Asia shares struggle as data shows going tough

(STOCK, AFTER, EXPECTED, INDEX, QUARTER, PERCENT)

By Charlotte Cooper
TOKYO (Reuters) - Asian stock markets struggled to gain ground on Wednesday as economic data showed the process of turnaround to recovery was likely to be a slow grind, and the dollar capitalized on that more cautious sentiment.
Oil held above $70 a barrel after industry inventory data showed a bigger-than-expected fall in crude stocks, which helped pare some of the previous day`s losses after data unsettled investors about a potential U.S. economic rebound.
In Japan, business confidence pulled back from a record low hit three months ago, but the improvement was smaller than market players had expected and still a negative reading.
That followed an unexpectedly steep slide in U.S. consumer confidence in June, which dented optimism on Wall Street about prospects for recovery and weighed on shares in Asia.
Australia`s benchmark index .AXJO got the new quarter off to a weak start, falling 2 percent as growth-sensitive stocks such as shopping mall owner Westfield Group (WDC.AX) lost ground.
The broader MSCI index of Asia-Pacific shares excluding Japan .MIAPJ0000PUS eased 0.4 percent, holding below June`s 2009 peak, while Tokyo`s Nikkei share average .N225 was flat, with Orix Corp (8591.T) and All Nippon Airways (9202.T) sliding on news of possible public share offerings. .T
Japanese construction machinery makers such as Komatsu (6301.T) edged higher on news that China`s official purchasing manager index (PMI) gained.
But analysts noted big Japanese firms in the Bank of Japan`s tankan survey planned to cut capital spending, a key driver of the economy, by 9.4 percent in the year to next March, more than the market expected.
"Basically, the tankan showed that things aren`t all that good in the near term but seemed encouraging for the longer term, making its overall impact neutral," said Kenichi Hirano, operating officer at Tachibana Securities.
"I`d have liked to see slightly better capital spending, but given the current situation it`s only natural that it should fall -- after all, with production down, the last thing manufacturers can do right now is spend."
In Seoul, shares rose 0.8 percent helped by a slower than expected fall in South Korean exports, while component-maker LG Innotek (011070.KS) rallied on the first day of trading after it completed a merger with LG Micron Ltd.
The U.S. Conference Board`s index of consumer attitudes fell in June to 49.3 from a downwardly revised 54.8 in May, deflating stocks on the last day of the quarter.
The Dow Jones industrial average .DJI slipped 0.97 percent, the Standard & Poor`s 500 Index .SPX dropped 0.85 percent and the Nasdaq .IXIC eased 0.49 percent.
Nevertheless, Wall Street still closed out its best quarter in a decade, with the S&P 500 jumping 15.2 percent in the three months to end-June, the blue-chip Dow advancing 11 percent and the Nasdaq climbing by more than a fifth. .N
JOBS DATA IN FOCUS  Continued...
Original article

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Iraq launches historic oil and gas auction

(AUCTION, FIRMS, LARGEST, CONTRACTS, DEALS, WHICH)

By Missy Ryan
BAGHDAD (Reuters) - Iraq will auction off eight giant oil and gas fields on Tuesday in its first major tender since 2003, giving oil firms a foothold in a country that may hold some of the world`s largest untapped energy reserves.
Private jets flew representatives from leading global firms like Exxon Mobil (XOM.N) and Total (TOTF.PA) into Baghdad, a city still ringed by blast walls and gripped by violence, to place their bids for the 20-year development contracts.
The companies are wading into a morass of controversy surrounding the deals, which some Iraqi lawmakers condemn as illegal and which even some within the state-run oil industry have criticized for selling Iraq`s vast oil wealth short.
Over six years after Saddam Hussein`s ouster was supposed to unleash Iraq`s oil potential, the auction marks the first real center-stage moment for the Oil Ministry, under growing pressure to boost disappointing output around 2.4 million barrels a day.
Iraq has proven oil reserves of 115 billion barrels, the world`s third largest, but the true amount of black gold sitting beneath Iraq`s desolate deserts could be far greater.
The auction, delayed by a day by a sandstorm, will be broadcast live from a hotel in Baghdad`s fortified Green Zone in a process Iraqi oil officials insist will be fully transparent.
Firms from the countries that launched the 2003 invasion, which triggered years of chaos and bloodshed, will be neither favored nor disadvantaged, they say.
Six of Iraq`s largest oilfields, which are already producing, and two natural gas fields, which have barely been tapped, will be auctioned off one at a time over the course of the day, and the auction may stretch into Wednesday if necessary.
For oil firms, the allure may be more about getting a foothold in Iraq`s oil sector than about the amount of money they expect to make in these deals, which are fixed-fee service contracts rather than the production-sharing deals they prefer.
Winning firms must pay Iraq $2.6 billion in signature bonuses and cover Iraq`s 25-percent share of development costs, which it will pay back in oil.
It will take a great deal of money to reverse the decades of war, sanctions and neglect that have left Iraq`s oil sector rusting, out-of-date, and unable to leverage enviable resources.
Oil Minister Hussain al-Shahristani, a nuclear scientist, says the deals will bring Iraq $1.7 trillion over 20 years. He defended the contracts when he was summoned to parliament last week by skeptical lawmakers who insist the deals will be illegitimate unless they are sent to parliament for approval.
The contracts also came in for condemnation from minority Kurds, who have signed their own deals with foreign firms and who are warning they could make it difficult for companies to work around the disputed, oil-producing city of Kirkuk.
Parliament`s failure to pass new energy legislation due to disagreement between Kurds and Arabs, raises more questions for firms coming into Iraq, as do national elections scheduled for January that could bring upheaval to a fledgling democracy.
But oil majors appear willing to confront the risks, and ongoing violence, for a chance to work in a place with such large untapped reserves.  Continued...
Original article

General Motors to seek approval to sell itself

(BANKRUPTCY, COURT, COMPANY, WOULD, PERCENT, CHRYSLER)

By Emily Chasan
NEW YORK (Reuters) - General Motors Corp is heading to bankruptcy court on Tuesday to seek approval to sell its assets to a "New GM" in a plan to reinvigorate the automaker under U.S. government ownership.
GM is seeking approval for the sale from U.S. bankruptcy Judge Robert Gerber just 30 days after filing for Chapter 11. Under the deal, brokered by the Obama administration`s autos task force, the company would sell its assets under Section 363 of the bankruptcy code to a "New GM" and continue to operate its best assets, like Chevrolet and Cadillac, while gaining access to billions in funding from the U.S. Treasury.
GM`s old assets would remain behind in bankruptcy court to be liquidated.
The deal faces several objections from bondholders and those concerned about the fate of its dealers, but no competing bidders have emerged as an alternative to the U.S. government`s $60 billion financing for GM, including a proposed equity investment of $50 billion that would give the U.S. Treasury a 60 percent ownership stake.
If the sale goes through it would mark the second big win this month for the Obama administration`s autos task force, which successfully brokered the sale of Chrysler LLC to a group led by Italy`s Fiat SpA. The U.S. Supreme Court cleared the way for that deal to go through on June 9.
"I think it is going even perhaps more smoothly than Chrysler, which is kind of interesting considering how much bigger GM is than Chrysler," said Stephen Lubben, a bankruptcy professor at Seton Hall Law School in New Jersey.
"Chrysler cleared the path for it and they`re using pretty much the same strategy," he added.
GM said in court documents that the sale would avoid a "systemic failure" for the U.S. auto industry and that it is the only way to provide "a genuine opportunity for the business to survive and thrive in an economically viable entity."
The company has shut 13 of its U.S. assembly plants for up to 11 weeks as part of a bid to cut production and run down inventory while it seeks approval of the sale in bankruptcy court.
The company plans to shed dealer contracts and has deals to sell brands like Hummer and Saturn that will not be carried over to the new company. It also plans to shed the Pontiac brand and GM said on Monday that it would cut operational ties with a Northern California auto plant it had operated in a joint venture with Toyota Motor Corp.
UPHILL BATTLE FOR CHALLENGERS
While dozens of objections have been filed in the bankruptcy case, some have already been resolved or withdrawn, and challengers to the deal could face an uphill battle since the same court has already approved the Chrysler sale.
"I think Judge Gonzalez kind of made life easier for Judge Gerber here," Lubben said, citing the New York bankruptcy judge who approved Chrysler`s sale and the several higher courts that backed his decision.
"People basically know the Second Circuit has already largely blessed this structure," he added.
GM has said more than 50 percent of its bondholders support the deal and also argued that the sale would maximize recovery for its stakeholders. Under the plan, the U.S. government would take a 60 percent stake in the newly formed company, the United Auto Workers union would have a 17.5 percent stake, the Canadian government would own about 12 percent, and GM bondholders are expected to get about 10 percent.  Continued...
Original article

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Gazprom to buy 0.5 bcm of Azerbaijani gas annually from 2010

(AZERBAIJANI, GAZPROM, AZERBAIJAN, RUSSIAN, VOLUME, BILLION, SUPPLIES)

BAKU, June 29 (RIA Novosti) - Gazprom will buy 500 million cubic meters of natural gas from Azerbaijan annually from January 1, 2010, CEO Alexei Miller said on Monday.
The Russian energy giant, which has not so far bought Azerbaijani gas, signed an agreement with the State Oil Company of Azerbaijan Republic (SOCAR) earlier in the day.
"Gazprom will buy Azerbaijani gas from January 1, 2010. Initially we will buy 500 million cubic meters of Azerbaijani gas," Miller said, without disclosing either the price or the pricing formula.
"The agreement signed today fixes a basic price that is commercially attractive to our Azerbaijani partners," the Russian businessman said.
The agreed volume of deliveries from SOCAR is less than one tenth of one percent of the 549.7 billion cubic meters of gas Gazprom itself produced last year.
Azerbaijan plans eventually to increase gas supplies to Russia, Azerbaijani President Ilham Aliyev said.
"We plan in the future to increase supplies as the volume of Azerbaijani natural gas production goes up," Aliyev said on Monday after talks with Russian President Dmitry Medvedev in Baku.
According to the Gazprom CEO, Azerbaijani gas to be pumped via a pipeline running between the two countries will be used in south Russian territories. He also pledged that similar volumes of gas would be reserved for European consumers.
Miller added that Gazprom was listed as a potential buyer of gas from the Shakh Deniz field with some privileges reserved for the company.
"We are confident that Gazprom has very good negotiating positions regarding long-term cooperation in the purchase of Azerbaijani gas," he said.
Speaking in early June at an oil conference in Azerbaijan`s capital, Baku, U.S. Deputy Assistant Secretary of State for European Affairs Matthew Bryza said that in 2012-2015 Azerbaijan would supply Europe with 12 billion cu m of gas from its Shakh Deniz field alone, raising supplies to 15 billion by 2015, and increasing them further by 2015-2020.
 
Original article

Anglo may look for Brazil partner, not defense move

(ANGLO, PROJECT, WOULD, ABOUT, BILLION, MINAS-RIO, PARTNER)

By Eric Onstad and Quentin Webb
LONDON (Reuters) - Miner Anglo American (AAL.L) is considering finding a partner for its huge iron ore project in Brazil, including from China, but the move is not a defense against an unwanted merger approach from rival Xstrata (XTA.L), sources familiar with the situation said on Monday.
Weekend newspaper reports said Anglo, which last week rebuffed a "merger-of-equals" proposal from Anglo-Swiss Xstrata, was plotting a defense strategy by seeking to sell part of its Minas-Rio project.
"Anglo believes it would be a logical step to secure a co-investor for a project of this size," a source close to Anglo told Reuters. "Anglo may have been pursuing this for some time."
Anglo said it declined to comment on media speculation.
No names were mentioned as possible partners, but the source said steel companies, Chinese investors and sovereign wealth funds were all possibilities.
Another source familiar with the situation said no detailed discussions were currently ongoing regarding a possible partner.
Both sources declined to be named.
Anglo concluded a deal last year to pay $5.5 billion for Minas-Rio and 69 percent of Amapa, another Brazilian iron ore project.
Minas-Rio will cost around $3.5 billion to build, but Anglo has previously said that financing was not a problem since it has about $9 billion in cash and loan facilities.
WARY ABOUT CHINALCO?
Newspaper reports citied various possible partners, including China`s Chinalco, Japanese trading house Sojitz (2768.T), Gulf Industrial Investment Company, a Bahrain iron oxide pellet producer, and Dubai Natural Resources World, owned by the Emirate of Dubai.
Analyst Michael Rawlinson at Liberum Capital said Anglo would be wary about a link-up with Chinalco after Rio Tinto canceled a $19.5 billion deal with the firm.
"We would expect the board to be cautious on a tie-up at group level with Chinalco given what happened at Rio. We are skeptical on a tie-up with Dubai at MMX since this would not address the project`s logistical complexities," he said in a note.
Rawlinson said Anglo was reportedly holding talks with Brazil`s Vale (VALE5.SA)(VALE.N), the world`s biggest iron ore producer, about assisting on logistical aspects of the project.
Anglo plans to launch the first phase of production at Minas-Rio, which is a high-quality iron ore deposit with an average of 68 percent iron content, in the second quarter of 2012.  Continued...
Original article

Oil rises over $69 after Nigerian attack report

(CRUDE, US, PERCENT, MONDAY, BARREL, PRESIDENT, DEMAND)

LONDON (Reuters) - Oil rose above $69 a barrel on Monday after Nigeria`s main militant group said it attacked an oil platform belonging to Royal Dutch Shell (RDSa.L) despite an amnesty offer from President Umaru Yar`Adua.
The Movement for the Emancipation of the Niger Delta (MEND) said in an emailed statement it had struck the Shell Forcados platform in the Delta state. There was no immediate independent confirmation.
The report followed an announcement on Friday by four Nigeria militant factions to accept in principle an amnesty offer from the country`s president, raising hopes Africa`s top oil producer would halt a battle with rebels.
U.S. crude for August delivery was up 10 cents at $69.26 a barrel by 0750 GMT (3:50 a.m. EDT). The contract fell $1.07 to settle at $69.16 a barrel on Friday.
London Brent crude was up 12 cents at $69.04.
Pipeline bombings, attacks on oil and gas installations and kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two-thirds of its installed oil output capacity of 3 million barrels per day.
DEMAND WEAK, STOCKS HIGH
Algerian Energy and Mines Minister Chakib Khelil said on Monday oil demand was still weak due to the weakness of the U.S. and European economies and world oil stocks remained high.
Khelil told reporters ahead of a meeting of gas producers an increase in OPEC oil production was hard to envisage, despite rising crude prices.
Asian stock markets slipped on Monday with Japan`s Nikkei average down 1 percent but European equities inched higher in early trade after slipping in the previous two sessions, with firmer pharmaceutical and mining stocks outpacing weaker financial shares. .T .EU
U.S. consumer confidence data on Tuesday leads a heavy calendar of economic data this week, including China`s Purchasing Managers Index on Wednesday and a U.S. jobs report and manufacturing data on Thursday.
The U.S. data will help determine whether an oil market rally, which has lifted prices more than 50 percent this year on hopes of economic recovery, has any legs.
In the first big number for the week, industrial output from the world`s No. 3 energy consumer Japan jumped 5.9 percent in May, the third straight month of increase after a big slump, although doubts remained whether it can sustain the momentum without a clear rebound in the United States and other key export markets.
Japanese oil demand has been hit by the economic slump over the last year. On Monday, Idemitsu Kosan Co (5019.T), Japan`s third-largest refiner, said it planned to refine 2.1 million kilolitres of crude oil in July, down 26 percent from a year earlier.
A top White House adviser said on Sunday President Barack Obama could discuss a second stimulus package to boost the economy if needed, but at the moment no more new money looked necessary.
Crude oil speculators on the New York Mercantile Exchange hiked their net long positions in the week to June 23, according to data from the Commodity Futures Trading Commission released on Friday.
(Reporting by Christopher Johnson in London and Fayen Wong in Perth; editing by Keiron Henderson)
Original article

Asia stocks mixed, dollar regains footing

(PERCENT, DOLLAR, AFTER, SHARES, CURRENCY, CENTRAL, JAPAN)

By Eric Burroughs
HONG KONG (Reuters) - Asian stock markets were mixed on Monday as many investors stuck to the sidelines as the second quarter winds down, while the dollar recovered from a slide on worries about the push by major emerging countries for a reserve currency alternative.
A drop in oil prices pulled down energy-related shares, with Japan`s Nippon Oil (5001.T) losing nearly 2 percent. Crude oil lost 51 cents a barrel to $68.65 on easing tensions in major exporter Nigeria.
Asian shares outside Japan have surged 32 percent in the second quarter, which would be the best quarterly gain in 16 years, as investors embraced the region on hopes it would emerge more quickly from the deepest global recession in decades.
World stocks have mostly shuffled sideways in the past few weeks as investors have questioned how quickly the global economy will return to growth, giving a boost to battered government bonds.
Asian manufacturers had cranked up production to increase inventories after having slashed them too sharply at the end of last year, but doubts remain about whether consumer and business demand will improve enough to make growth sustainable.
Japanese economic figures highlighted this trend. Industrial output jumped a hefty 5.9 percent in May for a third straight month of growth, but forecasts showed that factories expected the recovery to taper off in coming months.
"It is a sign of the unusual nature of the current cycle that the strongest rise in output on record can still be viewed as a moderate disappointment," said Richard Jerram, chief Japan economist at Macquarie Securities in Tokyo.
The MSCI index of Asia-Pacific shares outside Japan slipped 0.3 percent in light trade after having posted a 2.3 percent rise last week. The drop tracked a 0.2 percent dip in the U.S. S&P 500 .SPX on Friday.
The MSCI benchmark for Asia is up about 31 percent so far this year, outpacing the 7.4 percent increase in world stocks and the 1.7 percent rise in the S&P 500.
Japan`s Nikkei average .N225 edged up 0.4 percent, with shares of Nippon Electric Glass (5214.T) climbing 1 percent after the maker of LCD glass lifted its estimated earnings for the April-June quarter to double the top of its previous forecast range.
The dollar inched higher after being hit on Friday when China`s central bank renewed calls for a super-sovereign currency to reduce the U.S. dollar`s global domination, saying it was a serious defect in the international system for one currency to tower over all others.
On the sidelines of a meeting of central bankers over the weekend, China and Brazil said they were discussing a currency arrangement to allow exports and importers to settle deals in local currencies, thereby avoiding the dollar.
The dollar index, a gauge of its performance against six major currencies, rose 0.3 percent to 80.151 .DXY, near a two-week low struck on Friday. The euro retreated 0.3 percent to $1.4025, while the dollar was up 0.2 percent at 95.50 yen.
Government bonds pushed higher, helped in part by the rally in U.S. Treasuries last week after a record $104 billion of debt was sold without causing trouble for dealers.
Foreign central banks were believed to have been hefty buyers at each of the three auctions via indirect bids.  Continued...
Original article

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Nigerian rebels say hit Shell site despite amnesty

By Nick Tattersall
LAGOS (Reuters) - Nigeria`s main militant group said it had blown up a well-head in a Royal Dutch Shell oil field in Delta state late Thursday, hours after President Umaru Yar`Adua announced an amnesty offer for gunmen.
The Movement for the Emancipation of the Niger Delta (MEND) accused the military of going on a "punitive expedition" to hunt down suspected militants in the Agbeti community of Delta state after Yar`Adua`s amnesty proclamation.
"In response ... (operation) Piper Alpha continued its rampage on the Nigerian oil industry by blowing up the second remaining well-head of the Shell Afremo offshore oil fields in Delta state," MEND said in a statement e-mailed to media.
The military denied carrying out any such campaign.
"Our troops did not carry out any operation in Agbeti. This is a lie, propaganda by these miscreants to justify their attacks on isolated oil facilities," said Colonel Rabe Abubakar, spokesman for the joint military taskforce in the Niger Delta.
Afremo was one of the sites MEND also claimed to have attacked in a triple raid Sunday. It described the field as being 14 miles from an export terminal through which crude oil from Shell`s Forcados fields is pumped.
A senior industry source said at the time the location was not a deepwater installation, but a facility located in or close to the mangrove creeks, where pipelines and equipment run across broad stretches of water.
Shell has said it is checking its operations for damage from Sunday`s attacks.
BILLIONS IN LOST REVENUE
Yar`Adua Thursday offered the amnesty to gunmen who laid down their weapons during a 60-day period ending on October 4, in a bid to end years of unrest which have cost Africa`s top oil exporter billions of dollars in lost revenue.
Pipeline bombings, attacks on oil and gas installations and the kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two thirds of its installed capacity of 3 million barrels per day of oil.
The supply disruption has at times helped push world energy prices higher and cost Africa`s most populous nation, which relies on crude oil for 90 percent of its foreign earnings, tens of millions of dollars a day.
MEND`s latest campaign of sabotage, which began just over a month ago and which it has dubbed "Hurricane Piper Alpha," has already forced at least 133,000 barrels per day (bpd) of production to be shut down.
It has again had an impact on global energy prices, helping push oil toward $71 a barrel Friday.
One faction leader, Ateke Tom, has indicated he would consider taking part in an amnesty while a lawyer for Henry Okah, the suspected leader of MEND who is on trial for treason, has said he hoped his client would be covered by the proposal.  Continued...
Original article

GM says bankruptcy sale delay would kill suppliers

DETROIT (Reuters) - General Motors Corp needs to exit from bankruptcy quickly in order to avoid a "fatal" blow to many of its suppliers and the loss of thousands of jobs, Chief Executive Fritz Henderson said in a court filing on Thursday.
"Many of GM`s suppliers are already in the midst of a severe liquidity crisis, which has only been exacerbated by the current shutdown of certain GM production facilities," Henderson said.
GM has shut 13 of its U.S. assembly plants for up to 11 weeks in some cases as part of a bid to cut production and run down inventory as it reorganizes.
Henderson said tentative plans to resume operations at some GM plants by July 13 could be endangered if the court does not approve GM`s sale of its best assets out of bankruptcy in a deal brokered by the Obama administration`s autos task force and funded by the U.S. Treasury.
"If ... (the) new GM is not able promptly to commence operations, many of GM`s suppliers will have further draconian reductions in revenue and no income," Henderson said.
That could force suppliers "to shut down their respective operations -- perhaps permanently -- and thereby (terminate) thousands of jobs."
GM, which filed for bankruptcy on June 1, is seeking bankruptcy court approval to sell its best assets to a reorganized company funded by the U.S. Treasury .
Judge Robert Gerber of the federal bankruptcy court in Manhattan has scheduled a June 30 hearing on the proposed sale.
Some of GM`s smaller unions, including the IUE-CWA and the United Steelworkers and a group of states, including Ohio and Connecticut have filed objections to the sale.
No competing bidders have emerged as an alternative to the U.S. government`s $60 billion financing for GM, including a proposed equity investment of $50 billion that would give the U.S. Treasury a 60 percent ownership stake.
At least 15 auto parts suppliers have filed for bankruptcy or had their assets seized by creditors in 2009, according to the Motor & Equipment Manufacturers Association, which represents the industry.
Those suppliers include Visteon Corp, Metaldyne Corp and Noble International Ltd.
Last week, the White House rejected a request for up to $10 billion in additional emergency funding from the auto parts industry.
The case is In re: General Motors Corp, U.S. Bankruptcy Court, Southern District of New York, No. 09-50026.
(Reporting by Kevin Krolicki; editing by Andre Grenon)
Original article

Lear prepared to file for bankruptcy next week: report

DETROIT (Reuters) - Auto parts supplier Lear Corp (LEA.N) is preparing to file for bankruptcy as soon as next week, the Wall Street Journal reported on Thursday, citing people familiar with the matter.
The news comes as Lear faces a June 30 window, through which its lenders have agreed to waive the existing defaults under its primary credit facility.
Lear, which warned in March it might have to file for bankruptcy, has been exploring alternatives to restructure its debt outside of bankruptcy over the past months.
Lear spokesman Mel Stephens declined to comment.
The Journal reported that Lear had been in talks with banks in recent days for debtor-in-possession loans, the funding companies typically use to finance their stays in bankruptcy court. JPMorgan Chase (JPM.N) and Citigroup (C.N) will provide the bulk of the loan, according to the report.
Shares of Lear closed down 39 percent, or 34 cents, at 54 cents on the New York Stock Exchange before the news.
Southfield, Michigan-based Lear was in breach of its leverage covenants at the end of 2008 after borrowing all of the $1.2 billion available to it under the primary credit facility during the fourth quarter.
It had $3.5 billion of outstanding debt at the end of 2008, according to a filing with the Securities and Exchange Commission.
Lear, which makes seating and electrical equipment for vehicles, has suffered because of steep production cuts by General Motors Corp (GMGMQ.PK) and Ford Motor Co (F.N), which accounted for 42 percent of its global revenue in 2008.
U.S. auto sales fell 36.5 percent in the first five months of 2009 to their lowest level in nearly three decades.
The U.S. auto parts sector, already teetering on the brink of failure, has come under further pressure after Chrysler shut down nearly all of its production for the duration of its bankruptcy reorganization.
GM, which filed for bankruptcy on June 1, has also idled 13 assembly plants in North America for as long as nine weeks starting in mid-May.
(Reporting by Soyoung Kim; Editing Bernard Orr)
Original article

Kimberly-Clark to cut about 1,600 jobs

By Jessica Wohl
CHICAGO (Reuters) - Kimberly-Clark Corp (KMB.N) said on Thursday that it would cut about 1,600 salaried jobs, or roughly 3 percent of its workforce, as it tries to trim costs and respond faster to rivals and store brands.
The latest move comes four years after the maker of Kleenex tissues kicked off a three-and-a-half year cost cutting plan that included slashing about 6,000 jobs and closing about 20 manufacturing plants.
The plan announced on Thursday does not include closing any facilities. Kimberly-Clark had said in April that it expected to cut jobs in the second and third quarters as it tries to squeeze more costs out of the organization.
Its household products, such as Kleenex and Huggies diapers, have faced stiff competition from lower-cost store brands sold by retailers such as Wal-Mart Stores Inc (WMT.N) as consumers cut back. At the same time, its K-C Professional division has been pressured because the restaurants and other businesses it serves have been hit hard by the recession.
The move is "likely a necessary step" to allow Kimberly-Clark to invest in areas such as advertising and promotion as it tries to protect its market share, Sanford Bernstein analyst Ali Dibadj said.
Procter & Gamble Co (PG.N), in particular, has stepped up its push to grab cash-strapped consumers with lower priced versions of Bounty paper towels and Charmin toilet paper, as well as a lower cost line of diapers, Luvs. Kimberly-Clark competes directly with P&G in those categories.
PREDICTS $60 MILLION IN SAVINGS THIS YEAR
Kimberly-Clark said the latest round of job cuts would be in all regions and businesses and mainly impact salaried and non-production jobs.
The company offered a voluntary severance program for U.S. salaried employees this spring which about 600 people accepted, a spokesman said. Those jobs are included in the plan to reduce about 1,600 jobs from the company`s total of around 53,000.
Kimberly-Clark expects to record charges of $140 million to $150 million, or about 25 cents per share. About $110 million of those charges are slated for the second quarter.
It expects to see savings of about $60 million, or 10 cents per share, during the second half of the year.
In another effort to save, Kimberly-Clark decided earlier this year to freeze pension plan benefits for U.S. non-union employees.
Shares of Kimberly-Clark fell 0.6 percent to $51.46 in morning trade.
The shares slipped 1.8 percent from the beginning of the year through Wednesday, outperforming P&G, whose shares fell 11 percent in that period.
(Reporting by Jessica Wohl, editing by Dave Zimmerman)
Original article

Toyota`s new boss warns of two more tough years

Chang-Ran Kim; Asia Autos Correspondent
TOKYO (Reuters) - Toyota Motor Corp`s new president, the grandson of the group`s founder, warned on Thursday the auto industry faces another two tough years as he outlined his strategy to return the world`s No.1 car company to profit.
Toyota aims to build more autonomous operations in North America and shift its focus to marketing a region-specific vehicle line-up, rather than offering a full line-up in every region, Akio Toyoda told his first media conference in the job.
Most of Toyota`s factories around the world are underused as a global recession hammers car sales, sending two of America`s three big car makers into receivership.
Facing a second year of record losses, Toyota aims to cut costs from its already lean operations so it can be profitable using just 70 percent of its factory capacity.
"We want to do everything possible to avoid a third consecutive year of losses," Toyoda told reporters.
Toyoda said European efforts would focus on hybrid models.
Its remodeled Prius hybrid, launched last month, has been a rare bright spot, winning more than 180,000 orders in Japan.
Production has been limited to two plants so far, creating a bottleneck for delivery, while analysts say the fuel-sipping model could eat into sales of Toyota`s other more profitable cars.
Toyoda has said he aims to steer the company "back to basics" -- a promise also made by his predecessor, Katsuaki Watanabe, when he took over in 2005 as Toyota`s factories scrambled to meet soaring demand.
The push for profits would not involve plant closures, Executive Vice President Atsushi Niimi told the news conference.
"Right now, the market is very tough. But in two years, or at most three years, it will recover so we want to make sure we have the means to meet demand then," said Niimi, who heads manufacturing operations in Toyoda`s new-look executive team.
At the annual meeting this week, Toyota promised shareholders to do better to recover from a 461 billion yen ($4.8 billion) operating loss.
For the year to March 2010, it has forecast an even bigger loss, of 850 billion yen, although consensus forecasts are for a much smaller loss of 495 billion yen.
Unlike bankrupt U.S. rivals Chrysler and General Motors, Toyota has said it plans to ride out the downturn without slashing full-time jobs.
Many industry executives have said recent sales trends in major markets such as the United States and Japan indicate that demand has bottomed, but opinion is divided over when it will recover convincingly.  Continued...
Original article

Oil rises towards $69 on Nigeria attack

By Ramthan Hussain
SINGAPORE (Reuters) - Oil rose toward $69 on Thursday, after Nigeria`s main militant group raided a Royal Dutch Shell pipeline and disrupted a major export terminal, recouping losses caused by hefty builds in U.S. fuel stocks.
Prices had earlier extended Wednesday`s fall after data showed gasoline stocks in the world`s top consumer rose 3.9 million barrels last week, exceeding analysts` predictions, as refiners prepared for the peak driving season that was expected to be less robust this year, while distillates hit 10-year highs.
Analysts said the price drop was limited by a sharp 3.8 million barrel decline in U.S. crude stocks.
U.S. crude futures for August gained 27 cents to $68.94 a barrel by 0626 GMT (2:26 a.m. EDT), after falling to $68.11 earlier. London Brent crude rose 35 cents to $68.68.
"The EIA report which shows a large increase in products stocks was a negative factor for oil prices. But we are seeing that with oil falling from the high $60s, buying support emerged and limited the downside," said David Moore, commodity strategist at Commonwealth Bank in Sydney.
The Movement for the Emancipation of the Niger Delta (MEND) said it had attacked the Billie/Krakama pipeline in Rivers state in the Niger Delta that feeds into pumping stations linked to the Bonny crude terminal, one of Nigeria`s main export terminals.
No independent verification was immediately available on MEND`s latest statement, which came after the group also claimed responsibility on Sunday for attacks on three installations run by Shell, which had said it was investigating the reports.
The raids came ahead of the Nigerian president`s proposal later on Thursday for a 60-day amnesty programme for the militants, in a bid to end years of attacks on the oil industry, which have cut output to less than two-thirds of its installed capacity of 3 million barrels per day over the last three years.
"Bonny is a big stream and it will have a bullish impact," said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.
He added that the market had been in a correction phase after running up to as high as $73.23, the near eight-month high hit on June 11, which analysts see as a key resistance level.
Traders said oil`s recovery was partly due to a rally in Asian shares for a second day after the Federal Reserve reinforced that interest rates will be kept at a record low for a while.
The Fed left interest rates near zero percent but tweaked its statement to say financial markets had improved and signaled less concern about deflation, while reiterating the economy will remain weak.
The U.S. dollar gave up some of its gains, losing some ground to higher-yielding currencies, such as the Australian dollar, on the rise in stocks. A firmer dollar makes commodities priced in dollars more expensive for holders of other currencies.
Optimism over a potential recovery lifting oil demand has raised prices from below $40 over the past three months, though fears about the global economy lingered.
And government forecasters said that even though U.S. oil demand should rebound when the economy recovers, crude imports might not resume growth as quickly as they did when past recessions ended because of new domestic oil production coming onstream.
(Editing by Ben Tan)
Original article