Bloggy Business Today

By Chuck Mikolajczak

NEW YORK |
Mon Feb 6, 2012 10:23am EST

NEW YORK (Reuters) – Stock fell on Monday after a five-week rally on concerns Greece may be unable to avoid a chaotic default as it struggles to reach terms on a new bailout package.

Athens allowed another deadline to slip as political leaders failed to respond to terms for a new bailout from the European Union and Internation Monetary Fund. Greece needs the funds by March to meet big debt repayments.

German Chancellor Angela Merkel stepped up pressure on Greece, warning that time was running short for a deal to be struck.

“It’s inevitable the risk profile that Greece represents is definitely going to cool the market tone, there is absolutely no way around that,” said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

“That lack of clarity, the protracted nature of this crisis and the fact that it simply will not go away, it’s a bit unnerving to people who have seen the market tack on some very nice early year gains, and it forces people to want to be a little cautious.”

The Dow Jones industrial average .DJI was down 39.01 points, or 0.30 percent, at 12,823.22. The Standard Poor’s 500 Index .SPX was down 3.86 points, or 0.29 percent, at 1,341.04. The Nasdaq Composite Index .IXIC was down 7.66 points, or 0.26 percent, at 2,898.00.

The SP has rallied for five straight weeks on better-than-expected U.S. economic data, punctuated by Friday’s solid employment report, pushing the index up nearly 7 percent for the year.

Hasbro Inc (HAS.O) fell 0.3 percent to $35.76 after the maker of Nerf foam toys and Monopoly board games reported a fourth-quarter profit just above analysts’ lowered expectations.

Humana Inc (HUM.N) posted a big rise in fourth-quarter profit, but revenues came in below Wall Street expectations. Its shares fell 4.6 percent to $86.03. The Morgan Stanley healthcare payor index .HMO lost 0.7 percent.

Through Monday morning, of the 290 companies in the SP 500 reporting results, 60 percent posted earnings that topped Wall Street expectations, tracking below recent quarters at this point of the reporting season.

Other companies expected to post earnings include Yum Brands Inc (YUM.N), Pioneer Natural Resources Co (PXD.N), Dun and Bradstreet Corp (DNB.N) and Anadarko Petroleum Corp (APC.N).

Fidelity National Financial Inc (FNF.N) agreed to buy O’Charley’s Inc (CHUX.O) for $9.85 a share in a deal that values the casual dining chain at $221 million in cash. O’Charley’s shares surged 42.2 percent to $9.84.

Semiconductor

Article source: here

By Clara Ferreira-Marques and Victoria Howley

CAPE TOWN/LONDON |
Sun Feb 5, 2012 10:03am EST

CAPE TOWN/LONDON (Reuters) – Top executives at trader Glencore (GLEN.L) and miner Xstrata (XTA.L) are hammering out the final details of an $80 billion tie-up to seal the industry’s largest ever takeover, which could be announced as early as Tuesday.

Xstrata, in which Glencore already has a 34 percent stake, announced last week it had been approached by the world’s largest diversified commodities trader and was in discussions over an all-share “merger of equals,” a deal that would be the largest in the sector since Rio Tinto’s takeover of Alcan in 2007.

The agreement is set to be announced this week, potentially Tuesday, when Xstrata is due to publish 2011 results.

One source involved in the proceedings described the mood behind the scenes over the weekend as “constructive,” and others said brushed off concerns the latest round of talks would collapse over either of the two hurdles that have tripped them up in the past — governance and price.

The two groups, which restarted discussions before Christmas after years of on-off talks, have reached a preliminary understanding on the structure of the top management, according to sources familiar with the deal, with Xstrata expected to take a majority of seats on the board, to keep its chairman, City heavyweight John Bond, as well as its chief executive, Mick Davis, and its chief financial officer, Trevor Reid.

Glencore Chief Executive Ivan Glasenberg, who will be the largest single shareholder in the combined mining and trading entity, is expected to hold a deputy position.

Davis, who has been at the helm of Xstrata for a decade, is expected to receive an up to 10 million pound ($16 million)retention package in the event of “change of control,” to stay on as chief executive, the Sunday Times reported.

In the past, the issue of price and premium and the difficult valuation of Glencore’s marketing business has separated the two companies, but the two are this time discussing a percentage premium to Xstrata’s share price in the “low single digits” — effectively a ratio to balance out the value of both companies, according to several of the sources.

But Xstrata shareholders, who helped block a deal before Glencore’s record listing last May on the grounds that they needed a clearer valuation of the trader, could push for more.

“John Bond is the chairman, so we will be making very sure that he maximizes value for Xstrata shareholders, which means

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By Jan Strupczewski

BRUSSELS |
Sun Feb 5, 2012 9:16am EST

BRUSSELS (Reuters) – Euro zone finance ministers told Greece it could not go ahead with an agreed deal to restructure privately held debt until it guaranteed to implement reforms to secure a second financing package from the euro zone and the IMF.

Euro zone ministers had hoped to meet on Monday to finalize the second Greek bailout, which has to be in place by mid-March if Athens is to avoid a chaotic default, but the meeting was postponed because of Greek reluctance to commit to reforms.

Instead, the ministers held a conference call on Saturday to take stock of progress on the second financing package, which euro zone leaders set at 130 billion euros back in October.

“There was a very clear message that was conveyed from all participants of the teleconference … to the Greeks that enough is enough,” one euro zone official said. “There is a great sense of frustration that they are dragging their feet.

“They should get their act together and start talking honestly, decisively and speedily with the Troika on the aspects of the programme that remain to be finalized – on fiscal and labor market reforms,” the official said.

The Troika are the representatives of the European Commission, the European Central Bank and the International Monetary Fund, who have prepared a Greek debt sustainability analysis on which the second financing programme will be based.

“The main issue is the lack of reform, or prior action, in Greece,” a second euro zone official said.

Euro zone ministers were also dissatisfied with Greek Finance Minister Evangelos Venizelos because they believed the minister was paying more attention to his position within his party ahead of the April elections than to talks about reforms.

“There is a great sense of frustration with Minister Venizelos, who is very hard to get hold of because he is very busy campaigning for the leadership of (the Greek party) PASOK, so he is not available to meet with Troika members,” the first official said.

The Greek finance ministry said that comment seemed “ridiculous, if not suspicious, to all those who have a basic knowledge of the minister’s daily schedule.”

The ministry said his schedule included long meetings with troika representatives, constant contacts with counterparts and heads of institutions involved in the troika, meetings with the prime minister, teleconferences, contacts with the Institute of International Finance on a planned bond swap and generally “superhuman efforts made 24 hours a day” by a small

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By Angeliki Koutantou and George Georgiopoulos

ATHENS |
Sat Feb 4, 2012 9:45am EST

ATHENS (Reuters) – Greece’s government on Saturday struggled on in talks with lenders to secure a 130 billion euro ($171 bilion) bailout before turning to the trickier task of persuading political leaders to back the unpopular reforms involved in the rescue.

On the brink of bankruptcy, Athens must wrap up talks with foreign lenders on the bailout and get political approval for it soon to ensure funds begin flowing in time for the country to pay back 14.5 billion euros of bonds falling due in mid-March.

But negotiations with its ‘troika’ of international lenders have stumbled over their demands that include cutting labor costs by axing holiday bonuses and lowering the minimum wage – proposals strongly opposed by Greek political party leaders.

Athens failed to reach a deal with the European Union, European Central Bank and the International Monetary Fund in marathon negotiations that ended early on Saturday, with crucial issues still unresolved.

“The troika is not backing down on wages, holiday bonuses and supplementary pensions,” a Greek government official said after ministers met to discuss the reforms on Saturday.

“None of these issues have been resolved. They are all open and the onus is on political leaders.”

Finance Minister Evangelos Venizelos was due to continue talks with lenders on Saturday in a bid to clinch agreement before technocrat Prime Minister Lucas Papademos calls the socialist, conservative and far-right leaders in his coalition to seek their blessing.

That meeting of party chiefs, initially scheduled for Saturday, has now been put off until Sunday early afternoon, a government source said.

Euro zone finance ministers are also holding a conference call on Saturday to discuss Greece’s rescue, Venizelos has said.

“There are issues to be resolved but we expect the negotiations to be concluded by tomorrow,” a senior government official told Reuters on Saturday on condition of anonymity.

PROOF OF COMMITMENT

Increasingly frustrated with Athens’ inability to enact the reforms needed to reshape the recession-hit Greek economy, foreign lenders have demanded proof of the country’s commitment to spending cuts before doling out any more funds.

They want all the country’s political chiefs – who are keen not to be linked directly with the painful reforms as they gear up for elections expected in April – to back the measures, irrespective of the outcome at the polls.

“Greek political leaders must offer their commitment to the program,” said a source close to the lenders.

“No more loans will be approved if they don’t.”

The lenders have

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By Richard Hubbard

LONDON |
Fri Feb 3, 2012 11:10am EST

LONDON (Reuters) – After a blockbuster January for both equities and bonds – rallies that caught many in the market by surprise – investors will be paying keen attention to the world’s central banks in the coming week for signs of continued easy money.

They will also be closely watching negotiations over a second bailout deal for Greece, while Chinese data on trade and inflation and a heavy week of corporate earnings all lie ahead.

Investors are having to adjust quickly to signs that global economic growth, though very fragile, may be turning out to be better than many had thought likely.

“We expected the equity market to weaken in Q1 before staging a strong recovery around Q2 at the weakest point of the economic cycle,” said Peter Oppenheimer, chief global equities strategist at Goldman Sachs.

“We have been wrong so far,” he said, adding that significant headwinds remain, and corporate profits and activity are likely to be stagnant at best.

The European Central Bank, the Bank of England and the Reserve Bank of Australia all hold policy meetings during the week, on the heels of the U.S. Federal Reserve’s commitment to keep rates on hold until the end of 2014 at the earliest.

Tighter financial conditions as banks and households continue to shed debt are expected to keep policymakers on an easier footing despite the improvement in economic data and an easing up of the euro zone debt crisis.

The improved data was itself brought on by a large influx of low interest three-year loans from the ECB.

ECB TO WAIT

The ECB is set to add to this with another interest rate cut, but probably not in the week ahead. It is likely to wait until its March meeting to move its current record low of 1.0 percent down to 0.75 percent, according to a Reuters poll.

The success of the ECB’s three-year lending operation in December, which saw banks borrow 489 billion euros ($644 billion) at very low interest rates, has been a key factor in encouraging the view that the central bank will wait.

“The ECB’s action in December averted a major credit crunch,” said Christel Aranda-Hassel, director of European economics for Credit Suisse.

A second tender due at the end of February adds to the likelihood the central bank will adopt a ‘wait and see’ approach to rates next week.

The next loan offering could attract higher demand but even if it doesn’t, plenty of money will be

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