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Oil output freeze deal talks should end by March 1, says Russian minister

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MOSCOW Consultations on a preliminary deal between leading oil producers to freeze output should be concluded by March 1 after a group led by Russia and Saudi Arabia reached a common position this week in Doha, Russia’s energy minister said.

In a television interview aired on Saturday, Alexander Novak also said that the agreement announced on Feb. 16 was weighty enough.

“Those countries which have openly supported this approach are producing around 75 percent out of global (oil) export volumes. My point is that, in practice, this is enough to agree,” Novak told the Vesti on Saturday programme.

Russia, Saudi Arabia, Qatar and Venezuela said this week after talks in Doha that they were ready to freeze production at January levels if other producers do the same.

Iran welcomed the deal. But it stopped short of saying it would itself freeze production at January levels and its deputy oil minister said on Saturday it would increase production soon.

Novak said talks between Venezuela and Iran were still ongoing, and said consultations would also be held with non-OPEC countries, including Mexico and Norway.

“I believe that they (Mexico and Norway) would take a constructive stance,” he said.

If additional oil were not supplied to the market, then the global surplus of oil would fall by at least 1.3 million barrels per day, Novak added.


Novak said Iran had taken a relatively constructive stance on the Doha deal but not yet said it was ready to sign up to the proposals.

Its Deputy Oil Minister Rokneddin Javadi was quoted as saying on Saturday that Tehran aimed to increase oil production by 700,000 barrels per day in the near future.

Alexey Texler, Russia’s first deputy energy minister, said earlier this week that even without Iran there would be an effect from the deal.

According to Texler, Russia is talking about freezing January production levels. January output was around 1.5 percent higher than the annual average for 2015.

Novak also said it was “discussed with colleagues” that an oil price of $50 per barrel would suit consumers and exporters in the long term. He did not elaborate.

The minister believes that if the Doha agreement enters into force then Russia’s market share would remain unchanged.

(Reporting by Alexander Winning and Maria Kiselyova; Writing by Polina Devitt and Denis Pinchuk; Editing by John Stonestreet)

Source: R-Business


Japan fund makes late move to thwart Hon Hai in Sharp battle – sources

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TOKYO A Japanese state fund is making a final effort to secure a takeover of Sharp Corp as the ailing electronics maker considers a higher $5.8 billion offer from Taiwan’s Foxconn, criticising the composition of the company’s board, sources said.

Innovation Network Corporation of Japan (INCJ) officials are taking issue with two of Sharp’s board members who they believe have a conflict of interest as they represent a fund that holds preferred shares in the electronics company, according to the sources familiar with the fund’s complaint.

Sharp earlier this month said it would focus on takeover talks with Taiwan’s Foxconn, despite widespread expectations that INCJ’s rescue plan would be backed.

INCJ officials believe the two board members who represent the fund holding preferred shares are more inclined to favour a deal with Foxconn, known formally as Hon Hai Precision Industry Co, because INCJ has proposed that the preferred shares be cancelled in exchange for a bailout.

The fund has raised its concerns with the Sharp board, said the sources, who declined to be identified because they were not authorised to speak with media.

INCJ Chief Strategy Officer Tetsuya Hamabe, however, said it was not true that the fund had criticised the composition of Sharp’s board.

Sharp declined to comment.

Sharp board members are due to meet on Saturday, although it is not clear whether they will make a final decision on Hon Hai’s offer, another source said.

INCJ had offered to invest 300 billion yen ($2.6 billion) in the struggling electronics maker, less than a half of 659 billion yen investment proposed by Foxconn. INCJ had planned to combine its display business with that of rival Japan Display Inc, in which the fund holds a majority stake. ($1 = 114.2500 yen)

(Reporting by Yoshiyasu Shida, Makiko Yamazaki; Writing by Ritsuko Ando; Editing by Keith Weir and Clarence Fernandez)

Source: R-Business


Wall St Weekahead – Focus sharpens on Fed after hot inflation data

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NEW YORK With next week’s calendar full of economic data releases and speeches by economic policymakers, investors have been poised to watch the Federal Reserve for clues about the U.S. central bank’s next move, but an unexpectedly hot reading on inflation on Friday will further sharpen that focus.

After coming into 2016 with an expectation of three or four interest rate hikes through the year, market participants recently were viewing the Fed as likely raising interest rates once, if at all, in light of weak inflation and global volatility.

But Friday’s data showed the core consumer price index (CPI), a measure of underlying U.S. inflation, rose in January by the most in nearly 4-1/2 years to a 2.2 percent annualized rate. It drew particular attention as the number was above the Fed’s 2.0 percent target, though it is not the central bank’s benchmark inflation measure.

The uptick in price pressures has already shifted the market’s expectations on the Fed’s next move.

“The inflation numbers definitely caught the markets off guard,” said Joseph Lavorgna, senior economist at Deutsche Bank in New York.

“Last week at this time the market was pricing a 25 percent chance of a rate hike by year-end and now it’s over 40 percent and that’s largely because of today’s stronger than expected CPI.”

The dollar rose alongside Treasury yields shortly after the data, as markets saw the higher inflation as nudging the Fed towards tightening policy. The euro hit its lowest since Feb. 3.

Equity markets have also closely followed expectations on Fed policy. Lower rates tend to support stocks in general, with high-paying dividend names like utilities gaining investors’ favor. In an environment of rising rates, banks tend to take the lead.

The expectation of higher interest rates has been cited as one of the reasons for stocks having fallen as much as 11 percent this year. The S&P 500 is down 6 percent so far in 2016, and on track for its third positive week of the year.

The inflation numbers add to recent economic data, including a stronger job market and consumer spending, that will force the Fed to seriously reconsider more rate hikes, said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.

“I think what’s happening is that people are starting to put tightening back on the table,” Paulsen said.


Personal consumption expenditures, the Fed’s favorite measure of price inflation, is out next Friday and could confirm or outweigh the trend in the CPI reading. Among other market-moving numbers next week are purchasing managers indexes (PMIs) for the manufacturing and services sectors and two gauges of consumer confidence.

Investors and the Fed could address a decline in earnings, now seen as down 3.7 percent for the S&P 500 in the fourth quarter of last year, and lower outlooks for 2016 as other reasons to keep rates lower for longer.

The incoming data gives more weight to next week’s scheduled speeches from many Fed officials, including Vice Chair Stanley Fischer on Tuesday and Atlanta Fed President Dennis Lockhart on Thursday as markets look for a change in tone. Two Fed surveys of business conditions, Richmond and Kansas City, are also out next week.

“I don’t think the Fed can help stocks, they can only hurt them,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services in New York.

“If they came out too hawkish that can hurt stocks; too dovish can help a little but not create sustainable investor demand.”

In Fed-watcher parlance, hawks are seen quicker to push for rate hikes than doves.

In a U-turn late on Wednesday, Fed voting member and hawkish St. Louis Fed President James Bullard said it would be “unwise” to raise rates further given U.S. inflation data and global volatility. He speaks Wednesday in New York, followed by questions from the media.

The Fed’s policy-setting committee next meets March 15 and 16 in Washington, with a statement followed by a news conference with Chair Janet Yellen.

(Reporting by Rodrigo Campos, additional reporting by Chuck Mikolajczak and Laila Kearney; Editing by Chizu Nomiyama)

Source: R-Business

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