Hyundai Motor says targets 47% market share in S.Korea

Hyundai Motor, South Korea's top automaker, said on Sunday that it aimed to increase its domestic market share to 47% in 2011, driven by new models such as Veloster utility coupe and Grandeur luxury sedan.

Hyundai's 2010 domestic market share was 45%, far below its initial target of 52%, hit by the growth of its affiliate Kia Motors which sharply raised its share to 33.1 percent last year thanks to strong sales of K5 sedan and Sportage R sport utility vehicle.

South Korea is the biggest revenue source for Hyundai Motor and Kia Motors, which also compete with Renault Samsung, GM Daewoo and Ssangyong Motor in the domestic market.

Iran says $100 a barrel is appropriate price for oil

Iran's oil minister said on Sunday that USD 100 for a barrel of crude was appropriate and there was no need to hold an emergency OPEC meeting to discuss the price.

"The price of USD 100 for oil per barrel is real... OPEC does not need to hold an emergency meeting over the price issue," Massoud Mirkazemi told a news conference.

Shanghai eyes foreign firm listings, cross-border trade

Shanghai hopes to encourage foreign companies to raise capital through stock and bond issuance in Shanghai this year, Mayor Han Zheng said on Sunday, while also confirming the city plans a trial property tax during 2011.

Han said Shanghai aims to launch more cross-border financial services this year to support the central government's policy to promote the use of the yuan in cross-border trade settlements.

"We will attract bond issuance and public listing of well-established overseas companies," Han said in his annual work report to the Shanghai Municipal People's congress.

Shanghai will "support the launch of such new products as cross-border ETFs, income bonds, oil and lead futures," said Han. The city also plans to establish an insurance exchange this year, he said, without providing details.

China aims to build Shanghai, its financial capital, into an international financial centre able to compete with New York and London.

As part of efforts to further liberalise China's capital markets, Shanghai has long said it will allow foreign companies to sell shares on its stock exchange.

Fang Xinghai, Director-General of the Shanghai Financial Services Office, said late last year he hoped the country will start letting foreign companies sell shares in Shanghai in 2011, with approval processes for such listings to be made relatively simple.

More than two dozen companies, including HSBC and NYSE Euronext, have said they will seek a listing on the Shanghai Stock Exchange when the so-called international board is launched.

Han said one of the city's main tasks this year is to prepare for the trial run of a property tax to curb speculative investments in the real estate sector.

"We will step up macro-control measures, prioritize the supply of non-luxury residential units to be owned and occupied by ordinary citizens, and prepare for the trial reform on property tax as required by the central government," he said.

Shanghai will join southwestern Chongqing city, which has said it was planning a property tax on luxury homes to combat stubbornly high property prices.

Housing prices in major Chinese cities surged by more than a fifth in 2010, according to the China Real Estate Index System (CREIS), run by Soufun, China's biggest online real estate company.

But some developers believe a property tax will have limited impact on property prices as it will not change the severe supply shortage and strong demand in China's property market.

In Beijing, Mayor Guo Jinlong said at the municipal parliament session on Sunday that the local government would aim to reduce soaring housing prices as well as severe traffic congestion, the Xinhua news agency reported.

"We are under heavy pressure to stabilize housing and other retail prices, and optimize investment structure, now that a comparatively high proportion of investment goes to the real estate sector," Guo said in his government work report.

Last April, the central government stepped up tightening measures in the real estate sector as skyrocketing housing prices stoked public discontent.

The government has shut down several funding channels for developers, raised the minimum down payments for mortgages and capped the number of houses an individual can purchase.

Shanghai's property market has seen transactions and prices rising in recent weeks as sellers and buyers rush to complete deals before a property tax.

Etisalat says still working to complete Zain deal

UAE telecoms firm Etisalat said on Sunday it was still working to complete a "definitive transaction" to buy a stake in Zain for USD 12 billion, despite missing a January 15 due diligence deadline.

Etisalat said it had not made sufficient progress toward finalizing the deal by the deadline "due to unforeseen delays in Zain providing access to all relevant information".

"The parties do continue to work towards the announcement of a definitive transaction," Etisalat said in a statement.

Etisalat, the Gulf's second largest telecom group, had offered to buy a 46% stake of Zain for 1.7 dinars a share. The offer was made to one of Zain's major shareholders, Kuwaiti family conglomerate, the Kharafi Group.

In October, Kharafi Group said it had enough approvals from shareholders to tender to Etisalat's bid, even though the deal is still dependent on the sale of Zain's assets in Saudi Arabia, for anti-trust reasons.

Last week, CNBC Arabiya reported that Turkey's Cukurova Holding is in talks to buy 29.9% of Zain for USD 7.89 billion.

Automakers to rev up ad spending in 2011

Automakers stepped on the gas when it came to advertising during the US industry's comeback last year and the spending will only accelerate in 2011 as sales rise and companies tout their newest vehicles.

With US auto sales up more than 11% to about 11.6 million cars and light trucks last year, and optimism running high that sales could grow another 12% in 2011, consumers can expect more car ads, especially on TV and the Internet, trying to lure them to dealer showrooms, top auto and media executives said.

"Over the holidays, every TV commercial break had an ad for a car," said Brad Adgate, senior vice president of research at ad buyer Horizon Media. "They were ubiquitous. In some cases, you had more than one car commercial in a pod. I was staggered by it."

Automotive industry spending on advertising in the United States through the first nine months of 2010 rose almost 24% to USD 9.15 billion driven by increases throughout the sector, including General Motors Co, Chrysler and Toyota Motor Corp, according to Kantar Media.

When the full-year data is released, the growth rate will be higher than the 24% figure, said Matt VanDyke, Ford Motor Co's director of US marketing communications.

"There's still a lot of spending that's driven by the big fall prime-time TV properties," he said. "Sports and a lot of them did take place in the fourth quarter."

While last year's growth compares with an anemic 2009, which VanDyke said was the weakest in at least 15 years, he and others see the rebound continuing in 2011 with ad spending up in the double-digits on a percentage basis.

"I would guess that you're going to see it in line with the sales increase," AutoNation Inc President Michael Maroone told Reuters at the Detroit auto show.

Bottomline, with sales rising, ad budgets are too.

"You'll see everybody in the industry increasing their spend simply because the market is growing," said Bob Carter, the Toyota brand chief for the United States, told Reuters at Detroit auto show.

The industry's renewed confidence was reflected by GM's announcement at the show that it would be a major advertiser during the 2012 Summer Olympics in London. GM also returns to the Super Bowl next month with five ads after a two-year break from the National Football League's heavily watched championship game.

"They know that they have to reach the consumer, they know that they have to do it in big numbers and right now the best way to do it is on... network television," said Jo Ann Ross, president of network sales at CBS.

"They're putting their money where their mouth is," she added.

The ducks are flying

The growth is even more pronounced on the regional level as local broadcast TV advertising through the first nine months of last year surged 74% to almost USD 701 million, according to trade association TVB.

"There's an old adage, 'when the ducks are flying that's when you shoot,'" said Chuck Eddy, owner of a Chrysler-Dodge-Jeep dealer outside Youngstown, Ohio. "The consumers are out there, the public is starting to be receptive to the showroom floors in a pretty significant way."

Eddy's ad spending jumped 30% last year, and while the growth rate will be lower in 2011, the amount spent will top 2009. "I'm doing more advertising than I ever have."

Auto executives agree the growth is largely on TV and digital, including the Internet.

Also boosting the need for advertising is the rising number of new and redesigned vehicles, executives said. The number of new and significantly refreshed models in 2011 requiring ads to alert car buyers to their presence will be 49, up 63% from last year according to IHS Automotive.

"With the investment made in the product, once you have it you've got to get your story out there," Ford's VanDyke said. "There's kind of that minimum threshold where you need to certainly be big enough to be heard."

Another factor in the expected increases this year is the need for GM and Chrysler to show consumers they are new companies after their government-led bankruptcy reorganizations in 2009 and GM's return as a publicly traded company in November, executives said.

In addition, Toyota, coming off the hit to its reputation by its numerous recalls last year, still needs to run brand ads, executives said.

Investors crave more strong bank results

US bank stocks are flying high, and next week's earnings could give investors more reason to be optimistic about the sector.

Strong results from JPMorgan Chase & Co on Friday bolstered expectations for top US banks, many of which are due to report next week, including Citigroup and Goldman Sachs.

Financials have been among market leaders in the recent rally, with the Standard & Poor's 500 posting its seventh straight week of gains on Friday.

While the earnings outlook is keeping alive hopes that stocks have more room to run higher, the rise in bank shares has pushed sector indexes to near resistance levels, which could signal a rest stop for the shares in the holiday-shortened week.

The market will be closed Monday in observance of Martin Luther King Jr Day.

JPMorgan Chase on Friday reported profit and revenue that were stronger than analysts had expected, and the CEO said the bank could start to increase its dividend once regulators give the go-ahead, likely at the end of March. For details, see

Analysts said the news bodes well for other financials, most of which are due to report results next week.

"Financials could very easily be one of the real darlings of this particular earnings cycle," said Burt White, managing director and chief investment officer of LPL Financial in Boston.

Financials are projected to have by far the highest growth rate in earnings for the fourth quarter, largely because of easy year-ago comparisons, according to Thomson Reuters data.

Overall, S&P 500 earnings are expected to have increased by 32% from a year ago, the data showed.

Besides the banks, economic bellwether General Electric as well as marquee tech names Apple, Google and eBay are due to report.

Dreaming of bank dividends

Investors have been keen for news on when bank dividends will be reinstated, and when it happens, it's going to mean more investment in financials, White said.

"Once they start (paying dividends) ... you're going to see an enormous amount of buying from yield-starved investors, as well as funds and ETFs (exchange-traded funds) that really are going to have to relook at the landscape and put financials back in there," he said.

Among other top banks reporting next week are Morgan Stanley, Bank of America and Wells Fargo & Co.

The sector is benefitting from a steepening bond yield curve, which lets banks make more money on loans; a pickup in merger and acquisition activity, and a decline in loan losses, analysts said.

Headed for resistance

To be sure, though, the recent sharp rise in the sector could make it tougher for those shares to keep rallying.

The KBW Bank index

It's approaching a strong resistance area between 57 and 59. Worth noting: The KBW Bank index, the S&P financial sector and the Select Sector SPDR financial ETF all are near multi-month highs from last April.

The S&P 500's 7-week run of gains also serves as a sign that a pullback could be in store for stocks, analysts said. The last time the benchmark rose eight or more weeks in a row was a nine-week run between November 2003 and January 2004, according to Reuters data.

The S&P 500 is up 13.3% since the end of September.

Data from Thomson Reuters StarMine also suggests most banks could likely miss earnings expectations, based on the most recent and most accurate estimates.

Its estimate for Goldman Sachs is 0.2% below the consensus estimate, as calculated by Thomson Reuters. Similarly, StarMine's estimate for Bank of America is 0.4% below consensus, while Citigroup's is in line with consensus.

StarMine's estimate for Wells Fargo, meanwhile, is 0.2% above the consensus.

Reuters Quantitative Analyst Mike Tarsala said weak trading revenues could be among factors hampering banks' fourth-quarter results.

But the bias for now seems to be to the upside for banks, other analysts said.

Besides the benefit of the steeper yield curve, "there's an expectation of better economic activity showing up in the GDP data, which will then speak to the fact that perhaps the banks' lending profile" is improving, said Joseph Battipaglia, market strategist at Stifel Nicolaus, in Yardley, Pennsylvania.

Fiat workers back groundbreaking Italy labour deal

Workers at Fiat's iconic Mirafiori factory backed by a narrow majority a landmark labour deal that will save the loss-making plant and could overhaul labour relations in Italy, a union source told Reuters.

Vote counting in a referendum was still going on but the votes in favour of the contract have topped the threshold that guaranteed a victory to the 'Yes' camp, the Fimsic union said.

The deal limits strikes and absenteeism in exchange for a promise by Fiat, Italy's biggest industrial group, to keep investing in the country.

North Korea to set up economic development bureau

North Korea will establish a government body to fulfil 10-year strategy projects for its economy, official media said on Saturday, as record high prices are threatening a repeat of the 2008 food crisis in the world.

The KCNA news agency reported the North's cabinet had decided to set up the State General Bureau for Economic Development so as to build a "thriving socialist nation and to take a strategic position in the region and international economic relations".

"It puts main emphasis on building infrastructure and developing agriculture and basic industries including electric power, coal, oil and metal industries and regional development," the news agency said.

It will also help lay a foundation for the reclusive state to rank itself among the advanced countries in 2020, it added.

"When the above-said strategy plan is fulfilled, the DPRK will emerge not only a full-fledged thriving nation but take a strategic position in Northeast Asia and international economic relations."

DPRK is North Korea's official name, standing for the Democratic People's Republic of Korea.

North Korea's struggling economy in 2009 was 28.6 trillion South Korean won (USD 25.7 billion) in terms of its gross national income, less than 3% of South Korea's, the South's central bank had said.

The isolated state depends heavily on China for economic and diplomatic support. Its economic woes have deepened for years due to poor harvests and international sanctions imposed for its missile and nuclear tests.

Heightened tensions on the peninsula added to its economic difficulty after the North's shelling of an island in the South last November led Seoul to halt inter-Korea economic projects.

The North has appealed almost daily for talks with the South since the start of the year, but Seoul has dismissed Pyongyang's peace overtures as "insincere" and "propaganda".

BP, Russia's Rosneft in share swap, Arctic pact

BP Plc and Russia's state-controlled Rosneft agreed to a share swap under which they plan to jointly explore for offshore oil and gas in a deal that gives the UK company access to areas of the Arctic previously reserved for Russian oil companies.

BP, recovering from its Gulf of Mexico oil spill disaster, will swap 5% of its shares, valued at USD 7.8 billion, for 9.5% of Rosneft in an agreement that immediately raised concerns about US economic security from at least two American lawmakers and criticism from environmentalists.

The deal covers huge areas of the South Kara Sea in the Arctic that BP said could contain billions of barrels of oil and gas and had been previously off limits to foreign companies.

The pact, which is expected to be completed in a few weeks, highlights a rebound in relations with Moscow both for BP and its Chief Executive Bob Dudley, who was forced to flee Russia in 2008 after heading BP's Russian joint venture, TNK-BP, which is half-owned by BP.

Dudley said the deal was the first significant cross-shareholding between a nationally owned oil company and an international oil company and called it "a new template for how business can be done in our industry."

Dudley had been the boss for TNK-BP's formation in 2003 and was forced to leave due to what he described as a campaign of harassment by BP-TNK's billionaire oligarch co-owners.

The issue has since been resolved and Dudley returned to Moscow for the first time this summer, following his appointment as CEO of BP, to be warmly welcomed by officials.

"It has turned from a fistfight into a lovefest," said Cliff Kupchan, a director at Eurasia Group in Washington.

Russia is a key part of BP's global operation, providing the company with a quarter of its reserves before the US oil spill, so it is vital for Dudley to establish a good working relationship with the world's largest oil exporting nation.

US Congressman Edward Markey, who is the top Democrat on the House Natural Resources Committee, immediately called for a review of the deal by US regulators to see whether it affects the national and economic security of the United States. He noted that in 2009 BP was the top petroleum supplier to the US military.

And Republican Congressman Michael Burgess, who is on the House Energy and Commerce Committee, also said the deal "deserves some analysis and scrutiny" by the government's Committee on Foreign Investment in the United States given BP's ownership of critical oil assets in the U.S.

The US Treasury said it is forbidden by law to comment on investigations, planned or under way, by the committee.

Environmental group Greenpeace, noting the fragility of the Arctic, also lashed out.

"Now BP has bought its way into the Arctic by the back door. It seems the company learned nothing last year in the Gulf of Mexico," Charlie Kronick of Greenpeace said in a statement.

BP has a market capitalization of USD 150 billion US dollars, while Rosneft is valued at about USD 83 billion.

Arctic exploration

The venture underscores Europe's dependence on Russia for a rising share of its energy needs -- particularly for clean-burning natural gas. Russia holds one-fifth of the world's reserves of natural gas.

Chris Huhne, British Secretary of State for Energy and Climate Change, welcomed the "groundbreaking" deal and called it "good news for Europe, for the UK's energy security and worldwide."

BP's deal with Rosneft gives BP access to highly sought after reserves of oil and natural gas in Russia's remote Arctic region.

"It tells the world how important the Arctic is to the future of natural resource production, and while the US dillydallies and resists efforts by US companies to push forward into the Arctic, others are moving on, leaving the US behind," said John Hofmeister, the former CEO of Shell Oil Co. and founder of the group Citizens for Affordable Energy.

Russia, the world's top oil producer with output of more than 10 million barrels of oil per day (bpd), estimates that its Arctic zone holds about 51 billion tonne of oil, or enough to fully meet global oil demand for more than four years.

BP is seen filling a skills and technology gap for Rosneft as it seeks to develop the Arctic region.

"Rosneft is well aware that its ability to do deepwater Arctic work alone is very limited," said Kupchan. "They have been looking for ways to bring in companies with the technology and especially management skills needed to pull off deepwater Arctic work."

Russia wants to encourage oil exploration and production in its icy Arctic waters, but in the wake of BP's Gulf spill, Russian officials and experts warn that a similar accident in the Arctic could turn out far worse.

The BP-Rosneft discussions "are ones that have happened over a number of months and are not in reaction to anything in the United States," said Dudley at a London new conference. "This is part of BP's strategic direction of access to large hydrocarbon basins and we have had a strong relationship with Rosneft for a long time."

Russia has increasingly been looking to raise its influence on the global financial stage, with major companies -- including state-controlled ones -- seeking foreign acquisitions.

Some deals have come under fierce opposition in the countries involved, such as Surgutneftegas's purchase of a stake in Hungary's MOL. Others, like Sberbank's bid for German carmaker Opel, collapsed.

Prime Minister Vladimir Putin's government has also pledged to ease investors' access into Russia as it looks to foreigners to play a key role in helping to modernize the economy -- including through taking part in a big privatization drive starting this year.

Britain's new coalition government has attempted to improve relations with Moscow -- tense since the murder of ex-KGB agent Alexander Litvinenko in 2006 -- although tensions resurfaced last month with the expulsion of a Russian diplomat from London.

US-listed shares of BP, which had been trading higher, fell slightly to USD 49.00 in post-market trading. The stock had closed up 3.6% at USD 49.25 on the New York Stock Exchange.

Vote count close in landmark Fiat plant ballot

Partial referendum results on a groundbreaking labour deal at Fiat SpA's money-losing Mirafiori plant pointed to a very close race early on Saturday, with the "no" vote slightly ahead.

The accord limits strikes and absenteeism in exchange for Fiat's promise to keep investing in Italy. The 5,500-strong workforce at the Turin plant voted on Thursday and Friday on the deal, which has been approved by most unions at Mirafiori.

Chief Executive Sergio Marchionne, who engineered the Italian carmaker's 25% stake in Chrysler and transformed Fiat from an ailing conglomerate, has threatened to deploy the cash abroad if workers reject the changes.

The vote was seen a very close call. By 2330 GMT results from two of nine polling stations inside the plant gave a slight advantage to the 'no' camp, according to spokesmen for the FIOM, FISMI and FIM unions.

But Turin consultancy Termometro Politico was predicting 52% of voters would eventually back the deal, based on exit polls and early results, according to its website.

The contract is part of a Fiat-led unprecedented overhaul of Italian labour relations, which have been based on national deals rather than on a plant-by-plant basis.

"The Mirafiori accord ... is destined to be emblematic for the future, to keep factories open in Italy," Prime Minister Silvio Berlusconi told national television on Friday.

If workers accept the new contract, the company has pledged to invest 1 billion euros (USD 1.3 billion) to build new, high-end Alfa Romeo and Chrysler models at Mirafiori, Fiat's oldest plant and a symbol of Italian industry.

A simple majority is needed for approval. Turnout was heavy, with more than 96% of workers voting.

The contract has already been agreed at another of Fiat's five Italian factories. All of them lose money.

However, Fiat, Europe's No 6 carmaker by market share and Italy's biggest industrial group, also needs the deal to work in order to safeguard sales in its home market.

Cuts breaks

The proposed deal is part of a 20 billion euro "Fabbrica Italia" plan to double domestic production by 2014. It targets widespread absenteeism by curbing pay for those who take repeated sick leave around holidays and by ending wildcat strikes.

It cuts the number of breaks per eight-hour shift to three from four and raises the number of shifts to 18 a week from 15. Fiat can also call on each worker for 120 hours of overtime per year without union approval.

"This is an innovative deal that radically changes labour relationships in Italy and brings it closer to other western democracies," Roberto Di Maulo, secretary general of the FISMIC union, which backs Marchionne, told Reuters at the factory gate.

But the leftist FIOM-Cigl union, which says it represents around 23 percent of Mirafiori workers, has resisted the changes.

Mirafiori makes the Punto model and needs to roll out new models to survive.

Fiat's European sales fell 17% last year and its market share dropped to 7.6% from 8.7% in 2009.

ECB says ready to act on inflation if needed

The eurozone faces short-term price pressures which could linger, the European Central Bank said on Thursday, showing it could raise interest rates to contain inflation even while the bloc is gripped by a debt crisis.

ECB President Jean-Claude Trichet said prices needed to be monitored very closely after eurozone inflation jumped last month to 2.2%, the first time in two years it has risen above the central bank's target of just below 2%.

The ECB left rates on hold at a record low of 1% - a level Trichet said was "still appropriate". Risks to the medium-term outlook for price developments were still broadly balanced, "but could move to the upside", he added.

"We see evidence of short-term upward pressure on overall inflation, mainly owing to energy prices, which has not so far affected our assessment that price developments will remain in line with price stability over the policy-relevant horizon," Trichet told a news conference.

"We are permanently alert. We are never pre-committed not to move interest rates and our level of interest rates is designed to permit to deliver price stability."

The euro extended its gains versus the dollar in response to his remarks and short-dated bond yields rose.

"He sent a mild warning to markets that the ECB's assessment on interest rates could change," said Commerzbank economist Michael Schubert.

"What was more striking was that he emphasised that the ECB raised rates in July 2008, which stresses that the ECB could still raise rates in very uncertain times."

In 2008, the ECB hiked rates due to oil price-fuelled inflation just ahead of the Lehman bankruptcy that tipped the global financial system into full-blown crisis.

Trichet made a point of reminding reporters of that but said that while inflation could remain above target for a while, it was likely to subside towards the end of the year.

With inflation taking off, most notably in fast-growing emerging economies, several countries are already raising rates. South Korea and Thailand were the latest Asian economies this week to tighten as policymakers battle the impact of surging prices of food and other commodities.

"There is maybe a bit of a shift but I would not overdo it," Goldman Sachs economist Dirk Schumacher said of the ECB's stance on inflation. "One meeting is not enough to signal a major shift considering how volatile the situation is likely to remain."

The Bank of England also kept its interest rates on hold on Thursday at a record-low level of 0.5%. Markets are starting to price in a UK hike by the summer rather than near the year's end given inflation there has been above target for much of the last three years.

Debt crisis

Trichet put the onus firmly on eurozone governments to put their own houses in order to draw a line under the eurozone debt crisis which has forced Greece and Ireland to seek bailouts.

Successful bond auctions by Spain and Portugal this week eased some of the fears they may be next to seek outside aid.

"In view of the ongoing vulnerability to adverse market reactions, countries need to do their utmost to meet their deficit targets and put government debt and GDP ratios firmly on a downward trajectory," Trichet said.

He reaffirmed his support for the size and scope of the 440 billion euro (USD 574 billion) rescue fund to be increased, something top EU officials are pushing for, although Germany says it is opposed.

"We thought that this stabilisation fund should be improved quantitatively and qualitatively," Trichet said.

Investors wonder whether the ECB can increase its bond purchase programme to support Portugal, the latest government under pressure in a crisis which policymakers want to halt before it reaches the much bigger Spanish economy.

The pressure on the ECB to buy bonds may have been eased by Portugal's success in an auction of its benchmark 10-year bond on Wednesday, a similarly solid debt sale by Spain on Thursday and a call from the EU's top economic official for a stronger European financial safety net.

It did, however, buy Portuguese bonds to ease the path to its auction this week. Trichet merely said the programme was "ongoing".

The programme, which has left the ECB exposed to potential losses, has divided opinion within the bank, with Germany's Bundesbank chief Axel Weber voicing his opposition publicly.

Keeping its bond buying plans ambiguous affords the ECB an element of surprise when it acts, generating more impact.