MONEYCONTROL

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

2011-01-16T21:17:00.001-08:00

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

2011-01-16T21:16:00.003-08:00

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

2011-01-16T21:16:00.001-08:00

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

2011-01-16T21:15:00.000-08:00

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

2011-01-16T21:10:00.001-08:00

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

2011-01-15T02:17:00.002-08:00

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

2011-01-15T02:17:00.001-08:00

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

2011-01-15T02:16:00.000-08:00

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

2011-01-15T02:15:00.000-08:00

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

2011-01-15T02:14:00.000-08:00

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

2011-01-13T21:41:00.001-08:00

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.

French PM: Eurozone to do everything for stability

2011-01-13T21:40:00.002-08:00

French Prime Minister Francois Fillon said on Thursday that eurozone members would do "absolutely everything" for the bloc's economic stability, but stressed no additional bail out funding was currently required.

His comments, during a visit to London to meet British Prime Minister David Cameron, came as German Finance Minister Wolfgang Schaeuble said in Berlin that eurozone governments were working on a comprehensive package to solve the deep-rooted debt crisis that they hoped would be agreed by February or March.

"The eurozone members, and especially France and Germany, are ready do everything... absolutely everything to ensure the stability of the eurozone," Fillon said in a speech.

Speaking later at a news conference with Cameron, Fillon said that that there was no current need for additional funds to bail anyone out. Speculation has mounted that Portugal and Spain may have to seek bailouts to calm concern over national debts.

Cameron said Britain wanted to see the eurozone resolve its problems, but would not commit itself to additional measures to prop up the single currency.

"We want a strong eurozone, we want it to sort out its problems, we won't stand in its way, but we are neither joining the euro nor are we going to be drawn into fresh and new mechanisms within the euro," Cameron said during a news conference with the French prime minister.

Britain contributed around 7 billion pounds (USD 11 billion) late last year to the bailout of neighbouring Ireland but Cameron has been under pressure domestically to limit further financial support for eurozone countries.

Britain is part of the 60.0 billion euro (USD 78.8 billion) European Financial Stability Mechanism safety net under an agreement signed last year by the former Labour government. However, Cameron said Britain would not be part of an agreement that replaces that mechanism in 2013.

Markets have piled pressure onto Portugal in recent days, seeing it as the next eurozone country needing a bailout.

Asked specifically about Portugal, Cameron said he did not think it was right to speculate about individual countries.

Fillon said the eurozone needed a closer harmonisation of member countries' economic, fiscal and social policies.

He also said the global economic recovery was not sustainable without better economic and financial regulation, something that Paris would strive for during its presidency of this year's G20.

"The global economic recovery cannot be sustained without better economic and financial regulation," he said.

In an interview with The Times ahead of his meeting with Cameron, Fillon urged Britain to back Europe's efforts to save the euro currency, noting it would be "a catastrophe" for the British economy if the single currency failed.

Renault theft allegation kicks off spy inquiry

2011-01-13T21:40:00.001-08:00

French carmaker Renault kicked off a judicial investigation into industrial espionage on Thursday, alleging corruption, theft and concealment.

Renault did not name the perpetrators but said it had filed an official complaint following the discovery of serious misconduct detrimental to the company's "strategic, technological and intellectual assets."

Last week Renault suspended three executives on suspicion they had leaked information about its high-profile electric car technology in a case France has dubbed "economic warfare". This has prompted talk of tighter laws to protect its companies.

Renault Chief Operating Officer Patrick Pelata said the carmaker had been the victim of an organised international network but that key technology for electric vehicles, in which it is investing heavily, was safe.

The scandal threatened to harm improving relations between France and China, after a government source last week said intelligence services were looking into a possible China link.

The French government has since played down the possibility of a link to China, saying it is not accusing any one country of involvement, while China has denied any link to the case.

Hearing sheds light on Michael Jackson private life

2011-01-13T21:37:00.000-08:00

Michael Jackson may have called the anesthetic propofol his "milk," but rather than give him strength, it left him in such a vulnerable state that his urine was collected through a device for incontinent patients.

That was one view of Jackson's final days and the extreme measures he took in life to maintain his public image as a beautiful superstar, which were revealed in a six day hearing into his death that ended earlier this week.

Other details were his wearing of a surgical cap while he slept to cover his balding scalp, and the numerous tubes of skin bleach cream he used to hide the disorder vitiligo, which causes a discoloration of the skin, from which he suffered.

But for the man once dubbed Wacko Jacko in the media, there was a softer side revealed, too. He was depicted as a father who cared deeply for his three children, and even as he was hounded by paparazzi, he tried to give them a normal life.

On Tuesday this week, Los Angeles Superior Court Judge Michael Pastor ordered Jackson's doctor, Conrad Murray, to stand trial for involuntary manslaughter in the "Thriller" singer's 2009 death due to an overdose mainly of propofol.

The anesthetic is used in hospitals to sedate patients, but Jackson's doctor has admitted to giving it to him at home as a sleep aid. One prosecution witness testified to some evidence Jackson might have drank it he would a glass of milk.

At one point, Judge Pastor seemed puzzled over why Murray would make the unorthodox decision to administer -- at Jackson's request -- propofol for sleeplessness, since the drug's effects last only minutes.

"Isn't the person still sleep deprived?" Pastor asked Murray's defense attorneys. "What purpose does it do to administer a dose that's only going to keep the person asleep for five minutes?"

Joseph Low, an attorney for Murray, responded that after Jackson had experienced over many years the adrenaline of performing for thousands of fans, he found it hard to sleep.

"It's difficult to come down off your own chemistry, if you will," Low said. "The propofol doesn't allow you to sleep ... but it at least allows you to get started."

Night cap

Earlier in the hearing, witnesses testified to seeing a "condom catheter" on Jackson as he lay motionless in his bed. That is a device to collect urine through a tube in patients without control of bodily functions, such as those under deep sedation, testified Dr Richelle Cooper, the hospital physician who pronounced Jackson dead.

Elissa Fleak, a coroner investigator, said she found a jug of urine on a chair when she combed through Jackson's room.

Paramedic Richard Senneff testified that Jackson was also wearing a surgical cap when emergency workers arrived at his bedroom. That may be because, as revealed earlier in Jackson's autopsy report, he suffered from "frontal balding" and his hair was described as "sparse and connected to a wig."

Despite years of being maligned in the media for saying he suffered from skin discoloration disease vitiligo, when few believed that would be the reason for his changed skin color, the autopsy also disclosed that he did have the disease.

In the preliminary hearing, it was revealed that to make his skin appear one color, he used huge amounts of skin cream. Fleak testified she found tubes of the whitening chemical hydroquinone in Jackson's bedroom, and pharmacist Tim Lopez said he shipped 20 tubes of the cream to Murray.

There was another side of Jackson, too, that was told from the witness stand. Several people said Jackson shared a joyful life with his children Prince, 13, Paris, 12, and Blanket, 8, and on the day he died, his kids were playing, as usual, in the den, said family chef, Kai Chase.

"It was normally a happy home," Chase said. "There was always music playing. You could hear the sound of kids playing and animals playing."

Jackson family friend Firpo Carr told Reuters Jackson never sang about heaven, and that he had unique thoughts about it based on his religious beliefs.

"He did not plan on going to heaven, as you can tell from his songs, his whole thing was living in paradise on Earth with his children," Carr said.

OPEC only likely to act if oil rally lasts

2011-01-13T21:35:00.000-08:00

OPEC will only hold an emergency meeting if oil climbs above USD 100 and stays there, although the group's Gulf members could informally add supply if needed, a delegate from a Gulf OPEC member state said on Thursday.

Brent crude this week hit a 27-month high of close to USD 99 a barrel, raising concern in consuming countries about the impact of higher fuel costs on the tenuous economic recovery.

"OPEC will only have an extraordinary meeting if oil prices exceed USD 100 and stay there. We don't want the market to panic," the delegate told Reuters.

"And if the prices reach USD 100 and we see that there is a need of supply from our customers, Gulf countries will start producing above their quotas, but this has not happened yet."

Most officials in the Organization of the Petroleum Exporting Countries maintain there is no need to change a production-restraining policy adopted in 2008, in the aftermath of economic crisis. OPEC is not scheduled to hold another meeting until June.

That stance was reiterated earlier on Thursday by Libya's top oil official, who said USD 100 oil would not harm the world economy and there was no need for OPEC to add more supplies.

"We think there is enough supply and there should not be any meeting at this point in time," Shokri Ghanem, chairman of Libya's National Oil Corporation, told Reuters by phone.

OPEC's core Gulf members -- Saudi Arabia, Kuwait and the United Arab Emirates -- are the most able to pump extra oil in the 12-member group because they hold the bulk of the world's unused oil production capacity.

Saudi Arabia, which as the holder of the world's largest reserves is keen to preserve long-term demand for oil, has traditionally stepped in to add more oil if it considers the market is rising too fast.

There is no sign of that happening so far. Surveys show OPEC's Gulf members are producing closely in line with their supply targets, or OPEC quotas.

Temporary rise?

A second Gulf OPEC delegate said the price strength would probably not last and customers were not asking for extra oil.

Oil supply disruptions in Alaska and Norway, now being resolved, lifted prices this week. Analysts say Brent crude has been boosted since the start of the year by investment flows and technical factors, which could fade.

"Prices approaching USD 100 now is just a temporary situation and will not last and if economies can stand USD 98, they can afford USD 100. It's not like we're talking about prices of USD 120," the delegate said, adding the price strength was not backed up by any lack of oil.

"We didn't hear anything from our customers about shortages of supply."

Libya's Ghanem and a delegate from Kuwait agreed the price strength was probably temporary.

"Inventories are now lower than they were last year, but I see the current price level as temporary. Once it starts getting warmer, prices will return to the USD 70-USD 90 price range."

OPEC's discipline with the system of supply targets agreed in December 2008 has declined as the market has rallied.

By December 2010, OPEC was delivering 55% of promised curbs, a Reuters survey found. Even so, Saudi Arabia, Kuwait and the United Arab Emirates were delivering most of their share of the cutbacks.

The third delegate said Gulf states were producing within their agreed limits, adding it was too early to say whether OPEC would decide on an output change when its next scheduled meeting took place in June.

By contrast, the International Energy Agency, which represents 28 industrialised countries, has warned about the risks to economic recovery from rising oil prices.

The IEA said in December that OPEC might come under pressure to increase supplies in 2011.

Fed sees somewhat brighter outlook for US jobs

2011-01-12T21:04:00.001-08:00

The battered US labor market may finally be looking up, according to a report from the Federal Reserve that found modestly better job conditions across the country.

The Fed's Beige Book, based on anecdotal reports from the business contacts of the central bank's regional branches, painted an increasingly bright, if cautious, picture.

The findings were consistent with a recent pick-up in US economic data that has prompted some economists to beef up their forecasts for growth in the first half of 2011.

"All district reports indicated that employment levels are rising in at least some sectors, generally by modest amounts," the Fed said. Manufacturing also appeared to be doing well.

Still, caution was still prevalent among many businesses and the US housing sector remains in a rut, the Fed said.

Mortgage applications, import prices up

The latest data offered some modest encouragement on that front, with applications for US home mortgages rising as lending rates eased from recent highs.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 2.2% last week to its highest level in about a month.

It had dropped on a lull in refinancing activity as influential US Treasury yields soared in late 2010.

The Fed's report also chronicled increased price pressures for businesses, but little evidence that these were being passed on to consumers.

Those findings echoed data on import prices, which jumped 1.1% in December following a revised 1.5% increase in November. Prices were up 4.8% last year, according to the Labor Department.

Petroleum import prices climbed 3.9% in December, while non-petroleum costs rose just 0.4%.

Export prices advanced 0.7% after a 1.5% gain in November. They were up 6.5% in 2010, the biggest gain in records dating back to 1983, and nearly double the rise in 2009.

A low inflation environment in the United States has allowed the Federal Reserve to maintain a very loose monetary policy, but a recent spike in global energy and commodity prices has raised some concern about cost pressures.

One big reason for tame price growth has been the weakness in the housing market, which some economists worry will take an extended period to recover.

The US economy grew 2.6% in the third quarter, a level considered too meek to put a significant dent in the nation's 9.4% jobless rate.

Against that backdrop, the Fed announced in November it would buy an additional USD 600 billion in bonds over an eight month period in order to support the recovery by keeping long-term borrowing costs low.

Market interest rates have risen sharply since then despite the purchases, though policymakers have argued they might have risen even further without Fed action.

The improvement in conditions in the Beige Book report strengthens the case, made both by some top Fed officials and outside economists, that the latest round of bond-buying might not be necessary.

Fed Chairman Ben Bernanke, however, has argued the economy is running so far beneath its full potential that it continues to need help from the monetary authorities. The central bank has cited both weak employment conditions and very low inflation readings to justify its actions.

US public strongly opposes debt level increase

2011-01-12T21:03:00.002-08:00

The US public overwhelmingly opposes raising the country's debt limit even though failure to do so could hurt America's international standing and push up borrowing costs, according to a Reuters/Ipsos poll released on Wednesday.

Some 71% of those surveyed oppose increasing the borrowing authority, the focus of a brewing political battle over federal spending. Only 18% support an increase

The poll underscores the tough task ahead for US lawmakers as the debt nears its current ceiling of USD 14.3 trillion. Treasury Secretary Timothy Geithner last week warned that a failure to raise the borrowing limit in the coming months could lead to "catastrophic economic consequences".

Republicans, who won control of the House of Representatives in November on a promise to scale back government, hope to pair any debt-ceiling hike with a commitment from President Barack Obama to reduce long-term spending.

Republicans have vowed to slash USD 60 billion from the budget as soon as March, but many of those cuts are not likely to be popular with the public.

The United States posted an USD 80 billion budget deficit in December, slightly smaller than economists had expected, Treasury Department data showed on Wednesday.

The government has now posted a budget deficit for 27 straight months, the longest streak on record.

A deal to extend tax cuts that was approved by Congress last month is expected to cost more than USD 800 billion, putting a further hole in the deficit.

Obama wants broader tax reforms although it will be hard to get it through a divided Congress in the next two years. His administration is exploring ways to boost tax incentives for corporate investment in the United States, Treasury Secretary Timothy Geithner said.

What to cut?

Only 24% say the country can afford to cut back on education spending, a likely Republican target, and 21% support cuts to law enforcement.

With the Pentagon fighting wars in Afghanistan and Iraq, 51% supported cutbacks to military spending.

Less than half, 45%, support an expected Republican effort to pare environmental enforcement.

Some 53% support cutting the budgets of financial regulators like the Securities and Exchange Commission, in spite of the widespread consensus that a lax regulatory atmosphere contributed to the devastating financial crisis of 2007-2009.

And 47% support cutbacks to national parks, which were shuttered for several weeks during the budget battles of 1995 and 1996.

Expensive benefit programs that account for nearly half of all federal spending enjoy widespread support, the poll found. Only 20% supported paring Social Security retirement benefits while a mere 23 supported cutbacks to the Medicare health-insurance program.

Some 73% support scaling back foreign aid and 65% support cutting back on tax collection.

The poll of 1,021 US adults was conducted between Friday and Monday. It has a margin of error of plus or minus 3.1%.

Chrysler's focus is to raise new financing: CEO

2011-01-12T21:03:00.001-08:00

Chrysler Group is focused on raising new financing to pay back almost USD 7 billion it owes to the US and Canadian governments before an initial public offering of shares, Chief Executive Sergio Marchionne said on Wednesday.

"Our priority is to put in place a structure where Chrysler would become answerable to the capital markets only," Marchionne said at a meeting with financial analysts organized by Deutsche Bank.

"The most likely of the options under consideration is a financing package that would facilitate payment of all government debt prior to an IPO."

Chrysler, which was put under the management control of Fiat in a 2009 bankruptcy brokered by the Obama administration, owed USD 5.7 billion to the US Treasury and USD 1.2 billion to Canada as of the end of September.

Marchionne said the cost of financing that debt had kept the No 3 automaker from posting a profit for 2010 on sales of about 1.6 million vehicles.

US SEC to unveil studies on brokers, advisers

2011-01-12T21:02:00.000-08:00

US securities regulators are preparing to release two key studies this month that could lead to major changes in how investment advisers and brokers who offer advice to retail customers are regulated.

The studies, mandated by the Dodd-Frank financial reform law, require the Securities and Exchange Commission to dig into issues that could unleash a new regulator on investment advisers and could expose brokers to a strict mandate to put client interests first.

One study, which could be released as early as Friday, will look at the regulation of investment advisers and if they should be overseen by a self-regulatory group such as the Financial Industry Regulatory Authority (FINRA).

The other study, due to Congress by January 21, will explore imposing a uniform fiduciary standard on brokers and investment advisers offering advice to retail customers.

The study on the fiduciary standard will have the most immediate impact for investors. Its findings are likely to inform how the SEC writes rules to harmonize disjointed regulations for how investment advisers and brokers interact with their retail customers.

The issue has been a top priority for SEC Chairman Mary Schapiro, who has often complained mom-and-pop investors may not know the difference between someone offering investment advice and someone peddling financial products.

Currently, brokers and advisers are held to two different standards when dealing with retail customers. Advisers are held to a fiduciary standard that requires them to act in the best interest of their clients. Stockbrokers are held to a lesser suitability standard, which only requires them to offer products that are suitable to clients.

Over the years, however, the lines between the two have blurred as more brokers have gotten into the business of both offering advice and selling investment products.

At issue is how the SEC should tackle conflicts that can arise when brokers wear both hats. They may, for instance, get commissions for offering certain products. Or their firms may trade with retail investors on a principal basis.

Those who favor the traditional fiduciary standard fear the SEC may opt to write disclosure-based rules for brokers that will not be transparent or could be easily circumvented.

"Disclosure is, at best, insufficient for addressing conflicts of interest," said Knut Rostad, the chairman of the Committee for the Fiduciary Standard in a recent SEC letter. But others say imposing the currently vague fiduciary standards on brokers will not work and may limit product choice for investors.

The brokerage industry has proposed a disclosure-based solution.

"What we are hoping as a result of this SEC process is they come up with a practice that allows firms to make the disclosure of the conflict, get a client waiver if the client so desires and then you have a way forward," said Ira Hammerman, the general counsel at the Securities and Financial Markets Association, or SIFMA.

Ultimately, observers expect the SEC may try to come up with a new definition of fiduciary duty that finds a middle ground.

"I wouldn't be surprised if they do impose a modified fiduciary standard on broker-dealers -- one that may not be as strict as a common law fiduciary duty," said Hillel Cohn, a partner with Morrison & Foerster.

SRO being considered for advisers

The other study due out soon will look at the oversight regime of investment advisers, another area of securities law that differs from how brokerage firms are regulated.

Brokerage firms today are overseen by the SEC, as well as FINRA, while investment advisers that manage larger amounts of assets fall to the SEC and have no self-regulation. A lack of resources and funding at the SEC, however, has made it hard for the SEC to conduct exams as frequently as they should be.

Proponents of a self-regulatory organization, or SRO, for advisers say it is the best way to ensure investors are adequately protected.

Advisers oppose a self-regulatory group, especially if the group selected to oversee them is FINRA. They say they prefer the government to step up its oversight of the industry instead of outsourcing it to a private group.

Congress ultimately has to act to determine if investment advisers will be subjected to a new regulatory regime.

Internally, there is a good chance of some dissent among commissioners over the best approach. Democrat Elisse Walter, a former FINRA senior executive vice president, for instance, favors an SRO, while Democrat Luis Aguilar does not. Schapiro, the former head of FINRA, is recused from voting on the report.

Still, even if commissioners there are divided on a course of action, the decision to establish an SRO or increase the SEC's resources will fall to Congress. And that means action on the issue in the near-time may not be likely.

News Corp says looking at spinout or sale of MySpace

2011-01-12T20:55:00.000-08:00

News Corp is exploring strategic options for its MySpace Web site including a sale or a spinout, the company said on Wednesday, a day after the former social networking high-flyer slashed nearly half of its staff.

News Corp, which paid USD 580 million for MySpace in 2005, believes a spinout would be the most logical route, a source familiar with the matter told Reuters. That option would likely entail someone from the venture capital or the private equity community investing in MySpace, thereby altering the current ownership structure, the person said.

The company launched a new version of the site in October centered on music, movies and entertainment for the 35 year old and under crowd.

At an all-staff meeting on Wednesday, MySpace CEO Mike Jones announced that parent-company News Corp was exploring strategic options for the site, News Corp spokeswoman Julie Henderson confirmed on Wednesday. The news was first reported by Bloomberg.

"We are looking at a number of strategic options for the business, including a sale, merger or spinout," said Henderson.

News Corp Chief Operating Officer Chase Carey told Reuters in November that the company was exploring all options for MySpace, including a sale, and told investors that month that MySpace had quarters rather than years to turn itself around.

Once the top Internet social networking site, MySpace has been eclipsed in recent years by Facebook, which now counts more than 500 million users and was recently valued at USD 50 billion.

On Tuesday, MySpace announced that it was laying off 47% of its staff, or about 500 employees.

Twitter users have regional accents, study finds

2011-01-11T21:29:00.002-08:00

Twitter users tweet messages with regional dialects, using "suttin" for "something" if they are New Yorkers and "sumthin" if they are not, a new study found.

The social media site is displaying new dialects because it is such a conversational form of writing, according to the Carnegie Mellon University study to be presented on Tuesday to the Linguistic Society of America meeting in Pittsburgh.

On Twitter, users send or tweet messages no more than 140 characters long and often abbreviate to accommodate the short, quick format.

"Written communication often is less reflective of regional influences because writing, even in blogs, tends to be formal, and thus homogenized," the study team said in a statement.

The study found Twitter users in southern California might tweet "coo" for "cool," while those in northern California are more likely to write "koo," it found.

The word "very" is often expressed as "OD" in New York and "hella" in northern California, the study found.

The word "you" is often "uu" in New York but a single 'u' elsewhere, it said. Twitter users in large cities are more likely to use 'yu' than those in rural or suburban areas.

The study looked at 380,000 tweets by 9,500 users who wrote at least 20 messages via cell phone over a week in March 2010.

Regional dialects may be present on Facebook and other social media, but those are more private and less easily studied, said Jacob Eisenstein, who led the study.

The differences in regional expression allowed researchers to predict the location of a user in the United States within about 300 miles, Eisenstein said.

Art experts upbeat about London February auctions

2011-01-11T21:29:00.001-08:00

Bolstered by strong results last year, leading auction houses are hoping sales in London next month will ride an art market recovery after the sharp decline that sent prices tumbling in 2009.

Art experts at Sotheby's said they are cautiously optimistic that works by Pablo Picasso, Frances Bacon and Salvador Dali, which are on display in New York this week, will set some new artist's records at the February 10 sale in London.

"There continues to be a very, very strong global demand for quality works, from collectors both established and new," said Helena Newman, Sotheby's' European head of Impressionist and modern art.

"That was very much in evidence in New York and in London all through last year."

Sotheby's is exhibiting more than 50 of the most valuable works it will auction in London, including "La Lecture," a 1932 Picasso portrait of his mistress Marie-Therese Walter, which has an estimated price of up to USD 27 million, and "Three Studies for Portrait of Lucian Freud" by Francis Bacon that could fetch as much at USD 14 million.

The 50-plus works are valued at more than USD 120 million.

Bacon's triptych of his good friend Freud, and a diminutive Freud self-portrait, could sell from 40 to 55 million pounds (USD 62 million to USD 85 million).

Tobias Meyer, Sotheby's worldwide head of contemporary and post-war art, said Freud was on holiday at Ian Fleming's famous "Goldeneye" estate in Jamaica in 1952 when he found himself trapped on a banana boat with a group of people he despised.

The often-dour artist locked himself in a bathroom, and rendered the iconic self-portrait.

"It just show how great art can be produced anywhere," Meyer said.

Bacon's "Three Studies for a Portrait of Lucian Freud," has not been seen publicly in 45 years. In May 2008 a large Bacon triptych sold for $86.3 million, a record for the artist.

Works by Giacometti and Amedeo Modigliani are among scores of paintings and sculptures that are on display and will be auctioned in London.

A USD 104.3 million Giacometti sculpture sold at Sotheby's a year ago set a record for any work sold at auction, but it was soon eclipsed in May by the USD 106.5 million sale of a Picasso at Christie's. Sotheby's also set a Modigliani record in November at its New York sale.

"Collectors see art as a very good investment," Meyer said. "Prices have come back, but with credit markets opening up, maybe they don't need to sell to raise liquidity," he added, referring to the difficulty of securing rare, top-quality works to sell.

"That's why we see this intense competition for estates," he said.

Dali's early Surrealist portrait of Paul Eluard, expected to sell for more than 4 million pounds (USD 6 million), is poised to break the USD 5.7 million record for the artist set in May in New York.

Christie's displayed Impressionist and modern works this week at an exhibition in New York and a group of Surrealist offerings that will be auctioned in London on February 9.

Sotheby's Impressionist and modern auction is slated for February 8 in London.

Playboy scores $180 mn loan for bid to go private: LPC

2011-01-11T21:28:00.000-08:00

Jefferies is leading a USD 180 mn term loan backing a bid by founder Hugh Hefner to take Playboy Enterprises Inc private, banking sources told Thomson Reuters LPC on Tuesday.

The launch date for the term loan has not yet been determined, said the sources, who declined to be identified because the deal is private.

Icon Acquisition Holdings LP, which Hefner controls, plans to buy Playboy's shares along with Rizvi Traverse Management LLC. Playboy has about USD 115 mn in debt.

The transaction values the company at about USD 207 mn, or USD 6.15 a share.

Shares of Playboy rose 17% on Monday following the deal's announcement, to USD 6.09 a share. They were unchanged in Tuesday trading on the New York Stock Exchange.

Hefner owns about 70% of Playboy's Class A common stock and 28% of its Class B stock.

Playboy has been publicly traded since 1971. It was founded by Hefner in 1953 with USD $600.

Barclays chief says banks should stop saying sorry

2011-01-11T21:27:00.001-08:00

Banks should stop apologising for the mistakes which helped cause the financial crisis, Barclays Plc's new boss told British lawmakers, striking a defiant tone in a grilling over bonuses on Tuesday.

In a crammed room that spectators had to queue to enter, American Bob Diamond -- one of Europe's highest paid executives -- declined to say if he would again waive his bonus and would not say how much Barclays would lend to businesses.

"There was a period of remorse and apology for banks and I think that period needs to be over. We need our banks willing to take risks ... so we can create jobs," Diamond told the cross-party Treasury Select Committee during 2-1/2 hours of questioning.

Pay was the hot topic as expected. Britain is heading towards a "car crash" on the issue, according to Jesse Norman, a Conservative Member of Parliament and member of the Committee, who said the public resents seeing a UK bank bonus pool expected to reach 7 bn pounds (USD 11 bn) for 2010.

The UK government is struggling to force banks to commit to lend to small business and kick-start the economy in return for not clamping down too hard on banker pay.

But the government had not thrown in the towel on bank bonuses, a spokesman for Prime Minister David Cameron said when asked whether that was the case. Discussions with banks were proceeding, he said at a media briefing.

Diamond, who became CEO at the start of the year after running its investment bank for 14 years, said he was committed "to be responsible and to provide any restraint I can" on pay, but repeatedly said he had to compete against rivals such as Credit Suisse and Goldman Sachs in retaining key staff.

He said there had been no decisions yet on bonuses or the level of likely lending to businesses in the coming year.

Family decision

The row about irresponsible pay flared up again in Britain after a weekend report that Stephen Hester, CEO of majority state-owned Royal Bank of Scotland, was set for a 2.5 mn pound bonus.

Asked if he would waive his bonus this year, Diamond, who earned 21 mn pounds in 2007 but has waived his bonus for the last two years, said he would decide "with his family" whether to accept a bonus if he was awarded one.

Diamond, 59, said taxpayers should never have to bear the burden when a bank lands in trouble, reflecting global efforts to inflict more pain on bondholders in case a bank hits problems and not bail them out with taxpayer money.

But in one heated exchange, he refused to say he was grateful for taxpayer support during the financial crisis, instead acknowledging help from regulators and central banks.

Diamond also defended the universal banking model that combines retail and investment banking and which is under pressure internationally from financial regulators, saying it provided more stability.

Yet the new boss may opt to shrink his investment bank and other parts of Barclays with a radical shake up next month to ditch low-return assets, analysts at UBS said this week.

Diamond said he will be addressing the challenge of elevating returns above the cost of capital when he releases 2010 results on February 15, and estimated that higher capital requirements would hurt banks' profitability by 3 to 5 percentage points before any mitigating action.

Weaker banks will be harder hit and there is likely to be restructuring in the sector across Europe, he said.

Diamond said he was committed to keeping Barclays headquartered London, after some banks threatened to leave if regulations became too adverse.

Barclays shares were up 4.8% at 289.85 pence by 1549 GMT, after rising as high as 291.90p, their highest in two months. The European sector was up 1.5%.

Paris police use Facebook for car crash witnesses

2011-01-11T21:24:00.000-08:00

Internet-savvy police in Paris have started using social networks such as Facebook to appeal for witnesses to traffic accidents in a move some residents say smacks of Big Brother-style spying tactics.

Since January 1, Internet users connecting to the Paris police force's Twitter or Facebook page have been invited to provide information to help solve hit-and-run cases that have occurred in the notoriously crash-prone city and its suburbs.

A link directs users to the city police's main website, where they can find details of incidents, including dates, times and circumstances and a map of the location.

"These appeals for witnesses are an important element in solving crimes. Someone could easily have seen something and only remember it later," Xavier Castaing, head of communications for the Paris police, told Reuters.

Paris police are not the only force to turn to social media to try and crack difficult crimes. Detectives in Britain recently launched a Facebook campaign appealing for help catching the killer of landscape architect Joanna Yeates.

Castaing did not say whether online witness statements were already helping hit-and-run cases, and some members of the public complained on news websites that the initiative will encourage people to snitch on others.

"People will just use it to report their neighbours, to get back at them or harass them," was one irate comment posted on news website Le Post.

"It's really dangerous, we're getting into a system that can rapidly spiral out of control. The walls have ears," said another comment on the website of L'Express.

Castaing brushed off the idea the initiative could be regarded as spying.

"This kind of accident could happen to any of us, and for ideas of road safety to progress we need people to face up to their responsibilities," he said.

He said it was too early to say whether the initiative would be a success, but he hoped users connecting to the police Twitter or Facebook sites would spread the word.

For the time being, the Paris police Facebook page has some 700 "friends", or cyber acquaintances, more than the average web user, but still a limited network for crime-solving.