Lewis says pressure but no threat to BofA over Merrill

By Kim Dixon and John Whitesides
WASHINGTON (Reuters) - U.S. lawmakers accused the Treasury and Federal Reserve on Thursday of using threats and intimidation to force Bank of America to take over Merrill Lynch, a charge Bank of America Chief Executive Ken Lewis denied.
Republicans accused Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson of "putting a gun to the head" of Lewis to close the deal.
Both Bernanke and Paulson will be asked to testify at a later date before the House Oversight and Government Reform Committee.
Democratic Representative Elijah Cummings noted Lewis had told his board the Fed and Treasury would remove the board and management of the bank if it did not complete the purchase of Merrill Lynch despite growing losses there.
"If that isn't a threat, I don't know what is," Cummings said.
Lewis, the sole witness at the hearing, admitted after repeated questioning that there had been pressure, but sidestepped efforts to characterize the stance of Bernanke and Paulson as improper or an undue threat.
Lewis, who kept his answers brief and smiled and laughed at times during the grilling, said Bernanke and Paulson never asked him to keep information secret that the bank wanted to disclose to shareholders.
"I would say they strongly advised and they spoke in strong terms but I thought it was with good intentions," he said, arguing the pressure was not improper.
"It was in the context of them thinking it was in the best interests of Bank of America and the financial system."
Bank of America is regulated by the Federal Reserve.
The panel is examining the government's role in the January 1 purchase of Merrill Lynch, and the $20 billion in additional taxpayer bailout money given to Bank of America that month.
Lewis agreed to buy Merrill Lynch last fall in a deal put together with Treasury's assistance as Wall Street and the U.S. economy fell into a deep tailspin. Shareholders of Bank of America and Merrill voted in favor of the companies' merger last December 5.
"CLIMATE OF FEAR"
Lewis has said it was only later that month that he learned how fast Merrill was deteriorating, and then threatened to pull out of the merger, with officials of the Treasury and the Federal Reserve pushing for completion of the deal.
"This transaction took place in a climate of fear and intimidation by government officials," said Republican Representative Jim Jordan of Ohio. Continued...
Source: Reuters

Oil climbs over $73 on hopes for rising demand

By Richard Valdmanis
NEW YORK (Reuters) - Oil prices extended a three-day rally to near $73 a barrel on Thursday on rising hopes the recession has bottomed out, spelling a recovery in ailing world energy demand.
The International Energy Agency said it revised its outlook for global oil demand higher for the first time since August, two days after the U.S. government's energy forecaster did the same.
"These revisions do not necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession," the Paris-based adviser to 28 industrialized nations said.
U.S. crude rose $1.50 to $72.83 a barrel by 1:00 p.m. EDT, the highest price since October 21. London Brent crude gained $1.07 to $71.87.
Olivier Jakob, oil analyst at Petromatrix, said markets were now in a phase of identifying green shoots of economic recovery. The IEA report "will likely be taken as an additional green shoot," he said.
Meanwhile, U.S. data showing an increase in retail sales in May and a slowdown in weekly jobless claims reinforced perceptions that the deterioration of the world's top economy was easing.
Wall Street rose after the data while the U.S. dollar lost ground against the euro.
Adding support to energy markets was data from China, the second-largest oil consumer, showing oil imports in May rose 5.5 percent from a year ago, the second-highest volume on record.
Oil prices have jumped nearly 7 percent in three days on expectations that a potential revival of the economy and continued OPEC production curbs would tighten up consumer stockpiles.
OPEC members have agreed to cut 4.2 million barrels per day of output since last autumn in an attempt to counter sliding prices and soft world demand.
Venezuela's oil minister, Rafael Ramirez, said on Thursday that the group should not consider increasing production until world oil stockpiles are reduced.
U.S. crude stocks fell by a sharp 4.4 million barrels last week due to sliding imports, but they remain about 19 percent higher than a year ago, the Energy Information Administration (EIA) reported on Wednesday.
(Additional reporting by Alex Lawler and Joe Brock in London, Pascal Fletcher in St. Kitts; Editing by David Gregorio)

Source: Reuters

Riverstone pays $30 million in pension probe

By Joan Gralla
NEW YORK (Reuters) - Private equity firm Riverstone Holdings LLC agreed to pay $30 million to resolve its role in a corruption probe of New York state's pension fund, Attorney General Andrew Cuomo said on Thursday.
Like The Carlyle Group CYL.UL, which in May paid $20 million to settle its role, its partner Riverstone also agreed to stop using placement agents and undertake other reforms in Cuomo's new code of conduct.
For over two years, the Democratic attorney general has been probing millions of dollars of kickbacks paid by investment firms eager to invest the state's $110 billion retirement fund. The investment firms hired an array of middlemen -- lobbyists, lawyers, media consultants and placement agents -- who reaped the fees.
But by jacking up the "cost of doing business," these fees cost taxpayers dearly, Cuomo said in a conference call, noting the public now is being asked to contribute more to the fund to make up for its recent steep investment losses.
The state retirement fund will get the benefit of the payment by Riverstone, which manages $17 billion of assets.
Cuomo, who is continuing his probe, has been joined in the investigation by the U.S. Securities and Exchange Commission.
And while he said other states are just now "ramping up" their own investigations, New York for years has been rife with this kind of corruption, partly because just one individual, the state comptroller, runs the pension fund, he said.
Almost all other states have multi-member boards to oversee their funds, which altogether total almost $3 trillion.
So far, all indictments and charges involve the state pension fund when it was run by the former Democratic comptroller, Alan Hevesi. Two people have pleaded guilty.
CAMEO FOR "CHOOCH"
Hevesi was New York City's comptroller before he was elected to the same position in the state. Cuomo suggested that the city's use of pension boards protected New York City's funds from corruption.
"We haven't found any evidence of Mr. Hevesi committing or his team, his associates, or Mr. Morris, committing the same type of activity on the city side that they did once they got to the state side," Cuomo said.
The attorney general was referring to Henry Morris, who was Hevesi's top fund raiser. Morris has been indicted, along with the pension fund's former chief investment officer, David Loglisci. Lawyers for Morris, Loglisci and Hevesi, who has not been charged, all say their clients are innocent.
There was "an explosion of fraud," however, once Hevesi became the state comptroller, Cuomo said, calling for systemic reforms to safeguard the pension fund from any more corruption.
Riverstone's spokesman said: "For our investors and the firm, we believe we have reached the right decision through this resolution." Continued...
Source: Reuters

Delta plans bigger capacity cuts in downturn

By Karen Jacobs and Deepa Seetharaman
ATLANTA/NEW YORK (Reuters) - Delta Air Lines Inc (DAL.N) said on Thursday that it plans additional cuts in seat capacity this year as rising fuel prices and softer travel demand pressure business.
The world's biggest airline also said more capacity cuts could be on the way in its industry as airlines face the most challenging period since after the September 11, 2001, attacks.
"I would anticipate the combination of the economy staying at somewhat of a flatline level coupled with higher oil prices is going to do two things -- one, it's going to put pressure on pricing because you're going to need to cover the cost of oil," Delta President Ed Bastian told a Bank of America-Merrill Lynch conference that was broadcast over the Internet.
"If you can't recover the cost of oil, it's going to necessitate more dramatic capacity reductions as we get to the end of the year," he added.
Atlanta-based Delta said it plans to reduce system capacity by 10 percent from 2008, with reductions beginning in September. Earlier, Delta had said its system capacity would be down 6 percent to 8 percent from last year.
It also said it plans to cut international capacity an additional 5 percent on top of what it has already announced, for a total reduction of 15 percent. Earlier this year, Delta had said it would cut international capacity by 10 percent.
Continental Airlines Inc (CAL.N) said on Thursday it would outline further capacity moves in July, when it has more visibility on the status of business traffic.
"Business traffic is off quite substantially," Continental Airlines Chairman and CEO Lawrence Kellner told the Merrill Lynch investor conference.
"We are responding to that by making capacity adjustments," he said, adding that the domestic and European markets are weak.
Carriers have been hard-hit as the weak economy has caused consumers and businesses to curtail spending on travel. Demand has also been hurt by this year's outbreak of the H1N1 virus; and now, rising fuel prices are pressuring costs.
The International Air Transport Association, the voice of more than 200 global airlines, has repeatedly warned of a grim year for carriers as the recession has hurt demand. This week, the Geneva-based airline lobby nearly doubled its forecast for industry losses this year to $9 billion.
"Based on the trends we're seeing in June, I don't expect things to get any better," Southwest Airlines Co (LUV.N) Chief Executive Gary Kelly told the Merrill Lynch conference. He added that near-term prospects for the airline industry remain grim as consumers and corporations cut back on travel, forcing carriers to cut fares.
Glenn Tilton, CEO of United Airlines parent UAL Corp (UAUA.O), told his company's annual meeting that the government must do something to "dampen the speculative nature" of current high oil prices.
Delta's Bastian said that the H1N1 virus, formerly called swine flu, earlier this year had hurt bookings, especially in Asia, but added that bookings were starting to recover.
Delta also said it would accelerate the merger integration of Northwest Airlines and keep tight controls on costs and spending. It also said its latest reductions meant it would need to "reassess staffing needs," but added it would try to avoid involuntary layoffs. Continued...
Source: Reuters

Koenigsegg, Norwegian investors in Saab deal: source

Opel's suitors
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By Sven Nordenstam
STOCKHOLM (Reuters) - Swedish luxury carmaker Koenigsegg and Norwegian investors have struck a preliminary deal to buy General Motors' Swedish unit Saab, a source familiar with the matter said on Thursday.
The source told Reuters a letter of intent had been signed between the parties and said the financing of the deal had been agreed, leaving only minor issues to be resolved.
"The deal is there now and a few minor details remain," said the source, who declined to be identified.
Saab spokesman Eric Geers declined to comment on the report, saying the carmarker was "in the final stages of negotiations" and was still targeting a sale by early July.
Swedish television channel SVT, citing unnamed sources, reported the deal had been struck after intensive negotiations in Zurich, Switzerland. "Final negotiations about details on the deal will go on in the next months," SVT said on its website.
Saab Automobile, which was put up for sale by its now bankrupt U.S. parent earlier this year, had been in talks with two or three bidders in the past weeks with Deutsche Bank advising in the sales process.
The brand, whose sales comprised just over 1 percent of GM's total sales volume last year, has been hit hard by the economic downturn that has savaged sales on both sides of the Atlantic.
Saab, one of Sweden's best-known brands, has said it needs $1 billion of financing to help it overhaul production and launch new models while absorbing expected losses of about 3 billion crowns ($370 million) this year.
LUXURY CARS
Koenigsegg, founded by Christian von Koenigsegg in 2004, makes luxury sportscars. The company's headquarters is located in Angelholm, in southern Sweden, which currently houses 45 full-time employees, according to its website.
The tiny vehicle maker, part-owned by Norwegian entrepreneur Bard Eker through his holding company Eker Group AS, had sales of 106 million crowns last year.
The Swedish government said on Thursday it had authorized the debt office to begin talks with Saab on state loan guarantees. "The decision means that the Debt Office can initiate negotiations with Saab, the EIB and the coming owner, once one is revealed, about terms for state guarantees," the government said in a statement.
The guarantees are needed for Saab to receive loans from the European Investment Bank to finance environmentally friendly vehicles.
Sweden has until now said it was not prepared to consider loan guarantees for Saab unless the carmaker finds a private investor to underwrite its business plan.
(Additional reporting by Veronica Ek and Mia Shanley in Stockholm and Richard Solem in Oslo; Writing by Niklas Pollard; Editing by David Cowell and Dan Lalor)

Source: Reuters

Obama administration steps up push to oversee pay

No caps on executive pay -Treasury
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By Karey Wutkowski and Glenn Somerville
WASHINGTON (Reuters) - The Obama administration stepped up efforts on Thursday to push for measures that would tie executive pay at all publicly traded companies more closely to performance but faced some skepticism from lawmakers.
The Treasury Department on Wednesday said that seven companies receiving government bailout money will be subject to strict oversight on pay for their top executives and other highly paid employees and said it wants new laws to empower the Securities and Exchange Commission to ensure that shareholders have more say in setting pay.
"While the financial sector has been at the center of this issue, we believe that compensation practices must be better aligned with long-term value and prudent risk management at all firms," Treasury Counselor Gene Sperling told the House of Representatives Committee on Financial Services.
Both President Barack Obama and Treasury Secretary Timothy Geithner have said that Wall Street compensation practices encouraged excessive risk-taking, sowing the seeds of the financial crisis that has driven the United States and many other countries around the globe into recession.
Lawmakers from both major parties expressed uneasiness at the prospect of what they considered growing interference by government in business affairs. They suggested that regulatory reform and a determination to let companies stand or fail on their own would be preferable to putting taxpayer money into struggling companies.
"Executive compensation limits to address systemic risk are the wrong remedy for what is probably a nonexistent problem," said Republican Representative Jeb Hensarling of Texas.
But the committee's influential chairman, Representative Barney Frank of Massachusetts, took a different tack, saying he was not concerned about letting the government have a role in policing pay levels though he doubted whether some proposed measures would work.
Frank did not indicate whether he would oppose passage of the two new laws that Treasury wants -- one to give the SEC authority to oblige companies to allow non-binding shareholder votes on pay packages for top executives and another to ensure that internal pay committees that set pay levels and perks for company leaders are more independent from management.
A second Democrat, Representative Brad Sherman from California, said the administration's proposals did not go far enough, particularly the say-on-pay vote. "I believe we ought to look at that being binding, not just advisory," he said.
As he opened his testimony, Sperling said the government wasn't aiming to "micro-manage" pay practices nor to put caps on pay for executives. But he repeated that the current financial crisis was partly fueled by compensation practices that encouraged top executives to pursue risky strategies in hope of reaping big bonuses and incentive payments.
A Federal Reserve official sounded a warning at the same hearing about putting too tight a rein on pay for fear that it will make it harder for U.S. companies to attract the best talent.
"Regulation that is too severe and that does not recognize that the market for quality employees is global will threaten more harm than it will do good," said Scott Alvarez, the Fed's general counsel.
The White House on Wednesday named Kenneth Feinberg, the lawyer who oversaw the government's compensation fund for victims of the September 11, 2001, attacks, as its pay czar to police compensation of top earners at companies receiving "exceptional" government aid.
There are currently seven companies that will fall under Feinberg's oversight: General Motors, Citigroup, Bank of America, Chrysler, AIG, GMAC and Chrysler Financial. Feinberg will have wide-ranging authority to set pay for their top executives and other top earners as long as they are getting taxpayer-funded bailouts.
(Reporting by Karey Wutkowski and Mark Felsenthal, writing by Glenn Somerville, editing by Leslie Adler)

Source: Reuters

Wall Street gains on oil's jump and economic data

By Edward Krudy
NEW YORK (Reuters) - Stocks rose on Thursday as oil and other commodity prices climbed while retail sales and weekly jobless claims data raised hopes for an economic recovery.
Oil topped $72 per barrel, one day after settling at its highest level in seven months, lifting energy shares such as Chevron Corp (CVX.N), up 1.7 percent at $71.40, and . Rising commodity prices helped stocks like aluminum company and Dow component Alcoa Inc (AA.N), up 3.2 percent at $11.87.
May retail sales rose 0.5 percent, but the gain was mostly due to higher gasoline prices. Excluding autos and gasoline sales, they were up 0.1 percent.
"If you are seeing a pickup in the economy, that's going to be good for all these commodities. The more you produce, the more oil you are using," said Anthony Conroy, head trader for BNY ConvergEx, a Bank of New York affiliate, in New York.
"A lot of people that missed the rally earlier are now saying, 'I've got to get in.' If you are looking at sectors that are doing well, financials continue to lead."
The Dow Jones industrial average .DJI added 73.08 points, or 0.84 percent, to 8,812.10. The Standard & Poor's 500 Index .SPX rose 9.06 points, or 0.96 percent, to 948.21. The Nasdaq Composite Index .IXIC gained 13.56 points, or 0.73 percent, to 1,866.64.
Weekly initial jobless claims fell to 601,000, which was better than expected, suggesting improvement in the U.S. labor market.
Banks' stocks advanced after Goldman Sachs upgraded Regions Financial Corp (RF.N), up 7.5 percent at $4.30, and Fifth Third Banc Corp (FITB.O), up 5.2 percent at $7.72. The KBW Bank index .BKX rose 2.7 percent.
Some investors fear that rising commodity prices, combined with increasing U.S. Treasury bond yields, may hurt a recovery and spur a stock market correction. Investors will zero in on a 30-year bond auction at 1 p.m. EDT.
On Nasdaq, big-cap techs gained. Apple Inc (AAPL.O) was up 0.7 percent at $141.23 and topped the major advancers in the Nasdaq 100 .NDX.
The S&P 500 has jumped 40.1 percent since hitting a 12-year closing low on March 9. But the broad stock market has treaded water since early May as investors look for signs the economy is on the mend and mull the impact of rising interest rates and oil prices.
(Additional reporting by Ellis Mnyandu; Editing by Jan Paschal)

Source: Reuters

BofA's Lewis testifies on Merrill, Bernanke and Paulson eyed

By Kim Dixon
WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson will be asked to testify before Congress on their role in Bank of America's acquisition of Merrill Lynch.
At a congressional hearing on Thursday into the government's role in last year's purchase, the Democratic chairman of a key House panel said Bernanke and Paulson must address allegations they improperly pressured Bank of America to complete the deal.
"We will be looking for some answers to puzzling questions," said Edolphus Towns, Democratic chairman the U.S. House Oversight and Government Reform Committee.
"Did Paulson and Bernanke abuse their authority by ordering Mr. Lewis to go through with the Merrill acquisition, or did Mr. Lewis threaten to back out in order to squeeze more money out of the federal government?" Towns asked.
Bank of America Chief Executive Ken Lewis, the sole witness at the hearing, agreed with lawmakers under questioning that there was pressure from the government to complete the deal despite growing losses at Merrill.
"But it was in the context of them thinking it was in the best interests of Bank of America and the financial system," Lewis said.
"The threat was not what gave me concern. What gave me concern was that they would make that threat to a bank in good standing," Lewis said.
Republican investigators on the committee prepared a briefing paper that accused Paulson and Bernanke of "putting a gun to the head" of Lewis and Bank of America's board.
"This transaction took place in a climate of fear and intimidation by government officials," said Republican Representative Jim Jordan of Ohio.
The panel is examining the government's role in the January 1 purchase of Merrill Lynch, and the $20 billion in additional taxpayer bailout money given to Bank of America that month.
Lewis agreed to buy Merrill Lynch last fall in a deal put together with Treasury's assistance as Wall Street and the U.S. economy fell into a deep tailspin. Shareholders of Bank of America and Merrill voted in favor of the companies' merger last December 5.
Lewis has said it was only later that month that he learned how fast Merrill was deteriorating, and then threatened to pull out of the merger, with officials of the Treasury and the Federal Reserve pushing for completion of the deal.
Lawmakers repeatedly said Lewis must have known much earlier than he claims about the heavy losses at Merrill, which lost $15.84 billion in the fourth quarter of last year.
But Lewis said "nobody predicted the meltdown that occurred in the fourth quarter of 2008."
(Additional reporting by Mark Felsenthal; Editing by Tim Dobbyn)

Source: Reuters

Fresh data offers hope for economy

By Lucia Mutikani
WASHINGTON (Reuters) - U.S. retail sales rose for the first time in three months in May and the number of workers filing new claims for jobless benefits last week hit the lowest level since January, suggesting the recession was abating.
The Commerce Department said on Thursday that sales at U.S. retailers rose 0.5 percent last month, lifted by strong gasoline and building material receipts.
A separate report from the Labor Department showed the number of U.S. workers filing new claims for jobless aid fell 24,000 to 601,000 in the week ended June 6, the lowest since the week of January 24.
"It looks like we are turning the corner. There is pretty clear evidence that the worst of the labor downturn has passed, but we still expect more job losses," said Zach Pandl, an economist at Nomura Securities International in New York.
U.S. stocks were modestly higher, while the value of the dollar edged up against the Japanese yen.
The data bolstered the argument that the economy's severe recession was close to hitting a bottom, with the sales report raising optimism that consumer spending would probably be flat to only modestly lower in the second quarter.
However, analysts said the sales strength was largely a mirage that reflected higher gasoline prices.
Gasoline prices in rose in every week in May, according to government data, increasing from $2.13 a gallon at the beginning of the month to $2.57 by June 1.
Excluding sales at gasoline stations, retail sales rose just 0.2 percent, the Commerce Department said.
"The (economy's) tender green shoots could be snuffed out by the frost of higher mortgage rates and gasoline prices," said T.J. Marta, chief market strategist at Marta on the Markets in Scotch Plains, New Jersey.
Growing optimism that the deep U.S. recession, now in its 18 month, will soon be over and worries about surging U.S. government debt have pushed yields on U.S. Treasuries sharply higher in recent weeks.
The yield on the 10-year Treasury note, a benchmark for many mortgages, hit 4 percent on Wednesday for the first time since October and revisited that level briefly on Thursday in a potential challenge to the hoped-for economic recovery.
WHITHER THE U.S. CONSUMER
Consumer spending, which accounts for about 70 percent of U.S. economic activity, rose at a 1.5 percent annual rate in the January-March period after a 4.3 percent dive in the fourth quarter of last year.
Gasoline sales jumped 3.6 percent last month after dropping 0.8 percent in April, whiles sales of building materials climbed 1.3 percent, the biggest gain since April last year. Car sales rose 0.5 percent. Continued...
Source: Reuters

U.S. mortgage rates erase Fed's handiwork

NEW YORK (Reuters) - Mortgage rates leaped with bond yields in the past week to the highest since November, erasing strides made by a massive government program to help revive U.S. housing.
In late November, the government announced Federal Reserve programs to buy enormous amounts of mortgage-related debt to reduce loan rates and stabilize the hardest-hit housing market since the Great Depression.
The programs were later deepened, putting the Fed on track to absorb up to $1.45 trillion in mortgage bonds and agency notes as well as up to $300 billion in Treasury securities.
Average 30-year fixed mortgages jumped 0.30 point to 5.59 percent, the highest since the week ended November 26, Freddie Mac (FRE.N) said on Thursday.
That is more than a 7/8 point spike just since April, when the rate touched down to 4.78 percent -- the lowest since Freddie Mac began tracking it weekly in 1971.
Bond yields are a peg for setting home loan rates.
After falling sharply, bond yields soared over the past few weeks on economic reports that were not as weak as expected. The promise of record Treasuries issuance to fund various federal rescue programs has also pressured yields higher.
Mortgage rates, in response, swung swiftly from record lows back to rates seen prior to the federal interventions.
Home purchase activity has been fairly stagnant during this period, based on data from the Mortgage Bankers Association.
Mortgage rates remain lower than a year ago, when the 30-year loan averaged 6.32 percent.
But refinancing, which is highly sensitive to rate shifts, has fallen to the lowest levels since November.
Lenders charged an average of 0.7 percent on loans in the past week, unchanged from the prior week.
(Reporting by Lynn Adler; Editing by Diane Craft)

Source: Reuters

Oil extends rally on hopes for rising demand

By Alex Lawler
LONDON (Reuters) - Oil firmed to $72 a barrel on Thursday after the International Energy Agency raised its estimate for 2009 oil demand, adding to signs the fall in consumption may have bottomed out.
World oil demand will contract by less than previously expected this year, the International Energy Agency (IEA) said as it raised its 2009 forecast for the first time since August 2008.
Olivier Jakob, oil analyst at Petromatrix, said markets were now in a phase of identifying green shoots of economic recovery. The IEA report "will likely be taken as an additional green shoot," he said.
U.S. crude rose 66 cents to $71.99 a barrel by 1337 GMT (9:37 a.m. EDT), a near eight-month high. Brent crude gained 48 cents to $71.28.
Falling inventories in top oil consumer the United States also supported prices.
U.S. crude stocks fell by a sharp 4.4 million barrels last week, against expectations for a modest draw of 400,000 barrels, while products inventories also dropped, the Energy Information Administration (EIA) reported on Wednesday.
Gasoline inventories fell 1.6 million barrels last week against forecasts for a 800,000-barrel build as gasoline demand rose by 0.4 percent over the four-week period, the start of the U.S. summer driving season, the EIA said.
Distillate stocks, including diesel and heating oil, fell by 300,000 barrels, versus analysts expectations for a 1.4 million barrel increase.
Data from China, the second-largest oil consumer, suggested rising demand.
China's crude imports in May rose 5.5 percent from a year ago, the second-highest volume on record, the General Administration of Customs said on Thursday.
The U.S. dollar fell again against a basket of currencies on Thursday, adding support to dollar-denominated commodities.
(Additional reporting by Joe Brock; Editing by James Jukwey))

Source: Reuters

Wall Street set to rise as data eyed

NEW YORK (Reuters) - Wall Street was set to open flat on Thursday, with investors eyeing retail sales and weekly jobless data for fresh insight into the state of the recession-hit economy.
* Investors will watch a 30-year treasury note auction for direction on interest rates, one day after a weak 10-year auction sent yields on the benchmark note to a eight-month high. The latest results are due at 1 p.m. EDT.
* Stock investors have been concerned that rates may dampen an economic recovery by increasing borrowing costs for consumers and businesses and are drawing money away from the stock market.
* Retail sales are expected to have risen in May for the first time in three months, helped by rising gasoline prices and an uptick in demand for cars and light trucks. May sales, due at 8:30 a.m. are forecast to rise 0.5 percent, after falling 0.4 percent in April, according a Reuters poll.
* Weekly jobless claims, also due at 8:30 a.m., are expected to be lower by 6,000 to 615,000 for the latest week. Last week, the monthly payrolls data showed a mixed picture, with a slowing in the number of job losses in May but a rise in the unemployment rate.
* "Probably the real mover of the day will be retail sales," said Peter Cardillo, chief market economist at Avalon Partners in New York. "That will give us an insight as to whether or not the consumer is still overly cautious in spending or whether confidence is beginning to return."
* S&P 500 futures rose 1.70 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones Industrial Average futures added 12 points, while Nasdaq 100 futures were up 4.50 points.
* Chinese investment surged in May on the back of large government stimulus spending, fanning hopes that the world's third-largest economy may help to lead a global recovery.
* The price of oil continued to move higher, and investors were concerned that could harm a recovery. Energy company shares gained as U.S. front-month crude rose 1 percent.
* Brokerage KBW boosted its rating on Bank of America Corp (BAC.N) shares to "outperform" from "market perform," citing cheap valuation and a better balance sheet. The stock was up 2.7 percent to $12.30 before the bell.
* Data due after the market opens includes business inventories for April, expected to show a contraction of 1 percent for the month, in line with March's decline.
* National Semiconductor Corp (NSM.N) is to report fourth-quarter results, and is the only S&P 500 company reporting on Thursday.
* U.S. stocks fell Wednesday on worries that rising interest rates could hurt spending, but stocks pared losses late in the session to finish off the day's lows.
(Reporting by Edward Krudy; editing by Jeffrey Benkoe)

Source: Reuters

Oil rises to $72 as IEA raises demand outlook

By Alex Lawler
LONDON (Reuters) - Oil firmed to $72 a barrel on Thursday after the International Energy Agency raised its estimate for 2009 oil demand, adding to signs the fall in consumption may have bottomed out.
World oil demand will contract by less than previously expected this year, the International Energy Agency said as it raised its 2009 forecast for the first time since August 2008.
"Markets are currently in a phase of identifying green or bamboo shoots," and the IEA report "will likely be taken as an additional green shoot," said Olivier Jakob, oil analyst at Petromatrix.
U.S. crude rose 71 cents to $72.04 a barrel by 1105 GMT (7:05 a.m. EDT), a near eight-month high. Brent crude gained 50 cents to $71.30.
Falling inventories in top oil consumer the United States also supported prices.
U.S. crude stocks fell by a sharp 4.4 million barrels last week, against expectations for a modest draw of 400,000 barrels, while products inventories also dropped, the Energy Information Administration (EIA) reported on Wednesday.
Gasoline inventories fell 1.6 million barrels last week against forecasts for a 800,000-barrel build as gasoline demand rose by 0.4 percent over the four-week period, the start of the U.S. summer driving season, the EIA said.
Distillate stocks, including diesel and heating oil, fell by 300,000 barrels, versus analysts expectations for a 1.4 million barrel increase.
Data from China, the second-largest oil consumer, suggested rising demand.
China's crude imports in May rose 5.5 percent from a year ago, the second-highest volume on record, the General Administration of Customs said on Thursday.
The U.S. dollar fell again against a basket of currencies on Thursday, adding support to dollar-denominated commodities.
(Additional reporting by Maryelle Demongeot in Singapore; Editing by James Jukwey))

Source: Reuters

IEA sees start of recovery in oil demand

By Joe Brock
LONDON (Reuters) - World oil demand will contract by less than previously expected in 2009, the International Energy Agency said on Thursday in a further sign the economic outlook may have stopped deteriorating.
The agency, which advises 28 industrialized countries, said the upward adjustment followed stronger-than-expected demand early in the year in developed countries. The increase in the estimate for 2009 is the IEA's first since August 2008.
"These revisions do not necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession," the IEA said in its monthly Oil Market Report.
Global oil demand is expected to fall in 2009 by 2.47 million barrels per day (bpd) to 83.3 million bpd. The IEA's previous forecast was for consumption to contract by 2.56 million bpd, the sharpest fall since 1981.
The IEA joins the U.S. government's Energy Information Administration (EIA) in raising oil demand forecasts this week amid signs that the economic climate has stopped worsening. Expectations of recovery have helped drive oil prices to a 2009 high above $72 a barrel.
Despite the upward revision, the IEA's latest estimate is still calling for a deeper contraction in demand this year than other forecasters tracked by Reuters.
"This is possibly green shoots but let's keep this in context. This is still a market in which demand is declining sharply," David Fyfe, head of the IEA's Oil Industry and Market's Division, told Reuters.
Oil prices edged higher after the report was released. U.S. crude was up 48 cents to $71.81 by 0953 GMT (5:53 a.m. EDT).
GASOLINE TIGHTER, STOCKS COVER LOWER
Many analysts, including the IEA, have argued that oil's rally has been driven by sentiment and outside factors such as equities, rather than a tighter supply and demand balance.
But Thursday's IEA report noted some support for oil prices coming from the market's own fundamentals.
Crude processing in refineries was trending higher, OPEC supply restraint remains in place and gasoline markets are beginning to tighten, the IEA said. Also, oil stocks were lower expressed as days of forward demand.
Oil inventories in developed countries fell to 62.0 days of forward cover at end-April, a measure closely watched by the Organization of the Petroleum Exporting Countries (OPEC), which considers 52-53 days comfortable.
OPEC has been cutting its production since September last year to support prices as recession eroded demand. The group agreed to maintain its existing supply curbs of 4.2 million bpd at a May 28 meeting.
Higher oil output in May reduced OPEC's compliance rate with its pledged supply curbs to 74 percent, compared with 76 percent in April, the IEA said. Continued...
Source: Reuters

May U.S. foreclosures third highest on record

By Lynn Adler
NEW YORK (Reuters) - U.S. foreclosure activity for May ebbed from April's record, but mortgages still failed at a staggering pace as President Barack Obama's rescue programs had not had time to fully take root, RealtyTrac said on Thursday.
Foreclosure filings dipped 6 percent in the month but increased 18 percent from May 2008, marking the third highest month on record.
"There were almost one million foreclosure filings in a three-month period, and that's simply unprecedented," Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.
Temporary freezes on foreclosure activity ended in March. Failures of many seriously delinquent loans that were put on hold during those moratoria have been thrust back into the foreclosure cycle.
One in every 398 households with loans got a foreclosure filing in May. Filings, which include notices of default and auctions, were reported on 321,480 properties last month.
Stemming foreclosures is seen critical to bolstering home prices, consumer confidence and the recessionary U.S. economy.
Bank repossessions, known as real-estate owned or REOs, rose in May and should spike in coming months because the moratoria ended, RealtyTrac said.
OBAMA PLAN NEEDS TIME
The administration's plans to ease loan modifications and refinancing were detailed in early March and haven't been implemented long enough to derail foreclosures.
The hurdles are high. Unemployment reached a nearly 26-year peak in May and mortgage rates have leaped a percentage point from their spring lows to more than 5-1/2 percent.
"One of the cures to this problem is enough buying activity to eat up the inventory of distressed properties," Sharga said. "If mortgage rates go up to where people decide to wait out the market again, that's just going to add to the inventory numbers and put more downward pricing pressure on all homes."
RealtyTrac forecasts about 4 million foreclosure filings will be made this year on about 3.1 million households with loans. Last year, there was a record 3.1 million filings on about 2.4 million households.
In a more typical year, Sharga said there would be around 800,000 filings on 550,000 households.
"When you have a glut of inventory and downward pricing pressure that does tend to push properties into foreclosure," said Sharga.
States where sales and prices soared most in the five-year housing boom earlier this decade remained the hardest hit. Continued...
Source: Reuters

China's Beijing Auto interested in Volvo: report

By Fang Yan and Victoria Klesty
SHANGHAI/STOCKHOLM (Reuters) - Beijing Automotive Industry Holding Corp (BAIC) is interested in buying Ford Motor Co's (F.N) Volvo car unit, the Wall Street Journal reported, adding a new name to a list of potential Chinese bidders for the Swedish luxury car brand.
A team of BAIC executives is likely to visit Volvo's Gothenburg, Sweden headquarters as early as Thursday to meet with its executives and tour its research-and-development and manufacturing facilities, the paper said, citing three people familiar with the situation.
A spokesman for state-run BAIC, China's fifth-largest automaker, said he was not briefed on the company's interest in any foreign auto brands. BAIC expressed an initial interest in General Motors' (GMGMQ.PK) European brand, Opel, earlier this month but did not follow through.
Other potential Chinese buyers for Volvo that have cropped up in news reports include Geely Automobile Holdings (0175.HK), Ford's China partner Chongqing Changan Automobile Co (000625.SZ), and Chery Automobile.
Stefan Elfstrom, spokesman for Volvo Cars, declined to comment.
"Ford has said it is a process ongoing, but they haven't disclosed any names," Elfstrom said.
Ford Europe could not be reached immediately.
The worst industry downturn in decades has hammered major global automakers in the past year, forcing Ford's U.S. rivals, GM and Chrysler, into bankruptcy and leading to sales of a number of auto brands and assets.
ONCE Burned
But analysts said Chinese firms, burned by past acquisitions that backfired, lack skill and stomach to take over the entire operations of their foreign counterparts, and are more likely bargain hunters for technologies and assets being sold in secondary sales.
"Don't take the reports seriously. Lots of so called Chinese interest are leaked by investment bankers and lawyers trying to drum up deals," said Zhang Xin, an analyst with Guotai Junan Securities.
An industry source told Reuters BAIC was interested in technology and designs which could then be used in its first self-developed car which it hopes to roll out in 2010.
BAIC currently only makes Mercedes-Benz and Accent cars at joint ventures with Daimler AG (DAIGn.DE) and South Korea's Hyundai Motor (005360.KS).
"BAIC doesn't even have a in-house design car brand so far. How can anyone realistically expect it to take over and turn around Opel or Volvo?" asked the source, who was not authorized to speak publicly on the matter.
One of the people told Wall Street Journal that BAIC's interest was "preliminary" and "nascent." Continued...
Source: Reuters

May U.S. foreclosures 3rd highest on month on record

By Lynn Adler
NEW YORK (Reuters) - U.S. foreclosure activity for May ebbed from April's record, but mortgages still failed at a staggering pace as President Barack Obama's rescue programs had not had time to fully take root, RealtyTrac said on Thursday.
Foreclosure filings dipped 6 percent in the month but increased 18 percent from May 2008, marking the third highest month on record.
"There were almost one million foreclosure filings in a three-month period, and that's simply unprecedented," Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.
Temporary freezes on foreclosure activity ended in March. Failures of many seriously delinquent loans that were put on hold during those moratoria have been thrust back into the foreclosure cycle.
One in every 398 households with loans got a foreclosure filing in May. Filings, which include notices of default and auctions, were reported on 321,480 properties last month.
Stemming foreclosures is seen critical to bolstering home prices, consumer confidence and the recessionary U.S. economy.
Bank repossessions, known as real-estate owned or REOs, rose in May and should spike in coming months because the moratoria ended, RealtyTrac said.
OBAMA PLAN NEEDS TIME
The administration's plans to ease loan modifications and refinancing were detailed in early March and haven't been implemented long enough to derail foreclosures.
The hurdles are high. Unemployment reached a nearly 26-year peak in May and mortgage rates have leaped a percentage point from their spring lows to more than 5-1/2 percent.
"One of the cures to this problem is enough buying activity to eat up the inventory of distressed properties," Sharga said. "If mortgage rates go up to where people decide to wait out the market again, that's just going to add to the inventory numbers and put more downward pricing pressure on all homes."
RealtyTrac forecasts about 4 million foreclosure filings will be made this year on about 3.1 million households with loans. Last year, there was a record 3.1 million filings on about 2.4 million households.
In a more typical year, Sharga said there would be around 800,000 filings on 550,000 households.
"When you have a glut of inventory and downward pricing pressure that does tend to push properties into foreclosure," said Sharga.
States where sales and prices soared most in the five-year housing boom earlier this decade remained the hardest hit. Continued...
Source: Reuters

Oil rises above $72 on falling U.S. inventories

By Maryelle Demongeot
SINGAPORE (Reuters) - Oil rose above $72 a barrel on Thursday, heading for a third consecutive day of gains, after data showed falling U.S. crude and product inventories, adding to signs that oil demand may have bottomed out.
Prices have gained more than 5 percent since last Friday's settlement, and more than doubled since last winter's low $30s as investors have started to price in expectations for an economic recovery, which should boost consumption.
U.S. crude stocks fell by a sharp 4.4 million barrels last week, against expectations for a modest draw of 400,000 barrels, while products inventories also dropped, the Energy Information Administration (EIA) reported.
U.S. light crude for July delivery rose 76 cents to $72.09 a barrel by 0447 GMT, a near eight-month high, having gained $1.32 on Wednesday to settle at $71.33 after the U.S. inventory data was released.
London Brent crude gained 63 cents to $71.43.
"After the previous week's glitch, the downwards trend in excess inventory seems to have resumed," Barclays Capital said in its weekly oil data review.
"Oil prices continue their march to, and then beyond, $75 per barrel. Our forecast of an average $85 per barrel for 2010 appears well on track, and we believe further upside price risk exists incoming quarters," the analysts also said.
U.S. gasoline inventories fell 1.6 million barrels last week against forecasts for a 800,000-barrel build as gasoline demand rose by 0.4 percent over the four week period, the start of the U.S. summer driving season, the EIA said.
Distillate stocks, including diesel and heating oil, fell by 300,000 barrels, versus analysts expectations for a 1.4 million barrel increase.
The EIA report follows data from the American Petroleum Institute released late Tuesday, which showed a 6 million barrel draw in crude oil stocks, a 27,000 barrel rise in gasoline inventories and a 19,000 barrel gain in distillates.
The market will eye monthly reports by the International Energy Agency (IEA), adviser to 28 industrialized nations, which are to be released on Thursday, and by OPEC on Friday, for further optimistic assessments.
The EIA raised its 2009 demand forecast by 10,000 barrels per day in its June outlook on Tuesday, the first time since September that it has increased the demand estimate in its rolling monthly forecast.
The U.S. dollar fell again against a basket of currencies on Thursday, adding support to dollar-denominated commodities, as an auction of $19 billion in 10-year Treasury notes eased some investor fears about the United States' ability to sell long-term debt to help finance a ballooning budget deficit.
(Additional reporting by Chua Baizhen; Editing by Ben Tan)

Source: Reuters

China investment surge boosts recovery hopes

By Jason Subler and Hideyuki Sano
BEIJING/TOKYO (Reuters) - Chinese investment surged in May, adding to hopes the world's third largest economy may lead a recovery, but a record slump in Japan's first-quarter GDP reinforced expectations its rebound from recession will be slow.
China's investment pick-up, which comes on the back of massive government stimulus spending, offset surprisingly weak figures for exports and imports, which both fell for a seventh consecutive month and at an accelerating pace.
There was positive news from Australia, where a smaller-than-expected fall in employment built on hopes the country, which has so far dodged falling into recession, will see an economic revival sooner than other developed nations.
Global data in recent weeks has pointed to a rebound from the deepest recession in six decades, driving stock markets sharply higher from a March trough, but worries about the ballooning U.S. trade and budget deficits hang over the nascent recovery.
U.S. Treasuries edged up in Asian trade, after the benchmark 10-year yield advanced to 4 percent overnight, the highest since October 16, on concern about how expensive it will be for the U.S. government to finance its growing budget deficit.
"The risk of rising yields should not be discounted," said Joseph Brusuelas of Moody's Economy.com. "If continued, they will reduce home mortgage refinancing and curtail corporate borrowing, both critical to an economic recovery."
STIMULUS PLAN
China has sought to cushion the blow from falling exports with a 4 trillion yuan ($585 billion) economic stimulus plan.
Data on Thursday showed annual growth of fixed asset investment in urban areas in the January-May period accelerated to 32.9 percent. from 30.5 percent in the first four months of the year, suggesting the stimulus is working.
"I think this is a welcome sign of momentum building in the Chinese economy, and it's good for the global outlook," said David Cohen of Action Economics in Singapore.
Underpinned by optimism over the Chinese economy, commodity-related stocks in Asia rose for a third straight day while oil prices extended gains to seven-month highs.
The need for government pump-priming was underlined by May customs data that showed exports fell 26.4 percent on the year, while imports fell 25.2 percent, resulting in a trade surplus of $13.4 billion, compared with $13.1 billion in April and $18.6 billion in March.
"I've always been pretty conservative with China's import and export forecasts, and I think they haven't reached a bottom yet, because the U.S. and European economies are still deep in recession," said Sherman Chan of Moody's Economy.com in Sydney.
However, she also noted that trade flows today reflect orders placed several months ago, when the global economy was in dire straits. Investment, by contrast, is a better leading indicator.
Japan's economy contracted a revised 3.8 percent in the first three months of the year, better than economists' median forecast of 4.0 percent, which was the same as the initial estimate, but still the fastest pace since World War Two. Continued...
Source: Reuters

U.S. regulators ready laws for OTC derivatives crackdown

By John Poirier and Rachelle Younglai
WASHINGTON (Reuters) - The two primary U.S. financial market regulators are drafting legislation to implement the Obama administration's proposed crackdown on over-the-counter derivatives, said sources familiar with discussions at the agencies late on Wednesday.
In another sign that a merger is unlikely between the Securities and Exchange Commission and the Commodity Futures Trading Commission, the sources said the agencies could split oversight of OTC derivatives under the legal language they are working on for eventual submission to Congress.
The SEC, the larger and older of the two agencies, may take charge of regulating credit default swaps, a type of OTC derivative, for publicly traded companies, one source said.
The administration and congressional Democrats are working on tightening the rules for banks and markets to prevent a recurrence of the severe financial crisis that has been hammering economies worldwide for months.
On May 13, the administration proposed exerting more government control over the shadowy OTC derivatives market, which has widely been implicated in the credit crisis.
At that time, officials did not make clear which agency would be in charge of the crackdown. But it was clear that laws enforced by both the SEC and the CFTC would have to be amended to accommodate the administration's plans.
Since then, political obstacles in Congress and resistance from the agencies themselves have largely convinced lawmakers and the administration to back away from another financial reform idea -- merging the SEC and the CFTC.
A source familiar with the administration's thinking said a reforms package expected to be unveiled on June 17 by President Barack Obama will not include an SEC-CFTC tie-up.
But it will stress the need to bring the OTC derivatives market, now only loosely policed, under stricter regulation with more conservative capital, reporting and margin requirements for major participants.
In the United States, four large banks control over 90 percent of the derivatives market: JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, and Goldman Sachs Group Inc.
Trading in OTC derivatives, instruments that derive their value from other assets, exploded in size in recent years, with many large firms -- such as mega-insurer American International Group -- charging into the burgeoning market.
A key feature of the administration's plan will be to move more OTC derivatives trades through central clearinghouses or, in the case of standardized instruments, onto exchanges.
Customized instruments unsuited to such treatment would be subjected to more record-keeping, under the proposed changes.
(Writing by Kevin Drawbaugh; Editing by Lincoln Feast)

Source: Reuters

Oil heads towards $72 on falling U.S. inventories

By Maryelle Demongeot
SINGAPORE (Reuters) - Oil rose toward $72 a barrel on Thursday, heading for a third consecutive day of gains, after data showed falling U.S. crude and product inventories, adding to signs that oil demand may have bottomed out.
Prices have gained almost 5 percent since last Friday's settlement, and more than doubled since last winter's low $30s as investors have started to price in expectations for an economic recovery which should boost consumption.
U.S. crude stocks fell by a sharp 4.4 million barrels last week, against expectations for a modest draw of 400,000 barrels, while products inventories also dropped, the Energy Information Administration (EIA) reported.
U.S. light crude for July delivery rose 46 cents to $71.79 a barrel by 0048 GMT (8:48 p.m. EDT on Wednesday), having gained $1.32 on Wednesday to settle at $71.33, a fresh seven-month high after the U.S. inventory data was released.
London Brent crude gained 36 cents to $71.16.
"After the previous week's glitch, the downwards trend in excess inventory seems to have resumed," Barclays Capital said in its weekly oil data review.
"Oil prices continue their march to, and then beyond, $75 per barrel. Our forecast of an average $85 a per barrel for 2010 appears well on track, and we believe further upside price risk exists incoming quarters," the analysts also said.
U.S. gasoline inventories fell 1.6 million barrels last week against forecasts for a 800,000-barrel build as gasoline demand rose by 0.4 percent over the four week period, the start of the U.S. summer driving season, the EIA also said.
Distillate stocks, including diesel and heating oil, fell by 300,000 barrels, versus analysts expectations for a 1.4 million barrel increase.
The EIA report follows data from the American Petroleum Institute released late Tuesday, which showed a 6 million barrel draw in crude oil stocks, a 27,000 barrel rise in gasoline inventories and a 19,000 barrel gain in distillates.
The market will eye monthly reports by the International Energy Agency (IEA), adviser to 28 industrialized nations, which are to be released on Thursday, and by OPEC on Friday, for further optimistic assessments.
The EIA raised its 2009 demand forecast by 10,000 barrels per day in its June outlook on Tuesday, the first time since September that it has increased the demand estimate in its rolling monthly forecast.
Capping gains, the U.S. dollar fell again against a basket of currencies on Thursday, putting downward pressure on dollar-denominated commodities, as an auction of $19 billion in 10-year Treasury notes eased some investor fears about the United States' ability to sell long-term debt to help finance a ballooning budget deficit.
(Editing by Clarence Fernandez)

Source: Reuters

U.S. college grads shun Wall Street for Washington

By Wendell Marsh
WASHINGTON (Reuters) - Wall Street may be losing its luster for new U.S. college graduates who are increasingly looking to the government for jobs that enrich their social conscience, if not their wallet.
In the boom years, New York's financial center lured many of the brightest young stars with the promise of high salaries and bonuses. But the financial crisis has tainted the image of big banks, and with fewer financial jobs available, Uncle Sam may be reaping the benefit.
"Some grads might have seen two of their older siblings go through the dot-com crash and the emptiness of that, and now the Wall Street crash, just chasing after the big bucks," said John Challenger, chief executive of job placement company Challenger, Gray & Christmas.
Some of the appeal of Washington simply reflects the grim reality of graduating in the midst of the worst recession in decades. The U.S. unemployment rate jumped to 9.4 percent in May, which means new graduates are competing with a large pool of older unemployed workers for a limited supply of jobs.
A report from the National Association of Colleges and Employers projected a 21.6 percent decrease in new hires among college graduates. Almost every sector was hit, with banking taking the biggest blow, dropping 70.9 percent.
"Students don't see the private sector as being as viable this year," said Edwin Koc, director of strategic and foundation research for the Pennsylvania-based NACE.
Of the roughly 1.6 million students who recently graduated from college, only 19.7 percent had secured jobs upon graduation in May, according to NACE's 2009 student survey.
But Labor Department data shows employment in the Washington area has increased since early 2008, even as other regions have lost jobs.
"D.C. is the only place where we can point to that is actually adding jobs right now, and we also know that the government is hiring thousands of people to oversee both the (economic) stimulus package and all the associated projects," said Marisa Di Natale, Senior Economist for Moody's Economy.com.
GIVE BACK
Challenger said the excitement surrounding the election of President Barack Obama, who enjoyed huge support on college campuses, was also attracting young graduates to government and government-service contractors.
Britini Wilcher is one of them. Wilcher, a recent graduate from Spelman College in Atlanta, spent two summers as an intern for Merrill Lynch, which was hard hit by the financial crisis and taken over by Bank of America Corp last year.
When it came time to look for full-time employment, Wilcher wanted to do something with a bigger social impact.
The California native will be working in Washington for a government consulting firm where she will specialize in economic development.
"It's becoming trendy to take your community into your hands and give back, which is a good thing," Wilcher said. "People are empowered by the current political climate." Continued...
Source: Reuters

Palm names Rubinstein CEO days after Pre launch

By Alexei Oreskovic
SAN FRANCISCO (Reuters) - Palm Inc named Jon Rubinstein its CEO on Wednesday, hoping the former Apple executive will usher in a new era for a company seeking to revive its fortunes with a fresh smartphone launched last weekend.
Rubinstein, who was brought in as Palm's executive chairman when private equity firm Elevation Partners bought a stake in the company in 2007, played frontman for the new "Pre" phone, popping up at various industry conferences and touring retail outlets.
Rubinstein, 52, takes the helm on Friday, succeeding Ed Colligan, a 16-year Palm veteran who will take some time off and then join Elevation, Palm said in a statement.
Analysts said Rubinstein's own elevation was no surprise.
"Rubinstein has been a product guy, a consumer guy who gets what the product has to be," said Avian Securities analyst Matthew Thornton.
Shares of Palm rose 3.4 percent to $12.40 in after-hours trading, after falling 5.6 percent in Nasdaq trade.
Palm pioneered the market for handheld digital devices in the 1990s, but it has fallen behind competitors like Apple Inc and Research in Motion Ltd in recent years.
Rubinstein joined Palm in October 2007 after Elevation Partners bought a 25 percent stake for $325 million.
Elevation -- based in Menlo Park, California, with investments in Forbes, online real estate information company Move and analytics firm MarketShare Partners -- claims as co-founders well-known tech investor Roger McNamee, former Apple CFO Fred Anderson and pop singer Bono.
News of Rubinstein's appointment came on the heels of Palm's launch on Saturday of its Pre, considered the company's best chance to compete against Apple and its popular iPhone.
Investors have grown accustomed to seeing Rubinstein, often casually dressed, hold forth for Palm at high-profile events.
"This has been their guy," Thornton said. "From an execution standpoint, he's probably the guy they want to lead the next leg of growth.
PIONEER AND LAGGARD
Palm was early to the market for smartphones, which combine a cellphone and a personal digital assistant into one device, with its Treo product. But the company's products have fallen out of favor as RIM's BlackBerry and Apple's iPhone gained share in the smartphone market.
In its fiscal third quarter ended February 28, Palm reported a $95 million net loss after the company's smartphone revenue fell 72 percent year-over-year to $77.5 million. Continued...
Source: Reuters

U.S. moves to clamp on executive pay, names pay czar

By Glenn Somerville and Karey Wutkowski
WASHINGTON (Reuters) - The Obama administration on Wednesday named Kenneth Feinberg, the lawyer who oversaw the government's compensation fund for victims of the September 11, 2001, attacks, as its pay czar to police compensation of top earners at companies receiving "exceptional" government aid.
It also urged new laws to give shareholders more say on how executive salaries are set and put in place rules to govern pay at companies getting taxpayer aid, part of a multi-pronged effort to curb practices it says led to the financial crisis.
The pay packets of top executives, which sometimes are equal to several hundred times the pay of average employees, ignited a storm of controversy after the U.S. Treasury rescued banks and other companies from the brink of collapse by pumping in billions in taxpayer dollars.
Under the new rules, Feinberg would have broad control over pay for top executives of the seven firms deemed to be receiving exceptional assistance -- General Motors, Citigroup, Bank of America, Chrysler, AIG, GMAC and Chrysler Financial.
The rules implement congressional restrictions on bonuses for senior executives and other top earners at companies that receive government bailouts.
At the firms receiving exceptional assistance (each of which has received more than $500 million in aid) Feinberg would be able to reject pay packages for the five most senior executives at each firm. He would also have the power to reject the next 20 most highly paid employees if he finds the compensation excessive.
Many banks have chafed at curbs on pay that accompanied the capital injections they received from the government -- restrictions that 10 top U.S. banks will be free of after winning clearance Tuesday to repay bailout money.
Feinberg's decisions are to be guided by a set of principles that weigh the risks being taken by executives, the potential return for taxpayers, how pay is allocated between salary and other forms of compensation, comparable pay at other firms and whether pay is calculated to improve performance.
Separately, U.S. Treasury Secretary Timothy Geithner urged Congress to give the Securities and Exchange Commission new powers to affect how executive pay scales are set.
Treasury wants Congress to pass legislation to give the SEC authority to oblige all publicly traded companies to give shareholders a non-binding vote on pay packages for top executives. It also wants legal power for the SEC to ensure that internal pay committees, which set pay levels and perks for company leaders, are more independent from management.
LINKING PAY TO PERFORMANCE
Geithner said the administration's intent was not to set pay caps, but to link compensation more closely to a company's long-term financial performance.
"We will continue to work to develop standards that reward innovation and prudent risk-taking, without creating misaligned incentives," he said.
SEC Chairman Mary Schapiro told reporters that her agency was also working on executive compensation rules, but said they would not dictate particular pay levels.
The administration's legislative proposals may get a skeptical response from Congress. Representative Barney Frank, the powerful chairman of the House Financial Services Committee, said the proposal to make compensation committees more independent seems like "a fruitless task." Continued...
Source: Reuters

Palm names Rubinstein as CEO days after Pre launch

By Alexei Oreskovic
SAN FRANCISCO (Reuters) - Palm Inc (PALM.O) named Jon Rubinstein as its CEO on Wednesday, hoping the former Apple executive can usher in a new era for the company seeking to revive its fortunes with a fresh smartphone launched last weekend.
Rubinstein, who was brought in as Palm's executive chairman when Elevation Partners bought a stake in the company in 2007, has appeared to be the frontman for the new Pre phone, appearing at industry conferences and touring retail outlets.
He will become chief executive on June 12, succeeding Ed Colligan, a 16-year Palm veteran who will take some time off and then join Elevation, Palm said in a statement.
"Rubinstein has been a product guy, a consumer guy who gets what the product has to be," said Avian Securities analyst Matthew Thornton, adding that the change in leadership was not a complete shock to investors.
Shares of Palm rose 3.4 percent to $12.40 in after-hours trading, after falling 5.6 percent in Nasdaq trade.
Palm pioneered the market for handheld digital devices in the 1990s, but it has fallen behind competitors like Apple Inc (AAPL.O) and Research in Motion Ltd (RIM.TO) in recent years.
Rubinstein joined Palm in October 2007 after Elevation Partners bought a 25 percent stake for $325 million.
"This has been their guy," said Thornton. "From an execution standpoint, he's probably the guy they want to lead the next leg of growth.
Palm was early to the market for smartphones, which combine a cellphone and a personal digital assistant into one device, with its Treo product. But the company's products have fallen out of favor as RIM's BlackBerry and Apple's iPhone have gained share in the smartphone market.
The news of Rubinstein's appointment came days after Palm released the Pre on Saturday, considered the company's best chance to compete against Apple and its popular iPhone.
Shares of Palm have fallen this week amid concerns that sales of the highly anticipated new phone, which has garnered good reviews, may be hampered by supply constraints. Apple's price cut on its year-old iPhone could also hurt sales, analysts say.
(Reporting by Alexei Oreskovic; Editing by Richard Chang, Gary Hill)

Source: Reuters

Emails show Fed pressed BofA to do Merrill deal

By Kim Dixon
WASHINGTON (Reuters) - Emails from Federal Reserve officials appear to back assertions by Bank of America Chief Executive Kenneth Lewis that he was under pressure, to the point of losing his job, to complete the purchase of Merrill Lynch, despite worries about its financial condition.
Republican lawmakers on Wednesday released excerpts of documents, including an email from Richmond Fed President Jeffrey Lacker that cites Fed Chairman Ben Bernanke on Lewis' intent to exercise a "material adverse change" (MAC) clause to exit the Merrill deal.
"Just had a long talk with Ben ... Says they think the MAC threat is irrelevant because it's not credible. Also intends to make it even more clear that if they play that card and they need assistance, management is gone."
A congressional hearing on Thursday will examine Lewis' assertion that he was pressured by then U.S. Treasury Secretary Henry Paulson and the Fed to complete the deal and keep quiet about Merrill's condition.
Bernanke has said he "absolutely did not" ask Lewis to obscure any information that should have been reported.
A spokeswoman for Paulson has said Paulson told Lewis that both the Treasury and the Fed believed there was no legal basis for Bank of America to terminate the deal.
The U.S. House Oversight and Government Reform Committee hearing will feature Lewis as the sole witness and examine when Bank of America knew Merrill was on its way to a $15.84 billion fourth-quarter loss.
The panel will also examine the government's role in the January 1 purchase, and the $20 billion in additional taxpayer bailout money given to Bank of America that month.
The committee subpoenaed internal Fed documents after the Fed would not make copies of them for lawmakers.
Shareholders of Bank of America and Merrill voted in favor of the companies' merger last December 5. Lewis has said it was only later that month that he learned how fast Merrill was deteriorating, and then threatened to pull out of the merger.
A briefing paper by the committee's Republican staff cites an analysis commissioned for the Fed by investment management firm PIMCO that found "substantial deficiencies in the due diligence" carried out by Bank of America before the merger.
PLACING BLAME
Democrats want to focus on the role of Lewis and whether he notified investors in a timely manner, while Republicans are more focused on whether regulators exceeded their authority, according to lawmakers' aides.
Republicans want Fed and Treasury officials to come before the committee.
"Unfortunately this hearing is an imperfect forum... because not all the key players have been invited," the Republican briefing paper said. It accused Paulson and Bernanke of "putting a gun to the head" of Bank of America's CEO and its board. Continued...
Source: Reuters

Wall Street falls as rate worries dent recovery hopes

By Chuck Mikolajczak
NEW YORK (Reuters) - U.S. stocks fell on Wednesday on worries that rising interest rates could put a damper on consumer and business spending, but stocks pared losses late in the session to finish off the day's lows.
The market had extended losses after a 10-year Treasury note auction sparked a sell-off in bonds, pushing yields briefly above 4 percent for the first time since October. Stocks recovered from the sell-off after the bond market rebounded, with the yield at 3.9455 percent.
Investors are worried that higher yields, which act as a benchmark for many lending rates, could handcuff an economic recovery.
Interest rate-sensitive stocks, such as homebuilders and financials, were among the primary laggards, with the Dow Jones U.S. Home Construction index .DJUSHB off 1.5 percent and the S&P Financial index .GSPF down 1.6 percent.
"Rising interest rates are a headwind for the market," said Todd Salamone, vice president of research at Schaeffer's Investment Research in Cincinnati.
The Dow Jones industrial average .DJI fell 24.04 points, or 0.27 percent, to 8,739.02. The Standard & Poor's 500 Index .SPX slid 3.28 points, or 0.35 percent, to 939.15. The Nasdaq Composite Index .IXIC dropped 7.05 points, or 0.38 percent, to 1,853.08.
In its latest Beige Book survey of the economy, the Federal Reserve said U.S. economic conditions were weak or worsened through May, but some areas of the country saw signs the contraction was moderating.
U.S. crude oil futures rose to their highest level in seven months at over $71 a barrel, lifting energy companies. ExxonMobil (XOM.N) rose 1 percent to $73.84 and was the top boost to the Dow. The PHLX Oil Service Sector index .OSX gained 1.4 percent.
While gains in oil and other commodities had earlier supported stocks globally on hopes economic activity was quickening, U.S. investors worried that higher prices would fuel inflation and dent an economic recovery.
Trading was low on the New York Stock Exchange, with about 1.22 billion shares changing hands, below last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.35 billion shares traded, above last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by 1635 to 1376 while decliners beat advancers on the Nasdaq by about 1624 to 1038.
(Additional reporting by Ellis Mnyandu; Editing by Leslie Adler)

Source: Reuters

U.S. names 9/11's Feinberg "pay czar" of bailout companies

By Glenn Somerville and Karey Wutkowski
WASHINGTON (Reuters) - The Obama administration on Wednesday named Kenneth Feinberg, the lawyer who oversaw the government's compensation fund for victims of the September 11, 2001, attacks, as its pay czar to police compensation of top earners at companies receiving "exceptional" government aid.
The administration also urged new laws to give ordinary shareholders more say on how executive salaries are set.
The pay packets of top executives, which sometimes are equal to several hundred times the pay of average employees, ignited a storm of controversy after the U.S. Treasury rescued banks and other companies from the brink of collapse by pumping in billions in taxpayer dollars.
Many banks have chafed at restrictions on pay that accompanied the capital injections -- restrictions that 10 top U.S. banks will be free of after winning clearance on Tuesday to repay their bailout money.
Feinberg was named "special master" with authority to review, and potentially reject, compensation packages for executives at firms receiving taxpayer help.
He will review compensation structures for the top 100 salaried employees of firms receiving exceptional assistance, such as Bank of America, Citigroup and insurer AIG.
In addition, Treasury Secretary Timothy Geithner urged Congress to give the Securities and Exchange Commission new powers over executive pay.
Treasury wants Congress to pass legislation to give the SEC authority to oblige companies to give shareholders a non-binding vote on pay packages for top executives. It also wants legal power for the SEC to ensure that internal pay committees, which set pay levels and perks company leaders, are more independent from management.
LINKING PAY TO PERFORMANCE
President Barack Obama has argued that pay structures at financial firms encouraged excessive risk-taking, sowing the seeds of the financial crisis that has driven the United States and many other countries around the globe into recession.
Geithner said the administration's intent was not to set pay caps, but to link compensation more closely to a company's financial performance and to sound long-term direction of companies.
"We will continue to work to develop standards that reward innovation and prudent risk-taking, without creating misaligned incentives," Geithner said.
He added that pay rules for firms that getting federal bailout money were coming "relatively soon."
SEC Chairwoman Mary Schapiro told reporters that her agency's rules on compensation were "very much in flux still" but said they would not dictate particular compensation levels for corporate executives.
Geithner had met with Schapiro, Federal Reserve Governor Daniel Tarullo, Feinberg and pay experts at Treasury before speaking briefly to reporters. Continued...
Source: Reuters

Mounting deficits spark jitters about U.S. economy

By Mark Felsenthal
WASHINGTON (Reuters) - Gaping U.S. trade and budget deficits and a weak auction of government debt that pushed interest rates higher pointed to a bumpy road to recovery for the world's largest economy on Wednesday.
A Federal Reserve report noting businesses see some signs of moderation in the contraction, even though conditions were weak or deteriorated further in May, failed to ease anxiety about the economy.
Instead, financial markets found new reasons to worry that massive government spending and Fed cash infusions will lead to dangerous inflation and undercut any fledgling rebound.
A government bond auction pushed yields on the benchmark 10-year Treasury note above 4.0 percent for the first time in eight months, suggesting investors want the government to pay a premium to finance its huge deficit.
U.S. stocks ended little changed though, with the three month rally stalling on worry that rising interest rates could dampen consumer and business spending.
"The risk of rising yields should not be discounted," said Joseph Brusuelas of Moody's Economy.com. "If continued, they will reduce home mortgage refinancing and curtail corporate borrowing, both critical to an economic recovery."
Federal Reserve and U.S. Treasury Department officials have cited recent economic data and relative calm in financial markets as hopeful signs that a deep recession begun in December 2007 may be approaching its bottom.
But a sharp upswing in longer-term Treasury bond yields in recent weeks, spurred by worries over the burgeoning government budget deficit, threatens to derail any renewal of consumer spending or home buying.
The rise in bond yields has come despite the Fed's pledge to buy $300 billion in long-term Treasury securities to lower borrowing costs and stimulate economic activity.
BUDGET, TRADE GAPS WIDEN
The federal budget deficit logged a bigger-than-expected $189.7 billion in May, the U.S. Treasury reported on Wednesday. The nation's trade gap also widened to $29.2 billion in April, another report showed.
The White House last month forecast the fiscal deficit for 2009 will total $1.84 trillion, more than four times the record deficit of $455 billion in 2008.
Global worries about the sustainability of those deficits were emphasized by an announcement from Russia's central bank that it would cut the share of U.S. Treasuries in its $400 billion reserves.
Higher long-term bond yields have already driven up home mortgage interest rates and shriveled the number of home loan applications. The average 30-year fixed-rate mortgage jumped to 5.57 percent last week, well above the record low of 4.61 percent set in March.
An index of mortgage applications by the Mortgage Bankers Association registered a 7.2 percent drop to a four-month low. Continued...
Source: Reuters

Fiat closes Chrysler deal; new management team named

Business Update: The new Chrysler
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By Gilles Castonguay and Poornima Gupta
MILAN/DETROIT (Reuters) - Italian carmaker Fiat SpA closed its takeover of Chrysler on Wednesday, sealing the deal on Fiat's ambitious move to create a growing global player following one of the worst crises in the auto industry's history.
In a victory for the U.S. administration driving the restructuring of bankrupt Chrysler, the Supreme Court on Tuesday denied a request from Indiana pension funds to delay the sale.
Fiat Chief Executive Sergio Marchionne will become CEO of Chrysler. The automaker's former CEO, Bob Nardelli, will leave the company and return to Cerberus Capital, its former majority owner.
Chrysler's former vice chairman and president, Jim Press, will become Marchionne's deputy chief executive, and Fiat's chief financial officer, Richard Palmer, will become CFO of the new company.
In a memo to employees, Marchionne voiced optimism about the new company's outlook.
"There is no doubt in my mind that we will get the job done," he said. He called the alliance a "bold first step to implement" lessons learned.
He added that Fiat will begin the process of transferring Fiat's technology, platforms and powertrains to Chrysler plants in the next few months.
Fiat is joined by a union-aligned trust and the U.S. and Canadian governments in taking over the best parts of Chrysler.
Fiat shares were up 4.85 percent at 7.79 euros following news that the U.S. Supreme Court had removed the final obstacle to the deal on Tuesday.
DROP IN SALES
Fiat began looking for partners to gain scale late last year when the auto crisis intensified, leading to a dramatic drop in car sales.
CSM Worldwide, an industry consultancy, has forecast a 20 percent drop in global production to 52 million vehicles this year as carmakers lay off workers and leave their factories idle in the face of a sharp drop in demand.
Others in the industry do not feel the urgency to look for partners. Renault-Nissan Chief Executive Carlos Ghosn, for example, said on Wednesday his group had no problem with scale.
In Fiat's case, CSM Worldwide said it saw a "tremendous amount of risk" in trying to revive Chrysler.
Not only did it have to renew an aging product line but also persuade former customers to buy a Chrysler again. Continued...
Source: Reuters

Geithner says shareholders need say in executive pay

By Glenn Somerville and Karey Wutkowski
WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Wednesday the Obama administration wants Congress to pass new laws giving securities regulators power to force companies to let shareholders have more say in setting executive pay levels.
The administration also was expected to name a "pay czar" who would have authority to reject compensation plans for top employees at companies getting "exceptional" government aid, a administration official said.
Pay packets for executives that sometimes are several hundred times what average employees earn have angered the public since the U.S. Treasury began pumping hundreds of billions of taxpayers' dollars into banks to keep them afloat.
Geithner said Treasury wants Congress to pass two specific pieces of legislation. One would give the SEC authority to oblige companies to give shareholders a non-binding vote on pay packages for top executives.
The other legislative proposal that he said Treasury will offer is to give the SEC power to ensure that internal pay committees, which set pay levels and perks company leaders, are more independent from management.
WAITING FOR CZAR
Geithner met SEC Chairwoman Mary Schapiro, Federal Reserve Governor Daniel Tarullo and pay experts at Treasury before speaking briefly to reporters. At Schapiro's side sat Kenneth Feinberg, who sources had indicated will be named pay czar.
The pay czar, or "special master," will review compensation structures for the top 100 salaried employees of firms receiving exceptional assistance, such as Bank of America, Citigroup and insurer AIG, the official said.
Feinberg, a respected Washington lawyer, oversaw the government's compensation to the survivors of the September 11, 2001, terror attacks.
Geithner has said previously that Wall Street compensation practices became "divorced from reality" in the period before a severe financial crisis set in that helped drive the U.S. and much of the global economy into a recession that continues today.
The U.S. Treasury chief said the administration's intent was not to set pay caps, but to link compensation more closely to a company's financial performance and to sound long-term direction of companies. "We will continue to work to develop standards that reward innovation and prudent risk-taking, without creating misaligned incentives," Geithner said.
He added that pay rules for firms that getting federal bailout money were coming "relatively soon."
RULES IN FLUX
Schapiro told reporters that her agency's rules on compensation were "very much in flux still" but said they would not dictate particular compensation levels for corporate executives.
President Barack Obama has argued that pay structures at financial firms encouraged excessive risk-taking, sowing the seeds of a financial crisis that drove the United States and many other countries around the globe into recession. Continued...
Source: Reuters

U.S. sweetens 10-year note sale to draw wary buyers

By Richard Leong
NEW YORK (Reuters) - Investors sent a clear signal to the U.S. government on Wednesday. Pay up.
The U.S. Treasury was forced to sweeten its $19 billion sale of 10-year notes to attract investors who have grown wary of its burgeoning debt load. These notes originally sold in May cleared at 3.99 percent, the highest since August 2008.
This is the first auction of long-dated federal debt since questions over the U.S. government's credit-worthiness arose in the wake of a credit outlook downgrade of Britain by Standard & Poor's last month.
The United States and Britain are conducting similar policies to revive growth, but their tactic of borrowing heavily to finance massive stimulus and financial bailouts have raised doubts about their ability to repay their debt.
"The auction was weak...There's some negative psychology," said John Spinello, chief fixed-income technical strategist with Jefferies & Co. in New York.
The auction's "tail," or higher-than-expected yield the Treasury paid, deepened Wednesday's sell-off in the Treasuries market. Ten-year yield briefly touched 4 percent, a key trading support and a level not seen since October.
The rise in Treasury yields since May has rippled across other markets and increased mortgage rates and other consumer borrowing costs. This has also fanned worries an emerging economic recovery might stall, putting more pressure on the Federal Reserve and Obama Administration to do more to end the worst recession in decades.
DEMAND SPIKES WITH YIELD
Investors extracted 0.80 percentage point more in yield at this 10-year reopening than when the note was sold originally at the record quarterly refunding a month ago.
The added yield incentive pulled reluctant participants from the sidelines, resulting in the strongest bid 10-year auction since September 2007.
The bid-to-cover ratio, or amount of total bids to amount offered, came in at 2.62, while the share of indirect bids, which include those from foreign central banks and institutional investors, reached 34.2 percent, the highest for at a 10-year reopening in five years.
To be sure, that 10-year reopening in June 2004 was much smaller at $10 billion.
Disappointment over the 10-year sale cast a shadow over the Thursday's $11 billion reopening of a prior 30-year issue and subsequent Treasury offerings, analysts said.
"One of the probable consequences is that auctions in general are going to be sloppier than what historical norms suggest that will be, and to what we have become accustomed," said Ward McCarthy, managing director at Stone & McCarthy Research Associates wrote in a research note.
(Additional reporting by Ellen Freilich)

Source: Reuters

Oil hits 7-month peak as U.S. stockpiles wither

By Richard Valdmanis
NEW YORK (Reuters) - Oil prices surged to a seven-month high near $72 a barrel on Wednesday after a U.S. government report showed a slowdown in crude imports eating away at inventories in the world's top energy user.
U.S. crude for July delivery rose $1.32 to settle at $71.33 a barrel after hitting a peak of $71.79 earlier in the session -- the highest since October 22. London Brent rose $1.58 to $70.80 a barrel.
The gains came after the U.S. Energy Information Administration reported nationwide stockpiles fell by a larger-than-expected 4.4 million barrels last week as imports dropped by 676,000 barrels per day.
"The number that kind of stands out right away is the drop in crude oil imports," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. "If imports are going to drop, we're going to see some of the stockpiles erased."
The report also showed a decline in gasoline inventories as refiners slowed production and demand notched higher.
U.S. oil imports have been running below normal in recent weeks, reducing swollen storage levels and reinforcing the perception that OPEC production cuts are starting to make their mark on consumer nation supplies.
The cartel agreed to cut some 4.2 million barrels per day of output since last autumn in an effort to counter slumping world oil prices and shrinking demand triggered by the economic recession.
"Markets are pricing in the fact that high levels of global inventories are going to fall pretty fast in the third and fourth quarter if OPEC can maintain their current output levels," said Andrey Kryuchenkov, energy analyst at VTB Capital in London.
Kuwait's oil minister said Wednesday the group -- responsible for more than a third of the world's crude output -- could raise production if prices rose toward $100.
Wednesday's gains were capped by a rebound in the dollar against the euro -- which tends to put downward pressure on dollar-denominated commodities -- and losses in equities markets.
Oil prices had risen in the previous session, lifted by a separate report from the EIA in which the top government energy forecaster revised its global oil demand outlook higher for the first time since September.
Oil has more than doubled from the low $30s level hit this winter as investors have started to price in expectations for an economic recovery which should boost consumption.
(Additional reporting by David Sheppard in London, Maryelle Demongeot and Felicia Loo in Singapore and Rebekah Kebede in New York; Editing by Christian Wiessner)

Source: Reuters

Home Depot says worst of housing crisis over

By Dhanya Skariachan
NEW YORK (Reuters) - Home Depot Inc raised its 2009 profit forecast as the biggest home-improvement chain said Wednesday it sees better margins this year through improved efficiencies.
After seeing its sales hit by the housing market slump and resulting recession, Home Depot said economic indicators signal the worst of the U.S. housing correction has passed.
Home Depot, which has been upgrading service and products in its stores to win back market share from rival Lowe's Cos Inc, said earnings could be flat this year, rather than falling as it previously forecast.
Shares of Home Deport were up 9 cents to $24.44 in afternoon trading, paring gains of as much as 77 cents, or 3.2 percent, earlier on Wednesday.
The company's year-to-date performance in 2009 was ahead of plan, Home Depot Chief Financial Officer Carol Tome told a meeting with analysts which was also webcast.
The company said it plans to step up efforts to improve its distribution network by introducing more "rapid deployment centers" and more marketing campaigns targeting Hispanic communities.
Home Depot said its supply chain was not the best and had more room for improvement.
"We are playing a bit of catch-up," a company executive told the analyst meeting.
From appointing more bilingual staff to making items easier to locate in aisles, Home Depot plans a renewed focus on customer service at its stores.
Home Depot said its strategic initiatives and a revival of the home improvement market will allow it to achieve an operating margin of about 10 percent and a return on invested capital of about 15 percent.
Earlier this year, Home Depot announced plans to freeze officers' salaries and close certain specialty outlets to save money.
The Atlanta-based company, which shed about 7,000 jobs earlier this year, cut operating expenses 16.4 percent in the first quarter, which ended on May 3.
Credit Suisse analyst Gary Balter said Home Depot's message was that it would achieve better operating margins at similar productivity levels through better expense management and vendor relationships.
Home Depot could also benefit from pricing power and much better inventory and markdown management, Balter said in a note. He backed his "outperform" rating on the stock.
Home Depot expects earnings per share from continuing operations to be flat to down 7 percent this year, compared with its previous forecast of a 7 percent decline. Continued...
Source: Reuters