Rosneft shares nosedive after BP deal blocked

AFP, Moscow, March 25: Rosneft shares opened sharply lower on Friday after an arbitration tribunal blocked British energy giant BP's Arctic oil tie-up with Russia's largest oil company.

The state-held firm's shares were down about 1.5 percent in early trading on Moscow's MICEX exchange while those of BP's Russian joint venture TNK-BP opened the day higher by 0.9 percent.

The broader market was down as traders digested the Stockholm Arbitration Tribunal's Thursday decision to block the British firm's strategic alliance with Rosneft.

BP has vowed to try to complete the deal in some form but market analysts said uncertainty will hang over Rosneft's stock in the short term.

The unprecedented share-swap and Arctic exploration agreement was announced with much fanfare by the Russian government in January and was soon followed by a similar agreement between Rosneft and the US oil major Exxon Mobil.

The deal would have handed Rosneft five percent of BP's ordinary voting shares in exchange for approximately 9.5 percent of the Russian company's stock.

The two firms also agreed to jointly search for oil in Rosneft's three licensed blocks in the Arctic—a 125,000 square kilometre (48,000 square mile) region said to contain five billion tonnes of oil and 3.0 trillion cubic metres of gas.

But the deal was strongly opposed by the small group of billionaires who make the Russian half of the TNK-BP venture.

The group—known collectively as AAR and led by Alfa Group chief Mikhail Fridman—argued that the tie-up broke their shareholder agreement with BP to have the right of first refusal on the British firm's Russian ventures.

BP said in a statement that it may now return to arbitration in a bid to complete the share swap portion of the Rosneft deal.

Disgraced ex-David Jones boss lands new top job

AFP, Sydney, March 25: The disgraced former chief of Australia's upmarket department store chain David Jones landed another high-profile job Friday less than a year after quitting amid allegations of sexual misconduct.

Mark McInnes was appointed chief executive of Premier Retail, which owns Just Jeans, Jay Jays, Portmans, Jacqui E, and Peter Alexander with about 950 stores throughout Australia and New Zealand.

'In my previous role as CEO, I did make an error in judgement,' McInnes told journalists after the announcement of his Aus$2 million ($2 million) a year appointment.

'But I owned up to the error of judgement and I apologised to all concerned.'

McInnes resigned from David Jones last June after admitting behaving 'in a manner unbecoming of a chief executive to a female staff member' at two company functions.

In October, the department store settled a sexual harassment case brought against him by the ex-staffer who had sought $36.5 million for allegedly enduring his unwelcome advances.

David Jones said the out-of-court settlement was worth Aus$850,000, including a contribution from McInnes.

According to reports, McInnes left David Jones with more than Aus$8.6 million in cash and shares.

Premier chairman Solomon Lew called McInnes one of Australia's most successful retailers, and declined to comment on 'past events that did not involve Premier'.

'It goes without saying that Premier and Just (Jeans) have long had high standards of workplace values and performance. This has always been and always will be important,' Lew told reporters.

German Ifo indicator falls for first time since May

AFP, Berlin, March 25: Germany's Ifo indicator of business confidence in Europe's top economy fell in March for the first time since May, the Ifo institute said Friday.

The closely watched index inched down to 111.1 points from 111.3 in February after nine consecutive monthly rises. The fall was however not as steep as feared by economists, who had forecast on average a drop to 110.5 points.

Brazil airplane giant posts $341 mln 2010 profit

AFP, Sao Paulo, March 25: Brazil's Embraer, the world's third largest commercial airplane manufacturer, on Thursday announced over $340 million in profits in 2010.

The company said in a statement that it had posted profits of 600.2 million reals, or $341 million according to the average 2010 exchange rate, with a total benefit for shareholders of 573.6 million reals, or $326 million.

During the past year the company delivered 101 commercial aircraft and 145 business aircraft, 'exceeding annual delivery projections in all categories,' it said.

In 2009 the firm delivered 244 aircraft and posted a profit of $498 million.

Embraer's net income in 2010 was $5.35 billion, with 54 percent coming from the commercial aircraft sector.

The firm said it was hurt by the devaluation of the US dollar against the real, but that 2010 brought 'concrete signs of recovery' following the global economic crisis.

The aviation manufacturer expects a higher profit of $420 million this year and a net income of $5.6 billion.

With more than 17,000 employees, Embraer is the third largest airplane manufacturer behind global giants Boeing and Airbus.

Australia extends deadline for broadband network

AFP, Sydney, March 25: Australian senators have extended by two-and-a-half years the deadline for completion of the country's national broadband network in order to connect an extra million homes.

The company building the Aus$36 billion ($36 billion) system, NBN Co, now has until December 2020 to build the infrastructure across the vast continent, instead of the original June 2018 date.

Communications Minister Stephen Conroy said more time was needed to wire up 93 percent of residences, rather than the 90 percent first planned, to the high-speed optical fibre network.

'The build has expanded,' he told the Senate, before the amendment was passed on Thursday.

The government argues the broadband network will boost the economy and ease isolation for the huge country's rural regions, but the opposition claims it is too expensive.

Conroy forced an extra day of debate on the scheme after unveiling 23 pages of amendments to existing NBN legislation late on Wednesday.

Australia's second largest telecoms firm Optus has already expressed concerns about the proposed changes. Among them are proposals that would allow some companies, such as utility providers, to buy their Internet access directly from NBN rather than through retailers such as Optus and Telstra, as originally envisaged.

Telecoms companies also fear another amendment could water down the competition regulator's powers.

'To be frank these new amendments have thrown us a curve ball,' Optus chief executive Paul O'Sullivan said.

The broadband scheme was a key election pledge from Labor Prime Minister Julia Gillard and a major factor in allowing her to form a minority government backed by rural independents after last year's polls were deadlocked.

The government hopes the delivery of broadband will revolutionise workplaces and services—including in education and health—for a nation where thousands live in remote communities.

Most homes and businesses will be connected to optical fibre but a small proportion will be linked to NBN via wireless or satellite technology due to the vastness of the country.

BHP to invest billions in Australian iron ore, coal

AFP, Sydney, March 25: Mining giant BHP Billiton said Friday it will pour almost $13 billion into expanding its coal and iron ore operations in Australia, key commodities that are driving the boom in Asian economies.

The cashed-up resource giant's huge spending spree will see investment in mine and rail projects across the country as well as new equipment as it moves to meet ever growing demand from key markets in China and India.

Anglo-Australian BHP said $7.4 billion would be pumped into production growth in its Western Australia iron ore operations to boost capacity to more than 220 million tonnes a year.

Of that, $3.4 billion will be used to develop its Jimblebar mine and rail links, and to buy mining equipment and rolling stock.

Another $2.3 billion is earmarked for improvements to Port Hedland, including extra berths and shiploaders, a car dumper, rail works and rolling stock.

The rest of the investment will be used to improve port blending facilities and rail yards. BHP will contribute $6.6 billion to the projects and its partners the rest.

The Melbourne-based miner also announced a $5 billion cash injection into three key metallurgical coal projects in Queensland's Bowen Basin, with BHP providing $2.5 billion.

This will add 4.9 million tonnes of annual mine capacity through development of the company's Daunia operation and a new mine in Broadmeadow.

Port capacity at the Hay Point Coal Terminal will also be increased.

Another $400 million will be used to expand a thermal coal mine in the New South Wales Hunter Valley, the diversified company said in a statement.

BHP iron ore president Ian Ashby said the intention was to develop port capacity so that the company could fill its 240 million tonnes per annum allocation in Port Hedland's inner harbour.

'We have intentionally overbuilt the ore handling facilities at Jimblebar and expect to incrementally grow mine production to ensure that our port and rail systems are operated at full capacity during this debottlenecking programme,' he said.

First production from the Jimblebar mine was expected in early 2014.

BHP Billiton metallurgical coal president Hubie van Dalsen said the company had a deep pipeline of expansion projects to develop its large reserves of metallurgical coal.

'Our strategy is to rapidly progress development of these projects to capture the increasing demand we see for hard coking coal,' he said.

BHP has been at the forefront of a huge mining boom in Australia as emerging Asian economies—particularly China and India—voraciously consume the country's resources to fuel their breakneck growth.

Earlier this year the miner reported a 72 percent surge in net profit to $10.52 billion for the six months to December 31, thanks to sales to Asia and as the West edges out of an economic slump.

Chief executive of ferrous and coal, Marcus Randolph, said the company was well placed to meet increasing demand.

'We are the logical supplier to be expanding as fast as we reasonably can,' he told journalists.

Australian Stock Report head of research Geoff Saffer called BHP's decision a big boost for Australia.

'It's incredible, a nearly $10 billion investment (BHP's share) in coal and iron ore underlines the confidence BHP has in the future of our resources sector,' he said.

Friday's announcement came a day after the government agreed on a modified version of its controversial mineral resources tax, in which miners would be reimbursed for any future rise in their state royalty payments.

Despite the expansion plans, BHP's shares initially fell on the Australian Stock Exchange, largely due to speculation it could launch a possible takeover bid for Woodside Petroleum, analysts said.

They recovered to close the day five cents firmer at Aus$44.76 ($44.76).

Eurozone private sector lending stronger in February

AFP, Frankfurt, March 25: The rate of growth in eurozone bank loans to the private sector rose again in February, the European Central bank said Friday, signalling more support for growth across the 17-nation bloc.

Lending expanded by 2.6 percent from the same month a year earlier, up from 2.4 percent in January, an ECB spokesman said, reinforcing an upward trend that had been interrupted in December.

The central bank also said that eurozone money supply as measured by its M3 indicator grew by 2.0 percent in February, a rate that was stronger than the increase of 1.5 percent the previous month.

The ECB regards this figure as a key guide to pressures likely to affect inflation in the medium term.

Lending and money supply data are widely-followed indicators of consumer demand and overall economic activity.

Rising figures point to increased demand, which normally means inflation is picking up and could incite the ECB to raise interest rates.

The ECB has kept its key interest rate at a historic low of one percent since May 2009 but financial markets expect it to rise to 1.25 percent in April.

Members of the central bank's governing council are concerned about inflation, which at 2.4 percent is now well above the ECB's target of just under 2.0 percent.

A breakdown of the ECB loan data showed that lending to non-financial corporations gained 0.6 percent in February, slightly better than the January figure of 0.5 percent.

That measure had been contracting at the end of 2010.

Loans to households were 3.0 percent stronger on a 12-month basis, but that marked a slight easing from growth in January of 3.1 percent.

Consumer credits showed a decline of 0.9 percent in February, a narrow improvement on the previous month's decline of 1.0 percent.

Malaysian car production may face Japan hitch

AP, Kuala Lumpur, March 25: Malaysia's auto sales are on track to grow 2 percent to a record 618,000 vehicles this year, although production could be disrupted in coming months by parts shortages following Japan's earthquake and tsunami.

Sales last year in Southeast Asia's largest passenger car market rose 12.7 percent to 605,156 vehicles. For the first two months of this year, sales were up 4 percent, Malaysian Automotive Association president Aishah Ahmad said Friday.

The 2011 sales forecast of 618,000 vehicles will be reviewed in July when the situation in Japan is clearer, she said. There has been no impact on sales so far, Aishah said.

Japan's automakers suspended production after the massive March 11 earthquake and tsunami due to damage to suppliers' factories in northeastern Japan and power shortages. Most have only partially resumed production.

Japanese models account for about a third of vehicles sold in Malaysia, led by Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. The three carmakers said it was too early to assess the impact on their Malaysian factories.

Ang Boon Beng, who heads Edaran Tan Chong which distributes Nissan cars in Malaysia, said the bulk of car parts are sourced from other Southeast Asian nations to take advantage of low tariffs under a regional free trade pact and this has helped to cushion the impact on Malaysian automakers.

Nissan plans to introduce an electric car in Malaysia this year, although the launch date may be delayed depending on Japan's recovery, he said.

Honda senior general manager Azhar Abdul Wahab said stockpiles of parts are sufficient for the next three months, after which production may be hurt if the situation in Japan doesn't stabilize.

UMW Toyota Motor's President Ismet Suki said overtime work has been halted but there was no cause for alarm yet.

"We are still assessing the situation but I'm quite confident that the catch-up plans will be quite ambitious," he said.

Big queues for iPad 2 in Australia

AFP, Sydney, March 25: Hundreds of people queued for up to two days to get their hands on the iPad 2 which went on sale in Australia on Friday for the first time.

Apple's latest touchscreen tablet computer hit stores in the United States on March 11 but only went on sale here at 5:00pm (0600 GMT) and fans snaked round the company's flagship store in central Sydney.

First in line was Canadian backpacker Alex Lee who headed to the store straight from the airport after arriving from Singapore on Wednesday.

"I came straight from the airport. I arrived here Wednesday at noon and started the line," he said.

"At 5:00 pm today, I will have waited for over 53 hours."

But two nights sleeping on the pavement didn't dampen his excitement

"I feel good. I have queued before for the iPhone and the first iPad and every time I met heaps of cool people coming from all around the world," he added.

Tweeting from outside the store, Alex said he felt part of a community.

"In the line we help each other, we swap chairs and we bring back food. So many people are helping us, some even ask to take their picture with me," he said.

The iPad 2, which is one-third thinner, nearly 15 percent lighter and faster than the model released in April 2010, was also available in 24 other countries Friday, but not Japan.

It was scheduled to go on sale there last Friday but was delayed because of the devastating earthquake and tsunami.

Number eight and nine in the Sydney line, high school students Will and Josh, both took a day off from the classroom—with the blessing of their parents.

They arrived on Thursday afternoon and stayed overnight.

"It's the fourth time I've done this kind of thing," said Josh.

Further down the line, Apple fans were less hard-core.

"I really don't understand the excitement," said Sally, 73, from England.

"I just came here to have a look at the line for my son. Because he is working, I started queuing. The woman behind me gave me a chair."

Apple sold more than 15 million iPads last year and rival electronics manufacturers have been scrambling to produce their own touchscreen devices.

Blackberry maker Research In Motion recently announced that its iPad rival, the PlayBook, would shortly go on sale in the United States and Canada at a price identical to that of the iPad.

Besides the size and weight, the other major improvement to the iPad 2 is the addition of front- and rear-facing cameras that allow users to take still pictures and video and hold video conversations.

Apple’s iPad 2 hits overseas stores after US sell-out

Reuters, Wellington/Sydney, March 25: Hundreds of customers lined up outside Apple stores in Australia and New Zealand on Friday for the international launch of the iPad 2, which has flown off the shelves in the United States leaving the company struggling to meet demand.

Analysts forecast some 1 million devices may have been sold in the first weekend of the launch in the United States, but many warn that it's not clear how supply constraints will affect availability following the Japan earthquake and tsunami.

The iPad 2, a thinner and faster version that features two cameras for video chat, was introduced in the United States on March 11. But some would-be buyers have expressed frustration at how difficult it has been to secure one of the wildly popular tablet computers, sparking speculation Apple misjudged demand.

It went on sale in New Zealand at 0400 GMT. One store in Wellington was allocated just 12 of the gadgets and they were snapped up in a matter of minutes.

Sales kick off in Australia at 0600 GMT and then roll out to other countries including France, the United Kingdom, Canada, Denmark, Germany, Italy, Mexico, Netherlands, and Spain.

'If it wasn't for the iPad, I wouldn't be in Australia right now,' said Alex Lee, a backpacker from Canada, who was the first in the queue outside the glass-fronted Apple store in Sydney's central business district. He said he diverted his travels from Singapore to attend the launch.

'It's like a habit. I've also lined up on Regent Street in London for the iPhone', added Lee, who had a folding chair and blanket and had spent two nights waiting.

Apple staff in Sydney, dressed in the company's blue branded shirts , handed out trays of sandwiches to those in the queue, some of whom had bedded down on blankets overnight before being awoken by bright sunshine.

Its retail price in Australia starts at A$579 ($568), against $499 in the United States. The iPad 1 started selling in Australia from A$629 when it was launched.

In Wellington, staff at electronics retailer JB HiFi said they had only received about a dozen iPad 2s and they were snapped up in about 10 minutes. A sales assistant said the store did know when the next delivery would come in.

The first iPad, which went on sale a year ago, sold 500,000 units in the first week and crossed the 1 million unit mark in 28 days. Nearly 15 million iPads were sold in nine months of 2010, two or three times as many as analysts had predicted.

Apple Chief Executive Steve Jobs said on Tuesday the company was 'working hard to build enough iPads for everyone.'

Fiona Martin, a spokeswoman for Apple in Australia, declined to comment on whether there was enough stock to meet demand.

'We don't comment on speculation, we've got plenty down there for all those folk that are in the queue.'

A prospective buyer in Wellington, 22-year-old student Ian MacDonald, said he had held off buying the first generation iPad because it lacked a camera and he wanted any bugs ironed out.

'This version looks way better, with the cameras and it beats all the other tablets because there are so many apps (applications),' he said.

Myles Jihme, a student from Malaysia, waiting outside the Apple store in Sydney said he intended to buy two iPads, the maximum allowed by Apple, and would auction one for charity. 'All the profits from the sale will go to Japan's disaster fund,' he said.

In addition to Friday's roll out, the iPad 2 will be available in Hong Kong, South Korea, Singapore and other countries in April.

Apple now faces increased competition from rivals. Samsung Electronics and Motorola have tablets on the market and Blackberry-maker Research In Motion and Hewlett-Packard Co are set to release tablets in coming months.

India cancels 14 more 'fake' pilot licences

NEW DELHI (AFP) – India's aviation regulator said Friday it had cancelled the licences of 14 more commercial pilots caught forging their qualifications in a spreading scandal that has rocked passenger confidence.

Cases of pilots exaggerating their flying time while training and other irregularities have emerged since a captain who made several bad landings was found to have submitted faked paperwork to gain her licence.

At least six pilots, including from the Air India, Indigo and SpiceJet airlines, have already been arrested as authorities check thousands of licences.

"We have cancelled the licences of 14 pilots who were flying passenger planes. All of them had submitted fake training records," Directorate General of Civil Aviation chief E.K. Bharat Bhusan told AFP.

All 14 pilots had procured their eligibility certificates from the Rajasthan State Flying School in western India, where police are checking instructors' logbooks.

A pilot needs to have completed a minimum 200 hours of flying to get a licence but several of the pilots from Rajasthan State Flying School had only completed 50-60 hours, officials say.

Power outages could hamper Japanese recovery: IMF

AFP, Washington, March 25: Restoring power and government reconstruction spending are crucial to Japan's economy resuming growth, the IMF said Thursday, after Tokyo put the damage of the March 11 earthquake at $309 billion.

International Monetary Fund officials said they expected a short-term slowdown, but growth would "rebound" to pre-quake levels and more.

But unlike natural disasters in other countries, the potential of sustained power shortages due to the Fukushima Daiichi plant emergency, the shutdowns of other nuclear plants and the radiation threat complicate recovery prospects, they said.

"The uncertainties from the nuclear situation and the power interruptions could weigh on the recovery by disrupting production across the country, and by weighing on corporate and household sentiment," said Ken Kang, the IMF's Asia Pacific division chief.

Kang cited Japanese government figures that three to five percent of the country's capital stock was damaged or destroyed in the quake and subsequent tsunami, about double the scope of damage done by the 1995 Kobe earthquake.

"Despite the extensive damage we are of the view that the economic costs are manageable," he said.

Japan's government is fiscally strong enough to handle the recovery costs, and that boosting spending to rebuild the country would have no long-term impact on its fiscal standing.

"We view Japan as having a relatively ample pool of savings that it can finance its own reconstruction needs," said Mahmoud Pradhan, the IMF Japan mission chief.

The officials praised Japanese institutions, especially the Bank of Japan, for their "decisive and swift" response to the quake, and said the damage to the overall financial system is minimal."

They said the government did not need external aid, and that it had 1.3 trillion yen ($16 billion) available for quick disbursement to start the recovery.

Global crises to soften M&A near-term after strong Q1

Reuters, Philadelphia/London, March 25: This year is set to be a blockbuster for deals, exemplified by mega acquisitions such as T-Mobile USA or Genzyme, with turmoil in the Middle East and Japan causing just a temporary slowdown.

Worldwide mergers and acquisitions (M&A) have risen 58 percent so far this year, according to preliminary data from Thomson Reuters, marking the best start to a year since 2007 and building on last year's tentative recovery.

A doubling of deal volume in the United States and Europe, which was hobbled in 2010 by the sovereign debt crisis, as well as big deals such as AT&T Inc's (T.N) $39 billion bid for T-Mobile USA, helped push announced worldwide M&A to $717 billion so far this year.

"We expect the M&A market will continue to be robust for the balance of 2011. All the fundamentals exist -- improving economy, improving credit environment, high CEO confidence," said Jack MacDonald, Bank of America Corp's (BAC.N) co-head of Americas mergers and acquisitions.

"Given these fundamentals, global M&A could be up in excess of 20 percent in 2011," MacDonald said.

Other bankers estimated deal volume would rise 10 percent to 15 percent this year.

The first quarter was marked by large cross-border deals, including Sanofi-Aventis SA's (SASY.PA) $20.1 billion acquisition of Genzyme Corp (GENZ.O).

In a sign the financing markets are better than ever, JP Morgan underwrote a $20 billion bridge loan for AT&T, the bank's largest ever acquisition-related financing commitment.

Rick Leaman, a managing director at Moelis & Co, likened the T-Mobile USA deal to Procter & Gamble Co's (PG.N) acquisition of Gilette, which he said reopened the M&A market in 2005.

"It feels like a typical M&A recovery; maybe not as robust as it was in the mid 2000s or 1995-1996, but based on our backlog and what we're seeing in the market, activity levels are definitely improving," Leaman said.

JAPAN, MIDDLE EAST WEIGH NEAR-TERM

Still, conflict in the Middle East and the crisis created by the earthquake and tsunami in Japan could curtail dealmaking in the short-term.

"The overall year should be up, but these are very significant and serious events, and the kind of volatility they are causing (will) have some effect" on M&A discussions, said Robert Kindler, Morgan Stanley's (MS.N) global head of M&A.

Indeed, United Arab Emirates telecommunications company Etisalat (ETEL.AD) scrapped its $12 billion bid for a controlling stake in Kuwaiti rival Zain (ZAIN.KW) last week, citing unrest in the region as one of its reasons.

State-owned China Guangdong Nuclear Power may cut its offer for uranium miner Kalahari Minerals in light of Japan's nuclear crisis and lending banks are unwilling to underwrite Bain's $3.4 billion buyout of Japanese restaurant chain Skylark.

Mergers in the Asia Pacific region have reached $89 billion so far this year, up 25 percent from the year-earlier period.

Giuseppe Monarchi, head of M&A for Europe, Middle East and Africa at Credit Suisse, singled out opportunistic deals as more likely to be affected by events.

"M&A is not a decision you take lightly in any event. This is more likely to have an impact on more opportunistic deals, with a shorter-term focus, than those based on long-term strategic rationale," Monarchi said.

Rising oil prices could also have a cooling effect on near-term M&A, according to Stephen Trauber, global head of Energy at Citigroup Inc (C.N).

Energy and power, as well as financial institutions, were the busiest sectors for dealmaking in the first quarter, according to Thomson Reuters. Bankers expect these areas to remain active, along with healthcare and technology.

This year has also seen companies focus more on their core businesses and sell or spinoff other units. An example is Sara Lee Corp's (SLE.N) plan to split into two public companies.

Liam Beere, co-head of Europe, Middle East and Africa M&A at UBS AG (UBSN.VX), added that vendors were more motivated to sell than they were 12 to 18 months ago because the price gap between buyers and sellers had narrowed and "assets are more sensibly valued."

European activity was back to a more normal 25 percent of global dealmaking as long-expected transactions such as LVMH Moet Hennessy Louis Vuitton SA's (LVMH.PA) offer for Italian luxury goods company Bulgari SpA (BULG.MI) emerged.

"A transaction involving T-Mobile or Bulgari has long been anticipated. We should brace ourselves for more deals like this, where the question is when and not if a transaction will happen," said Hernan Cristerna, head of M&A for Europe, the Middle East and Africa at JP Morgan.