossal mistake".

"The chance that now exists to establish mutually respectful, equitable dialogue ... must not be missed."

He said he would "very much not like" Poroshenko to place conditions on dialogue between Moscow and Kiev, such as mediation by the United States and European Union.

"We probably don't need middlemen," Lavrov said, but he added that Russia was ready to work with the EU and United States to help the Ukrainian government and its opponents take steps to ease tension and resolve the crisis. (Additional reporting by Ludmila Danilova, Editing by Timothy Heritage and Peter Graff)

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Sanctions will make Russia use rouble for trade - PM Medvedev

Written By Unknown on Minggu, 25 Mei 2014 | 18.12

MOSCOW Sat May 24, 2014 9:36am EDT

MOSCOW May 24 (Reuters) - Western sanctions will galvanise Russia into using the rouble as a currency for international trade, the country's prime minister Dmitry Medvedev said in an interview published on Saturday.

"Trading for roubles - this is a definite priority," Medvedev said. "This, in fact, should ultimately move the rouble from the cohort of freely convertible currencies into the ranks of reserve currencies."

He was speaking in an interview recorded for the television programme "Vesti on Saturday with Sergey Brilev", shown on the Rossiya channel and published on the government's website.

In recent weeks officials have said the government is considering making it obligatory for state-owned companies to receive payment for key exports in roubles, rather than in dollars as at present.

EU leaders meet next week to discuss steps that could be taken to target broader sectors of the Russian economy if Ukraine's presidential election on Sunday is disrupted. The United States has also threatened sanctions that could target broad sectors such as energy, banking and mining.

Russia has long aspired to boosting the international status of the rouble, hoping that it will eventually become a currency widely held in governments' foreign exchange reserves, similar to the dollar and euro.

Medvedev referred to such reserve currencies as "the top league".

"Of course, the more we sell, for example, our products, including oil, gas, machine-building, defence products for roubles, the more we will encourage such a quality for our currency."

MINIMAL IMPACT

Commenting on the impact of Western sanctions more broadly, Medvedev played down their immediate negative consequences.

"At present the effect of sanctions on the Russian economy is absolutely minimal, if you can talk about any effect at all," he said.

His assessment contrasts with that of many analysts, who say the sanctions - and in particular the threat of further sanctions - have encouraged massive capital outflows, leading to slumping investment and stagnant economic growth.

Medvedev's comments also contrast with those of President Vladmir Putin, who has said Western sanctions are having a real impact on Russian business and limiting their access to funding.

So far Western sanctions have largely targeted individual officials, as well as select companies linked either to Crimea or to President Vladimir Putin's close personal associates.

Medvedev admitted that sectoral sanctions could be very damaging. "This means that a whole range of export possibilities of Russia will be threatened," he said.

"For the economy, of course, it won't be a holiday, this is obvious." (Reporting By Jason Bush, editing by David Evans)

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UPDATE 1-EU should heed European firms in Russia before imposing further sanctions -Putin aide

Sat May 24, 2014 8:15am EDT

(Adds background, quotes)

By Darya Korsunskaya

ST PETERSBURG, Russia May 24 (Reuters) - The European Union should consider the interests of European companies working in Russia when deciding on whether to impose sanctions on Moscow over its involvement in Ukraine, President Vladimir Putin's top economic aide said on Saturday.

The United States and European Union have already hit dozens of officials, lawmakers and companies close to Putin with sanctions and EU leaders are due to discuss next week further steps they could take against Russia if there are disruptions to Ukraine's presidential election on Sunday.

"I hope very much that when making these decisions ... the dependence and interests of European companies that are working in Russia (will be considered)," Andrei Belousov told reporters on the sidelines of the St Petersburg International Economic Forum.

"These are European companies, which are working here, working for European markets for the most part, and which are taking suitcases full of cash to Europe."

The measures, including restrictions ranging from luxury good imports to an oil and gas ban, envisage three scenarios - low-intensity, medium-intensity and high-intensity sanctions.

Belousov said that if any new measures were to restrict Russia's foreign trade, Russia may take legal action by appealing to the Dispute Settlement Body (DSB) of the World Trade Organisation.

"If the (DSB) authority decides in favour of Russia, our colleagues from the U.S. and the EU will find themselves, in - how to say it - an interesting position," Belousov said.

If the DSB were to decide in favour of the U.S. and Europe, Belousov said, it would be "even more interesting".

"This would mean that sanctions (have) become a WTO practice," he said. (Writing by Lidia Kelly; Editing by Jason Bush and Raissa Kasolowsky)

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GLOBAL ECONOMY WEEKAHEAD-EU election casts shadow over euro zone as ECB meeting approaches

Sun May 25, 2014 5:00am EDT

* Ukraine election could send jitters through markets

* Eyes on ECB board's signals ahead of June policy meeting

* Housing data due in Britain and United States

* BoE Governor Carney due to speak Tuesday evening

* Japan data due including retail sales, inflation, jobs

By Ana Nicolaci da Costa

LONDON, May 25 (Reuters) - Investors this week will be watching the results of elections that could deal a blow to political parties that are key to reform efforts in the European Union and could also fan instability in Ukraine.

The bonds of some struggling euro zone governments sold off last week as investors worried about expected gains for anti-EU parties in European Parliament votes in Greece and Italy.

In Greece, a strong showing by parties opposed to the terms of its EU-led bailout may hurt the fragile coalition government, potentially paving the way for a new national vote.

In Italy, a poor result for Prime Minister Matteo Renzi's party could undermine his drive for swift reforms, which he promised when he took power in a party coup earlier this year.

The rise of anti-EU parties in northern Europe could make it harder for the European Union to deal quickly with any future resurgence of the euro zone crisis, analysts said.

"It looks like we are going to see the far-right parties making further gains and it is going to make it more difficult for the European authorities to deal with any subsequent euro crisis events," said Victoria Clarke, economist at Investec.

Elections for the European Parliament were held from May 22 to 25.

Ukrainians vote in a presidential election on Sunday and if favourite Petro Poroshenko falls short of an absolute majority, market jitters could grow ahead of a second round of voting on June 15.

Tensions between Ukraine and Russia have escalated in recent months, with Kiev accusing Moscow of sowing deadly disorder in its mostly Russian-speaking east, where pro-Moscow separatists have declared independence and asked to join Russia.

"(If) we head to a second-round vote ... then we might find that we see risk assets suffering in the process until some form of stability has been put in place. So that could be a couple of quite painful weeks and would, if anything, reinforce the case for ECB policy easing on June 5," said Clarke of Investec.

The European Central Bank is widely expected to cut interest rates then, a Reuters poll showed, having clearly flagged that possibility at its last monetary policy meeting.

All this means a three-day ECB forum in Portugal that starts on Sunday and features president Mario Draghi and several ECB board members will be keenly watched by the markets.

Euro zone money supply data on Wednesday and Italian and Spanish inflation numbers on Friday may reinforce the case for more easing if they come in weak.

"The euro area's economic recovery is bedding in, but inflation is well below the ECB's target and there is a risk that deflation could take hold across the region," Standard Chartered said in a research note.

"This could elicit more expansionary policy."

EXIT STRATEGY

But David Mackie, chief European economist at JP Morgan does not expect an ECB rate cut in June to be the start of a sustained campaign to provide more stimulus.

"We have not changed our broad macro story, which is that the region is heading towards a 2 percent growth environment," he said. "So we don't think that what will happen in June would then be followed by more aggressive action later in the year."

In contrast to the ECB, both the Bank of England and the Federal Reserve are considering their way out of their stimulus programmes as their economies recover, even though U.S. data is expected to show contraction in output in the first quarter.

But the housing market, which is strengthening in Britain and losing steam in the United States, could yet complicate matters for both central banks, analysts say.

Britain has said it will use mortgage lending controls before resorting to interest rates to cool the sector. BoE Governor Mark Carney is due to speak on Tuesday evening.

But the U.S. housing market may yet require more help from the Fed.

"Both central banks are putting together their strategies for exiting the ultra-loose monetary policy that we've had over recent years but at opposite ends of the scale in terms of their considerations for the housing sectors," Clarke said.

"In the UK, the talk is about whether there is a possible housing bubble and in the States (it) is virtually the opposite ... the Fed has the problem of working out whether its housing sector can withstand a policy tightening probably in the early part of next year."

Housing data from both countries this week could shed further light on this, with British Bankers Association's mortgage lending data due on Tuesday followed by statistics on the Help to Buy mortgage guarantee programme on Thursday.

In the United States, the house price index is due on Tuesday and pending home sales on Thursday.

A second estimate of U.S. gross domestic product on Thursday is expected to show the economy contracted 0.4 percent in the first quarter - when much of the country was bit by fierce winter weather - from a previous reading of 0.1 percent growth, according to a Reuters poll.

National Australia Bank said a soft reading in the first quarter would not change the outlook for the Fed which is scaling back its bond-buying.

Japan also releases a slew of data this week, including retail sales, inflation, unemployment, and industrial output. (Additional reporting by John Geddie; Editing by Hugh Lawson and Alison Williams)

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BOJ's Kuroda says options remain if further easing needed

Written By Unknown on Sabtu, 24 Mei 2014 | 18.12

TOKYO Fri May 23, 2014 8:16pm EDT

TOKYO May 24 (Reuters) - Bank of Japan Governor Haruhiko Kuroda said the central bank still has policy options left if it were to ease monetary policy further to fend off risks that may threaten the achievement of its price target.

Kuroda repeated his view that the world's third-largest economy is making steady progress toward meeting the BOJ's 2 percent price target, with core consumer inflation having reached 1.3 percent for four straight months in March.

"But we are ready to adjust policy, be it further monetary easing or something else, if changes in economic and financial developments derail the path toward meeting the price target," he said in an interview with the Nikkei business daily published on Saturday.

Kuroda said the BOJ will not ease incrementally in response to temporary fluctuations in the economy, suggesting that the bank will consider acting again only if it sees enough evidence that doing so is necessary to meet the price target.

He did not elaborate on what steps the BOJ could take if it were to expand stimulus, only saying that this would depend on the type of risks the bank is responding to at the time.

"We will take the most effective and efficient measure to deal with economic and financial developments at the time," he said, adding that there are "no limits" to the kind of options remaining for the central bank.

The BOJ deployed an intense burst of stimulus in April last year, pledging to pump money via aggressive asset purchases to accelerate inflation to 2 percent in roughly two years in a country that has been mired in deflation for 15 years.

It has kept policy steady since then. Some market players have said the BOJ's tool kit has been exhausted after last year's massive monetary stimulus, under which it already gobbles up 70 percent of newly issued government bonds each month. (Reporting by Leika Kihara)

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Russian minister confident EU won't impose sanctions on exports

ST PETERSBURG, Russia Sat May 24, 2014 3:16am EDT

ST PETERSBURG, Russia May 24 (Reuters) - Russian Economy Minister Alexei Ulyukayev said on Saturday he was confident that the European Union would refrain from imposing sanctions that could hit some of the country's major exports.

European Union leaders are to discuss next week a series of steps they could take against Russia if there are disruptions to Ukraine's presidential election on Sunday.

The measures, including restrictions ranging from luxury goods imports to an oil and gas ban, envisage three scenarios - low-intensity, medium-intensity and high-intensity sanctions.

"I sincerely believe that it will not come to the adoption of these measures," Ulyukayev told journalists on the sidelines of the St Petersburg International Economic Forum. (Reporting by Darya Korsunskaya; Writing by Lidia Kelly)


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EU should consider its business in Russia when deciding on sanctions - Kremlin

ST PETERSBURG, Russia Sat May 24, 2014 6:00am EDT

ST PETERSBURG, Russia May 24 (Reuters) - The European Union should consider the interests of European companies working in Russia when deciding on whether to impose sanctions on Moscow over its involvement in Ukraine, President Vladimir Putin's top economic aide said on Saturday.

"I hope very much that when making these decisions ... the dependence and interests of European companies that are working in Russia (will be considered)," Andrei Belousov told the St Petersburg International Economic Forum.

"These are European companies, which are working here, working for European markets for the most part, and which are taking suitcases full of cash to Europe."

Belousov also said that Russia may take legal action if sanctions were to restrict the country's foreign trade. (Reporting by Darya Korsunskaya; Writing by Lidia Kelly, editing by Jason Bush)


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Luxembourg's Juncker blinks in unaccustomed EU election spotlight

Written By Unknown on Jumat, 23 Mei 2014 | 18.13

Fri May 23, 2014 5:42am EDT

* Former Luxembourg prime minister tours Europe to rally support

* Juncker top candidate of Europe's main centre-right group

* Victory in May 22-25 elections could propel him to top EU job

By Jan Strupczewski

PORTO, Portugal, May 23 (Reuters) - Standing on stage before a 1,000-strong crowd of cheering supporters last weekend, a look of unease flashed across the face of Jean-Claude Juncker, the former prime minister of Luxembourg now running for the top job in Europe.

Accustomed to sober grey suits and backroom dealing, the grey-haired 59-year-old, seemed unsure quite how to respond to the throng of chanting Portuguese. Then, as an accomplished politician, he found his groove.

"Por-tu-gal! Por-tu-gal!" he joined the chant, thrusting his arms above his head with clenched fists.

The moment captured, he was ushered off stage and back to a waiting private jet, which flew him on to Lisbon, next stop on a two-month tour of 18 EU countries ahead of elections to the European Parliament, which end on Sunday.

As the top candidate for the European People's Party, Europe's main centre-right political movement, Juncker is well placed to become the next president of the European Commission if the EPP beats the centre-left.

It's not an open-and-shut-case: he would still have to be nominated by EU leaders and confirmed by the parliament. But for the first time, Europe is personalizing the race for the Commission presidency, and Juncker is leading the pack.

For a man who has spent most of his life in the opaque world of Luxembourg politics, including 19 years as prime minister, being thrust into a pan-European election campaign that is somewhat styled on U.S. politics is unfamiliar.

Having sat in endless closed-door meetings during the euro zone debt crisis - he once said people in his position sometimes have to lie and prefers "secret, dark debates" - being on the campaign trail in Portugal and Greece is not Juncker's natural territory.

During his whistle-stop tour, he visited a farm outside Lisbon, dropping in on deputy prime minister Paulo Portas, who was dressed in a brown jacket and farmer's hat, in sharp contrast to Juncker's suit and open-necked shirt.

That said, Juncker made a point of meeting everyone from waiters to policemen, shaking hands and chatting briefly.

A smoker of heavy Ducal cigarettes, Juncker does not attempt to hide his habits, including enjoying a glass of wine over lunch and a gin-and-tonic at the end of the day.

After four decades in politics, he is unfazed and almost dismissive of media attention, with a tendency to make fun of formality, at one point stroking the fluffy covering of a TV microphone as if it were a pet.

DOG CALLED PLATO

The question is whether Juncker, who chaired meetings of euro zone finance ministers during the crisis and was involved in the painful bailouts of Greece, Portugal and Ireland, can rally support among disillusioned voters across Europe.

And even if he can, whether EU leaders, many of whom shared the room with him during crisis summits until he stepped down late last year, believe he is the right person to lead the work of the Commission for the next five years and beyond.

While Portuguese voters might be expected to be wary after years of grinding recession, there were positive noises from some as Juncker toured the Milaneza pasta factory in Porto.

"He is known as a friend of Portugal, sensitive to social issues," said Rui Azevedo, 47, a quality control manager at the factory.

A fifth of Luxembourg's population of 530,000 originally comes from Portugal, and Juncker was happy to drop in that he has Portuguese friends and neighbours.

He struck a similar chord in Greece, another stop on his tour, letting it be known that he had adopted a dog from the island of Samos and named it Plato. Chatting with Greek Prime Minister Antonis Samaras, a political ally, Juncker jokingly complained that the dog didn't understand French.

Keen to rebuild bridges with the southern 'periphery' after years of turmoil, during which it seemed possible that Greece could leave the euro zone and the region collapse, Juncker said he had no time for black-and-white divisions across Europe.

"It is simply not true that the virtuous are in the north and the sinners and losers are in the south," he said, adding that he did not like the terms 'old' and 'new' Europe.

"I know some old countries that behave as if they were new and some new ones that behave like founding members," he said.

BRIDGE BUILDER

A fluent speaker of German, French and English as well as his native Luxembourgish, Juncker is in many respects a consummate European politician of the old school, wheeling and dealing in conference rooms to clinch compromises.

In that regard, he hardly seems like someone to inspire the younger generation and change how business in Brussels is done.

Yet few people understand as well as Juncker how the EU machinery works and what is required to get a deal.

"Since my youth, I had a certain idea about Europe, inspired by experiences of my father's generation and by important things that I experienced myself," he told Reuters during the tour.

His father, a steelworker, was one of some 10,000 Luxembourgers drafted into the German army during World War Two. Juncker, like his country, is in some ways a link between France and Germany, the two nations that drive European policy and out of whose enmities the European Union was crafted.

Having been at the table for every major decision taken in Europe over the past two decades, Juncker is in effect betting that his institutional knowledge will make him indispensable when leaders decide who to nominate as Commission president.

Wearing a hard hat as he toured a construction site in Athens, his armed bodyguard never far away in a country where European officials have been targeted with violence, Juncker expressed confidence in his prospects.

"Which other candidate has the support of both Germany and Greece?" he asked with a knowing smile. "I am the man." (Reporting by Jan Strupczewski. Editing by Luke Baker)

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UPDATE 1-Visa and Mastercard to stay in Russia, help create payment system

Fri May 23, 2014 6:48am EDT

(Adds detail, finmin quotes)

By Darya Korsunskaya

ST PETERSBURG, Russia May 23 (Reuters) - Credit and debit card companies Visa Inc and Mastercard Inc pledged on Friday to continue to operate in Russia and proposed creating their own Russia-based payment operators.

Visa and Mastercard executives met members of the Russian government in St Petersburg to discuss new rules that would oblige foreign card companies to pay a hefty security deposit to the central bank to work in Russia.

The companies said the rules - passed by Russia's parliament after the West imposed sanctions on a number of individuals and companies over the Ukraine crisis - would complicate their Russian operations but had no plans to exit.

"In any situation, we will stay in Russia," Ilya Ryaby, general director of Mastercard in Russia, told journalists at the St Petersburg International Economic Forum.

Andrew Torre, director of Visa in Russia, said: "We are willing to work in Russia and after this meeting we hope that a compromise solution will be found".

After Friday's meeting, Ryaby said the card companies had discussed what could be done to create a system of cashless transactions and a system of servicing payment cards in Russia.

Russian Finance Minister Anton Siluanov told reporters that Visa and Mastercard's plans to set up Russia-based subsidiaries would take around a year and a half. In the meantime they would work with Russia's existing payment systems, he said.

"We are willing to cooperate in this direction," Siluanov said. "I think we will find a solution that suits both Visa and Mastercard and the Russian Federation."

Visa and Mastercard stopped serving several Russian banks after the United States imposed sanctions over the annexation of Crimea in March.

Russia later launched a package of measures aimed at stimulating the creation of a Russian national payment system to reduce its reliance on Western companies.

Among those measures, foreign card companies would from July 1 have to pay a security deposit of 25 percent of their average daily turnover in Russia to the central bank once a quarter. (Writing by Alexander Winning; Editing by David Holmes)

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MOVES-Standard Life, Citibank Japan, Brooks Macdonald Funds

Fri May 23, 2014 6:49am EDT

May 23 (Reuters) - The following financial services industry appointments were announced on Friday. To inform us of other job changes, email to moves@thomsonreuters.com.

The company has recruited Luke Savage from Lloyd's of London as its new chief financial officer, filling the space left by Jackie Hunt a year ago.

The company said it appointed Peter Eliot as its chief executive following the retirement of Kazuya Jono. Eliot, currently the CEO of Citigroup Japan Holdings Corp, will continue in his present position as well.

The fund management arm of Brooks Macdonald Group Plc said it appointed David Scammell to the newly created role of international business development manager. Scammell, who will be based in London, joins from Frontier Investment Management. (Compiled by Anannya Pramanick and Shubhankar Chakravorty in Bangalore)


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GLOBAL MARKETS- Steady growth signs lift European stocks and bonds

Written By Unknown on Kamis, 22 Mei 2014 | 18.12

Thu May 22, 2014 5:15am EDT

* China's manufacturing data buoys risk markets

* Stocks, bonds rise as PMIs show euro zone recovery intact

* ECB easing allays European election fears

* Fed minutes show no rush to raise rates

By John Geddie

LONDON, date (Reuters) - European stocks and government bonds rose on Thursday buoyed by another month of private sector growth, firmer Chinese data and signs the U.S. Fed will maintain some monetary support for the world's largest economy.

An unexpected pickup in Europe's service industry was offset by underwhelming factory activity, but was enough to show that the euro zone's fragile recovery has some traction.

Early readings from Germany, the bloc's industrial heartland, set a strong tone while France remained the laggard.

"This doesn't change the picture of the euro zone having one of its best growth spells in the past three years. It's broad-based, with the one exception being France," said Rob Dobson, senior economist at survey compiler Markit.

Riskier assets were in vogue after manufacturing data showed some signs of the economy stabilising in China. Meanwhile, minutes from the U.S. Federal Reserve's last meeting showed it was in no rush to raise interest rates.

European stocks rose 0.2 percent, with the main bourses in London, Frankfurt rising 0.3 percent respectively, and Paris up 0.1 percent.

Government bond yields also dipped, with expectations of further monetary easing from the European Central Bank supporting bond prices and allaying trepidation about EU elections.

The first polls for the European Union parliament since the bloc's debt crisis blew up open on Thursday, and an expected rise in eurosceptic parties threatens to destabilise some governments or sway them to delay any painful economic reforms.

Spanish and Italian 10-year yields were both 2 basis points lower at 3.00 and 3.18 percent, respectively, while German Bunds dipped 1 bps to 1.37 percent.

REVIVING MARKETS

The ECB has already strongly hinted it will cut rates at its June policy meeting, moving the deposit rate into unprecedented negative territory.

"If banks have to pay interest on the money they park in the euro system, this could revive the money market between banks, among others, and therefore also stimulate lending to businesses," said ECB Governing Council member Jens Weidmann.

Targeted measures aimed at boosting lending to small- and mid-sized firms programme and a programme of asset purchases, known as quantitative easing, has also been mooted.

As well as nurturing growth, the bank wants to stave off deflation and cool a stubbornly strong euro. The euro was back under $1.37 on Thursday, towards the lower end of a very tight range it has held in all week.

LOSING APPEAL

Sterling fell against the dollar and the euro on Thursday after UK data showed a bigger-than-expected fiscal deficit, prompting some investors to take profits in the pound's recent rally to 5-1/2 year highs.

Markets looking for the Bank of England to raise rates early next year, and a surge in retail sales underlining the strength of the UK's recovery, is keeping the pound firm.

Elsewhere, the yen eased versus the dollar on Thursday and edged away from a 3 1/2-month high.

The yen has risen in recent weeks, partly because speculation has receded that the Bank of Japan will ramp up monetary stimulus.

One focal point for the yen is whether Japanese investors will step up their investment in higher-yielding overseas assets, at a time when domestic bond yields have been held low by the BOJ's massive monetary stimulus.

In a sign of such yield-seeking behaviour by Japanese investors, Japan Post Insurance is investing more in Japanese stocks and foreign bonds, according to disclosures and a person with knowledge of the investment strategy.

(Editing by Larry King/Ruth Pitchford)

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UPDATE 1-Deutsche Bank defends capital increase at annual meeting

Thu May 22, 2014 5:10am EDT

(Adds CEO and investor quotes, details)

By Thomas Atkins and Arno Schuetze

FRANKFURT May 22 (Reuters) - Deutsche Bank AG defended plans to raise 8 billion euros ($11 billion) in equity on Thursday, as its top executives faced investors at the lender's annual shareholders' meeting less than a week after announcing the surprise plan.

Germany's largest bank launched the share issue only weeks after first hinting it was unable to retain enough profit to fortify its finances ahead of a pan-European regulatory health check of banks slated for later this year.

"We know some of you are sceptical. Some of you may ask, why should we trust this team to deliver?" said co-Chief Executive Anshu Jain in a speech to the meeting.

Co-CEO Juergen Fitschen said: "We aim to position Deutsche Bank among the very small global group of leading banks that will define a new era for the banking industry.

Announcing the capital increase, Deutsche had diluted and delayed its turnaround targets originally set for 2015, pleading for patience as the bank, like many of its rivals, struggles to restructure and restore profitability.

Jain, who has been criticised by shareholders in the past as being a detached Anglo-Saxon investment banker with little knowledge of Germany's distinctiveness, for the first time addressed the bank's owners at length in German, having previously spoken in English.

"Both in our business environment and within Deutsche Bank, some challenges were tougher than we anticipated," the Indian-born British citizen told the meeting, attended by some 9,000 investors, at Frankfurt's huge convention centre.

Deutsche Bank, whose shares have fallen about 15 percent in value in the past 12 months against a 13 percent gain among European rivals, came under attack from some at the meeting.

"When is this nightmare finally going to end?" fund manager Ingo Speich from Union Investment said in the text of a speech. "Stockholders and investors are losing their patience with legal battles, fines and breaches of corporate governance and compliance.

"Much investor trust has been wasted. The capital hike is not helping," Speich said.

LACK OF PROGRESS

Shareholder approval is not required for the capital hike but some investors have voiced anger with the issue and with a lack of progress on resolving a long list of investigations that has dogged the bank since the 2008-2009 financial crisis.

"With the capital hike, the bank builds an extra cushion so that it is better prepared for the ECB test," said Stefan Best, managing director at ratings agency Standard & Poor's in Frankfurt.

Management has pointed to "tectonic shifts" that have opened opportunities in investment banking. European rivals including UBS and Barclays have withdrawn from areas such as bond trading, where Deutsche believes it can succeed as a big European player on a stage dominated by U.S. rivals like Goldman Sachs and JPMorgan.

"Whether Deutsche Bank comes out of the financial crisis as a winner in investment banking remains to be seen," Best said.

Separately, management will ask shareholders to approve a proposal permitting senior staff to receive bonuses worth twice base pay.

European Union rules say bankers' bonuses cannot exceed their annual fixed salary, or twice that if shareholders approve, to curb the sort of excessive risk-taking blamed for the financial crisis.

The bonus cap is one of the most high-profile rules approved by the 28-country bloc following public anger over high pay at banks, many of which were propped up by taxpayers in the crisis. (Editing by David Holmes)

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