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Business News

BRUSSELS CK Hutchison Holdings Ltd (0001.HK) has offered concessions in a bid to secure EU antitrust approval for its proposed 10.3-billion-pound ($14.47 billion) bid for Telefonica’s (TEF.MC) British mobile unit, the European Commission said on Wednesday.

The EU competition enforcer did not provide details in line with its policy. It extended the deadline for its decision to May 19 from April 22, according to a filing on its website.

(Reporting by Foo Yun Chee, editing by Robin Emmott)

FRANKFURT/BERLIN Carsten Kengeter, the chief executive of Deutsche Boerse, (DB1Gn.DE) lauded the benefits for the Frankfurt exchange and its customers on Wednesday of a proposed deal to merge the German exchange operator with the London Stock Exchange (LSE.L).

The talks are being closely watched by the government in Berlin, whose backing Kengeter needs to win support for the merger.

Some lawmakers in Berlin, fearing a loss of control, questioned what would happen if Britain votes to leave the European Union on June 23.

Both companies have downplayed any risk from Brexit, saying last week that the proposed merger would prosper regardless of whether Britain stays or leaves.

Kengeter told a financial conference in Frankfurt that the array of trading and services on offer in Frankfurt and London would not shrink as a result of the merger.

Moreover, banks would benefit from the merger of derivatives clearing activities because they would not have to put up as much collateral, he said.

“Market participants, including banks, would experience considerable cost savings,” Kengeter said, adding that takeover rules limited his ability to comment on the merger discussions.

Theodor Weimar, head of UniCredit’s (CRDI.MI) German unit HVB, agreed that the European exchange landscape was currently too fragmented and the creation of a large European player would benefit banks. “That would be positive,” he said.

Some lawmakers expressed reservations.

“In the case of Brexit, there is of course the danger that activities could be moved outside the European Union and therefore no longer subject to European regulatory standards,” said senior German conservative lawmaker Ralph Brinkhaus.

Carsten Schneider, a senior lawmaker in the Social Democrats (SPD) said he would welcome the creation of a large, European exchange that is not susceptible to takeover.

German Chancellor Angela Merkel, Finance Minister Wolfgang Schaeuble and EU Competition Commissioner Margrethe Vestager were all informed about the plans, said another person familiar with the talks.

Deutsche Boerse’s failed 2011-2012 tie-up with NYSE Euronext was blocked partly because Berlin did not advocate for it strongly enough in Brussels, according to sources.

The Economy Ministry in the German state of Hesse, where Deutsche Boerse is based, was also opposed to that deal.

The fact that Kengeter would run the day-to-day operations of a new company is viewed favorably in Berlin, while he is also regarded as easier to deal with than former NYSE boss Duncan Niederauer, said one person familiar with both merger attempts.

“Kengeter is far more diplomatic,” the person said.

(Reporting by Jonathan Gould, Andreas Kroener and Matthias Sobolewski; Writing by Caroline Copley; Editing by Elaine Hardcastle)

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* FTSE 100 ends 0.1 pct lower at 6,147.06 points

* ITV falls on outlook

By Sudip Kar-Gupta

LONDON, March 2 Britain’s top equity index fell on Wednesday, with the market’s earlier gains fizzling out as oil prices weakened, while shares in ITV and Intertek also declined.

The blue-chip FTSE 100 index ended down 0.1 percent at 6,147.06 points, closing lower for the first time in four days. The FTSE is down by around 2 percent since the start of 2016, and 14 percent below an April 2015 record high.

Television and media group ITV fell 3.5 percent, as the company’s cautious outlook about its advertising revenue offset more positive factors such as higher earnings and a special dividend payout.

“It would appear that a drop in viewing numbers on its main ITV channel has raised concerns that despite rising advertising revenues, the company is losing market share,” said CMC Markets UK chief market analyst Michael Hewson.

Intertek, which carries out tests to ensure the safety of products, also fell 4.6 percent as its annual results underwhelmed some investors while Goldman Sachs cut its price target on the stock.

Traders said February’s unexpected dip in the UK’s construction Purchasing Managers’ Index (PMI) to a 10-month low, was also weighing on the London stock market.

“A weaker than forecast construction PMI has not helped,” said Spreadex analyst Connor Campbell. (Additional reporting by Kit Rees; Editing by Catherine Evans)

SAN RAMON, Calif. San Francisco Federal Reserve President John Williams said Wednesday that the key message from the U.S. central bank is that interest-rate hikes will be “gradual.”

If at some point the Fed does need to ease policy, he said, he would rather use tried and true monetary policy tools like quantitative easing rather than negative interest rates which could carry more costs than benefits.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)

HOUSTON Private equity fund Energy & Minerals Group told investors on Wednesday it will cease “any and all new business activities” with Aubrey McClendon, the former chief executive officer of Chesapeake Energy Corp (CHK.N), a day after the federal government indicted him for allegedly breaking antitrust laws.

The U.S. Justice Department charged McClendon on Tuesday with rigging bids for oil acreage. McClendon has denied the charges and wasn’t immediately available for comment on Wednesday.

Houston-based EMG, which has invested some $3 billion in ventures with McClendon since he left Chesapeake in 2013, said the allegations won’t affect any of its portfolio companies.

In a letter to investors, EMG head John Raymond said “these are serious allegations” of land bid rigging against McClendon that could have “serious implications” for the energy industry.

(Reporting by Ernest Scheyder; Editing by Terry Wade)

Crude prices recovered from earlier losses and were up more than 1 percent.

A report by payrolls processor ADP on Wednesday showed the U.S. private sector added more jobs than expected in February, suggesting solid job growth despite market turmoil and worries about a slowing global economy.

The report serves as a precursor to the more comprehensive monthly jobs report by the U.S. Labor Department on Friday.

“We’re in a holding pattern until Friday, when we get the payrolls number,” said Jeff Kravetz, regional investment director at U.S. Bank Wealth Management in Phoenix, Arizona.

“There’s still a lot of money out there that’s looking for a home and if we continue to get good economic data, it is going to be positive for stock markets here,” he said.

Stocks surged on Tuesday, driven partly by encouraging factory and construction data, helping the S&P 500 claw back most of its losses from the last two months.

The index, which had fallen as much as 10.5 percent, is now down 3.6 percent for the year.

At 11:10 a.m. ET, the Dow Jones industrial average .DJI was up 5.13 points, or 0.03 percent, at 16,870.21, the S&P 500 .SPX was up 1.4 points, or 0.07 percent, at 1,979.75 and the Nasdaq Composite index .IXIC was up 1.47 points, or 0.03 percent, at 4,691.07.

Five of the 10 major S&P sectors were higher, led by the energy sector’s .SPNY 0.86 percent rise. Exxon (XOM.N) gave the biggest boost.

The U.S. economy continues to show signs of recovery even as China and euro-zone countries struggle to spark their sputtering economic growth engines, pushing central banks to adopt diverging monetary policies.

Investors are increasingly facing the prospects of higher interest rates from the U.S. Federal Reserve, while also expecting more monetary stimulus from the European Central Bank and the People’s Bank of China.

Shares of Monsanto (MON.N) were down 7.8 percent at $85.25 after the company slashed its 2016 profit forecast. The stock was the biggest drag on the S&P 500.

The Fed will also issue its Beige Book report of anecdotes on business activity at 2 p.m. ET.

Advancing issues outnumbered decliners on the NYSE by 1,461 to 1,397. On the Nasdaq, 1,434 issues rose and 1,142 fell.

The S&P 500 index showed four new 52-week highs and no new lows, while the Nasdaq recorded 15 new highs and 16 new lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D’Silva)

SAN RAMON, Calif. San Francisco Federal Reserve President John Williams struck an optimistic note on Wednesday, telling a group of businessmen that the U.S. economy is powering through headwinds from abroad and faces no tangible risk of recession.

The U.S. economy still needs “some accommodation” over the next few years, he said, but raising rates gradually is the “right strategy.”

Domestic demand is strong enough to keep pushing down unemployment and begin raising inflation back towards the Fed’s 2-percent goal, despite economic weakness abroad, he said.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)

MCK.N) said it would buy drugstore chain Rexall Health from Katz Group for C$3 billion ($2.23 billion) to strengthen its position in Canada’s pharmaceutical supply chain.

The deal will give McKesson access to about 470 retail pharmacies, and help leverage its existing assets in the country, particularly in Ontario and Western Canada, the companies said.

This is the second acquisition announced by San Francisco-based McKesson in recent weeks. Late last month, it announced its plan to buy two privately held cancer care service providers for about $1.2 billion, to add muscle to its specialty health business.

The more than 150-year old McKesson, which also distributes drugs to CVS Health Corp (CVS.N), in January said its fiscal 2017 earnings would likely be hit by weak generic drug pricing and narrowed its profit forecast for 2016.

McKesson’s lucrative supply deal with Rite Aid Corp (RAD.N) hangs in the balance after the drugstore chain Rite Aid agreed in October to be bought by Walgreens Boots Alliance Inc (WBA.O).

Walgreens sources its drugs from rival distributor AmerisourceBergen Corp (ABC.N).

Analysts have estimated that the Rite Aid contract is worth between $15 billion to $25 billion a year for McKesson, accounting for up to 15 percent of its annual revenue.

Leerink Partners analyst David Larsen said he had greater confidence that McKesson would come in at the high end of its fiscal 2017 earnings forecast, and that these acquisitions would help offset the likely roll-off of the Rite Aid contract in fiscal 2018.

The Rexall Health acquisition, which will be funded by a mix of cash and debt, is expected to close later this year and should modestly add to McKesson’s adjusted earnings in fiscal 2017.

McKesson shares were up about 3 percent at $161.14 on the New York Stock Exchange on Wednesday.

($1 = C$1.35)

(Reporting by Natalie Grover in Bengaluru; Editing by Shounak Dasgupta)

AMBC.O) by putting its own nominees up for election to the company’s board, a person familiar with the matter said.

Canyon, which holds a 4.5 percent stake in the company, is seeking to persuade Ambac to settle $4 billion in insurance claims, which Canyon has a significant interest in.

The hedge fund plans to nominate at least three Ambac directors to stand for election ahead of a March 15 deadline, the person said on Wednesday, in what is known as a proxy contest. Details of its proposed slate are still being finalized, the person added.

The person asked not to be identified because the deliberations are confidential. Ambac declined to comment, while Canyon did not immediately respond to requests for comment.

The policy claims relate to complex financial instruments, including secured mortgage-backed securities, that were insured by Ambac and were at the center of the financial crisis that began around 2007-2008.

Canyon has previously asked for Ambac to ask its regulator, the Commissioner of Insurance of the State of Wisconsin, to accelerate Ambac’s settlement of the claims. Ambac has argued the matter is entirely in the hands of the regulator.

Canyon has also asked Ambac to buy back the claims itself in the open market or offer policyholders cash for their policies, in a practice known in the industry as commutation. This would also boost the value of the claims that Canyon has an interest in.

Canyon has also raised corporate governance issues at Ambac, questioning the pay and performance of the company’s chief executive Nader Tavakoli.

(Reporting by Michael Flaherty in New York; Editing by Bill Rigby)

BRUSSELS The European Parliament on Wednesday began a year-long investigation into the Volkswagen (VOWG_p.DE) emissions scandal and whether regulators could have done more to prevent it.

EU regulation of the car industry has been under scrutiny since Volkswagen admitted last September it rigged U.S. tests for nitrogen oxide emissions in diesel vehicles.

In a first closed-door session, the committee of inquiry elected its chair from the Socialists and Democrats and four vice-presidents to represent the political range of the European Parliament.

Some EU sources question how effective the inquiry will be as the risk is it will degenerate into political point-scoring and the main political group, the centre-right European People’s Party, said it should not be “a witch hunt”.

The Green Party said that was not the aim and the committee would make a real difference if it could expose years of alleged close ties between the car industry, the European Commission and some politicians.

“In this year, it is crucial that we perform our process in an organised and transparent way so that the conclusions cannot be denied by European Commission and national authorities,” Dutch Green politician Bas Eickhout said.

“That is the crux. If we do our job poorly, they can just ignore the reports. That is going to be the biggest challenge.”

The Green Party has pushed for change and, together with some centrist lawmakers, wanted to tear up a compromise deal that allows diesel cars to continue producing above agreed limits.

In the end, they narrowly failed to get a veto, but setting up the parliamentary enquiry secured cross-party support.

On Wednesday, the European People’s Party said it welcomed the work of the committee, but would cease to support it if it turned into a political blame game.

“We will not accept that the committee turns into a detrimental witch hunt on the European automotive industry, diesel technology or the European Commission,” EPP spokesman Krisjanis Karins of Latvia, said.

The Green Party said it expected the committee to hear from representatives of all sides, including the industry, the Commission and national authorities.

The European Commission has also asked the industry and national authorities for information and proposed a radical reform of legislation that would give the EU executive enforcement powers that until now have been in the hands of member states that tended not to use them.

(Additional reporting by Barbara Lewis; Editing by Elaine Hardcastle)