Central Bank fears trigger global selloff in bonds, shares

By Richard Hubbard

LONDON | Tue Jun 11, 2013 8:22am EDT

 

(Reuters) - The yen rose while shares, bonds and gold fell on Tuesday as investors retreated into cash, unnerved by fears that major central banks are cooling in their commitment to the money-pumping that has buoyed global markets.

The selloff was triggered in Tokyo when the Bank of Japan left its policy unchanged, refraining from any fresh measures to tackle rising government bond yields that threaten to thwart its $1.4 trillion stimulus program.

Traders also noted nervousness about a German Constitutional Court hearing on the legality of the European Central Bank's bond-buying scheme, which added to long-running fears over the U.S. Federal Reserve winding down its stimulus plan.

By the end of the European morning session, the broad FTSEurofirst 300 index .FTEU3 had lost 1.5 percent to be at a six week low. The dollar had sunk as much as two percent against the yen to be near 98.50 yen, and German 10-year bond yields had risen 4 basis points to 1.59 percent.

Gold was down 1 percent, close to a three-week low at $1,371.11 an ounce, while U.S. stock index futures pointed to further weakness ahead for Wall Street. .N

The selloff encompassed traditional safe havens and riskier asset classes. "This is by no means an indication the markets are entering a new downturn," said Viktor Nossek, head of research at Boost ETP, an exchange traded products provider.

"This is seasonal and sentiment driven. We're entering summer and markets have seen good year-to-date gains, so people are taking this opportunity to sell," he said.

BOJ SPARK

However, the selling was led by a sharp fall in the dollar which followed the BOJ's decision to refrain from taking additional measures to curb recent bond market volatility at its regular monthly policy meeting.

BOJ Governor Haruhiko Kuroda did subsequently try to reassure the markets the central bank would consider fresh steps if yields spike again in the future, but the decision rattled many foreign investors.

"There were some expectations that the BOJ would curb bond market volatility and that has not happened," said Chris Walker, currency strategist at Barclays.

In the selloff that followed, the euro lost over 1 percent against the resurgent Japanese currency to be at 128.70 yen. But it firmed against the weaker dollar to be just under $1.33 and near a 3-month high.

Japan's Nikkei index closed down 1.5 percent .N225, though this followed Monday's 4.9 percent gain, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS tumbled 1.1 percent to hit a 6-1/2-month lows.

The selling spread across emerging shares as well, sending MSCI's benchmark index .MSCIEF to a nine-month low and extending losses caused by political tensions in Turkey and worries about China's slowing economy.

MSCI's world equity index .MIWD00000PUS, which tracks shares in 45 countries, shed 0.4 percent to end three days of gains.

DEBT NERVES

Debt investors pulled out of some of the riskiest assets in the euro area with Greek 10-year bond yields suffering their worst daily loss over a year, rising a full point to stand at 10.66 percent.

The Greek government's failure to find buyers for the state-owned natural gas company, threatening a bailout goal of privatization, piled on the pressure.

Safe haven debt also took a hit with U.S. Treasury yields touching their highest levels in more than a year. The benchmark 10-year note rose 4.5 basis points to 2.26 percent.

The concerns over China weighed on commodity markets and Brent crude dropped $1.35 at $102.60 a barrel, while copper traded near a one-month low at $7,082 a tonne.

(Editing by Ruth Pitchford)

Referensi : http://www.reuters.com/article/2013/06/11/us-markets-global-idUSBRE88901C20130611

SoftBank raises Sprint offer, wins key shareholder support

By Mari Saito and Sinead Carew

TOKYO/NEW YORK | Tue Jun 11, 2013 6:15am EDT

 

(Reuters) - Japanese mobile operator SoftBank Corp (9984.T) said it agreed with Sprint Nextel Corp (S.N) to raise its offer for the U.S. wireless carrier to $21.6 billion from $20.1 billion, as it fights off a counter bid by Dish Network Corp (DISH.O).

SoftBank's amended offer, Japan's biggest outbound deal, won the backing of hedge fund Paulson & Co, Sprint's second-biggest shareholder, which had earlier supported the Dish bid. Paulson said it would vote all its shares in favor of SoftBank's improved offer.

Under the new deal, SoftBank will buy shares from current Sprint shareholders at $7.65 each, up from the previous offer of $7.30 per share. The Japanese firm, led by billionaire founder Masayoshi Son, will increase its cash injection to Sprint shareholders to $16.6 billion, up by $4.5 billion, and will end up with 78 percent of Sprint, up from 70 percent in its previous bid, the companies said in a statement on Tuesday.

The revised agreement came a day before Sprint shareholders were due to vote on SoftBank's offer, which is up against a rival bid from U.S. satellite TV provider Dish Network worth $25.5 billion. [ID:nL2N0EM19H] That meeting has been put back until June 25.

In a brief statement, Dish said it "will analyze the revised SoftBank bid as we consider our strategic options," adding it still believes Sprint has tremendous value.

A person familiar with Dish's thinking said the company was unlikely to go away after the sweetened SoftBank offer. "They're moving the deckchairs around. It doesn't represent meaningful incremental value for Sprint shareholders," said the person, who asked not to be named. "SoftBank's revised offer is probably less than people would have expected them to come back with."

Charlie Ergen, Dish's billionaire chairman known for launching fierce takeover battles, said last month he could take on a bidding partner and even sell off non-core assets to pay down debt if a bidding war with SoftBank became too pricey.

WAIT AND SEE

A major Sprint shareholder said they would wait until Dish reacts before making any decisions. "SoftBank's bid is now superior to Dish's, but we have to see how it plays out. We have two very clever guys who want the same asset," said the person who didn't want to speak publicly on the matter.

The source noted SoftBank's cash increase looked good, and said that a smaller percentage of public shares remaining - not held by SoftBank - could help boost those shares.

SoftBank's Son said the new deal "delivers more upfront cash to Sprint stockholders, while still achieving our goal of creating a well-capitalized Sprint that is better positioned to bring meaningful competition to the U.S. market."

Son, an unusually aggressive risk-taker in a cautious Japanese corporate culture, wants Sprint as a springboard into the United States, where it would come up against the twin towers of the mobile landscape - Verizon Communications Inc (VZ.N) and AT&T Inc (T.N). Son, who brought the iPhone (AAPL.O) to Japan, is betting U.S. growth can offer relief from cut-throat competition in Japan's saturated mobile market.

DISH DEADLINE

Sprint said its committee evaluating Dish's bid unanimously determined it "is not reasonably likely to lead to a 'superior offer'". Dish has carried out due diligence since receiving a waiver on some merger agreements from SoftBank since May, but the committee said Dish failed to put forward an actionable offer.

"As a consequence of the lack of progress with Dish and the improved terms from SoftBank, the special committee ended its discussions with Dish," Sprint said, though Dish has until June 18 to come back with a best and final offer.

SoftBank said it will use proceeds from recent bond sales as well as a bridge loan already signed with four banks last year to finance the revised deal.

In Tokyo, SoftBank shares initially climbed 1.8 percent after the announcement, extending the previous day's 9.5 percent jump, the stock's biggest one-day gain since October. The shares later retreated to trade 0.4 percent lower, while the benchmark Nikkei average .N225 was down 0.9 percent.

(Additional reporting by Edwina Gibbs, Dominic Lau and Sinead Carew; Editing by Edmund Klamann and Ian Geoghegan)

Referensi : http://www.reuters.com/article/2013/06/11/us-softbank-sprint-idUSBRE95A0CB20130611

OPEC sees room for its over-target oil output

By Alex Lawler

LONDON | Tue Jun 11, 2013 7:52am EDT

 

(Reuters) - OPEC predicted world oil demand will grow more quickly in the rest of 2013 and indicated the group can keep pumping more oil than the output target it retained at a May 31 meeting without over-supplying the market.

The Organization of the Petroleum Exporting Countries in a monthly report forecast world oil demand would expand by 900,000 barrels per day (bpd) in the second half, up from 700,000 bpd in the first six months of 2013.

"The second half of the year is expected to see higher demand," said the report by OPEC's economists. "In terms of demand growth, the expected global economic recovery in the second half of this year could also add more barrels to seasonally higher global consumption."

With oil prices near the group's preferred level of $100 a barrel, OPEC at a May 31 meeting agreed to retain its output target at 30 million bpd, leaving the door open for informal supply tweaks by top exporter Saudi Arabia depending on demand.

OPEC has been pumping above the target and in May. Supply rose by 106,000 bpd to 30.57 million bpd, according to secondary sources cited by the report, led by Saudi Arabia which typically pumps more in summer to meet domestic air conditioning demand.

Still, the report said that output rate was broadly in line with OPEC's estimate of the average demand for its crude in the second half of 30.47 million bpd - meaning most of the surplus will be absorbed rather than head into inventories.

"Overall, existing fundamentals portray a market with ample supply, which is further reflected in comfortable crude oil stock levels," the report said.

OPEC reiterated its familiar warning of downside risks to the demand outlook from weak economic growth.

For 2013 as a whole, it forecast world oil use would grow by 780,000 bpd, slightly lower than 790,000 bpd previously expected.

The report is the first of this month's three prominent oil supply and demand forecasts to emerge. The U.S. government's Energy Information Administration - at present more bullish on demand growth than OPEC with a forecast of 890,000 bpd - issues its report later on Tuesday.

The International Energy Agency's monthly update is due on Wednesday.

(Reporting by Alex Lawler, editing by William Hardy)

Referensi : http://www.reuters.com/article/2013/06/11/us-opec-oil-idUSBRE95A0HL20130611

Boeing scores over $10 billion in U.S. aircraft orders

By Andrea Shalal-Esa

RIDLEY PARK, Pennsylvania | Tue Jun 11, 2013 8:36am EDT

 

(Reuters) - Boeing Co (BA.N) has won two multibillion dollar U.S. orders for its Chinook helicopters and the V-22 Osprey it builds with Bell Helicopter, sharply expanding the company's backlog at a time when overall U.S. defense spending is starting to decline.

The U.S. Navy told Reuters on Monday that it planned to sign a five-year contract valued at just under $6.5 billion for 99 new V-22 tilt-rotor aircraft built by Boeing and Bell, a unit of Textron Inc (TXT.N).

On Tuesday, Boeing and the U.S. Army announced a separate deal valued at $4 billion for 177 more CH-47 Chinook helicopters, plus options for up to 38 more of the twin-rotor workhorse helicopters. <ID:L2N0EN043>

The contracts, which have a combined value of over $10 billion, will help shore up Boeing's revenues while some other companies are seeing their orders scaled back or cut.

"I'm extremely bullish on the rotorcraft industry," Leanne Caret, vice president and general manager for vertical lift in Boeing's military aircraft division, told Reuters in an interview at the company's sprawling plant outside Philadelphia.

Caret said she expected Boeing to double its rotorcraft revenues by 2030 but declined to give specific dollar targets or the company's current revenues in the sector.

She said past innovations in rotorcraft occurred after wars or other events such as the Iranian hostage crisis of 1979-1980, and Boeing was committed to continuing to invest in research and development initiatives even as defense spending declined.

"The multiyear agreements are critical because we're going to continue to advance the technology that occurs on both the Chinook and the Osprey fleets," said Caret, who headed the Chinook program before moving into her current job in January.

Caret said the government was "fair, but tough" in its negotiations with Boeing, and the company clearly had hard work ahead meeting its commitments on both contracts, which carry fixed price terms, and offer significant savings compared with buying the aircraft one year at a time.

She said the Chinook multiyear agreement resulted in savings of 19 percent when compared with the estimated cost of buying the same number of aircraft year by year. Work on the multiyear agreement first began in 2009, she said.

Boeing was able to achieve the savings through $130 million in investments to modernize the Ridley Park plant, where Boeing builds both the V-22 Ospreys and the Chinook helicopters, Caret said. She also cited concerted efforts to get the best pricing for components from suppliers.

She said she and top military officials met with suppliers to encourage them to "lean forward" and give their very best pricing.

"We were very clear that if we couldn't generate the savings that the U.S. government required ... or better than those savings, that there may not be a multiyear (deal)," she said.

Robotics and lean production methods helped generate significant savings on the Chinook production line, Caret said. It now takes just over 40 minutes to move an aircraft down the line, instead of nearly a whole shift.

The government also benefited from strong demand for Boeing helicopters and the V-22 Osprey, Caret said. By including options for foreign orders in the contract, Boeing and the government aimed to offset any declines in U.S. orders caused by mandatory across-the-board budget cuts.

Boeing has also reduced its management structure, cutting about 30 percent of its executives last year, she said.

She said the company was now turning to the automotive, gaming and other non-defense industry for more ideas on how to make rotorcraft more competitive and efficient.

(Editing by Mark Potter)

Referensi : http://www.reuters.com/article/2013/06/11/us-boeing-rotorcraft-idUSBRE95A0J420130611