Tuesday, January 8, 2013
Wednesday, January 2, 2013
European shares jump on U.S. budget deal
* FTSEurofirst 300 up 1.3 pct, highest since May 2011
* Miners top gainers, copper up strongly
* Euro STOXX 50 volatility index drops 14 pct
By Tricia Wright
LONDON, Jan 2 (Reuters) - European shares rallied across the board at the start of the new year after U.S. lawmakers approved a deal to prevent a fiscal crunch that had threatened growth in the world's largest economy.
The Republican-controlled House of Representatives late on Tuesday finally approved a bill that will raise taxes on top U.S. earners, fulfilling President Barack Obama's re-election promise and avoiding $600 billion in broader-based tax hikes and spending cuts.
Asian shares rose strongly overnight on the news, while copper prices climbed 2.2 percent, with robust manufacturing data from top metals consumer China also aiding the mood.
The FTSEurofirst 300 rose 1.3 percent at 1,148.97 by 0914 GMT, hitting levels last seen in May 2011.
Uncertainty as to whether U.S. politicians would manage to hammer out a deal to avoid the fiscal cliff had cast a shadow over market sentiment in the last weeks of 2012.
"The U.S. news allows some apprehension to be reduced and although we have been confident of a deal being announced last minute we can now see more aggressive buying in today's session," Atif Latif, director of trading at Guardian Stockbrokers, said.
The Euro STOXX 50 Volatility Index, or VSTOXX, Europe's widely-used measure of stock market risk aversion, dropped 14 percent on Wednesday following the U.S. budget deal.
The VSTOXX - which is used to measure the cost of protecting stock holdings against corrections - tumbled to 18.45.
China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high and adding to evidence of a move back toward growth in the world's biggest metals consumer.
That helped basic resources stocks put in a solid showing on Wednesday, the top performing sector with a 3.1 percent advance.
The euro zone's blue-chip Euro STOXX 50 firmed 49.54 points, or 1.9 percent, to 2,685.47.
The Euro STOXX 50 climbed 13.8 percent in 2012, while the FTSEurofirst 300 rose 13.2 percent, boosted by bold measures from central banks to resolve Europe's debt crisis and revive global growth.
Among technical strategists there was optimism as to how 2013 would proceed.
"We've started the year on a positive note, and it does look like the market is pushing on towards 2,722," Barclays Capital's chief European technical strategist Phil Roberts said, referring to the Euro STOXX 50.
The 2,722 level in technical analysis is an equality target - the point at which the rally from the low in 2011 to the high in March 2012 is replicated off the low in June 2012.
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CAR rebels say to join peace talks, halt advance
BANGUI | Wed Jan 2, 2013 4:28am EST
"I have asked our forces not to move their positions starting today because we want to enter talks in Libreville for a political solution," Seleka rebel spokesman Eric Massi told Reuters by telephone from Paris.
"I am in discussion with our partners to come up with proposals to end the crisis but one solution could be a political transition that excludes (President Francois) Bozize."
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TEXT-S&P:Ratings on Citigroup funding unaffected by merger
Jan 02 - Standard & Poor's Rating Services today said that Citigroup's announced merger of Citigroup Funding Inc., an intermediate holding company, with Citigroup Inc., the ultimate parent, does not affect the ratings on any of the debt issues from Citigroup Funding Inc. The ratings on these issues were based on a full and unconditional guarantee from Citigroup Inc. Any debt issues outstanding under Citigroup Funding Inc. will be assumed by Citigroup Inc. (A-/Negative/A-2).
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WRAPUP 13-United States avoids calamity in 'fiscal cliff' drama
* Obama wins victory in tax fight
* Vote caps weeks of budget wrangling
* House Republicans back away from plan to confront Senate
* Bill raises taxes on the wealthiest
By Andy Sullivan and Richard Cowan
WASHINGTON, Jan 1 (Reuters) - The United States averted economic calamity on Tuesday when lawmakers approved a deal to prevent huge tax hikes and spending cuts that would have pushed the world's largest economy off a "fiscal cliff" and into recession.
The agreement hands a clear victory to President Barack Obama, who won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans. His Republican antagonists were forced to vote against a core tenet of their anti-tax conservative faith.
The deal also resolves, for now, the question of whether Washington can overcome deep ideological differences to avoid harming an economy that is only now beginning to pick up steam after the deepest recession in 80 years.
Consumers, businesses and financial markets have been rattled by the months of budget brinkmanship. The crisis ended when dozens of Republicans in the House of Representatives buckled and backed tax hikes approved by the Democratic-controlled Senate.
Asian stocks hit a five-month high and the dollar fell as markets welcomed the news. China's state news agency Xinhua took a more severe view, warning the United States must get to grips with a budget deficit that threatened not a "fiscal cliff" but a "fiscal abyss". Most of China's $3.3 trillion foreign exchange reserves are held in dollars.
The vote averted immediate pain like tax hikes for almost all U.S. households, but did nothing to resolve other political showdowns on the budget that loom in coming months. Spending cuts of $109 billion in military and domestic programs were only delayed for two months.
Obama urged "a little less drama" when the Congress and White House next address thorny fiscal issues like the government's rapidly mounting $16 trillion debt load.
There was plenty of drama on the first day of 2013 as lawmakers scrambled to avert the "fiscal cliff" of across-the-board tax hikes and spending cuts that would have punched a $600 billion hole in the economy this year.
As the rest of the country celebrated New Year's Day with parties and college football games, the Senate stayed up past 2 a.m. on Tuesday and passed the bill by an overwhelming margin of 89 to 8.
When they arrived at the Capitol at noon, House Republicans were forced to decide whether to accept a $620 billion tax hike over 10 years on the wealthiest or shoulder the blame for letting the country slip into budget chaos.
The Republicans mounted an effort to add hundreds of billions of dollars in spending cuts to the package and spark a confrontation with the Senate.
RELUCTANT REPUBLICANS
For a few hours, it looked like Washington would send the country over the fiscal cliff after all, until Republican leaders determined that they did not have the votes for spending cuts.
In the end, they reluctantly approved the Senate bill by a bipartisan vote of 257 to 167 and sent it on to Obama to sign into law.
"We are ensuring that taxes aren't increased on 99 percent of our fellow Americans," said Republican Representative David Dreier of California.
The vote underlined the precarious position of House Speaker John Boehner, who will ask his Republicans to re-elect him speaker on Thursday when a new Congress is sworn in. Boehner backed the bill but most House Republicans, including his top lieutenants, voted against it.
The speaker had sought to negotiate a "grand bargain" with Obama to overhaul the U.S. tax code and rein in health and retirement programs that are due to balloon in coming decades as the population ages. But Boehner could not unite his members behind an alternative to Obama's tax measures.
Income tax rates will now rise on families earning more than $450,000 per year and the amount of deductions they can take to lower their tax bill will be limited.
Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn.
However, workers will see up to $2,000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut.
The non-partisan Congressional Budget Office said the bill will increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in.
But the measure will actually save $650 billion during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.
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CAR rebels say to join peace talks, halt advance
BANGUI | Wed Jan 2, 2013 4:28am EST
"I have asked our forces not to move their positions starting today because we want to enter talks in Libreville for a political solution," Seleka rebel spokesman Eric Massi told Reuters by telephone from Paris.
"I am in discussion with our partners to come up with proposals to end the crisis but one solution could be a political transition that excludes (President Francois) Bozize."
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Euro STOXX 50 volatility index drops 14 pct
PARIS | Wed Jan 2, 2013 4:11am EST
The VSTOXX - which is used to measure the cost of protecting stock holdings against corrections - tumbled to 18.45, reversing most of a Dec. 28 surge that had been fuelled by fears a deal would not be struck.
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BRIEF-International Mining confirms Afferro approach
LONDON | Wed Jan 2, 2013 3:43am EST
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TEXT-S&P:Ratings on Citigroup funding unaffected by merger
Jan 02 - Standard & Poor's Rating Services today said that Citigroup's announced merger of Citigroup Funding Inc., an intermediate holding company, with Citigroup Inc., the ultimate parent, does not affect the ratings on any of the debt issues from Citigroup Funding Inc. The ratings on these issues were based on a full and unconditional guarantee from Citigroup Inc. Any debt issues outstanding under Citigroup Funding Inc. will be assumed by Citigroup Inc. (A-/Negative/A-2).
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UPDATE 1-CAR rebels halt advance, agree to peace talks
BANGUI Jan 2 (Reuters) - Rebels in Central African Republic said they had halted their advance on the capital on Wednesday and would start peace talks, averting a clash with regionally-backed troops in the mineral-rich nation.
The announcement gave only a limited reprieve for President Francois Bozize as the insurgents told Reuters they might insist on his removal in the negotiations in Gabon's capital Libreville.
Seleka rebels, who accuse the president of reneging on an earlier peace deal, had advanced to within striking distance of the capital Bangui after a three-week onslaught.
"I have asked our forces not to move their positions starting today because we want to enter talks in Libreville for a political solution," Seleka spokesman Eric Massi told Reuters by telephone from Paris.
"I am in discussion with our partners to come up with proposals to end the crisis, but one solution could be a political transition that excludes Bozize," he added.
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European shares jump on U.S. budget deal
* FTSEurofirst 300 up 1.3 pct, highest since May 2011
* Miners top gainers, copper up strongly
* Euro STOXX 50 volatility index drops 14 pct
By Tricia Wright
LONDON, Jan 2 (Reuters) - European shares rallied across the board at the start of the new year after U.S. lawmakers approved a deal to prevent a fiscal crunch that had threatened growth in the world's largest economy.
The Republican-controlled House of Representatives late on Tuesday finally approved a bill that will raise taxes on top U.S. earners, fulfilling President Barack Obama's re-election promise and avoiding $600 billion in broader-based tax hikes and spending cuts.
Asian shares rose strongly overnight on the news, while copper prices climbed 2.2 percent, with robust manufacturing data from top metals consumer China also aiding the mood.
The FTSEurofirst 300 rose 1.3 percent at 1,148.97 by 0914 GMT, hitting levels last seen in May 2011.
Uncertainty as to whether U.S. politicians would manage to hammer out a deal to avoid the fiscal cliff had cast a shadow over market sentiment in the last weeks of 2012.
"The U.S. news allows some apprehension to be reduced and although we have been confident of a deal being announced last minute we can now see more aggressive buying in today's session," Atif Latif, director of trading at Guardian Stockbrokers, said.
The Euro STOXX 50 Volatility Index, or VSTOXX, Europe's widely-used measure of stock market risk aversion, dropped 14 percent on Wednesday following the U.S. budget deal.
The VSTOXX - which is used to measure the cost of protecting stock holdings against corrections - tumbled to 18.45.
China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high and adding to evidence of a move back toward growth in the world's biggest metals consumer.
That helped basic resources stocks put in a solid showing on Wednesday, the top performing sector with a 3.1 percent advance.
The euro zone's blue-chip Euro STOXX 50 firmed 49.54 points, or 1.9 percent, to 2,685.47.
The Euro STOXX 50 climbed 13.8 percent in 2012, while the FTSEurofirst 300 rose 13.2 percent, boosted by bold measures from central banks to resolve Europe's debt crisis and revive global growth.
Among technical strategists there was optimism as to how 2013 would proceed.
"We've started the year on a positive note, and it does look like the market is pushing on towards 2,722," Barclays Capital's chief European technical strategist Phil Roberts said, referring to the Euro STOXX 50.
The 2,722 level in technical analysis is an equality target - the point at which the rally from the low in 2011 to the high in March 2012 is replicated off the low in June 2012.
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Qtel buys further $360 mln stake in Tunisian telco
DUBAI | Wed Jan 2, 2013 3:55am EST
DUBAI Jan 2 (Reuters) - Qatar Telecom (Qtel), the majority state-owned telecommunications operator, has agreed with the Tunisian government to buy a further 15 percent stake in that country's operator Tunisiana for $360 million.
The purchase raises the Qatari firm's stake in Tunisiana to 90 percent, Qtel said in a statement seen on Wednesday. Wataniya , Qtel's Kuwaiti arm, already held 75 percent of Tunisiana.
The Tunisian government will retain a 10 percent holding in Tunisiana with a view to conducting a public offer of shares in future, the statement added.
Qtel has been raising stakes in its subsidiaries, taking advantage of the gas-rich Gulf state's healthy financial position at a time when other large telecommunications firms are shying away from deals.
"We also look forward to continuing our partnership with the Tunisian authorities as Tunisiana enters into a new phase of its development with the continuing expansion of 3G services and the launch of fixed line services in 2013," Sheikh Abdullah bin Mohamed bin Saud al-Thani, chairman of Qtel Group, said in the statement.
Some Gulf investors have been looking to raise their presence in Tunisia, where valuations are low because of the political strife which followed the Arab Spring uprising. Other Arab Spring countries such as Egypt and Libya have also been targeted by cash-rich Gulf buyers.
Qtel has expanded into more than 16 countries in the past decade and spent nearly $4 billion last year to take majority ownership of its Iraqi unit Asiacell and Kuwaiti arm Wataniya in separate deals.
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BRIEF-Brenntag says to take over Altivia for $125 mln
FRANKFURT | Wed Jan 2, 2013 4:25am EST
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DIARY - Schedule of forthcoming world elections
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New airline operating licences in Saudi may take 3-6 months
A model plane stands in an airline ticketing office in Riyadh, July 17, 2012.
Credit: Reuters/Fahad ShadeedBy Asma Alsharif and Praveen MenonJEDDAH/DUBAI | Mon Dec 31, 2012 6:06am EST
JEDDAH/DUBAI (Reuters) - Foreign airlines may need about three to six months to obtain operating licences letting them enter Saudi Arabia's domestic aviation market, a spokesman for the General Authority for Civil Aviation (GACA) said on Saturday.
GACA announced on Friday that Qatar Airways and Bahrain's national carrier Gulf Air had become the first foreign airlines to obtain carrier licences under which they would be able to run local and international flights in the kingdom.
Fourteen foreign and local companies had applied for the licences, which mark a major reform of the aviation market in Saudi Arabia, the biggest Arab economy and by far the largest country in the Gulf geographically.
Currently, only national carrier Saudi Arabian Airlines and budget airline National Air Services serve a domestic market of about 27 million people. Foreign carriers can only fly in and out of Saudi Arabia, not within the country.
Over 54 million passengers passed through Saudi Arabia's 27 airports last year, up 13.6 percent from 2010, according to GACA data. But the kingdom has one of the smallest airline networks in the region relative to its size, and passengers have complained about the limited range of flights as well as the quality of service.
In a statement to Reuters on Saturday, the GACA spokesman said Qatar Airways and Gulf Air were working on final procedures for their operating licences.
He did not comment on whether other firms among the 14 that applied for carrier licences might eventually be successful. The 14 included firms fully owned by Saudis, Gulf-Arab firms, and consortiums of Saudi-Gulf and Saudi-Chinese companies.
OPPORTUNITY
Over the past year, Saudi Arabia has taken steps to liberalise its economy in several areas in an effort to create jobs and diversify away from heavy dependence on oil. For example, it is trying to develop a home mortgage industry.
Earlier this month the information minister said GACA would be allowed to grant permission for airlines to raise their fares under certain circumstances, and that fuel prices at Saudi airports would be reviewed to ensure fairer competition.
Abdulwahab Abu Dahesh, a Saudi financial analyst, said he believed the government would also remove subsidies now provided to existing Saudi airlines.
"This has to happen in 2013 because there will be no competition unless that problem is solved," he said. "This needs to be resolved before these firms start operations."
Qatar Airways could be a strong competitor in Saudi Arabia. It is growing rapidly, and in October became the first major Gulf airline to announce plans to join the oneworld alliance, a global group of carriers which cooperate in areas such as route networks, frequent flyer schemes and procurement.
Akbar Al Baker, chief executive of Qatar Airways, has said he is interested in the possibility of launching an airline in Saudi Arabia.
By contrast, Gulf Air has been struggling; last month it cut an order for Boeing (BA.N) planes and revised a deal with Airbus (EAD.PA) as it restructured its fleet to reduce pressure on its finances.
Nevertheless, Riyadh has been supporting Manama politically and economically during the social unrest that has plagued Bahrain since last year. A Saudi operating licence could help Gulf Air by letting it diversify beyond its weak home market.
Officials for Qatar Airways and Gulf Air declined to comment on the airlines' plans when contacted by Reuters on Saturday. (Writing by Andrew Torchia)
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CAR rebels say to join peace talks, halt advance
BANGUI | Wed Jan 2, 2013 4:28am EST
"I have asked our forces not to move their positions starting today because we want to enter talks in Libreville for a political solution," Seleka rebel spokesman Eric Massi told Reuters by telephone from Paris.
"I am in discussion with our partners to come up with proposals to end the crisis but one solution could be a political transition that excludes (President Francois) Bozize."
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Euro STOXX 50 volatility index drops 14 pct
PARIS | Wed Jan 2, 2013 4:11am EST
The VSTOXX - which is used to measure the cost of protecting stock holdings against corrections - tumbled to 18.45, reversing most of a Dec. 28 surge that had been fuelled by fears a deal would not be struck.
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WRAPUP 13-United States avoids calamity in 'fiscal cliff' drama
* Obama wins victory in tax fight
* Vote caps weeks of budget wrangling
* House Republicans back away from plan to confront Senate
* Bill raises taxes on the wealthiest
By Andy Sullivan and Richard Cowan
WASHINGTON, Jan 1 (Reuters) - The United States averted economic calamity on Tuesday when lawmakers approved a deal to prevent huge tax hikes and spending cuts that would have pushed the world's largest economy off a "fiscal cliff" and into recession.
The agreement hands a clear victory to President Barack Obama, who won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans. His Republican antagonists were forced to vote against a core tenet of their anti-tax conservative faith.
The deal also resolves, for now, the question of whether Washington can overcome deep ideological differences to avoid harming an economy that is only now beginning to pick up steam after the deepest recession in 80 years.
Consumers, businesses and financial markets have been rattled by the months of budget brinkmanship. The crisis ended when dozens of Republicans in the House of Representatives buckled and backed tax hikes approved by the Democratic-controlled Senate.
Asian stocks hit a five-month high and the dollar fell as markets welcomed the news. China's state news agency Xinhua took a more severe view, warning the United States must get to grips with a budget deficit that threatened not a "fiscal cliff" but a "fiscal abyss". Most of China's $3.3 trillion foreign exchange reserves are held in dollars.
The vote averted immediate pain like tax hikes for almost all U.S. households, but did nothing to resolve other political showdowns on the budget that loom in coming months. Spending cuts of $109 billion in military and domestic programs were only delayed for two months.
Obama urged "a little less drama" when the Congress and White House next address thorny fiscal issues like the government's rapidly mounting $16 trillion debt load.
There was plenty of drama on the first day of 2013 as lawmakers scrambled to avert the "fiscal cliff" of across-the-board tax hikes and spending cuts that would have punched a $600 billion hole in the economy this year.
As the rest of the country celebrated New Year's Day with parties and college football games, the Senate stayed up past 2 a.m. on Tuesday and passed the bill by an overwhelming margin of 89 to 8.
When they arrived at the Capitol at noon, House Republicans were forced to decide whether to accept a $620 billion tax hike over 10 years on the wealthiest or shoulder the blame for letting the country slip into budget chaos.
The Republicans mounted an effort to add hundreds of billions of dollars in spending cuts to the package and spark a confrontation with the Senate.
RELUCTANT REPUBLICANS
For a few hours, it looked like Washington would send the country over the fiscal cliff after all, until Republican leaders determined that they did not have the votes for spending cuts.
In the end, they reluctantly approved the Senate bill by a bipartisan vote of 257 to 167 and sent it on to Obama to sign into law.
"We are ensuring that taxes aren't increased on 99 percent of our fellow Americans," said Republican Representative David Dreier of California.
The vote underlined the precarious position of House Speaker John Boehner, who will ask his Republicans to re-elect him speaker on Thursday when a new Congress is sworn in. Boehner backed the bill but most House Republicans, including his top lieutenants, voted against it.
The speaker had sought to negotiate a "grand bargain" with Obama to overhaul the U.S. tax code and rein in health and retirement programs that are due to balloon in coming decades as the population ages. But Boehner could not unite his members behind an alternative to Obama's tax measures.
Income tax rates will now rise on families earning more than $450,000 per year and the amount of deductions they can take to lower their tax bill will be limited.
Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn.
However, workers will see up to $2,000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut.
The non-partisan Congressional Budget Office said the bill will increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in.
But the measure will actually save $650 billion during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.
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TEXT-S&P:Ratings on Citigroup funding unaffected by merger
Jan 02 - Standard & Poor's Rating Services today said that Citigroup's announced merger of Citigroup Funding Inc., an intermediate holding company, with Citigroup Inc., the ultimate parent, does not affect the ratings on any of the debt issues from Citigroup Funding Inc. The ratings on these issues were based on a full and unconditional guarantee from Citigroup Inc. Any debt issues outstanding under Citigroup Funding Inc. will be assumed by Citigroup Inc. (A-/Negative/A-2).
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European shares jump on U.S. budget deal
* FTSEurofirst 300 up 1.3 pct, highest since May 2011
* Miners top gainers, copper up strongly
* Euro STOXX 50 volatility index drops 14 pct
By Tricia Wright
LONDON, Jan 2 (Reuters) - European shares rallied across the board at the start of the new year after U.S. lawmakers approved a deal to prevent a fiscal crunch that had threatened growth in the world's largest economy.
The Republican-controlled House of Representatives late on Tuesday finally approved a bill that will raise taxes on top U.S. earners, fulfilling President Barack Obama's re-election promise and avoiding $600 billion in broader-based tax hikes and spending cuts.
Asian shares rose strongly overnight on the news, while copper prices climbed 2.2 percent, with robust manufacturing data from top metals consumer China also aiding the mood.
The FTSEurofirst 300 rose 1.3 percent at 1,148.97 by 0914 GMT, hitting levels last seen in May 2011.
Uncertainty as to whether U.S. politicians would manage to hammer out a deal to avoid the fiscal cliff had cast a shadow over market sentiment in the last weeks of 2012.
"The U.S. news allows some apprehension to be reduced and although we have been confident of a deal being announced last minute we can now see more aggressive buying in today's session," Atif Latif, director of trading at Guardian Stockbrokers, said.
The Euro STOXX 50 Volatility Index, or VSTOXX, Europe's widely-used measure of stock market risk aversion, dropped 14 percent on Wednesday following the U.S. budget deal.
The VSTOXX - which is used to measure the cost of protecting stock holdings against corrections - tumbled to 18.45.
China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high and adding to evidence of a move back toward growth in the world's biggest metals consumer.
That helped basic resources stocks put in a solid showing on Wednesday, the top performing sector with a 3.1 percent advance.
The euro zone's blue-chip Euro STOXX 50 firmed 49.54 points, or 1.9 percent, to 2,685.47.
The Euro STOXX 50 climbed 13.8 percent in 2012, while the FTSEurofirst 300 rose 13.2 percent, boosted by bold measures from central banks to resolve Europe's debt crisis and revive global growth.
Among technical strategists there was optimism as to how 2013 would proceed.
"We've started the year on a positive note, and it does look like the market is pushing on towards 2,722," Barclays Capital's chief European technical strategist Phil Roberts said, referring to the Euro STOXX 50.
The 2,722 level in technical analysis is an equality target - the point at which the rally from the low in 2011 to the high in March 2012 is replicated off the low in June 2012.
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South Korea's Hyundai, Kia expect slowest sales growth in 10 years
1 of 6. The logo of Hyundai Motor is seen on a car displayed at a Hyundai dealership in Seoul in this July 1, 2011 file photo. South Korea's biggest automakers Hyundai Motor Co and affiliate Kia Motors Corp are targeting a 4 percent increase in global sales in 2013 to a combined 7.41 million vehicles, their slowest growth since 2003.
Credit: Reuters/Truth Leem/FilesBy Hyunjoo JinSEOUL | Tue Jan 1, 2013 8:04pm EST
SEOUL (Reuters) - South Korea's biggest automakers Hyundai Motor Co (005380.KS) and affiliate Kia Motors Corp (000270.KS) are targeting a 4 percent increase in global sales this year to a combined 7.41 million vehicles, their slowest growth since 2003.
The duo, which together ranks fifth in global car sales, is bracing for more modest growth after years of expansion at breakneck speed. Group chairman Chung Mong-koo has slowed capacity building to focus on improving branding and profitability in the hopes of better competing with rivals that include Japan's Toyota Motor Corp (7203.T).
Hyundai Motor and Kia will pursue brand innovation by raising the quality of our vehicles, Chung, the 74-year-old chairman of Hyundai Motor and Kia's parent group, said in his annual speech to employees on Wednesday.
In line with that strategy, Kia promoted chief designer and executive vice president Peter Schreyer - known for his design contributions to the iconic Audi TT - to president late last week.
Earlier in 2012, Hyundai Motor poached ex-BMW designer Christopher Chapman to head its U.S. design center.
"Chairman Chung said our maximum capacity is 8 million vehicles. No more than that. Instead, he said we need to move upmarket and raise margins," a former top Hyundai executive told Reuters.
Hyundai Motor plans to unveil a luxury-concept vehicle at the upcoming Detroit motor show, a spokesman said, without elaborating.
The auto maker targets sales of 4.66 million vehicles this year, while Kia has set a goal of 2.75 million, according to regulatory filings.
RISING WON
But investors are concerned that growth momentum will wane with Hyundai Motor and Kia's go-slow strategy and the firming South Korean won.
Hyundai and Kia's industry-leading margins are being threatened by the strengthening won, which reduces repatriated earnings and pricing power. The South Korean currency rose 7.6 percent against the dollar last year, its biggest percentage gain since 2009.
By contrast, the yen is softening, which could tip the competitive balance in favor of their Japanese rivals such as Honda Motor Co Ltd (7267.T).
Reflecting those concerns, shares in Hyundai Motor rose 2.6 percent in 2012 while Kia shares slumped 15.3 percent, underperforming the wider market's .KS11 9.4 percent gain.
Hyundai and Kia were the worst performing stocks among the world's top five automakers last year, according to Thomson Reuters data.
A dearth of new models for Hyundai Motor and Kia this year may also erode sales growth, analysts say.
The next generation of Genesis, Hyundai Motor's premium sedan, may be unveiled only in late 2013.
Kia Motors plans to launch a new Soul compact car this year, a spokesman said, without elaborating on possible rollout plans for other models.
PREVIOUS TARGET
Hyundai Motor and Kia sold a combined 7.12 million vehicles in 2012, up 8 percent from the previous year and better than their original target of 7 million.
The duo drove up sales in China when their Japanese competitors were hit by a backlash in a dispute over islands in the East China Sea last year.
In the United States and Canada, Hyundai Motor and Kia's sales have not been greatly affected so far by their November 2 admission that they had overstated the fuel economy of more than 1 million cars.
Hyundai Motor, which started new plants in China and Brazil in 2012, is in a better position to increase sales this year than Kia, which did not add any capacity at all last year.
The companies plan to release their global sales results for December later on Wednesday. Figures for the United States are due on Thursday.
(Additional reporting by Daum Kim in SEOUL; Editing by Ryan Woo and John Mair)
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Kenyan Airways flight makes emergency landing in Sudan
KHARTOUM | Wed Jan 2, 2013 4:27am EST
KHARTOUM (Reuters) - A Kenyan Airways plane with 56 passengers on board made an emergency landing in the Sudanese capital, Khartoum, after an engine caught fire, witnesses said on Wednesday.
Nobody was hurt, but the incident on Tuesday night left passengers stranded in a country difficult for travel because credit cards do not work in Sudan due to U.S. trade sanctions. Banks change dollars only at a very unfavourable exchange rate compared with the dominant black market.
The Cairo-bound Boeing 737-700 took off in Khartoum after a regular stopover following a flight from Nairobi. But it had to return to the Sudanese capital after 20 minutes, three passengers on board flight KQ 320 told Reuters.
"An engine caught fire and the plane suddenly lost much altitude. The pilot made a sharp turn and returned to Khartoum," said Souhair Mohamed Hawala, an Egyptian passenger. "There was panic on board. People were crying or praying."
Other passengers showed what they said were pictures from the damaged wing and engine of the plane.
A Kenyan Airways official said the plane had returned with an unspecified "engine problem" and needed to be repaired in Sudan. "We don't know the cause yet," he said, adding passengers would be booked on the airline's next flight out of Sudan after 24 hours. (Reporting by Ulf Laessing; Editing by Peter Cooney)
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United States avoids calamity in "fiscal cliff" drama
1 of 12. Speaker of the House John Boehner (R-OH) walks with House Majority Leader Rep. Eric Cantor (R-VA) to a meeting with House Republicans on the ''fiscal cliff'' budget deal on Capitol Hill in Washington on January 1, 2013. Washington's last-minute scramble to step back from a ''fiscal cliff'' ran into trouble on Tuesday as Republicans in the House of Representatives balked at a deal to avert a budget crisis.
Credit: Reuters/Joshua RobertsBy Andy Sullivan and Richard CowanWASHINGTON | Wed Jan 2, 2013 4:21am EST
WASHINGTON (Reuters) - The United States averted economic calamity on Tuesday when lawmakers approved a deal to prevent huge tax hikes and spending cuts that would have pushed the world's largest economy off a "fiscal cliff" and into recession.
The agreement hands a clear victory to President Barack Obama, who won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans. His Republican antagonists were forced to vote against a core tenet of their anti-tax conservative faith.
The deal also resolves, for now, the question of whether Washington can overcome deep ideological differences to avoid harming an economy that is only now beginning to pick up steam after the deepest recession in 80 years.
Consumers, businesses and financial markets have been rattled by the months of budget brinkmanship. The crisis ended when dozens of Republicans in the House of Representatives buckled and backed tax hikes approved by the Democratic-controlled Senate.
Asian stocks hit a five-month high and the dollar fell as markets welcomed the news. China's state news agency Xinhua took a more severe view, warning the United States must get to grips with a budget deficit that threatened not a "fiscal cliff" but a "fiscal abyss". Most of China's $3.3 trillion foreign exchange reserves are held in dollars.
The vote averted immediate pain like tax hikes for almost all U.S. households, but did nothing to resolve other political showdowns on the budget that loom in coming months. Spending cuts of $109 billion in military and domestic programs were only delayed for two months.
Obama urged "a little less drama" when the Congress and White House next address thorny fiscal issues like the government's rapidly mounting $16 trillion debt load.
There was plenty of drama on the first day of 2013 as lawmakers scrambled to avert the "fiscal cliff" of across-the-board tax hikes and spending cuts that would have punched a $600 billion hole in the economy this year.
As the rest of the country celebrated New Year's Day with parties and college football games, the Senate stayed up past 2 a.m. on Tuesday and passed the bill by an overwhelming margin of 89 to 8.
When they arrived at the Capitol at noon, House Republicans were forced to decide whether to accept a $620 billion tax hike over 10 years on the wealthiest or shoulder the blame for letting the country slip into budget chaos.
The Republicans mounted an effort to add hundreds of billions of dollars in spending cuts to the package and spark a confrontation with the Senate.
RELUCTANT REPUBLICANS
For a few hours, it looked like Washington would send the country over the fiscal cliff after all, until Republican leaders determined that they did not have the votes for spending cuts.
In the end, they reluctantly approved the Senate bill by a bipartisan vote of 257 to 167 and sent it on to Obama to sign into law.
"We are ensuring that taxes aren't increased on 99 percent of our fellow Americans," said Republican Representative David Dreier of California.
The vote underlined the precarious position of House Speaker John Boehner, who will ask his Republicans to re-elect him speaker on Thursday when a new Congress is sworn in. Boehner backed the bill but most House Republicans, including his top lieutenants, voted against it.
The speaker had sought to negotiate a "grand bargain" with Obama to overhaul the U.S. tax code and rein in health and retirement programs that are due to balloon in coming decades as the population ages. But Boehner could not unite his members behind an alternative to Obama's tax measures.
Income tax rates will now rise on families earning more than $450,000 per year and the amount of deductions they can take to lower their tax bill will be limited.
Low temporary rates that have been in place for the past decade will be made permanent for less-affluent taxpayers, along with a range of targeted tax breaks put in place to fight the 2009 economic downturn.
However, workers will see up to $2,000 more taken out of their paychecks annually with the expiration of a temporary payroll tax cut.
The non-partisan Congressional Budget Office said the bill will increase budget deficits by nearly $4 trillion over the coming 10 years, compared to the budget savings that would occur if the extreme measures of the cliff were to kick in.
But the measure will actually save $650 billion during that time period when measured against the tax and spending policies that were in effect on Monday, according to the Committee for a Responsible Federal Budget, an independent group that has pushed for more aggressive deficit savings.
(Additional reporting by Rachelle Younglai, Thomas Ferraro, Mark Felsenthal, David Lawder; Writing by Andy Sullivan; Editing by Alistair Bell and Eric Beech)
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Passage of bill to avoid "cliff" should bolster Wall Street
Speaker of the House John Boehner (R-OH) (front, in green tie) walks with Congressman Dave Camp (R-MI) (R) after a meeting with House Republicans about a ''fiscal cliff'' deal on Capitol Hill in Washington January 1, 2013.
Credit: Reuters/Joshua RobertsBy Ryan VlastelicaNEW YORK | Wed Jan 2, 2013 12:16am EST
NEW YORK (Reuters) - U.S. stocks are poised for gains to begin the year after the late passage of a bill to avoid harsh tax hikes that would have hit most Americans and crimped economic growth.
However, harsh reality awaits any euphoria that comes from avoiding the "fiscal cliff". In two months, battles over further spending cuts and, in particular, the U.S. federal debt limit will come to a head.
The House of Representatives voted for a bill passed on Monday by the Senate that will raise taxes on wealthy individuals and families and preserve certain other benefits that will, together, soften some of the blow that would have been sustained without an agreement to avoid the fiscal cliff.
That puts Wall Street in prime position to begin 2013 with a rally, even if thorny issues remain to be addressed in the coming months in Washington.
Asian markets extended gains modestly, with the MSCI Asia Pacific ex-Japan index of stocks up 1.7 percent. U.S. markets will not have a chance to react until 6 a.m. ET, when futures trading begins after the New Year's Day holiday.
"When you separate the fundamentals of the economy from the headlines, the fundamentals really suggest we can support higher prices in the new year," said Bill Vaughn, equity portfolio manager at Evercore Wealth Management in San Francisco.
The Standard & Poor's 500 stock index ended the year up 13 percent, its best gain since 2009, mostly shrugging off the debt-related worries that dominated headlines during the year.
Equity markets held up in the last two months of the year as well, expecting a resolution to head off $600 billion in spending cuts and tax hikes that could push the economy into recession if they stay in effect for long. While the deadline to avert the cliff was December 31, legislation can be formulated to retroactively prevent going over.
The back-and-forth in recent weeks has primarily been of concern to businesses, where confidence has eroded. Some slowing in economic growth due to the impasse is expected, but that may play into the hands of value investors if the market corrects in coming months.
"It appears as though politics will dominate for some time," said Richard Bernstein, chief executive of Richard Bernstein Advisors in New York. "That being said, equity market valuations already reflect this ... the stock market is attractive from my perspective."
Stock markets around the world were closed Tuesday because of New Year's Day. Some Republicans in the House had expressed concern on Tuesday afternoon that a bill would not be finished before U.S. markets open.
Many traders will still be away from their desks because of the holiday, indicating trading volume will stay near its recent low levels. The anemic action, coupled with uncertainty over the cliff, resulted in a spike of volatility in December, with the CBOE Volatility index jumping 13.5 percent in the month.
DEBT CEILING BATTLE REMAINS
The bill that passed does not contain the kind of spending cuts that many conservative Republicans favor in order to bring down the high U.S. federal debt.
Even as this battle recedes, markets will look ahead to another fight in the next few months, this time over whether Congress will approve an increase in the U.S. debt ceiling.
The White House has said it will not negotiate the debt ceiling as in 2011, when the fight over what was once a procedural matter preceded the first-ever downgrade of the U.S. credit rating. But it may be forced into such a battle again. A repeat of that war is most worrisome for markets.
"The spending side fight looms and it will be tougher," said David Kotok, chairman and chief investment officer at Cumberland Advisors in Sarasota, Florida. "The Republican caucus is tighter on that side."
Markets posted several days of sharp losses in the period surrounding the fight in 2011. Even after a bill to increase the ceiling passed, stocks plunged in what was seen as a vote of "no confidence" in Washington's ability to function, considering how close lawmakers came to a default.
Economists at Goldman Sachs, in a note Tuesday, said the coming fight to raise the debt ceiling -- where Republicans are likely to demand spending cuts while President Obama pushes for more taxes -- "is likely to be at least as politically difficult as the last increase was in the summer of 2011."
During this fight, the markets have been less volatile, largely because the effects of the spending cuts and tax hikes will be gradual, and there was an ongoing expectation that a retroactive fix was in the offing.
(Additional reporting by David Gaffen, David Randall, Chuck Mikolajczak and Richard Leong; Editing by Neil Fullick and Paul Tait)
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Kosovo struggles to shake Wild West image among investors
A general view of Pristina, capital of the breakaway Kosovo province, is seen as the sun rises, January 22, 2008.
Credit: Reuters/Hazir RekaBy Fatos BytyciASTRAZUB, Kosovo | Mon Dec 31, 2012 7:09am EST
ASTRAZUB, Kosovo (Reuters) - When Briton Christopher Gilbert and London-educated Etrur Albani teamed up to dig marble in Albani's native Kosovo, they knew they were taking a gamble.
For two years, Albani and Gilbert, who was better known in Britain as an entertainment industry entrepreneur, knocked on literally hundreds of doors in search of intrepid investors.
They eventually turned up 12, convincing them that the risk associated with investing in this young Balkan nation was overblown and that the image of crime and corruption did not match the reality.
One of the poorest corners of Europe, Kosovo is in dire need of outside investment as it tries to make a go of the independence it won from Serbia in 2008.
By September, Gilbert and Albani's Fox Marble Holdings (FOX.L) was listed on the junior tier of the London Stock Exchange and had spent 1 million euros in readying five mines for business.
Mining is seen as a potential driver of growth in Kosovo, a small country blessed with mineral deposits and Europe's youngest population, but shackled with a damaging reputation for gangsters and graft.
Now, Fox Marble's dream is in tatters, its licences to cut and sell Kosovo's marble revoked and millions of euros of investment hanging in the balance.
Whether the victim of over-zealous officials or something more sinister, Fox Marble has gone from investment trailblazer to cautionary tale in the risks of doing business in this country of 1.7 million people roughly half the size of Wales.
"We spent two years convincing people that the country risk was not something that people needed to be concerned about and now everybody is turning to me and saying, 'We told you so'," Gilbert told Reuters.2
In December, Kosovo's Mining and Minerals Commission ICMM.L revoked four of Fox Marble's five licences, saying the firm had failed to start work within an agreed time frame.
"It could take years for the work to start. How do we know?" the chairman of the ICMM board, Ahmet Tmava, told Reuters. "Our resources must not be held hostage."
Gilbert said the firm had needed more time to raise funds but had already spent heavily on machinery, taxes and preparing the mines.
He cited a Kosovo law saying that the ICMM is obliged to inform the company in writing and give it 2-4 months to address the complaint. Fox Marble got neither, Gilbert said. Tmava said the company was informed "verbally".
"VERY STRANGE"
Asked what was behind the decision, Gilbert, who was in Pristina trying to save the licences, chose his words carefully.
He said the mining authorities had acted outside the law, and suggested there was perhaps more to the matter than met the eye. The mines contain deposits valued by Gilbert and Albani at billions of euros.
"It's certainly a very strange situation for a company that is spending money in Kosovo. We don't know what the realpolitik is behind this, but clearly there is something going on."
Asked about the allegations of political interference in the marble case, Kosovo's minister of economy and development, Besim Beqaj, said only: "I'm not aware of anything like that."
Britain's ambassador to Kosovo, Ian Cliff, said the British government was "very concerned" and, in a written response to questions from Reuters, said he had heard of allegations of political interference.
"I hope this is not the case," Cliff said, adding that British Foreign Secretary William Hague had raised the issue with Kosovo "at the highest level".
The United States and the European Union have spent an estimated 4 billion euros in stabilising Kosovo and encouraging good governance and growth since NATO went to war in 1999 to halt the killing and expulsion of civilians by Serbian forces fighting rebels from Kosovo's ethnic Albanian majority.
With ethnic tensions subsiding, Western powers formally gave up "supervisory" powers over Kosovo this year. But an EU police and justice mission retains some executive authority to investigate cases of organised crime, corruption and war crimes.
NATO retains some 6,000 troops on the ground, mainly in the north where a small Serb minority still rejects Kosovo as a sovereign state.
The government insists it is changing perceptions. There are positives: Kosovo's legislative framework has been crafted to meet most EU standards; construction is thriving, driving average annual economic growth of 5 percent over the past five years; foreign direct investment was up 14 percent to 379 million euros in 2011; in October the World Bank lifted Kosovo from 126 to 98th place in a poll on ease of doing business.
"Kosovo has been challenged by a bad image unfairly attached to it due to the past," said Valdrin Lluka, head of the Kosovo Investment Promotion Agency, part of the Ministry of Trade.
"When investors come with expectations of high crime and corruption, they see a beautiful country, friendly people and a friendly business environment," he told Reuters. "Good news is not news, so foreigners get to know only the dark side of Kosovo, and that's what's damaging us."
HARD TO INVEST WITHOUT BRIBES?
But there was more bad news in November: an Austrian firm said it had stopped printing Kosovo's biometric passports for now because 1.4 million euros in fees had not been paid.
Natali Velija, a German citizen and the company's local partner in Kosovo, was arrested on suspicion of embezzling the money, but Velija says it was spent on bribes for a handful of officials from the Ministry of Interior.
The Austrian company denies bribing anyone.
Kosovo suffered a heavy blow last year when the sale of the country's most profitable company, the state telecom concern PTK, collapsed after corruption charges were filed against a number of senior PTK officials.
Avni Zogiani, founder of the Cohu (Wake Up) non-governmental organisation dedicated to fighting corruption, said it was extremely difficult to invest in Kosovo without political connections or a readiness to bribe.
"When we talk about small and medium-sized projects of a few million euros, then they're dealt with through bribes," he said.
Albani said he and Gilbert had struggled to shake the stereotype. "When we went to Italy to buy machines," he said, "they asked, 'Why are you coming with a letter of credit? Where's your suitcase of money?'"
Investors and Western officials in Kosovo also cite frequent power cuts, an underdeveloped administration, widespread tax evasion and high interest rates on bank loans, some as much as 25 percent as banks hedge against political and economic instability.
Kosovo is ranked 105 on Transparency International's graft perception index, on a par with Bolivia, Gambia and Mali.
"I spend a lot of my time persuading British companies and financial institutions that the Kosovo 'country risk' is less than they think - so that they will support investment here," said Cliff, the British ambassador.
"The key practical question for the Kosovo institutions is this: can Kosovo afford to lose 10 million pounds of British investment and the jobs and exports that will go with it?"
Gilbert and Albani, first inspired by a 2005 USAID report extolling the quality and colour of marble in Kosovo, stood to make a lot of money.
They estimate the five mines that Fox Marble won licences to exploit, including Red Rock near the village of Astrazub in southwest Kosovo, contain around 240 million cubic metres of marble worth billions of euros.
Albani and Gilbert say Kosovo marble was used in building the White House in Washington and the Vienna Opera House.
In Astrazub, villagers recall marble mining under socialist Yugoslavia, and say their ancestors told stories of its extraction when Kosovo was part of the Ottoman Empire.
Signs of traditional, small-scale excavation can still be seen. A new mining venture would be a boon for the local economy, which like the rest of Kosovo struggles to absorb new jobseekers who often end up emigrating for work. Kosovo also has lignite, lead, chromium, zinc, nickel and silver deposits.
Mining in Kosovo ground to a halt during the violent disintegration of Yugoslavia in the 1990s, and has only restarted on a limited scale over the past few years. In the north, Kosovo's giant Trepca lead and zinc mine complex stands idle, hostage to complex ownership disputes.
Fox Marble has filed a complaint with the ICMM, and Gilbert insisted they would not give up. "We're not going anywhere. This is grave for Fox Marble, but it's a tragedy for Kosovo." (Editing by Matt Robinson and Mark Heinrich)
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Qatar Airways files $600 mln claim over new airport
Qatar Airways new Boeing 787 Dreamliner taxis after arriving on it's inaugural flight to Heathrow Airport, west London December 13, 2012.
Credit: Reuters/Andrew WinningDUBAI | Mon Dec 31, 2012 6:02am EST
DUBAI (Reuters) - Qatar Airways said it was filing a $600 million legal claim against a contractor for a delay in opening a new international airport in Doha.
Lindner Depa Interiors, a German-Dubai joint venture DEPA.DI, holds a $250 million contract to build 19 airport lounges by the middle of 2012, Qatar Airways said in a statement on Saturday.
In a statement later in the day, LDI said it had not received a legal claim from Qatar Airways and described the carrier's allegations as "false and misleading".
It said it was not able to meet its original completion deadline because it was denied full access to the project site for the first nine months of a 16-month contract.
LDI also said it had no contractual relationship with Qatar Airways and that it was in arbitration with its client on the project, New Doha International Airport. Qatar Airways will run the airport when it becomes operational.
The $15.5 billion airport in the Qatari capital will be the hub for the airline, which has grown to a fleet of 116 aircraft since its launch 15 years ago. The new airport was scheduled to open this month but is now expected to start operating in late 2013, Qatar Airways said.
It said Doha's existing airport had reached capacity and the delay in moving to a new facility was hindering the company's expansion plans.
LDI is a joint venture between Lindner Group and Depa United Group DEPA.DI. (Reporting By Praveen Menon; Writing by Angus McDowall; Editing by Robert Birsel and Jane Baird)
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Drifting Shell drill ship grounds on rocks off Alaska
By Yereth Rosen
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ANCHORAGE, Alaska | Tue Jan 1, 2013 7:12am EST
ANCHORAGE, Alaska (Reuters) - A large drill ship belonging to oil major Shell ran aground off Alaska on Monday night after drifting in stormy weather, company and government officials said.
The ship, the Kulluk, broke away from one of its tow lines on Monday afternoon and was driven, within hours, to rocks just off Kodiak Island, where it grounded at about 9 p.m. Alaska time, officials said.
The 18-member crew had been evacuated by the Coast Guard late Saturday because of risks from the ongoing storm.
With winds reported at up to 60 miles an hour and Gulf of Alaska seas of up to 35 feet, responders were unable to keep the ship from grounding, said Coast Guard Commander Shane Montoya, the leader of the incident command team.
"We are now entering into the salvage and possible spill-response phase of this event," Montoya told a news conference late on Monday night in Anchorage.
There is no known spill and no reports of damage yet, but the Kulluk has about 155,000 gallons of fuel on board, Montoya said.
The grounding of the Kulluk, a conical, Arctic-class drill ship weighing nearly 28,000 gross tons, is a blow to Shell's $4.5 billion offshore programme in Alaska.
Shell's plan to convert the area in to a major new oil frontier has alarmed environmentalists and many Alaska Natives but excited industry supporters.
Environmentalists and Native opponents say the drilling program threatens a fragile region that is already being battered by rapid climate change.
"Shell and its contractors are no match for Alaska's weather and sea conditions either during drilling operations or during transit," Lois Epstein, Arctic program director for The Wilderness Society, said in an email.
"Shell's costly drilling experiment in the Arctic Ocean needs to be stopped by the federal government or by Shell itself given the unacceptably high risks it poses to both humans and the environment."
BEDEVILLED
The Kulluk's woes began on Friday, when the Shell ship towing it south experienced a mechanical failure and lost its connection to the drill vessel.
That ship, the Aivik, was reattached to the Kulluk early on Monday morning, as was a tug sent to the scene by the operator of the Trans Alaska Pipeline System. But the Aivik lost its link Monday afternoon, and the tug's crew could only try to guide the drill ship to a position where, if it grounded, "it would have the least amount of impact to the environment," Montoya said.
The Kulluk was used by Shell in September and October to drill a prospect in the Beaufort Sea. It was being taken to Seattle for the off-season when the problems began on Friday.
Susan Childs, emergency incident commander for Shell, held out hope that a significant spill from the drill ship was unlikely.
"The unique design of the Kulluk means the diesel fuel tanks are isolated in the center in the vessel and encased in very heavy steel," she told the news conference.
Shell is waiting for weather to moderate "to begin a complete assessment of the Kulluk," she said. "We hope to ultimately recover the Kulluk with minimal or no damage to the environment."
The Kulluk was built in 1983 and had been slated to be scrapped before Shell bought it in 2005. The company has spent $292 million since then to upgrade the vessel.
Shell's Arctic campaign has been bedevilled by problems. A second drill ship, the Discoverer, was briefly detained in December by the Coast Guard in Seward, Alaska, because of safety concerns. A mandatory oil-containment barge, the Arctic Challenger, failed for months to meet Coast Guard requirements for seaworthiness and a ship mishap resulted in damage to a critical piece of equipment intended to cap a blown well. (Editing by Patrick Graham)
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Revellers gather in NY's frigid Times Square on New Year's Eve
Revelers fill Times Square during a celebration to mark the start of the new year in New York December 31, 2012.
Credit: Reuters/Gary HershornBy Peter Rudegeair and Greg RoumeliotisNEW YORK | Tue Jan 1, 2013 10:34am EST
NEW YORK (Reuters) - Throngs of Revellers in and around New York's Times Square bid farewell to 2012 and extended a raucous greeting to 2013 early Tuesday.
The crowd in midtown Manhattan, which police expected to approach 1 million, cheered and counted down the final seconds of 2012 as a large lighted crystal ball descended for the last minute of the old year - a tradition started in 1907.
Thousands cheered as the new year officially began and a blizzard of colourful confetti fell on the famous square. But the cheers - and a spirited crowd rendition of the song "New York, New York" - were quickly drowned out by a fireworks show.
Paul Hannemann, the head of an incident response team at the Texas Forest Service, was in New York to help with the reconstruction efforts in areas hit by Superstorm Sandy.
Even as he spent his first New Year's Eve in Times Square, Hannemann's thoughts were on Washington, D.C., where lawmakers worked late into the night to reach a deal to avoid the so-called fiscal cliff of automatic tax hikes and spending cuts that many economists fear could send the nation back into recession.
"I hope everybody can come together in 2013 so our country can get its finances in order and our economy back in place," Hannemann, 60, said.
In addition to the crowd on hand in Times Square, another billion people were expected to watch on television, city officials said.
People filled pens in the centre of Times Square hours before the end of 2012. Police set up barricades to keep away the overflow crowd. Once people entered the police pens, they were not allowed to leave, no alcohol was permitted and there were no restrooms.
At 6 p.m. the ball rose to the top to the top of its 70-foot (21-meter) pole and fireworks went off.
A few minutes earlier, the cheering crowd turned silent when the ceremony released balloons for each of the victims of the December 14 elementary school shooting in Newtown, Connecticut.
Mark Barrigan, a medical software product manager, traveled from Dallas to witness the ball drop live for the first time this year, fulfilling a longtime wish.
"It was one of those bucket list items," Barrigan said, referring to a list of activities people plan to do before they die.
Asked what he was hoping for in the new year, Barrigan replied, "Hopefully they'll make some good decisions in Washington, D.C."
Elsewhere in America, same-sex marriage became legal at 12:01 a.m. in Maryland.
Maryland, Maine and Washington state became the first three U.S. states to approve gay marriage by popular vote on November 6. Nine states and the District of Columbia now have statutes legalizing gay marriage.
FREEZING TEMPERATURES
The temperature in Times Square was predicted to hover just above freezing around midnight, with a possibility of rain or snow flurries, forecasters said.
The Revellers came for the people-watching for which Times Square is famous, and to see performers such as Taylor Swift, Psy, Carly Rae Jepsen and Neon Trees.
"For me, 2013 is about leaving everything behind and starting from scratch," said Mara Trevin, a 26-year-old who moved from Buenos Aires to New York last week to start a new life.
"That's my resolution."
The illuminated, crystal-covered ball - some 12 feet (3.7 metres) in diameter and weighing nearly 12,000 pounds (5,443 kg) - began its descent on schedule at 11:59 a.m. EST, dropping 70 feet (21 metres) in 60 seconds.
One of those crystals was engraved with the name of Dick Clark, the American entertainer who hosted a popular television presentation of the Times Square New Year's celebrations for decades.
He died in April of a heart attack. Clark had suffered a stroke in 2004 that sidelined from the New Year's Eve show for the first time since he launched the annual broadcast in 1972.
But he gamely returned to the program the following year, and had continued to announce the annual countdown to midnight.
As part of the city's New Year's Eve celebration, more than one ton of confetti was to be released from the rooftops of surrounding buildings in Times Square.
The end-of-the-year crowds capped a year in which 52 million people visited New York City, the third straight record-breaking year for tourism, city officials said on Monday.
More than a million additional tourists visited the city in 2012 compared to 2011, a 2.1 percent increase, they said.
The first version of the ball in Times Square descended in 1907 from a flagpole. (Additional reporting by Joshua Lott; Editing by Daniel Trotta, James B. Kelleher, David Gregorio, M.D. Golan and Eric Walsh)
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Top Goldman Sachs execs get shares on New Year's Eve
Lloyd Blankfein, chairman and CEO of The Goldman Sachs Group, delivers remarks at an event sponsored by the Economic Club of Washington in Washington, July 18, 2012.
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U.S. fiscal cliff deal prompts broad rally
1 of 7. The London Stock Exchange is seen during ther morning rush hour in the City of London April 11, 2011.
Credit: Reuters/Toby MelvilleBy Marc JonesLONDON | Wed Jan 2, 2013 3:43am EST
LONDON (Reuters) - European shares, oil and gold rose strongly on Wednesday after U.S. politicians struck a long-awaited deal to avoid a fiscal crisis, while safe-haven dollar and German government bonds fell.
Lawmakers approved a plan to prevent huge tax increases and delay spending cuts that together would have pushed the world's largest economy off the "fiscal cliff" and into a likely recession.
European markets followed their Asian counterparts and rallied on the news, while futures markets pointed to Wall Street doing the same.
London's FTSE .FTSE, Frankfurt's DAX .GDAXI and CAC 40 .FCHI in Paris opened between 1.4-1.9 percent higher, pushing the pan-European FTSEurofirst 300 .FTEU3 up 1.3 percent and the MSCI world index .MIWD00000PUS 0.8 percent.
"This is great news for global growth and explains why shares and other growth-related assets are up strongly today," said Shane Oliver, strategist at AMP Capital.
Although the U.S. deal is not as far-reaching as markets had wanted, Tuesday's approval by the House of Representatives of a plan already backed by the Senate allayed fears that Republican objections to the heavy emphasis on taxes rather than spending cuts could have scuppered an agreement.
Assets which are traditionally see as more risky rose across the board with crude oil futures up 1.1 percent, gold gaining $7 an ounce and copper futures in London up 1.7 percent.
In currency markets the euro rose to $1.3281 as the dollar fell 0.5 percent against a basket of major currencies .DXY.
The Japanese yen also continued its slide, hitting its lowest level since July 2010, as investors bet that the Bank of Japan would have to take ever-more aggressive easing steps to support the economy and satisfy the new government.
The pattern was the same for bonds, where prices of higher-yielding Spanish and Italian government bonds rose and the German equivalent, usually favored by risk-averse investors, fell. The Bund future was last 89 ticks down at 144.75.
"The compromise is supportive for risk sentiment as we've seen in a few markets already and it should weigh on Bunds which should correct in line with (U.S.) Treasuries. Treasuries could even underperform," said Rainer Guntermann, a strategist at Commerzbank.
(Reporting by Marc Jones; editing by David Stamp)
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Insight: How Colombian drug traffickers used HSBC to launder money
By Carrick Mollenkamp and Brett Wolf
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Tue Jan 1, 2013 1:06am EST
n">(Reuters) - When several Colombian men were indicted in January 2010 on money-laundering charges, the case in Brooklyn federal court drew little attention.
It looked like a bust of another nexus of drug traffickers and money launderers, with mainly small-time operatives paying the price for their crimes.
One of the men was Julio Chaparro, a 48-year-old father of four who owned three factories that made children's clothing in Colombia.
But to U.S. authorities the case was anything but ordinary. Chaparro, prosecutors alleged, helped run a money-laundering ring for drug traffickers that took advantage of lax controls at UK-based international banking group HSBC Holdings Plc. It was one of the most important leads for U.S. investigators pursuing a case against the bank that eventually led to a $1.9 billion settlement on December 11.
Chaparro was "basically putting the orchestra together" and investigators saw "him as a major player in terms of cleaning a lot of money," said James Hayes, special agent in charge of Homeland Security Investigations at U.S. Immigration and Customs Enforcement in New York. Known as ICE, the agency and its task force led the probe.
The Colombian's lawyer, Ephraim Savitt, said Chaparro was a middleman in the operation, but disputed the extent of his client's role, saying he was the "page turner of sheet music for the conductor."
Chaparro, who was arrested in Colombia in 2010 and extradited to the United States in 2011, pleaded guilty to a money-laundering conspiracy count in May and is awaiting sentencing in 2013.
An HSBC spokesman declined comment.
Much about the trail that drug traffickers used to move U.S. dollars - the proceeds from drug sales - through HSBC and other banks remains unclear. By design, the process is layered to evade detection.
But a review of confidential investigative records that originate from two U.S. Attorney office probes and federal court filings in New York and California, as well as interviews with senior law-enforcement officials, shows how investigators tracing the activities of people who allegedly worked with Chaparro were able to expose large-scale money laundering at one of the world's biggest banks.
The federal law-enforcement task force - named after El Dorado, the mythical city of gold in South America - used wire taps, email and computer searches, information from at least one inside source, and old-fashioned surveillance, to piece together the ring's operations.
SMUGGLED ACROSS BORDER
Drug cartels sold narcotics in the United States and routed the cash to Mexico, often using couriers to smuggle it across the border. That cash would then be put into bank accounts at HSBC's Mexico unit, where large deposits could be made without arousing suspicion, according to U.S. Department of Justice documents.
In one filing, U.S. prosecutors said, Chaparro and others allegedly utilized accounts at HSBC Mexico to deposit "drug dollars and then wire those funds to ... businesses located in the United States and elsewhere. The funds were then used to purchase consumer goods, which were exported to South America and resold to generate ‘clean' cash."
In a typical transaction, a middleman in a drug cartel would offer to deliver consumer goods, such as computers or washing machines, to Colombian businesses on favorable terms. Another person in the United States would buy the goods from firms using funds from drug trafficking, and fulfill those orders.
Money launderers exploited the laxness of HSBC in policing shadowy money flows, the Department of Justice said earlier this month. Failures included not conducting due diligence on customers, not adequately monitoring wire transfers or cash shipments and not having enough employees to run anti-money laundering systems. U.S. Assistant Attorney General Lanny Breuer called the lapses "stunning failures of oversight."
The situation was so bad, according to the Department of Justice, that in 2008, the head of HSBC's Mexican operations was told by Mexican regulators that a local drug lord described the bank as "the place to launder money."
The Chaparro probe, led by ICE and the Justice Department, converged over the past two years with two other investigations - led by federal prosecutors and investigators in West Virginia and by the Manhattan district attorney - resulting in this month's settlement with HSBC.
HSBC and its employees avoided criminal indictments, as the bank agreed instead to a deferred-prosecution deal that forces it to strengthen controls and accept a compliance monitor.
Today, Chaparro sits in a federal detention center in Brooklyn, reading the Bible and awaiting sentencing, said Savitt, a former U.S. prosecutor in Brooklyn, who submitted a list of questions to Chaparro for Reuters.
"He is contrite, regretful and ashamed about his crimes," Savitt said. "He wants to serve his time and rejoin his family. He understands that a prison term could prevent that from happening for many years."
Under federal guidelines, he could face 15 to 18 years in prison.
ON CHAPARRO'S TRAIL
The El Dorado federal task force, based in a building on the west side of Manhattan near Chelsea Piers, serves as an umbrella organization for some 250 law-enforcement officials from state, local and federal agencies.
One of the task-force supervisors is Lieutenant Frank DiGregorio, a former New York detective who spent years tracking the so-called Black Market Peso Exchange, which is used to convert dollars to Colombian pesos through trading in goods. DiGregorio along with two younger investigators - Graham Klein and Carmelo Lana - led the HSBC case.
The overall probe began in 2007 when investigators analyzed how courier companies ferried cash through airports in Miami and Houston, a person familiar with the case said. They ultimately tracked that to HSBC's operations in Mexico and then connected it to funds moving through New York.
A tipping point in the investigation came in 2009 when El Dorado agents arrested a man named Fernando Sanclemente. Two sources familiar with the case say Sanclemente was an operative in Chaparro's network.
Sanclemente, who was charged with allegedly conducting financial transactions tied to narcotics trafficking, is free on bail with a $200,000 bond, according to the latest court docket entry, which dates to January 2012. His lawyer, James Neville, declined to discuss the status of the case.
According to a criminal complaint filed against him by Lana, the El Dorado agent, on June 30, 2009, task force agents followed Sanclemente for more than two hours as he drove around Queens in New York to ferry cash from drug sales.
Sanclemente first met with a person for about "30 seconds" on one street corner, and left with a yellow plastic bag. Later that night, he drove to a Dunkin' Donuts near LaGuardia Airport, where a black livery cab pulled up and the driver handed him a black bag.
The El Dorado team followed Sanclemente to Laurel Hollow, New York, some 40 minutes away, where the investigators stopped and searched him, finding about $153,000 in the two bags. At Sanclemente's apartment, investigators said they found ledgers and documents consistent with money laundering.
With the arrest, investigators gained insight into Chaparro's alleged transactions. At one point, investigators set up undercover bank accounts where they were able to get Chaparro's network to wire proceeds that could be traced back to HSBC's Mexico operations, according to people familiar with the situation and a Department of Justice filing in the HSBC case.
Federal agents would ultimately home in on $500 million that had moved from HSBC Mexico to HSBC's operations in the United States, according to the confidential investigative records.
Between October 6, 2008 and April 13, 2009, Chaparro and others conducted money laundering transactions totaling $1.1 million tied to narcotics trafficking, the indictment against Chaparro alleged.
(Reporting By Carrick Mollenkamp and Brett Wolf of the Compliance Complete service of Thomson Reuters Accelus; Additional reporting by Tomas Sarmiento Cordero in Mexico City and Aruna Viswanatha in Washington; Editing by Paritosh Bansal and Martin Howell)
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Wall Street ends 2012 riding high on "cliff" deal optimism
Traders work the floor at the New York Stock Exchange in New York, December 26, 2012.
Credit: Reuters/Eduardo MunozBy Chuck MikolajczakNEW YORK | Tue Jan 1, 2013 9:27am EST
NEW YORK (Reuters) - U.S. stocks closed out 2012 with their strongest day in more than a month, putting the S&P 500 up 13.4 percent for the year, as lawmakers in Washington closed in on a resolution to the "fiscal cliff" negotiations.
The S&P 500's gain for the year marks its best performance since 2009, as stocks navigated through debt crises in Europe and the United States that dominated the headlines. Still, with numerous issues involving budget talks unresolved, markets could still be open to a shock should the deal break down unexpectedly.
Fittingly, in the last session of the year, stocks bounced back and forth on the headlines out of Washington, as both President Barack Obama and Republican Senate leader Mitch McConnell issued statements indicating a deal to avert the cliff was close.
"The worst news could have been the president coming out and saying, 'We don't have a deal and we've giving up,' and he didn't say that," said Ron Florance, managing director of investment strategy for Wells Fargo Private Bank, based in Scottsdale, Arizona.
"My personal skepticism, I don't trust anything out of Washington until it is signed, sealed and delivered, and it is not signed, sealed and delivered."
While a deal on the cliff is not yet official, investors may be ready to take on more risk next year in hopes of a greater reward.
McConnell said an agreement had been reached with Democrats on all of the tax issues in the potential deal, removing a large hurdle in the talks. An agreement is needed in order to avert a combination of tax hikes and spending cuts that many believe could push the U.S. economy into recession.
A source familiar with the matter said an emerging deal, if adopted by Congress and President Barack Obama, would raise $600 billion in revenue over the next 10 years by increasing tax rates for individuals making more than $400,000 and households earning above $450,000 annually.
Despite the uncertainty, the market encountered only occasional bouts of volatility this year. For the first time since 2006, the CBOE Volatility Index or VIX .VIX, the market's favored indicator of anxiety, did not surpass the 30 level, a threshold that usually signals heightened worry among investors.
"Given all the threats in 2012, the VIX was relatively tranquil," said Bill Luby, the author of the VIX and More blog in San Francisco, citing the crises in Spain and Greece, along with constant intervention from the Federal Reserve.
The Dow Jones industrial average .DJI gained 166.03 points, or 1.28 percent, to end at 13,104.14. The Standard & Poor's 500 Index .SPX gained 23.76 points, or 1.69 percent, to finish at 1,426.19. The Nasdaq Composite Index .IXIC gained 59.20 points, or 2.00 percent, to close at 3,019.51.
Monday's gains enabled the S&P 500 to snap a five-day losing streak, its longest skid since September.
The S&P 500 closed out 2012 with a 13.4 percent gain for the year, compared with a flat performance in 2011. The Dow rose 7.3 percent in 2012 and the Nasdaq climbed 15.9 percent.
Financials .GSPF were the strongest of the S&P's 10 industry sectors this year, gaining more than 26 percent, led by Bank of America (BAC.N), which more than doubled in 2012, and was the best performer of the Dow industrials.
Of the S&P's 10 sectors, only defensively oriented utilities .GSPU ended the year lower, falling 2.9 percent.
Gains in Apple Inc (AAPL.O), the most valuable U.S. company, helped lift the Nasdaq. The stock rose 4.4 percent to $532.17, lifting the S&P information technology sector index .GSPT up 2.2 percent. For the year, Apple rose 31.4 percent, ending with a market value of about $501.4 billion.
Each of the Dow's 30 components finished the session in positive territory, led by a 3.2 percent climb in Caterpillar Inc (CAT.N) to $89.58.
Volume was modest, with about 6.06 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, slightly below the daily average of 6.42 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 6 to 1, while on the Nasdaq, four stocks rose for every one that fell.
(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)
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U.S. clears way for wider in-flight Internet deployment
By Jim Wolf
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WASHINGTON | Mon Dec 31, 2012 6:29am EST
WASHINGTON (Reuters) - The U.S. Federal Communications Commission has cleared the way for wider adoption of in-flight Internet services, aiming to cut by as much as 50 percent the time needed for regulatory approval.
Newly adopted rules should boost competition in this part of the U.S. mobile telecommunications market and promote "the widespread availability of Internet access to aircraft passengers," the FCC said in a statement Friday.
Since 2001, the commission has cleared companies on an ad hoc basis to market in-flight broadband services via a satellite antenna fixed to an aircraft's exterior.
Under a newly adopted framework, the licensing procedures will be simpler, the commission said.
Airlines will be able to test systems that meet the commission's standards, establish that they do not interfere with aircraft systems and then get approval of the Federal Aviation Administration, the FCC statement said.
The FAA, a Labor Department arm responsible for operating the nation's air traffic control system, said in response that the FCC's effort to establish standards "will help to streamline the process" for airlines to install Internet hookups on planes.
The goal is to speed the processing of applications by up to 50 percent, FCC Chairman Julius Genachowski said in a separate statement.
The FCC drive to promote broadband aboard planes does not change a ban on the in-flight use of cell phones, which is tied to concerns about interference with ground stations.
Genachowski earlier this month urged the Federal Aviation Administration to allow more electronics on aircraft.
The FAA announced in August that it was forming a government-industry group to study aircraft operators' policies to determine when portable electronic devices may be used safely during flight. (Reporting By Jim Wolf; Editing by Claudia Parsons)
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