U.S. Core Capital Goods Orders Rise Less than Expected

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 0.9% last month, the Commerce Department said on Monday. These so-called core capital goods orders fell 0.8% in February after bitterly cold temperatures gripped large parts of the country.

Economists polled by Reuters had forecast core capital goods orders increasing 1.5% in March.

(Reporting by Lucia Mutikani; Editing by Edmund Blair)

U.S. Lidar Maker Luminar Partners with Airbus to Test Autonomous Flight Tech

The two companies will work on enhancing aircraft sensing and perception, Luminar said, adding that its technology could also substantially improve the safety of existing aircraft applications.

“Partnering with Luminar…will help us define and explore the next step towards more autonomous flight vehicles,” said Sandra Schaeffer, chief of Airbus UpNext, the planemaker’s future technologies division.

California-based Luminar makes lidar sensors, which use laser light to detect objects ahead of and around the vehicle, and are a key component of many self-driving systems being developed by automakers.

“We’re able to directly re-apply what we’ve accomplished for the automotive industry into aviation,” said Luminar Chief Executive Austin Russell.

In March, Luminar announced a deal with the self-driving software subsidiary of Volvo Cars to offer a combination hardware-software system to other automakers.

Luminar went public through a merger with Gores Metropoulos Inc, a special purpose acquisition company (SPAC), and began trading in December.

(Reporting by Sanjana Shivdas in Bengaluru; Editing by Devika Syamnath)

Oxford COVID-19 Vaccine Tech Maker Vaccitech Targets $613 Million Valuation in U.S. IPO

The company, which has development programs for conditions including hepatitis B, prostate cancer and non-small cell lung cancer, has raised $216 million to date from Gilead Sciences, Sequoia Capital China and Oxford Sciences Innovation among others.

The UK-based company, spun out of Jenner Institute at the Oxford University in 2016, said it plans to list its American Depositary Shares (ADS) on Nasdaq under the ticker symbol “VACC”.

It said it was offering 6.5 million ADSs, each representing one ordinary share, priced between $16 and $18 each. At the top end of the range, the IPO would rake in $117 million for Vaccitech.

The company intends to use proceeds from the offering to fund its ongoing clinical programs and its early-stage research and development.

Morgan Stanley, Jefferies, Barclays, William Blair and H.C. Wainwright & Co are the underwriters for the offering.

(Reporting by Niket Nishant and Manojna Maddipatla in Bengaluru; Editing by Shinjini Ganguli)

Stocks Slip as Investors Turn Cautious Ahead of Fed Meeting

By Tommy Wilkes

LONDON (Reuters) -Stocks gave up early gains on Monday as confidence that economies are recovering rapidly was overshadowed by caution over the speed of the market’s rally and ahead of a U.S. Federal Reserve policy meeting.

The start to the week was quiet as investors refrained from taking on large positions before a two-day Fed meeting that will begin on Tuesday and the impending release of quarterly gross domestic product numbers for the United States.

Investors have remained ebullient in recent weeks, with Wall Street hitting another intraday record high on Friday and European shares not far off their own record highs.

But there was some limited selling on Monday in Europe.

The Euro STOXX 600 was down 0.1% by 1050 GMT while Germany’s DAX lost 0.13%. Britain’s FTSE 100 was flat.

Wall Street futures pointed to a weaker open after Friday’s gains.

Asian shares rallied, however. MSCI’s broadest index of Asia-Pacific shares outside Japan reached its highest since March 12, despite a late selloff in Chinese shares.

That helped offset the falls in Europe and lift the MSCI world equity index, which tracks shares in 49 countries, by 0.16%.

Stocks — as well as most other risk assets — are basking in a massive rally. The MSCI world index has suffered only three down months in the past 12 and is up nearly 5% this month and 9% for the year as investors bet on a rapid post-pandemic economic rebound turbocharged by vast government and central bank stimulus.

Analysts, however, say stocks look a little overvalued and that the rally will run into hurdles after setting such a lightning pace and with so much of the economic recovery and fiscal stimulus splurge already priced in.

“The real crux of the issue, however, is what’s in the price. The year-to-date rally has increasingly eliminated upside to our targets,” noted Andrew Sheets, a strategist at Morgan Stanley.

“Across four major global equity markets (the U.S., Europe, Japan and emerging markets), only Japan is currently below our end-2021 strategy forecast.”

BOLSTER CONFIDENCE

Still, recent data pointing to a solid global economic recovery has bolstered confidence and limited any investor nervousness, as have strong corporate earnings and the continued rollout of COVID-19 vaccinations in developed economies.

Early April manufacturing activity indicators out last week pointed to a robust start to the second quarter with data hitting record highs in the United States and signalling an end to Europe’s double-dip recession.

First-quarter U.S. gross domestic product data due later in the week is likely to show activity probably returned to pre-pandemic levels, analysts said.

Most observers expect the Fed will stick to its pledge to keep stimulus flowing easily until the economy has recovered sufficiently and downplay the threat of rising inflation — any suggestion otherwise could knock confidence sharply.

“The equity market is happy that the Federal Reserve is likely to continue with no new guidance on eventual tightening of policy as it wants to react to outcomes rather than anticipating them and believes that any inflationary rise in coming months will prove transitory,” said Steen Jakobsen, Chief Investment Officer at Saxo Bank.

In currencies, the dollar — which had benefited from rising Treasury yields the past few months – fell against a basket of currencies to its weakest since March 3. Other major currencies were little changed.

Bitcoin snapped a five-day losing streak with an 8.5% jump. Cryptocurrencies fell on Friday on concern that U.S. President Joe Biden’s plan to raise capital gains taxes would curb investments in digital assets.

Those tax proposals, while raising hackles among some investors, caused only a temporary blip in stock markets’ march higher.

Government bond yields rose as investors dumped safer assets.

The U.S. 10-year Treasury yield rose 2 basis points to 1.5843% but that is some way off the plus-1.7% levels hit earlier this month when fears about a spike in inflation rattled markets. Euro zone government bond yields also ticked higher.

Turkey’s lira rebounded 1.3% following its recent slide but remains close to an all-time low as a chill settled on relations with the United States and after the new central bank chief signalled rate hikes would harm the economy.

In commodities, U.S. crude fell $1.01 to $61.13 per barrel and Brent eased $1.11 to $65.

Gold climbed 0.1% to $1,779 an ounce.

(Editing by Ed Osmond and Bernadette Baum)

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BP Applies to Set up U.S. Retail Power Business

By Ron Bousso and Chris Prentice

BP wants to supply electricity in California, Illinois, Ohio, Pennsylvania and Texas in its first foray into the retail power business, according to an April 20 filing with the Federal Energy Regulatory Commission (FERC) seen by Reuters.

The British company has no retail energy trading business but is one of the largest North American power traders, supplying wholesale customers such as power generators and cities with gas, renewable energy and storage.

A new subsidiary called BP Retail Energy will supply the power, going head-to-head with utilities that are under growing pressure from investors and governments to cut carbon emissions.

“BP Energy Retail is a retail energy marketing company that intends to sell electricity products directly to commercial and industrial customers and residential customers,” the filing said.

BP declined to comment.

The filing listed the sources of electricity generation BP Retail Energy is affliated with. They were BP’s U.S. onshore wind farms, solar power plants and its natural gas plant in Whiting, Indiana.

BP has set out plans to increase its renewable power capacity 20-fold while reducing its oil output by 40% by 2030 to slash its greenhouse gas emissions.

Its plans rely in large part on expanding its customer base for fuels, electric vehicle charging and convenience stores. It has not said publicly it would set up a retail power business.

European rivals including Royal Dutch Shell and France’s Total are also targeting fast growth in the retail power sector as they move away from oil and gas.

Shell’s retail business has focused on Britain while Total has built a large portfolio in France and northwest Europe.

BP generates renewable power in the United States through several onshore wind farms and Lightsource BP, a solar developer in which it holds a 50% stake. BP is also developing offshore wind farms with Norway’s Equinor off the east coast.

BP wants to boost its renewable power generation from about 3.3 gigawatts (GW) in 2020 to 50 GW in 2030 and ramp up the volume of electricity it trades from 214 terawatt-hours (TWh) a year to 500 twh over the same period.

(Reporting by Ron Bousso; Editing by David Clarke)

Euro holds 8-week highs against the dollar as dovish Fed weighs

By Julien Ponthus

LONDON (Reuters) – The euro held at an eight-week high against the dollar on Monday despite a disappointing sentiment survey in Germany as expectations the U.S. Federal Reserve will maintain its dovish stance at a policy meeting weighed on the greenback.

German business morale improved by less than expected in April as a third wave of COVID-19 infections and problems with supply of components in the industrial sector seemed to slow the recovery in Europe’s largest economy.

Analysts however kept focusing on the general direction of travel of the economy, seen firmly on its way out of the COVID-19 crisis.

“Notwithstanding the slight disappointment in today’s figures, the April Ifo results combine with other closely-watched surveys for the eurozone economy…in signalling momentum improvement at the start of Q2,” commented economist Ricardo Amaro at Oxford Economics.

On Friday, the common currency posted its biggest daily gains since early February after positive data on European services and manufacturing activity lifted sentiment.

Adding to the optimism, a source told Reuters that the German government has raised its growth forecast for this year to 3.5%, compared with the 3% growth it was expecting back in January.

The euro had given up the morning’s gains by around midday on the continent, to stand 0.01% lower at $1.2095, clinging to its highest levels since the beginning of March.

The dollar index was down 0.11% at 90.80, its lowest level since March 3.

The Fed’s next meeting ends on Wednesday, and while no major policy changes are expected, investors will pay close attention to comments from Chairman Jerome Powell.

Powell is likely to face questions over whether an improving labour market and rising coronavirus vaccinations warrant a withdrawal of monetary easing, but most analysts expect him to say such talk is premature, which would put downward pressure on Treasury yields and the dollar.

“The Fed has managed to convince the market that it is in no position to begin contemplating tapering, never mind raising rates, for – in their own words – ‘some time’,” John Velis, a strategist at BNY Mellon wrote to clients.

The dollar stood at 107.77 yen, close to its lowest since March 4.

The British pound was 0.1% higher at $1.3894, adding to a 0.3% gain in the previous session.

In emerging markets, the Turkish lira weakened to as much as 8.48 versus the dollar, close to its record low of 8.58 reached in early November.

The currency, among the worst performers in emerging markets this year due to worsening relations with the United States and worries about a dovish central bank governor, recouped some losses during the morning and was last quoted at 8.3150.

The onshore yuan edged up to 6.4841 per dollar, just shy of a six-week high.

Elsewhere, the Australian and New Zealand dollars rose toward one-month highs.

In the cryptocurrency market, Bitcoin reclaimed the $50,000 mark, jumping over 8% and on course to snap five straight days of losses exacerbated by U.S. President Joe Biden’s plan to raise capital gains taxes for wealthy investors.

 

(Reporting by Julien Ponthus; Editing by Kirsten Donovan)

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Oil Falls as India’s COVID-19 Surge Dents Demand Outlook

By Bozorgmehr Sharafedin

Brent crude was 89 cents, or 1.4%, lower at $65.22 a barrel by 0846 GMT. U.S. West Texas Intermediate (WTI) crude was down 87 cents, or 1.4%, at $61.27 a barrel.

Both benchmarks fell about 1% last week.

“The market is tending to focus more on the bad news from India and Japan at present, where the number of new coronavirus cases has risen sharply, prompting increased mobility restrictions to be imposed,” said Commerzbank analyst Eugen Weinberg.

India and Japan are world’s third and fourth biggest crude oil importers.

India’s new coronavirus infections hit a record peak for a fifth day on Monday as countries including Britain, Germany and the United States pledged to send urgent medical aid to help battle the crisis overwhelming its hospitals.

Consultancy FGE expects gasoline demand in India to slip by 100,000 barrels per day (bpd) in April and by more than 170,000 bpd in May. India’s total gasoline sales came to nearly 747,000 bpd in March.

Diesel demand, which at about 1.75 million bpd accounts for about 40% of refined fuel sales in India, may slump by 220,000 bpd in April and by another 400,000 bpd in May, FGE says.

In Japan, a third state of emergency in Tokyo, Osaka and two other prefectures began on Sunday, affecting nearly a quarter of the population as the country attempts to combat a surge in cases.

The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, will discuss output policy at a meeting this week, but most analysts believe it will go ahead with its decision to ease output restrictions from May.

The group in a meeting at the start of April agreed to ease production curbs by 350,000 barrels per day (bpd) in May, another 350,000 bpd in June and a further 400,000 bpd or so in July.

“The looming wave of fresh OPEC+ supply coupled with renewed demand concerns has dented hopes for a meaningful summer price pounce,” said Stephen Brennock of oil broker PVM.

(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Yuka Obayashi in Tokyo; Editing by Kirsten Donovan)

Stronger Pound Drags FTSE 100 Lower; Midcaps Outperform

By Devik Jain

(Reuters) -London’s FTSE 100 edged lower on Monday as heavyweight export-oriented companies slipped on a stronger pound, while a rally in shares of IMI helped the mid-cap index outperform the blue-chip index.

The FTSE 100 fell 0.1% as large dollar-earning consumer staples companies such as Diageo, British American Tobacco, and Unilever dropped after the pound strengthened.

However, the losses were limited as miners added 1.4% after copper prices hit their highest in over 10 years. [MET/L]

Aero and defence stocks also rose, with Rolls Royce jumping 3.7% after it said on Friday it was in constructive talks with Spain over the sale of its Spanish unit ITP Aero.

The domestically focussed mid-cap FTSE 250 index added 0.3%. Engineering firm IMI jumped 7% to the top of index after it raised its annual profit outlook.

Globally, the mood was upbeat amid concerns over rising cases in parts of Asia ahead of U.S. Federal Reserve’s meeting, series of economic data and earnings reports from U.S. tech heavyweights and big UK banks this week. [MKTS/GLOB]

“With a data calendar as juicy as this week, Monday morning COVID-19 nerves are likely to be quickly forgotten,” said Jeffery Halley, senior market analyst at OANDA.

The FTSE 100 has gained 7.3% year-to-date as encouraging economic data on the back of speedy COVID-19 vaccinations and constant policy support from the government lifted optimism about a stronger economic recovery.

Goldman Sachs expects Britain to grow by a “striking” 7.8% this year, more than the United States following a nearly 10% slump last year as it was hit by longer coronavirus lockdowns than many of its peers.

Global education group Pearson rose 2.2 after posting a 5% increase in underlying revenue growth in the first quarter, helped by strong demand for online learning courses.

Food ingredients maker Tate & Lyle added 6.2% after saying it was exploring the sale of a controlling stake in its commercial sweeteners unit and separate it from its food and beverage solutions business.

(Reporting by Devik Jain in Bengaluru; Editing by Saumyadeb Chakrabarty and Uttaresh.V)

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Sterling Begins New Week Buoyant, Ignores Political Noise

By Ritvik Carvalho

The pound appeared unaffected by the news and gained against the dollar for a second week on Friday, helped by better than expected economic data that indicated Britain’s economy may be rebounding from its worst annual contraction in 300 years.

Prime Minister Boris Johnson is facing a stream of allegations in newspapers about everything from his muddled initial handling of the COVID-19 crisis to questions over who financed the redecoration of his official apartment.

Defence Secretary Ben Wallace has denied a report that Johnson said he would rather bodies piled “high in their thousands” than order a third social and economic lockdown to stem coronavirus infections.

Asked last month about the refurbishment plans, Johnson’s spokeswoman said all donations, gifts and benefits were properly declared, and that no party funds were being used to pay for the refurbishment.

Bets on an economic rebound have fuelled sterling’s rise against the dollar and euro this year as Britain’s COVID-19 vaccination programme outpaced its peers. The country is emerging from a third national lockdown, and is preparing for the second phase of lifting restrictions.

Sterling was 0.3% higher at $1.3923, off last week’s top of $1.4009. Against the euro it was 0.3% higher at 86.82 pence.

“The political noise surrounding sleaze allegations against the Conservative government have yet to do any real damage to GBP and instead the focus will be on early indications on the pick-up in activity as the economy reopens,” said Chris Turner, global head of markets at ING.

Net speculative long positions on sterling – or the total of market bets the pound will increase in value to the dollar – slipped marginally in the week up to last Tuesday, CFTC data on Friday showed. The market still remains long on the pound.

“We think net long positions on the pound are here to stay thanks to the upbeat expectations on the UK recovery that have been fuelled by fast vaccinations and looser virus containment measures,” ING’s FX strategist Francesco Pesole said in a note to clients.

Bank of England Deputy Governor Ben Broadbent has forecast consecutive quarters of rapid growth but also warned that inflation will prove less predictable, according to an interview with the Telegraph newspaper.

It may be too soon to call a “roaring twenties” scenario, but it certainly means “very rapid growth at least over the next couple of quarters” particularly as the economy will be boosted by people simply saving less, Broadbent said in remarks published Saturday evening in the Telegraph newspaper.

(Reporting by Ritvik Carvalho; Editing by Ana Nicolaci da Costa)

German Business Morale Improves Less Than Expected in April – Ifo

The Ifo institute said its business climate index edged up to 96.8 from 96.6 in March. A Reuters poll of analysts had pointed to a bigger increase to 97.8.

“Both the third wave of infections and bottlenecks in intermediate products are impeding Germany’s economic recovery,” Ifo President Clemens Fuest said in a statement.

Companies raised their assessment of the current business situation once again, but they were less optimistic about the coming six months, the survey showed.

The business climate in manufacturing improved further to reach its highest level in nearly three years, with industrial companies reporting full order books and humming factories.

“The demand situation is still very good,” Fuest said.

But their business outlook was less optimistic as 45 percent of companies reported bottlenecks in intermediate products, the highest value since 1991, the institute said.

The Ifo figures were broadly in line with the PMI survey from last week that showed factories continued to churn out goods at a near-record pace in April while activity in the services sector remained sluggish.

The government is expected to raise its 2021 GDP growth forecast on Tuesday after Economy Minister Peter Altmaier hinted earlier this month that Berlin was mulling an upward revision to the 3% estimate it presented in January.

(Reporting by Michael Nienaber, editing by Thomas Escritt)

Toshiba Must Seek Suitors, Another Big Shareholder Says, After CVC’s $21 Billion Offer

By Makiko Yamazaki and Scott Murdoch

The comments by 3D Investment Partners, which owns a 7.2% stake in Toshiba, come as a $21 billion buyout offer from CVC Capital Partners earlier this month has sparked expectations for a bidding war for the Japanese company.

While Toshiba dismissed that offer citing a lack of details, CVC has not thrown in the towel and sources have said some other private equity investors are also considering making bids.

“We call upon the board to openly welcome interest from suitors who could enhance corporate value and ask the board to conduct a formal review of strategic alternatives,” 3D said in a letter sent to Toshiba’s board on Monday and made public.

“To conduct a fair and proper process, Toshiba should explicitly indicate that it is open to alternative ownership structures and correct media speculation that Toshiba’s management team and board have a strong preference for remaining a listed company,” 3D said.

The industrial conglomerate has said it believed that being publicly traded provided a “capital structure suitable for enhancing long term value creation” but added that its board would not disregard various proposals, including those to take the company private.

In response to a request for comment on 3D’s letter, Toshiba reiterated that stance on Monday.

“This letter may be the starting point of multi-party dialogue … other shareholders certainly feel the same way, and addressing the board publicly puts them on the spot,” Quiddity Advisors analyst Travis Lundy, who writes on Smartkarma, told Reuters.

“I expect more shareholders will come forward with similar letters”

Earlier this month, U.S. hedge fund Farallon Capital Management, Toshiba’s third-largest shareholder with a stake of around 6%, also called on the Japanese conglomerate to seek other offers from potential suitors.

Singapore-based Effissimo Capital Management, Toshiba’s top shareholder with a stake of around 10%, has not commented since CVC’s offer was made public.

Bain Capital, KKR & Co Inc and Canada’s Brookfield Asset Management are also looking at potential bids for Toshiba, Reuters has reported.

A senior executive at one of Toshiba’s main lenders said that several private equity funds have contacted his bank for potential financing, but no talks are in progress.

In the letter, Singapore-based 3D suggested it would take further action if the Toshiba board fails to consider its request, saying shareholders “will have no choice but to seek a more significant and ongoing role in governance”.

It estimated Toshiba’s fair stock value in excess of 6,500 yen. Toshiba shares closed 1.3% higher on Monday at 4,465 yen, compared to the broader Tokyo stock market’s 0.2% gain.

“Shareholders will hold management accountable if they try to block these interests to buy the company,” said another Toshiba investor, who could not be named because of confidentiality constraints.

(Reporting by Makiko Yamazaki; Additional reporting by Yuki Nitta in Tokyo and Scott Murdoch in Hong Kong; Editing by Muralikumar Anantharaman)

Philips Lifts 2021 Forecast as Q1 Sales Soar amid Pandemic

By Bart H. Meijer

The Dutch health technology company said core earnings surged 74% in the first quarter to 362 million euros ($438 million) compared with the year earlier period, on a 9% rise in comparable sales, easily beating analysts’ expectations.

“Revenue growth was a bit stronger than we originally expected”, Chief Executive Frans van Houten told reporters.

“On that basis and expecting a strong second quarter, we are raising our guidance.”

Philips, which sells products ranging from electrical toothbrushes to medical imaging systems, said it now expects “low-to-mid-single-digit comparable sales growth” for 2021, up from earlier guidance for low growth.

All business segments and markets contributed to the strong growth in the first months of 2021, Van Houten said, as hospitals resumed elective procedures and investments which were put on hold during the first wave of the pandemic last year.

Demand also remained strong at the Connected Care division, which supplies equipment needed to treat COVID-19 patients such as respiratory machines and monitoring and software platforms that allow remote care.

Philips still expects the growth of this division to slow over the course of this year, following a surge in demand in the second half of 2020.

The company’s shares openend roughly flat on Monday, having risen around 15% since the start of the year.

PROVISION DAMPENS NET PROFIT

However, Philips also said it had made a 250 million euro provision to deal with risks it detected in some of its respiratory care devices.

It said sound abatement foam used in some of its sleep and respiratory care devices could degrade when cleaned incorrectly or when used in hot and humid conditions.

“We have seen a very low incident rate”, Van Houten said. “But out of precaution we feel we need to take action and repair affected machines and change this component.”

The provision meant net profit was stable at 40 million euros in the first quarter from the year earlier period.

Analysts had expected 326 million euros in adjusted earnings before interest, taxes and amortisation (EBITA) and a 6% rise in comparable sales.

Last year’s results were restated to reflect the 3.7 billion euro sale of the household appliances business to Hillhouse Capital announced last month.

(Reporting by Bart Meijer; Editing by Edwina Gibbs, Kirsten Donovan)

Turkish Lira Nears Record Low, Rattled by U.S. Ties and Rates Policy

By Jonathan Spicer and Ece Toksabay

The currency, among the worst performers in emerging markets this year, weakened as much as 0.6% to 8.48 versus the dollar, close to its 2021 low water mark and closing in on its record of 8.58 reached in early November.

“Market negativity is intense. (The) risk of an overshooting episode is unfortunately elevated,” Robin Brooks, chief economist at the Institute of International Finance, said on Twitter.

The lira shed 3.5% in the last three trading days as it became clear that U.S. President Joe Biden would officially recognise the 1915 massacres of Armenians in the Ottoman Empire as a genocide.

Turkey, a NATO ally, sharply criticised the White House’s decision, which was announced on Saturday, and said it undermined trust and friendship.

Turkish assets are particularly sensitive to strains in relations with Washington given past fallout from U.S. sanctions and economic threats, including a spat in 2018 with then- President Donald Trump that sparked a lira crisis and recession.

President Tayyip Erdogan’s spokesman and adviser, Ibrahim Kalin, told Reuters that Washington should act responsibly since it was in no one’s interest to “artificially undermine ongoing relationships for narrow political agendas.”

“Everything that we conduct with the United States will be under the spell of this very unfortunate statement,” he said in an interview on Sunday.

Adding to investors’ jitters, Central Bank Governor Sahap Kavcioglu, who was appointed a month ago, said late on Friday that while he would keep monetary policy tight for now, any rate hike would send a bad message for the real economy.

“Who is happy with high interest rates?” he said in his first televised interview as bank head.

RATE CUTS

The lira was at 8.4600 at 0630 GMT, and has dipped the last six straight trading days.

It plunged as much as 15% last month after Erdogan sacked Naci Agbal, a respected policy hawk, as central bank governor and appointed Kavcioglu, who like Erdogan is a critic of tight monetary policy and has espoused the unorthodox view that it causes inflation.

Agbal had raised the policy rate to 19% to curb inflation that has risen above 16% and is expected to hit 18%. Many foreign investors who snapped up Turkish assets under Agbal fled when he was fired.

Analysts expect the bank to begin cutting rates around mid-year and some predict Kavcioglu could revert to a costly policy, conducted before Agbal was appointed in November, of selling foreign currency (FX) reserves to support the lira.

The political opposition has pressed Erdogan and his ruling AK Party to account for some $128 billion in sales in 2019 and 2020, which were made by state banks and backed by central bank swaps, sharply depleting its FX reserves.

In the interview, Kavcioglu defended the sales in the face of what he called “attacks” that began with the 2018 crisis.

Kavcioglu “seemed quite confident about the quality of reserves, saying (they) were only shifted from assets to liabilities,” said Ozlem Derici Sengul, founding partner at Spinn Consulting.

But “losing assets and holding liability means the system remains quite fragile against a situation like a bank run where households and companies need their FX deposits,” she said.

Erdogan has fired three central bank chiefs in two years, eroding monetary credibility.

(Additional reporting by Daren Butler; Writing by Jonathan Spicer;Editing by Gareth Jones)

Abu Dhabi Ports raises $1 Billion Loan

By Yousef Saba

Nine banks provided the facility, with Citi and First Abu Dhabi Bank having lead roles in the transaction, the first source said on condition of anonymity.

The source added that HSBC and Standard Chartered were also involved in the loan for the company, which is owned by Abu Dhabi state holding company ADQ.

Abu Dhabi Ports, FAB, HSBC and Standard Chartered did not immediately respond to Reuters requests for comment. Citi declined to comment.

Issuers in the Gulf have been raising debt, seeking to benefit from low rates as the region emerges from an economic downturn caused by the COVID-19 pandemic and last year’s oil price plunge.

Abu Dhabi Ports was also likely to issue bonds soon, the second said. Fitch Ratings and S&P Global Ratings both assigned the company an A+ credit rating on Thursday.

ADQ, which sovereign wealth fund tracker Global SWF said last month was worth $110 billion, has gained prominence in the past year as Abu Dhabi consolidated several government assets under its banner.

Another ADQ subsidiary, power utility TAQA, raised $1.5 billion in a bond deal last week. Food and beverages group Agthia, also owned by ADQ, mainly used bank debt to finance its acquisition of three quarters of Egypt’s Ismailia Agricultural and Industrial Investment.

(Reporting by Yousef Saba; Editing by Edmund Blair)

Draghi Says Deal Reached with EU on Italy’s Recovery Plan

By Giuseppe Fonte and Gavin Jones

Italy plans to spend more than 220 billion euros ($266 billion) from European Union and national funds to revive its coronavirus-battered economy, a draft seen by Reuters showed.

Economy Minister Daniele Franco unveiled the plan’s details to the cabinet late on Saturday, after it was delayed for 12 hours to allow negotiations to proceed with Brussels.

Draghi’s spokesperson said he told his ministers that he got the green light from the Commission by intervening directly in the talks, even though there were still some “marginal adjustments” to iron out.

Draghi’s intervention included a call with Commission President Ursula von der Leyen, the spokesperson said.

Foreign Minister Luigi Di Maio said Draghi announced the “go-ahead” from the Commission to the ministers who were reviewing the latest draft of the plan for the first time.

The sometimes fractious, multi-party cabinet welcomed the news of a deal.

“There was an excellent atmosphere of collaboration and enthusiasm,” Di Maio told Reuters.

The Commission’s concerns over Italy’s recovery plan centred on a lack of detail over structural reforms of areas such as the public administration, the justice system and the tax system, as well as the way the investments in the plan will be put into practice and monitored, sources told Reuters last week.

The draft of the plan includes dozens of projects under six headings: ecological transition, digitalisation, infrastructure, education and research, social inclusion and health.

The government says that thanks to the investments and structural reforms in the plan, Italy’s gross domestic product in 2026 will be 3.6 percentage points higher than it would otherwise have been.

The formal target date for presentation by all 27 EU countries of their recovery plans is April 30, but Brussels has said this is not a rigid deadline and half of the national plans will probably be submitted in May.

(Writing by Gavin Jones; Editing by Giulio Piovaccari and Hugh Lawson)

Exclusive – Qatar Petroleum Plans Debut Dollar Public Bond Sale

By Yousef Saba and Davide Barbuscia

The world’s top liquefied natural gas (LNG) supplier sent banks a request for proposals for the planned debt sale in the last few weeks, the sources said, with one of them adding it will likely raise billions of dollars.

“It will be a big deal,” the source said.

QP, which did not immediately respond to a request for comment, plans to vastly expand its capacity in coming years.

The company said last month it would take full ownership of its Qatargas 1 LNG plant, the country’s first, when its 25-year contract with international investors including Exxon Mobil Corp and Total SE expires next year.

The planned debt sale comes as energy companies in the region seek different means to raise cash after they were pummelled last year by the double shock of the COVID-19 pandemic and oil prices collapsing.

QP last year was looking at job and cost cuts to cope with the slump in oil and gas demand caused by the new coronavirus.

Sources told Reuters last week Saudi Arabia’s oil giant Aramco is planning to refinance a $10 billion revolving credit facility. It is also working on a $12.4 billion deal to monetise its oil pipelines network.

Abu Dhabi National Oil Company (ADNOC) has done similar infrastructure deals that lease ownership of assets, raising billions of dollars in the past two years.

It is also planning initial public offerings of its drilling business and its joint venture with chemical producer OCI.

QP, wholly owned by the Qatari government, has sold bonds through private placements in the past, including in dollars and in Japanese yen. It has more than $3.25 billion in outstanding loans and bonds, according to Refinitiv data.

(Reporting by Yousef Saba and Davide Barbuscia; editing by David Evans)

Analysis: Tesla’s Bad Week in China was Months in The Making

The pile-on by media and scolding by regulators show how precarious China can be for big foreign brands, and how a company’s handling of an incident can turn into a crisis if the country’s tightly-controlled news outlets turn against it.

Tesla’s defiance of industry convention, embodied by founder Elon Musk and a corporate culture that rarely admits mistakes, has won fans in the United States, but has backfired in China. Musk had such cachet that China’s government allowed Tesla to be the first foreign carmaker not forced to team up with a partner to make cars locally. Now, Tesla is learning lessons its longer-established rivals got years ago.

Tesla’s troubles in China also underscore a problem Musk and senior Tesla executives have acknowledged, though mainly in relation to the company’s North American business. Tesla’s rapid sales growth has outrun its capacity to repair vehicles when hardware goes bad.

“Service expansion is really important to the future strategy of the company,” Tesla Chief Financial Officer Zach Kirkhorn told investors in January.

When a Tesla customer, angry over the handling of her complaint about malfunctioning brakes, climbed on top of a Tesla in protest on Monday at the Shanghai auto show, videos of the incident went viral.

The incident escalated after Grace Tao, Tesla’s vice president for external relations – a former anchor at state broadcaster CCTV – questioned whether the angry customer, surnamed Zhang, was acting on her own.

In an interview with a local news outlet, Tao said, “maybe she … I don’t know, I think she is quite professional, there should be (someone) behind her.”

“We have no means to compromise, it’s just a process in the development of a new product,” she added.

Tesla scrambled into damage-control mode, asking the online news outlet to withdraw the report, the outlet said on Tuesday on WeChat.

‘INSINCERE’ APOLOGY

Tesla issued a series of increasingly contrite late-night statements, from Monday’s “no compromise” to Tuesday’s “apology and self-inspection.” By Wednesday night, Tesla said it was “working with regulators for investigation.”

The official Xinhua news agency said Tesla’s apology was “insincere” and called for removal of a “problematic senior executive,” while the Global Times cited Tao’s comments in calling Tesla’s “blunder” a lesson for foreign firms in China.

Tao, who joined Tesla in 2014, could not be reached for comment. Tesla did not reply to a request for further comment.

“There have been consistent complaints on social media with Tesla in China regarding its quality and service issues, which seem to have been largely ignored by the local team until Tuesday,” said Tu Le, analyst at research firm Sino Auto Insights.

“It’s a delicate dance, though, since Tesla helps highlight the entire EV sector helping ALL companies grow their sales and raise their profiles,” he said.

Tesla cars, made at its own Shanghai factory, are highly popular in China, which is by far the world’s biggest EV market and accounts for 30% of Tesla’s sales.

Investors have not shown worry. Tesla shares rose this week.

PRECARIOUS POSITION

Pressure on Tesla had been building.

Last month, it came under scrutiny when the military banned Teslas from entering its complexes, citing security concerns over vehicle cameras, sources told Reuters. Days later, Musk appeared by video at a high-level forum, saying that if Tesla used cars to spy in China or anywhere, it would be shut down.

Tesla appeared to have scrapped much of its public relations team in the United States last year, although it has been hiring public relations staff in China.

For communications, it relies heavily on Musk’s Twitter feed, which has over 50 million followers. As of Thursday, he had been silent on the China situation, which remained a hot topic, as Tesla owners took to Weibo to complain about quality issues such as sudden acceleration or steering failure.

On Thursday, Global Times Editor-in-Chief Hu Xijin said the intent is not to force Tesla from China.

“Our ultimate goal is to make foreign companies adapt to the Chinese market, seriously abide by Chinese laws and regulations, respect Chinese culture and consumers, and become a positive element in the Chinese economy. Whether it is a lesson or help, it all points to the same goal.”

(Reporting by Tony Munroe in Beijing and Yilei Sun in Shanghai; additional reporting by Hyunjoo Jin in San Francisco; Editing by Nick Zieminski)

Blackstone’s First-Quarter Earnings Surge as It Cashes Out on Assets

By Chibuike Oguh

Dealmaking activity surged in the quarter as a booming stock market and low borrowing costs emboldened private equity firms to sell some of their assets for top dollar. [L8N2LR63L]

Blackstone reported distributable earnings per share of $96, surpassing the average Wall Street analyst estimate of 76 cents, according to financial data provider Refinitiv.

In its push to cash out on assets in the quarter, Blackstone floated app Bumble Inc in the stock market in a $2.2 billion initial public offering. Blackstone had paid $3 billion for a majority stake in Bumble in 2019. [L4N2KH2L]

Blackstone said its private equity portfolio appreciated 15.3% in the quarter, compared with an 5.8% rise in the benchmark S&P 500 stock index over the same period. Opportunistic and core real estate funds rose 5.3% and 3.2%, respectively.

Total assets under management rose to $648.8 billion, from $618.6 billion in the previous quarter, driven by strong fundraising. It ended the quarter with $148.2 billion of unspent capital.

Blackstone said it would pay a quarterly dividend of 82 cents per share.

(Reporting by Chibuike Oguh in New York)

U.S. Weekly Jobless Claims Fall to New One-Year Low

By Lucia Mutikani

But the labor market recovery has a long way to go, with the report from the Labor Department on Thursday showing at least 17.4 million people were collecting unemployment checks in early April, a sign that long-term joblessness was becoming entrenched.

“While new layoffs have slowed considerably, they are still nowhere near the level associated with a stable labor market,” said Andrew Stettner, senior fellow at The Century Foundation. “The problem isn’t that unemployed workers are not accepting jobs, but rather that the number of jobless people far outpaces the number of suitable job openings.”

Initial claims for state unemployment benefits decreased 39,000 to a seasonally adjusted 547,000 for the week ended April 17, the lowest since mid-March 2020. Data for the prior week was revised to show 10,000 more applications received than previously reported.

Economists polled by Reuters had forecast 617,000 applications for the latest week.

It was the second straight week that claims were below the 700,000 level since March 2020 when mandatory shutdowns of non-essential businesses like restaurants and bars were enforced to slow the first wave of COVID-19 infections. There were large declines in filings in Texas and New York.

Claims have remained high because of fraud, especially in California and Ohio. The enhancement of the unemployment benefits programs, including a weekly $300 subsidy, could also be encouraging some people to attempt to file a claim for assistance, though not every application is approved.

The latest Labor Department data on first payments show only a fraction of claims were successful over the past months.

The weekly subsidy and the Pandemic Unemployment Assistance (PUA) program will run through Sept. 6.

The unprecedented surge in claims early in the pandemic could also be messing with the model that the government uses to strip seasonal fluctuations from the data. Claims jumped to a record 6.149 million in early April 2020. In a healthy labor market, claims are normally in a range of 200,000 to 250,000.

Including the PUA program, 699,798 people filed claims last week, squeaking below 700,000 for the first time since the pandemic started.

U.S. stocks opened slightly lower after the release of the data. The dollar was steady against a basket of currencies. U.S. Treasury prices were mixed.

BROAD IMPROVEMENT

The United States has expanded COVID-19 vaccination eligibility to most American adults, and more than half that population has had at least one dose of a vaccine, according to the U.S. Centers for Disease Control and Prevention. A third of U.S. adults are fully vaccinated, as well as 26% of the population overall, it said.

That, together with the White House’s $1.9 trillion pandemic rescue package, has allowed for broader economic re-engagement. The resulting surge in demand has left businesses scrambling for workers. Retail sales raced to a record high in March and factories are humming.

Last week’s claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of April’s employment report. First-time filings have dropped from 765,000 in mid-March.

Claims are generally considered a leading labor market indicator, but they have lagged employment during the pandemic.

While the recent downward trend supports expectations for robust job gains in April, economists are keeping an eye on the number of people receiving benefits under both the regular state unemployment insurance and government-funded programs to get a better read of the labor market’s health.

The claims report showed the number of people receiving benefits after an initial week of aid decreased 34,000 to 3.674 million in the week ended April 10.

The so-called continuing claims have declined from 23.1 million at the height of the crisis. Part of the drop is likely because of people finding work and exhausting their eligibility for benefits, which is limited to 26 weeks in most states.

About 5.6 million people were on extended benefits during the week ended April 3, up 447,704 from the prior week. Another 492,999 were on a state program for those who have exhausted their initial six months of aid, down 119,699 from the week before. There were 17.405 million people receiving benefits under all programs during the week ended April 3.

“The unemployment claims data point to another strong jobs report for April despite all the drawbacks with the data,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. “The magnitude of the decline in claims suggests a marked improvement in the economy and the labor market as COVID restrictions continue to be eased.”

The economy created 916,000 jobs in March, the most in seven months. Employment, however, remains 8.4 million jobs below its peak in February 2020.

(Reporting by Lucia MutikaniEditing by Chizu Nomiyama and Paul Simao)

Saudi Aramco to Refinance $10 Billion Revolving Loans

By Davide Barbuscia

Aramco, the world’s largest oil company, raised the revolving credit facility in 2015 with a wide group of international and local banks.

That financing included two five-year loans, one in U.S. dollars and one in riyal, and two annually renewable one-year loans, also split between the two currencies.

Aramco, which declined to comment, last year extended the two five-year facilities by two years, pushing their maturities to March next year, according to a bond prospectus.

It is now planning to refinance the $10 billion revolving loans, two banking sources said, confirming a report by LPC, a fixed income news service that is part of Refinitiv.

“Rather than keep rolling it on a year basis, which is where it is right now, they’ll come and do a refinancing,” said one of the sources.

Aramco has recently agreed with banks to extend by a year a separate one-year $10 billion loan it raised in May last year, said one of the two banking sources.

It is also arranging a $10.5 billion loan for investors buying a stake in its oil pipeline business.

Aramco’s debt-to-equity ratio more than doubled to 55% in 2020 from a year before, it said last month, after the group kept a pledge to deliver a $75 billion dividend to support state coffers despite a slide in profits.

Its “gearing” ratio – a measure of the degree to which Aramco’s operations are financed by debt – was 23% last year, compared to minus 0.2% at the end of 2019.

(Reporting by Davide Barbuscia; Editing by Jan Harvey)