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POLONIA Rate falls 0.73 pp.

July 25, 2014 - reuters.com

WARSAW, Jul 25 (Reuters) - POLONIA the reference rate for Overnight deposits amounted to 1.69 percent. The volume of transactions concluded till 16:30 by banks participating in POLONIA fixing amounted to 3,155 mln PLN. Note: Description of reference rate at: http://www.acipolska.pl/ ((warsaw.newsroom@reuters.com))

UPDATE 1-Brazil's current account deficit shrinks, FDI covers gap

July 25, 2014 - reuters.com

(Adds historical comparisons, deficit-to-GDP ratios) BRASILIA, July 25 (Reuters) - Brazil posted a current account deficit BRCURA=ECI of $3.345 billion in June, a smaller-than-expected gap that was fully offset by foreign direct investment inflows for the first time since November, central bank data showed on Friday. The country had been expected to post a deficit of $3.9 billion, according to the median forecast of 19 analysts in a Reuters poll. Brazil's current account deficit in May was $6.635 billion. The current account is a country's widest measurement of foreign exchange flows, including trade, services, interest payments and remittances. Foreign direct investment BRFDI=ECI -- which falls into Brazil's balance of payments' capital account -- was $3.924 billion in June, in line with market expectations of $3.925 billion. The last time that FDI at least covered the current account deficit was in November of 2013. The country's current account gap has widened sharply over the last two years due to a dwindling trade surplus that had its weakest result in a decade in 2013. The current account gap as percentage of GDP dropped slightly to 3.58 percent in June from 3.61 percent the previous month. (Reporting by Alonso Soto; Editing by Meredith Mazzilli and W Simon) ((alonso.soto@thomsonreuters.com)(+55 61 34267027)(Reuters Messaging: alonso.soto.thomsonreuters.com@reuters.net)) Keywords: BRAZIL ECONOMY/EXTERNAL

TLTRO to stall bank funding plans

July 25, 2014 - reuters.com

* Senior unsecured bond issuance to fall off a cliff * TLTRO to have same impact as UK's Funding for Lending * Declining funding costs unable to compensate investors for bail-in threat By Aimee Donnellan and Gareth J Gore LONDON, July 25 (IFR) - Banks are likely to shelve plans to sell senior unsecured bonds, with bosses opting to save money by replacing private funding with much cheaper emergency loans from the European Central Bank designed to spur lending. Under the so-called targeted longer-term refinancing operations launched by the central bank last month, eurozone banks will be able to borrow up to 400bn starting in September, paying just 0.25% a year for the privilege - well below what they would pay to borrow in the markets. This bargain-basement funding is likely to lead banks to pull plans for bond issues. "The introduction of another LTRO means that unsecured funding levels will drop," said Damian Saunders, a DCM syndicate official at BNP Paribas. When the ECB launched the first two LTRO exercises in December 2011 and February 2012, bank bond issuance initially stalled but reignited as spreads tightened. But this time around investors say they are expecting investment opportunities from eurozone banks to dry up for a longer period of time, leaving the UK and Nordics to carry the primary issuance load. According to market sources, UniCredit and another peripheral national champion are not planning on issuing senior unsecured debt until next year. Bankers say that financial institutions are likely to grab as much cash as they can from the first two auctions as there will be no stigma attached to reducing their overall funding costs. "When the news first came out, the consensus among issuers was that they were not going to use it. However, as time has gone on, we get the sense that more will use it than first thought," said a DCM syndicate banker. "I would imagine the ECB is very keen for banks to use the TLTRO and will be going on a marketing offensive." DASH FOR CASH The ECB's attempt to encourage banks to lend to small and medium enterprises by providing cheap loans with no strings attached comes at a time when investors are already battling for allocations on rare unsecured bank bonds. Since the middle of June, only one European bank has issued a benchmark senior unsecured deal, compared with four that came to the market during the same period last year. And these figures are reflective of a greater trend of declining senior unsecured funding since the onset of the financial crisis as banks aggressively deleverage and lean on the ECB for cheap loans. The slump has dented revenues for investment banks running such deals. According to Thomson Reuters data, European banks have so far issued about 147bn equivalent of senior unsecured bonds, a slightly higher run rate compared with last year's total but dramatically lower than supply seen at the height of the credit bubble. In 2007, issuance of senior bank debt reached 318bn equivalent. BAIL-IN RISK This decline in issuance, along with the ECB's pledge to do "whatever it takes" to support the eurozone, has driven senior unsecured spreads down by more than 100bp in less than a year. And that move will be accentuated if senior issuance dries up even further and a lack of supply distorts prices. "The financials sector is extremely strong at the moment and could grind tighter as a result of these programmes," said Neil Williamson, head of EMEA credit research at Aberdeen Asset Management. "It should help cement the levels we have been seeing over the past few months but that's not to say that these programmes will somehow fix the market in a way that it won't experience corrections." Over the past year the cost of insuring bank debt as measured by the iTraxx Senior index has more than halved to 66bp (from 135bp). However, this marked improvement in funding costs is eroding the buffer investors are seeking to cushion them from the risk of bail-ins that could leave them holding nothing. The recent situation surrounding BES, when the Portuguese government said that a private solution had to be found for a private sector problem, should serve as a stark reminder that senior debt could be on the chopping block in a worst-case scenario. But in the face of the ECB backstop, European investors say they have little choice but to buy bonds with tighter spreads as redemptions are piling up and they would otherwise miss out on much-needed returns. FUNDING GAP One factor that could provide a temporary boost to senior issuance later this year is that banks will soon need to prepare to repay the three-year money they borrowed in late 2011 and early 2012. While some banks have repaid the money early to rate their financial strength, Spanish and Italian lenders still owe about 350bn borrowed under the first LTROs, which will need to be paid back. Because of the terms of the new TLTRO, however, many peripheral banks will not simply be able to transfer their borrowing from the old programme to the new. New money is linked to existing lending to the economy, meaning Spanish and Italian banks will only be able to borrow 54bn and 75bn respectively - leaving them with a gap to fill. (Reporting by Aimee Donnellan and Gareth J Gore, additional reporting by Helene Durand; Editing by Matthew Davies) ((aimee.donnellan@thomsonreuters.com)(+44 207 542 2952)(Reuters Messaging: aimee.donnellan.reuters.com@reuters.net)) Keywords: ECB BANKS

With eye on sanctions, foreigners slash Russia stock, bond investments

July 25, 2014 - reuters.com

By Sujata Rao LONDON, July 25 (Reuters) - Foreign equity and bond investors who had tentatively ventured back into Russia after a huge early-2014 selloff are again slashing their holdings for fear of being caught in the crossfire of Western sanctions. Russia has fared worst among the big emerging equity markets this year, with dollar-based losses of 13 percent. The rouble is down 5 percent against the dollar RUB= , second only to the Argentine peso, and investors are demanding a 2.8 percentage point premium to U.S. Treasuries to hold Russian dollar bonds, 80 bps higher than January. While sanctions already bar some Russian firms from Western capital markets, Washington's assertion that the Kremlin supplied artillery to Ukrainian rebels who are blamed for last week's shooting-down of a Malaysian passenger jet may bring another wave of sanctions that could cripple the economy. Some analysts say sanctions may not in the end be tightened, but many investors have not waited to find out. "We took a decision to sell up our position. It's more to do with risk management rather than fundamentals," said Aymeric Forest, who runs a $5 billion multi-asset fund at Schroders. That's a U-turn for Forest, who added to his Russia position after the Crimea crisis earlier this year because of high corporate dividends and cheap valuations. He said the decision to sell was made as soon it became clear Washington would ratchet up the sanctions. Under existing sanctions, both U.S. and European investors are barred from buying new securities issued by some Russian companies that have a significant state shareholding or are seen as close to the Kremlin. Many such as Forest fear these restrictions may soon extend to existing stocks and bonds, forcing investors into a firesale of the assets. "Legal and political risks have escalated ... we had a small position and we liquidated completely," he added. On Russian equity markets, where freely traded shares make up 29 percent of the capitalisation, foreigners' share is 19 percent, down from 21 percent in December, according to the Macro-Advisory consultancy in Moscow. June fund flows data from Boston-based fund tracker EPFR showed emerging market investors who had been pessimistic on Russia since the start of the year had actually swung to a big overweight - meaning they held more Russian stocks than the country's 5.4 percent weight in the MSCI index .MSCIEF . That was due to easing tensions since end-May when Russia struck a more conciliatory tone towards Kiev. But many of those positions will have been washed out in July as the crisis escalated, said Bank of America Merrill Lynch equity strategist Wesley Fogel. EPFR data for the past week showed investors pulled $172 million from Russia funds, the biggest outflow in six months. Fogel advises clients to buy Russian equities at current prices -- relative to expected earnings over the next 12 months they trade at about half the emerging markets average. But his view hinges on a positive outcome to the crisis, without further sanctions. "People are underweight Russia but that doesn't mean more selling cannot happen, because investor confidence is quite fragile," said Michel Danechi, portfolio manager at Swiss fund manager EI Sturdza. While share valuations and dividends are attractive in Russia, Danechi says he is staying away from companies that are under sanction, such as energy firms Rosneft and Novatek. THERE ARE ALTERNATIVES Salman Ahmed, global fixed income strategist at Lombard Odier, also reckons both sides will take a step back, meaning sanctions are unlikely to be tightened further. But his fund remains underweight in Russian rouble debt relative to its 10 percent weight in the benchmark GBI-EM index for local currency emerging debt. Rouble debt was until recently seen as attractive because of its 8 percent-plus yields - boosted further by the central bank's half point rate rise on Friday - and JPMorgan's latest client survey, conducted before the air disaster, showed a tiny 0.7 percent overweight. On dollar debt and the rouble, most funds are underweight, JPM found. The bank advised clients not to exceed index weight on rouble bonds and to use credit default swaps to hedge risk. Similarly Morgan Stanley said it was downgrading Russian corporate and local bonds to underweight. "Anyone involved in Russia must be cognizant that there will be periodic blow-ups and short squeezes," Ahmed said. "If you look at it from a relative asset angle, you will be giving up 8.5 percent yield, but in South Africa or Turkey you can capture similar yield with lower volatility." LONG-TERM Like Ahmed, many others see the West as reluctant to hurt their economic interests by cutting off trade and investment ties with Russia. President Vladimir Putin too will seek to avoid conflict that may wreck Russia's economy, they say. But that does not make them keen to venture in. For one, Russian firms must repay $160 billion in the next year. Morgan Stanley calculates. State-owned banks, that the EU is proposing to ban from capital markets, have around $33 billion coming due. Few expect default but the situation carries risks for Russia's $475 billion reserves war chest. Second, the economy is flirting with recession and capital flight has already hit $75 billion this year. Michael Cirami, co-director and portfolio manager at Eaton Vance Investment Managers' global fixed income division, believes the EU is unlikely to take any drastic measures but that has not changed his pessimistic view on Russia. "Ukraine is not the problem. Ukraine is the symptom of the problem," Cirami said. "We've been bearish on Russia since 2010. Oil dependency is huge...there is a broken growth model." (Additional reporting by Chris Vellacott; editing by Philippa Fletcher) ((sujata.rao@thomsonreuters.com)(44 20 7542 6176)(Reuters Messaging: sujata.rao.thomsonreuters.com@thomsonreuters.net)) Keywords: UKRAINE CRISIS/RUSSIA INVESTORS

INVESTMENT FOCUS-With eye on sanctions, foreigners slash Russia stock, bond investments

July 25, 2014 - reuters.com

By Sujata Rao LONDON, July 25 (Reuters) - Foreign equity and bond investors who had tentatively ventured back into Russia after a huge early-2014 selloff are again slashing their holdings for fear of being caught in the crossfire of Western sanctions. Russia has fared worst among the big emerging equity markets this year, with dollar-based losses of 13 percent. The rouble is down 5 percent against the dollar RUB= , second only to the Argentine peso, and investors are demanding a 2.8 percentage point premium to U.S. Treasuries to hold Russian dollar bonds, 80 bps higher than January. While sanctions already bar some Russian firms from Western capital markets, Washington's assertion that the Kremlin supplied artillery to Ukrainian rebels who are blamed for last week's shooting-down of a Malaysian passenger jet may bring another wave of sanctions that could cripple the economy. Some analysts say sanctions may not in the end be tightened, but many investors have not waited to find out. "We took a decision to sell up our position. It's more to do with risk management rather than fundamentals," said Aymeric Forest, who runs a $5 billion multi-asset fund at Schroders. That's a U-turn for Forest, who added to his Russia position after the Crimea crisis earlier this year because of high corporate dividends and cheap valuations. He said the decision to sell was made as soon it became clear Washington would ratchet up the sanctions. Under existing sanctions, both U.S. and European investors are barred from buying new securities issued by some Russian companies that have a significant state shareholding or are seen as close to the Kremlin. Many such as Forest fear these restrictions may soon extend to existing stocks and bonds, forcing investors into a firesale of the assets. "Legal and political risks have escalated ... we had a small position and we liquidated completely," he added. On Russian equity markets, where freely traded shares make up 29 percent of the capitalisation, foreigners' share is 19 percent, down from 21 percent in December, according to the Macro-Advisory consultancy in Moscow. June fund flows data from Boston-based fund tracker EPFR showed emerging market investors who had been pessimistic on Russia since the start of the year had actually swung to a big overweight - meaning they held more Russian stocks than the country's 5.4 percent weight in the MSCI index .MSCIEF . That was due to easing tensions since end-May when Russia struck a more conciliatory tone towards Kiev. But many of those positions will have been washed out in July as the crisis escalated, said Bank of America Merrill Lynch equity strategist Wesley Fogel. EPFR data for the past week showed investors pulled $172 million from Russia funds, the biggest outflow in six months. Fogel advises clients to buy Russian equities at current prices -- relative to expected earnings over the next 12 months they trade at about half the emerging markets average. But his view hinges on a positive outcome to the crisis, without further sanctions. "People are underweight Russia but that doesn't mean more selling cannot happen, because investor confidence is quite fragile," said Michel Danechi, portfolio manager at Swiss fund manager EI Sturdza. While share valuations and dividends are attractive in Russia, Danechi says he is staying away from companies that are under sanction, such as energy firms Rosneft and Novatek. THERE ARE ALTERNATIVES Salman Ahmed, global fixed income strategist at Lombard Odier, also reckons both sides will take a step back, meaning sanctions are unlikely to be tightened further. But his fund remains underweight in Russian rouble debt relative to its 10 percent weight in the benchmark GBI-EM index for local currency emerging debt. Rouble debt was until recently seen as attractive because of its 8 percent-plus yields - boosted further by the central bank's half point rate rise on Friday - and JPMorgan's latest client survey, conducted before the air disaster, showed a tiny 0.7 percent overweight. On dollar debt and the rouble, most funds are underweight, JPM found. The bank advised clients not to exceed index weight on rouble bonds and to use credit default swaps to hedge risk. Similarly Morgan Stanley said it was downgrading Russian corporate and local bonds to underweight. "Anyone involved in Russia must be cognizant that there will be periodic blow-ups and short squeezes," Ahmed said. "If you look at it from a relative asset angle, you will be giving up 8.5 percent yield, but in South Africa or Turkey you can capture similar yield with lower volatility." LONG-TERM Like Ahmed, many others see the West as reluctant to hurt their economic interests by cutting off trade and investment ties with Russia. President Vladimir Putin too will seek to avoid conflict that may wreck Russia's economy, they say. But that does not make them keen to venture in. For one, Russian firms must repay $160 billion in the next year. Morgan Stanley calculates. State-owned banks, that the EU is proposing to ban from capital markets, have around $33 billion coming due. Few expect default but the situation carries risks for Russia's $475 billion reserves war chest. Second, the economy is flirting with recession and capital flight has already hit $75 billion this year. Michael Cirami, co-director and portfolio manager at Eaton Vance Investment Managers' global fixed income division, believes the EU is unlikely to take any drastic measures but that has not changed his pessimistic view on Russia. "Ukraine is not the problem. Ukraine is the symptom of the problem," Cirami said. "We've been bearish on Russia since 2010. Oil dependency is huge...there is a broken growth model." (Additional reporting by Chris Vellacott; editing by Philippa Fletcher) ((sujata.rao@thomsonreuters.com)(44 20 7542 6176)(Reuters Messaging: sujata.rao.thomsonreuters.com@thomsonreuters.net)) Keywords: UKRAINE CRISIS/RUSSIA INVESTORS

FOREX-U.S. dollar gains on durable goods data, dip in German sentiment

July 25, 2014 - reuters.com

* U.S. dollar hits new eight-month high against euro * U.S. durable goods data, weak German Ifo underpin dollar * Geopolitical tensions weigh on euro (Updates prices, adds comment, changes byline, dateline, previous LONDON) By Sam Forgione NEW YORK, July 25 (Reuters) - The U.S. dollar hit new eight-month highs against the euro on Friday after stronger-than-expected data on U.S. durable goods orders boosted the greenback, while weak German business sentiment heightened concerns about the euro zone. The Commerce Department said Friday that orders for long-lasting U.S. manufactured goods rose 0.7 percent in June, beating economists' expectations for a 0.5 percent rise. The data pointed to momentum in the U.S. economy and underpinned the dollar, which had earlier gained on a drop in Germany's Ifo survey of business sentiment. ID:nL2N0Q00MM "U.S. data has been good or better than expected, whereas European data continues to point to a slowdown," said Boris Schlossberg, managing director in FX strategy at BK Asset Management in New York. Germany's Ifo survey of business sentiment based on a monthly survey of some 7,000 firms fell to 108.0 in July, marking its third consecutive monthly decline and missing estimates of 109.4, according to a Reuters poll of economists. The euro hit a new eight-month low against the dollar of $1.3427 in the wake of the U.S. durable goods orders data, which came on the heels of more positive U.S. jobless data Thursday. The euro fell against the dollar partly on geopolitical tensions between Russia and Ukraine, which could hurt European growth given trade between Russia and Germany, analysts said. European Union ambassadors reached preliminary agreement on Friday to push ahead with hard-hitting sanctions against Russia but details have yet to be worked out, diplomats said. ID:nL6N0Q02VT "There's some perception that if geopolitical tensions escalate, the euro zone economy would be the most potentially vulnerable economy in the G10, and that hurts the euro," said Vassili Serebriakov, currency strategist at BNP Paribas in New York. The euro was last down 0.2 percent against the dollar to trade at $1.34365. The dollar was flat against the Japanese yen JPY= at 101.8 yen, and was up 0.19 percent against the Swiss franc CHF= to trade at 0.90435 franc after hitting a fresh five-month high of 0.90485. The U.S. dollar index .DXY , which measures the dollar against a basket of six major currencies, was last up 0.14 percent at 80.982. While the U.S. and European data helped lift the dollar, a drop in U.S. government bond yields limited the dollar's gain. Benchmark 10-year U.S. Treasury notes US10YT=RR were last up 8/32 in price to yield 2.478 percent, with fixed-income traders disappointed by soft spots in the U.S. durable goods data including weaknesses in airlines and other sectors. (Reporting by Sam Forgione; Editing by James Dalgleish) ((Sam.Forgione@thomsonreuters.com)(646-223-6189)(Reuters Messaging: sam.forgione.thomsonreuters.com@reuters.net)) Keywords: MARKETS FOREX/

Sterling firmer vs euro as GDP data highlights diverging fortunes

July 25, 2014 - reuters.com

(Adds gilts) By Jemima Kelly LONDON, July 25 (Reuters) - Sterling rose against the euro on Friday after data showed Britain's economy is bigger than it was before the financial crisis six years ago, highlighting the increasingly divergent economic and policy outlooks for the UK and euro zone. Gross domestic product (GDP) expanded by 0.8 percent in the April-June period, the same strong pace as in the first three months of the year and in line with forecasts in a Reuters poll of economists. ID:nL9N0KU02Q The data came a day after the International Monetary Fund (IMF) cited Britain as a bright spot while it cut its forecast for total global economic growth in 2014. ID:nL2N0PZ1PB Earlier on Friday data showed German business sentiment falling for the third consecutive month, with the Ifo think-tank citing geopolitical tensions as affecting the business climate. Germany has strong trade links with Russia and so could be affected by tougher sanctions over the situation in Ukraine. ECONDE That followed healthier German data on Thursday showing German business activity expanding more rapidly than expected in July, with the services sector growing at its fastest in three years. That gave a boost to the euro, which had hit a 23-month low against the pound on Wednesday. But the euro fell to 79.10 pence, down 0.2 percent on the day EURGBP=D4 and on track for its second straight week of losses. "The GDP report was bang in line with expectations, and as such it doesn't change the outlook policy significantly," said Adam Cole, G10 head of currency strategy at RBC Capital Markets, He expected the Bank of England to hike interest rates by the end of the year. In contrast, the European Central Bank is likely to maintain loose monetary conditions, with many expecting it to opt for quantitative easing later this year. QE is seen negative for the currency as it increases supply and drives down its value. Sterling pared some losses against the dollar after the data and was flat on the day at $1.6985 GBP=D4 . The pound slipped below $1.70 on Thursday for the first time since June after weaker-than-expected retail sales numbers cast some doubt on the case for a swift rise in interest rates. Although the British economy has looked to be recovering strongly this year, June's retail sales added to a run of slightly weaker data. Significantly, wage growth - a key issue for central banks considering raising interest rates - was shown earlier in the month to be lagging inflation. "It doesn't do too much for rate hike expectations though, with some investors recently pushing back their calls for a rate hike to first-quarter 2015," said Alex Edwards, head of corporate desk at UKForex. "The headlines indicate that all is rosy again but it isn't quite with average earnings struggling to keep pace with the improving jobs numbers. It indicates that there is still quite a lot of slack in the economy." GILTS UK gilt futures FLGcv1 were up 40 ticks on the day at 111.17 at 1354 GMT, in line with German Bunds. Ten-year yields GB10YT=RR were 3.8 basis points lower at 2.57 percent and thirty-year yields GB30YT=RR were 2.1 bps lower at 3.29 percent. "We are seeing the long-end give up a bit of ground so we would argue there are some sings of a concession, (that the market is) making room for the linker deal next week," one trader said. Britain's debt management office will next week sell an inflation-linked bond maturing in 2058, via syndication. "The geo-political noise out there is enough to keep us underpinned before the close," the trader said. The gilts market showed little reaction to the GDP data. (Additional reporting by Anirban Nag and Ana Nicolaci da Costa; Editing by Tom Heneghan) ((anirban.nag@thomsonreuters.com, +44 20 7542 8399, Reuters Messaging: anirban.nag.thomsonreuters.com@reuters.net)) Keywords: MARKETS STERLING/CLOSE

PRECIOUS-Gold set for second weekly loss on strong economic data

July 25, 2014 - reuters.com

* Gold trades near 5-week lows below $1,300/oz * Dollar up after strong U.S. durable data * European, U.S. shares fall (Updates prices, adds comment) By Clara Denina LONDON, July 25 (Reuters) - Gold edged up on Friday but not far off a five-week low, and was headed for a second straight week of losses, as a strong dollar after robust economic data offset a fall in equities due to rising political tensions. Spot gold XAU= was up 0.2 percent at 1,294.36 an ounce by 1409 GMT, after losing nearly 1 percent on Thursday, when it hit its lowest since June 19 at $1,287.46. U.S. gold futures GCcv1 were up $4.00 to $1,294.80 an ounce. The dollar was up 0.1 percent against a basket of currencies, gaining support from a bigger-than-expected increase in U.S. durable orders in June. ID:nL2N0PZ2NH The market awaited the release of July U.S. non-farm payrolls and the Federal Open Market Committee meeting, both scheduled for next week. ECONUS "In the short term, movements in the dollar, the FOMC meeting and a new series of U.S. economic data will dictate the price of gold," Commerzbank analyst Daniel Briesemann said. European shares were weighed by weak German economic data, while U.S. stocks opened lower after soft company earnings results. MKTS/GLOB Gold has lost 1.3 percent of its value so far this week, following a two percent fall in the previous week, mostly on speculation that an improving employment sector in the United States could signal an early rate increase by the Federal Reserve. Higher interest rates would encourage investors to switch to assets that, unlike gold, pay interest. "The little bounce at the moment is just due to players covering a few shorts after gold managed not to breach the 200-day moving average at $1,286 in the previous session, which has been a focal point in numerous occasions over the past few months," Saxo Bank senior manager Ole Hansen said. Gold had managed to stay above $1,300 an ounce for most of this week as violence continued in Gaza, and tensions between the West and Russia over Ukraine remained high. As a gauge of investor sentiment, holdings of the SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, fell 3.6 tonnes on Thursday - the biggest one-day drop in more than a month. GOL/ETF In the physical market, buying picked up slightly in the previous session as prices dipped below $1,300, but demand was still much weaker than was seen last year. Silver, platinum and palladium were also headed for weekly losses, with spot silver XAG= down 1.6 percent for the week. It was up 0.3 percent at $20.38 an ounce, having touched its worst since June 19 at $20.26 in the previous session. Platinum XPT= was up 0.5 percent at $1,470 an ounce, while palladium XPD= rose 1 percent to $875.75 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by William Hardy and Pravin Char) ((clara.denina@thomsonreuters.com)(+44 207 542 9420)(Reuters Messaging: clara.denina.thomsonreuters.com@reuters.net)) Keywords: MARKETS PRECIOUS/

Energy group Enersis profit slips against strong comparative

July 25, 2014 - reuters.com

SANTIAGO, July 25 (Reuters) - Net profit at Latin American energy group Enersis SA ENE.SN fell more than 40 percent in the first half of 2014, roughly in line with market estimates, against a strong numbers a year ago and currency headwinds. Net profit for the six months to end-June was 191 billion Chilean pesos ($339 million), compared with 322 billion pesos a year earlier and a Reuters estimate of 204 billion pesos. Enersis, which distributes electricity in Chile, Argentina, Peru, Colombia and Brazil, benefited in 2013 from a one-time payment from the Argentine government. A devaluation of the Argentine peso also had a negative impact in 2014, the group said late on Thursday. The Chile-based company, which is controlled by Spain's Endesa ELE.MC , has said it plans to invest $9 billion in South America over the next five years. Its listed energy generation subsidiary, Endesa Chile, END.SN , reported a net profit of 93 billion pesos in the first half, down 7 percent from a year ago, largely because of rising energy costs in Chile. Chile is facing a power crunch, as supply struggles to meet the demands of its crucial energy-hungry copper mining industry. ($1 = 563.6500 Chilean Pesos) (Reporting by Rosalba O'Brien and Anthony Esposito; Editing by Steve Orlofsky) ((anthony.esposito@thomsonreuters.com)(Twitter: @ReutersChile)(+562-2370-4253)(Reuters Messaging: anthony.esposito.thomsonreuters.com@reuters.net)) Keywords: ENERSIS RESULTS/

Sterling firmer vs euro as GDP data highlights diverging fortunes

July 25, 2014 - reuters.com

(Adds quotes, background) By Jemima Kelly LONDON, July 25 (Reuters) - Sterling rose against the euro on Friday after data showed Britain's economy is finally bigger than its pre-crisis size, highlighting the increasingly divergent economic and policy outlooks for the UK and the fragile euro zone. Gross domestic product (GDP) expanded by 0.8 percent in the April-June period, the same strong pace as in the first three months of the year and in line with forecasts in a Reuters poll of economists. ID:nL9N0KU02Q The data came a day after the International Monetary Fund (IMF) cited Britain as a bright spot while it cut its forecast for total global economic growth in 2014. ID:nL2N0PZ1PB Earlier on Friday data showed German business sentiment falling for the third consecutive month, with the Ifo think-tank citing geopolitical tensions as affecting the business climate. Germany has strong trade links with Russia and so could be affected by tougher sanctions on it. ECONDE That followed healthier German data on Thursday showing business activity in Europe's largest economy expanding more rapidly than expected in July, with the services sector growing at its fastest in three years. That gave a boost to the euro, which had hit a 23-month low against the pound on Wednesday. But the euro fell to 79.10 pence on Friday, down 0.2 percent on the day EURGBP=D4 and on track for its second straight week of losses. QE FOR EUROZONE? "The GDP report was bang in line with expectations, and as such it doesn't change the outlook policy significantly," said Adam Cole, G-10 head of currency strategy at RBC Capital Markets, who expects the Bank of England to hike interest rates by the end of the year. In contrast, the European Central Bank is likely to maintain loose monetary conditions and many expect it to opt for quantitative easing later this year. QE is seen as negative as it increases the currency's supply and drives down its value. Sterling pared some losses against the dollar after the data and was flat on the day at $1.6985 GBP=D4 . The pound slipped below $1.70 on Thursday for the first time since June after weaker-than-expected retail sales numbers cast some doubt on the case for a swift rise in UK interest rates. Although the British economy has looked to be recovering strongly this year, June's retail sales added to a run of slightly weaker data. Significantly, wage growth - a key issue for central banks considering raising interest rates - was shown earlier in the month to be lagging inflation. "It (the GDP data) doesn't do too much for rate hike expectations though, with some investors recently pushing back their calls for a rate hike to first-quarter 2015," said Alex Edwards, head of corporate desk at UKForex. "The headlines indicate that all is rosy again but it isn't quite, with average earnings struggling to keep pace with the improving jobs numbers. It indicates that there is still quite a lot of slack in the economy." (additional reporting by Anirban Nag; Editing by Gareth Jones) ((anirban.nag@thomsonreuters.com, +44 20 7542 8399, Reuters Messaging: anirban.nag.thomsonreuters.com@reuters.net)) Keywords: MARKETS STERLING/CLOSE

Ugandan shilling rises slightly, more gains seen

July 25, 2014 - reuters.com

KAMPALA, July 25 (Reuters) - The Ugandan shilling UGX= edged up on Friday on the back of banks selling dollars and market participants said it could rise further next week due to inflows from charity groups. At 0952 GMT, commercial banks quoted the shilling at 2,623/2,633, slightly up from Thursday's close of 2,627/2,637. "In the interbank we've seen some significant (dollar)selling which has strengthened the shilling," said Benon Okwenje, trader at Stanbic Bank. "I am expecting strong inflows as we approach the end of month so the shilling should trade marginally stronger next week," he said, citing dollar inflows from non-governmental organisations operating in the country. The shilling is down 3.9 percent against the greenback in the year to date, under pressure from a range of factors, including aid stoppages by donor nations who were angered by the enactment of an anti-gay law earlier in the year. Daniel Muganza, trader at Centenary Bank, said the shilling could benefit from tighter liquidity in the markets after the central bank mopped up excess liquidity on Friday. He said the central bank removed a total of 149 billion shillings ($56.83 million) from the interbank market via a seven-day repurchase agreement (repo). UGX Spot Rate..... UGX= Ugandan Shilling Money Guide.... UGX/1 Calculated Cross Rates.......... UGXX= Deposits..................... UGXDEPO= Deposits & Forwards............. UGXF= Uganda Equities Guide....... UG/EQUITY Uganda All Share Index........ .ALSIUG Shilling background ..... UGX/BKGDINFO Ugandan Debt Guide............ UG/DEBT All Uganda Bonds............. 0#UGTSY= Uganda T-Bills.............. 0#UGTSYS= Uganda Benchmark............. 0#UGBMK= Central Bank ................ BOUGINDEX Ugandan Contributor Index.... UG/CONT1 Uganda Coffee Prices....... COFFEE/UG01 ($1 = 2622.0000 Ugandan Shillings) (Reporting by Elias Biryabarema; Editing by Duncan Miriri and Raissa Kasolowsky) ((Email:elias.biryabarema@thomsonreuters.com)(Tel: +256772887571)(Reuters Messaging: elias.biryabarema.thomsonreuters.com@reuters.net)) Keywords: UGANDA CURRENCY/

EURO DEBT SUPPLY-Italy is the only euro zone bond issuer next week

July 25, 2014 - reuters.com

LONDON, July 25 (Reuters) - Italy will be the only euro zone sovereign bond issuer next week, when it holds two separate auctions on July 28 and July 30. * The first Italian auction will offer up to 4.25 billion euros of 2018 and 2026 inflation-linked bonds and 2016 zero-coupon bonds. Details of the second sale are yet to be released. ID:nR1N0OX01F * The Italian Treasury has cancelled its mid-August auction, as well as its offering of inflation-linked bonds at the end of next month as it sits on ample cash, having completed more than 60 percent of its 2014 funding target. * About 60 billion euros of Spanish and Italian coupon and debt repayments will return to the market next week. (Compiled by Marius Zaharia, editing by Nigel Stephenson) ((marius.zaharia@thomsonreuters.com, +44 207 542 0950, Reuters Messaging: marius.zaharia.thomsonreuters.com@reuters.net)) Keywords: EUROZONE DEBT/OUTLOOK

Belgian business sentiment at nine-month low in July

July 25, 2014 - reuters.com

BRUSSELS, July 25 (Reuters) - Belgian business confidence, a bellwether for the euro zone, fell by more than expected to a nine-month low in July, as confidence among managers in the trade industry fell sharply. The business confidence index, often referred to as the leading indicator, fell to -7.5 from -6.2 in June, the central bank said on Friday, below the average forecast of -6.5 in a Reuters poll of 10 economists. The increase removed the gains made in June, with demand forecasts worse for trade, manufacturing and construction, but up for business-related services, the reverse of what happened the previous month. "The opinion indicators deteriorated sharply in trade, especially demand forecasts and, to a lesser extent, the outlook for orders placed with suppliers and expectations on the employment front," the national bank said in a statement. The fall of confidence among managers in the construction and manufacturing industries was less pronounced. The Belgian number comes just hours after the closely watched German Ifo business climate index also fell to its lowest level in nine months, suggesting firms there are worried about geopolitical tensions. ID:nL6N0Q024K Belgium, the euro zone's sixth-biggest economy and one of its most open, exports a large number of semi-finished goods to Germany. Consumer sentiment in Belgium dropped to its lowest level in 11 months, figures showed last week, with greater fears over the labour market after Belgian food retailer Delhaize DELB.BR announced job cuts. ID:nB5N0MH00F (Reporting by Robert-Jan Bartunek; editing by Philip Blenkinsop) ((robertjan.bartunek@thomsonreuters.com)(+32 2 2876850)(Reuters Messaging: robert-jan.bartunek.thomsonreuters.com@reuters.net)) Keywords: BELGIUM ECONOMY/LEADING

UPDATE 2-Russia raises rates in move seen as arming for sanctions

July 25, 2014 - reuters.com

* Key rate hiked by 50 bps to 8 pct * Move said governed by high inflation, geopolitical risks * Russia anticipates more sanctions over Ukraine-analysts (Add analysts' comments, detail) By Alexander Winning and Lidia Kelly MOSCOW, July 25 (Reuters) - The Russian central bank unexpectedly raised interest rates on Friday, apparently preparing for possible further Western sanctions over Ukraine that could speed up capital flight from Moscow's already battered markets. The 28-nation EU has warned it may curb Russian access to capital markets, arms and energy technology in response to last week's downing of a Malaysian airliner in an area of eastern Ukraine held by Russian-backed separatists. ID:nL6N0PZ510 The central bank, in one of its most hawkish decisions in recent years, said the 50-basis points rate hike was governed by concerns about high inflation and geopolitical tensions - an apparent reference to Ukraine. "Inflation risks have increased due to a combination of factors, including, inter alia, the aggravation of geopolitical tension and its potential impact on the rouble exchange rate dynamics," the central bank said in a statement. The $2 trillion economy is flirting with recession, recording zero growth in the second quarter, the rouble remains shaky and capital flight has already hit $75 billion this year. "This has nothing to do with inflation - with the economy failing to fire, the central bank should be cutting rates," said Timothy Ash, head of emerging markets strategy at Standard Bank in London. "This is more to do with the central bank raising the defences on the assumption that further Western sanctions are going to follow, hiking capital flight and likely putting downward pressure on the rouble. The bank's decision brings the central policy rate, the one-week minimum auction repo rate, to 8.0 percent, after cumulative rate hikes of 200 basis points in March and April when the rouble and stocks tumbled after the first wave of Western sanctions on Moscow for the annexation of Ukraine's Crimea. "I counted three mentions of the word geopolitical in the central bank statement, I think we can read something into that," said Neil Shearing, chief emerging markets economist at Capital Economics in London. THE MUDDY FUTURE The decision to raise rates is seen as another headwind for domestic investment activity, as it makes borrowing more expensive, and dampens gross domestic product growth, which most analysts envisage at barely above zero this year. But it shows the risks and the price Russia is paying for continued involvement in the Ukrainian conflict, with investment by domestic firms already in decline for most of recent months. Government officials rushed to describe the sanctions impact as "peanuts," but former Finance Minister Alexei Kudrin, esteemed by investors, warned this week Russia had already lost 1 percent GDP growth and might lose more in coming years. "Russia is yet to choose its decision, which it will announce to the world in regard to settling the conflict in Ukraine," Kudrin said in a rare criticism of the conservative policies of the Kremlin. The rouble, which lost 10 percent against the dollar RUBUTSTN=MCX earlier in the year but since recovered, firmed briefly on the central bank's decision, but later traded down 0.2 percent on the day. Stocks on rouble-denominated MICEX .MCX were down 1.5 percent, losing 2.5 percent this week. ID:nL6N0Q01E0 "The move is marginally supportive for the rouble, even though it won't be able to stop foreign capital repatriation if bolder sanctions are approved, while reignited pressure from potential household demand for hard currency would only be addressed if banks continue raising their deposit rates," Dmitry Polevoy, chief economist at ING in Moscow, said in a note. The rouble's spring decline contributed 0.8 of a percentage point to annual inflation, which remains the main worry for President Vladimir Putin's electorate, according to opinion polls. Inflation hit 7.8 percent in June - well above the central banks' forecast of up to 6.5 percent for the whole of 2014. "If high inflation risks persist, the Bank of Russia will continue raising the key rate," the central bank said. "Basically ... we can expect the key rate to go higher if new risks materialise (for, example, introduction of level III sanctions on Russia and the rouble getting seriously hit), which is not beyond imagination," analysts at Gazprombank said in a note. The decision indicates Russia is preparing for what may lie ahead, analysts said. "Maybe the central bank has been given the nod by their political masters in the Kremlin that this crisis is still going to get worse before it gets better," Ash, of Standard Bank said. (Additional reporting by Oksana Kobzeva, Elena Orekhova, Vladimir Abramov, Dasha Korsunskay; Writing by Lidia Kelly; Editing by Timothy Heirtage and Philippa Fletcher) ((lidia.kelly@thomsonreuters.com)(+7 495 775 1242)(Reuters Messaging: lidia.kelly.reuters.com@reuters.net)) Keywords: RUSSIA CENBANK/RATES

UPDATE 2-Russian assets slide as EU sanctions threat looms large

July 25, 2014 - reuters.com

* Stocks, rouble down on concerns of new EU sanctions * Central bank surprises with hawkish rate rise (Recasts to reflect further falls, c.bank rate hike) By Alexander Winning MOSCOW, July 25 (Reuters) - Russian assets slipped on Friday as investors took the view that a possible new wave of European Union sanctions over Moscow's involvement in the Ukraine crisis could cause severe damage to whole sectors of the Russian economy. In a sign policymakers are nervous about the impact of sanctions - which are also being ratcheted up by the United States - the central bank unexpectedly raised its key interest rate by 50 basis points. ID:nL6N0Q02PZ "It's clear that the key factor for market dynamics today is the expectation of EU sanctions. ... All other information is for the moment beyond the border of what's influencing trades," said Artyom Argetkin from BCS brokerage. The dollar-denominated RTS index .IRTS was down 1.5 percent at 1248.3 points at 1200 GMT, while the rouble-based MICEX .MCX traded 1.4 percent lower at 1389.9 points. Russian sovereign dollar bonds fell across the curve on the sanctions fears, while the rouble weakened slightly against the dollar, despite being boosted by the central bank rate decision and the end-of-month tax period. Ambassadors of the 28-nation EU are discussing options to curb Russian access to capital markets, arms and energy technology in response to last week's downing of a Malaysian airliner in an area of eastern Ukraine held by Russian-backed separatists. ID:nL6N0PZ510 The EU is also expected to expand its list of those targeted by sanctions including asset freezes on Friday due to Moscow's perceived backing of the pro-Russian separatists fighting Ukrainian government forces. Earlier, the United States said Russia was firing artillery across its border, targeting Ukrainian military positions, and that Moscow intends to deliver heavy weapons to separatist forces. ID:nL2N0PZ2AH Russia's $1.5 billion 2043 dollar bond 78307ADH3= fell almost 2 cents while the 2030 issue XS011428878=TE fell half a cent. Russian yield spreads over U.S. Treasuries widened 7 basis points to 285 bps on the EMBI Global index 11EML . ID:nL6N0Q038D The rouble, meanwhile, was down 0.08 percent against the dollar RUBUTSTN=MCX to trade at 35.07 but strengthened 0.08 percent versus the euro EURRUBTN=MCX to 47.16. "Markets-wise, the [central bank] move is marginally supportive for the rouble, even though it won't be able to stop foreign capital repatriation if bolder sanctions are approved," Dmitry Polevoy, chief economist for Russia and CIS at ING bank. The Russian currency was 0.03 percent weaker at 40.51 against the dollar-euro basket RUS=MCX the central bank uses to gauge the rouble's nominal exchange rate. Investors pulled $172 million from Russia-dedicated funds between July 17 and 23, the largest outflow since January, analysts at VTB Capital said in a note, citing data from Emerging Portfolio Fund Research released on Friday. For rouble poll data see FXRUB FXEURRUB FXRUS For Russian equities guide see RU/EQUITY For Russian treasury bonds see 0#RUTSY=MM Russia in graphics: http://link.reuters.com/dun63s (Additional reporting by Olga Popova in Moscow and Sujata Rao in London; Editing by Lidia Kelly and John Stonestreet) ((alexander.winning@thomsonreuters.com)(+7 495 775 1242)(Reuters Messaging: alexander.winning.thomsonreuters.com@reuters.net)) Keywords: RUSSIA MARKETS/

SNAPSHOT-India stocks, bonds, rupee, swaps, call at close

July 25, 2014 - reuters.com

STOCKS .BSESN .NSEI ----------------------- The benchmark BSE index ended down 0.55 percent and the broader NSE index 0.51 percent lower, as investors took profits in blue-chips. .BO GOVERNMENT BONDS IN088323G=CC -------------------------------- The benchmark 10-year 2023 bond yield ended 2 bps higher at 8.67 percent, compared with its previous close, as dealers prepared to shift to the new 10-year benchmark paper, while concerns remained about tight liquidity conditions. IN/ RUPEE INR=D2 -------------- The partially convertible rupee ended higher at 60.1025/1125, compared with Thursday's close of 60.12/13, as heavy dollar demand from importers to meet month-end commitments was offset by greenback sales from custodian banks, continuing a pattern of largely range-bound trading. INR/ INTEREST RATE SWAPS INROIS MIOIS= ------------------------------------- The benchmark five-year swap rate ended up 2 bps at 7.89 percent, while the one-year rate closed unchanged at 8.40 percent. CALL MONEY INROND= --------------------- India's cash rate ended at 8.40/8.45 percent compared with Thursday's close of 9.00/9.10 percent. ---------------------- Double click on codes in <> Reuters MIOR/MIBOR MIBR= NSE MIBID/MIBOR MIBR=NS Reuters Corporate Bond Yield/Spread 0#AAAINBMK= For Reuters Benchmarks IN/BENCH (Compiled by Dipika Lalwani) ((dipika.lalwani@thomsonreuters.com)(Reuters Messaging: dipika.lalwani.thomsonreuters.com@reuters.net)) Keywords: INDIA SNAPSHOT/

UPDATE 2-Brazil to boost credit to counter economic slowdown

July 25, 2014 - reuters.com

(Adds details on changes in bank reserve requirements, background) By Walter Brandimarte RIO DE JANEIRO, July 25 (Reuters) - Brazil's central bank on Friday announced measures to boost credit in the country's ailing economy, one week after keeping its benchmark interest rate at its highest level in over two years to fight inflation. The bank said in a statement it was freeing up an estimated 30 billion reais ($13.5 billion) in the financial system through changes to banks' reserve requirements. The move "aims at improving the distribution of liquidity in the economy" given a recent slowdown in credit and relatively low levels of bad loans, the bank said. After years of slow growth, the Brazilian economy is now flirting with a recession as manufacturing shrinks and industry workers lose their jobs. Inflation, however, remains at the ceiling of a government target, leaving policymakers in a difficult position. Among the changes announced on Friday, banks will be allowed to use 50 percent of the amount they set aside as reserve requirements on term deposits to provide more credit or to purchase loan portfolios from eligible financial institutions. The central bank also increased to 134 from 58 the number of financial institutions that are eligible to sell their loan portfolios under that option. In a separate statement, the central bank said it was adjusting minimal capital requirements for retail credit operations. The decision aims at reviewing macroprudential measures that were implemented as of 2010, when policymakers sought to slow down the pace of credit growth in Brazil, according to the statement. Macroprudential policies are meant to care for the health of the financial system by increasing or reducing reserve and capital requirements as well as, in the case of Brazil, taxing financial operations. Initially used to ease the flow of U.S. dollars into the economy and limit a rapid credit expansion, Brazil started to remove some macroprudential measures as the economy weakened in 2012. (Reporting by Walter Brandimarte Editing by W Simon) ((walter.brandimarte@thomsonreuters.com)(+55 21 2223 7149)(Reuters Messaging: walter.brandimarte.thomsonreuters.com@reuters.net)) Keywords: BRAZIL CENBANK/REQUIREMENTS

UPDATE 2-Ireland keen to repay bailout loans early - minister

July 25, 2014 - reuters.com

* Paying loans back early attractive for Ireland - minister * Ireland borrowing on markets at lower rate than IMF loans * Irish finance ministry says all options being looked at (Recasts with comments from minister) By Padraic Halpin DUBLIN, July 25 (Reuters) - Ireland would like to secure agreement from its European Union partners to allow it to repay some of its bailout aid early and reduce the cost of carrying its debt, a government minister said on Friday. Enterprise Minister Richard Bruton made the comments after the Irish Times reported that Ireland was taking soundings on whether its EU partners would allow it to repay the loans provided by the International Monetary Fund ahead of schedule. "That certainly would be attractive. Ireland is able to borrow at very low rates and if we can take advantage of that to reduce the cost of carrying debt that would be in Ireland's interests," Bruton told reporters when asked if Dublin was looking to pay off some of its loans early. "That's what we do at every opportunity - seek to find the cheapest possible lending sources and no doubt we would like to secure that agreement." Paying off the IMF portion of the bailout debt early would allow Ireland to cut its debt servicing costs but could in theory penalise other EU states by making them wait longer for repayment of funds they granted. Irish Finance Minister Michael Noonan said earlier this month he was considering how Ireland could repay the IMF loans early, but that such a move would also trigger early repayment of EU funds. Ireland, which completed its three-year EU/IMF aid programme last year, returned to bond markets in January 2012 and borrowed 10-year debt at a record low of 2.32 percent last month. ID:nL6N0PL26B Its IMF loans have an average maturity of seven years and are due to be paid back in instalments from July 2015 to December 2023. Their average interest rate exceeds 4 percent. The repayment schedule on the EU loans, which carry lower rates of interest, was initially similar. But member states agreed to extend the maturities last year. Officials in Dublin have been assessing the appetite among member states to sanction early repayment of only the IMF funds before a formal application seeking a sign-off from EU countries is made, the Irish Times said, without citing sources. The possible benefit to Ireland of such a refinancing could be up to 600 million euros, Goodbody Stockbrokers chief economist Dermot O'Leary said in a note. The finance ministry said all options were being looked at regarding debt sustainability but no decision had been made. "Technical issues are considered as a matter of course," a ministry spokesman said in a statement. "This review process can include contact with other authorities to assess that their understanding of the position on the loans is the same as ours." A spokesman for the European Commission said Ireland had so far not submitted any request for early repayment of loans granted under the EFSM rescue fund. (Additional reporting by Julia Fioretti in Brussels, editing by John Stonestreet and Raissa Kasolowsky) ((padraic.halpin@thomsonreuters.com)(+353 1 500 1529)(Reuters Messaging: padraic.halpin.thomsonreuters.com@reuters.net)) Keywords: IRELAND EU/IMF

UPDATE 1-Freeport, Indonesia sign deal, paving way for copper exports to resume

July 25, 2014 - reuters.com

(Adds quotes, details) By Fergus Jensen JAKARTA, July 25 (Reuters) - Freeport-McMoRan Inc FCX.N and the Indonesian government on Friday reached a deal over a contract dispute that should pave the way for a resumption of the U.S. company's copper exports after a six-month halt. Indonesia's top copper miner hopes next month to ramp up production and restart concentrate shipments from Grasberg, one of the world's largest copper mines, said Freeport Indonesia CEO Rozik Soetjipto. If other miners follow suit, the deal will take some of the pressure off president elect Joko Widodo. Widodo was declared the winner of Indonesia's presidential elections this week and has said solving the dispute - which has sapped government mining revenues - would be one of his top priorities when he takes power in October. "With this (MoU) we send a message to the next government that Freeport wants to build this and this and this," said Sukhyar, the coal and minerals director general. As part of Friday's deal, the government reduced Freeport's copper concentrate export tax to 7.5 percent from 25 percent after the company agreed to pay a bond as a guarantee they will build a smelter later. The tax rate that Freeport is subject to is part of a new tax regime for mineral concentrate exporters approved on Friday by the finance ministry. "The 7.5 percent rate is not automatic, and is connected to their spending on a (smelter) guarantee bond and a percentage from the cost of their investment," said Deputy Finance Minister Bambang Brodjonegoro. The government forecasts Freeport, which is expected to soon receive an export permit by the trade ministry, to ship 756,000 tonnes of copper concentrate in the second half of the year, Sukhyar said. A dispute with mining companies triggered by the imposition in January of new regulations, which included the export tax and a ban on mineral ore exports, had cost $1.3 billion in lost shipments of copper concentrate. The mining regulations were intended to force miners to develop smelters and mineral processing facilities and part of a government push to derive bigger returns from Indonesia's mineral resources. But rather than pay it, most miners stopped exporting from Southeast Asia's biggest economy and one of the world's top mineral producers. The ban on the export of unprocessed ore remains in place. (Additional reporting by Adriana Nina Kusuma; Writing by Randy Fabi; Editing by William Hardy) ((Randolph.Fabi@thomsonreuters.com)(+62 21 2992 7601)(Reuters Messaging: randolph.fabi.thomsonreuters.com@reuters.net)) Keywords: INDONESIA MINING/FREEPORT

Sri Lankan rupee gains on remittances, exporter dollar sales

July 25, 2014 - reuters.com

COLOMBO, July 25 (Reuters) - The Sri Lankan rupee rose on Friday, helped by heavy inward remittances for the Ramazan festival and exporter dollar sales, while dollar buying by a state bank prevented any sharp appreciation. The rupee LKR=LK ended at 130.20/25 per dollar, firmer from Thursday's close of 130.23/25. Dealers said state banks also lowered the dollar buying rate by 2 cents to 130.21, from the previous day's 130.23, to curb sharp gains in the local currency. "There are heavy inward remittances, probably for Ramazan," said a currency dealer. Finance Secretary P.B. Jayasundera said on Wednesday Sri Lanka was building up its foreign exchange reserves while keeping its currency stable as the island nation sees more dollar inflows. ID:nL4N0PY3VX Speaking at a Foreign Correspondents' Association forum, Jayasundera said the choice was to let the exchange rate appreciate and enjoy the short-term gain or let the exchange rate remain flexible within a reasonable level. Jayasundera, the top technocrat in President Mahinda Rajapaksa's government, said though technically the government had the luxury of allowing the rupee to appreciate, the authorities did not want that to happen. The central bank has absorbed more than $750 million so far this year, which Jayasundera attributed to a rise in inflows from exports, tourism and remittances. Dealers had been expecting the rupee to appreciate due to weak growth in imports and private sector credit, despite multi-year low interest rates. Private sector credit growth hit a more than 4-1/2-year low of 2.2 percent in May on the year, compared with 3.3 percent a month earlier. May imports fell 17.6 percent on the year to $1.28 billion. (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu) ((ranga.sirilal@thomsonreuters.com)(+94-11-232-5540)(Reuters Messaging: ranga.sirilal.thomsonreuters.com@reuters.net)(www.twitter.com/ra ngaba)) Keywords: MARKETS SRI LANKA/FOREX

India to auction 150 bln rupees of T-Bills on July 30

July 25, 2014 - reuters.com

July 25 (Reuters) - The Reserve Bank of India will auction 150 billion rupees ($2.50 billion) of treasury bills on July 30, including 90 billion of 91-day t-bills and 60 billion rupees of 182-day t-bills, it said in a release on Friday. ($1 = 60.1025 Indian Rupees) (Reporting by Aditya Kondalamahanty in Bangalore; Editing by Anupama Dwivedi) ((Aditya.K@thomsonreuters.com)(+91 80 6749 4771)(Reuters Messaging: Aditya.K@thomsonreuters.com@reuters.net)) Keywords: INDIA CENBANK/TREASURIES

Indian rupee edges up but snaps two-week gaining streak

July 25, 2014 - reuters.com

* Rupee ends at 60.1025/1125 per dlr vs 60.12/13 on Thursday * Good dlr selling by custodian banks offsets import demand * INR seen in 59.60 to 60.50 broad range next week - traders By Swati Bhat MUMBAI, July 25 (Reuters) - The Indian rupee ended marginally higher on Friday, as heavy dollar demand from importers to meet month-end commitments was offset by greenback sales from custodian banks, continuing a pattern of largely range-bound trading. Still, the rupee fell 0.3 percent for the week, posting its first weekly loss in three in a week dominated by flows rather than major events or factors. Traders said they will continue to monitor movements in other Asian currencies and moves in domestic shares for clues in the near-term. "There were some heavy dollar inflows with custodian banks which helped offset the demand from oil firms and other importers," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank. "Geopolitical tensions will be the key trigger to watch out for as there are no other factors internally. The 59.80 to 60.50 range will continue to hold." The partially convertible rupee INR=D2 closed at 60.1025/1125 per dollar, compared with 60.12/13 on Thursday. The unit hit 59.98 on Thursday, its strongest since July 14. Traders broadly expect the unit to hold in a range of 59.60 to 60.50 next week. The rupee continues to be supported by good foreign buying in Indian shares and debt markets, although that was offset by importer demand for dollars. India's broader NSE index .NSEI fell on Friday after hitting a record high for a third consecutive session on profit-taking in blue-chips. .BO In the offshore non-deliverable forwards PNDF , the one-month contract was at 60.26 while the three-month was at 60.74. FACTORS TO WATCH * Euro battling losses after poor German data FRX/ * Rupiah edges up, baht pauses after rally EMRG/FRX * Euro, stx sag as Ukraine woes hit German confidence MKTS/GLOB * Foreign institutional investor flows INFII INFII01 * For data on currency futures INRFUTURES DIARIES & DATA: Indian Data Watch ECONIN European diary WEU/EQTY2 Indian diary IN/DIARY US Diary US/DIARY (Editing by Subhranshu Sahu) ((swati.bhat@thomsonreuters.com)(+91-22-61807353)(Reuters Messaging: swati.bhat.thomsonreuters.com@reuters.net)) Keywords: MARKETS INDIA FOREX/

UPDATE 2-African Barrick Gold looks beyond savings target

July 25, 2014 - reuters.com

* Raises full-year production target to more than 700,000 ounces * Aims to save more than $185 mln by year-end - CEO * First-half net profit $40.8 mln vs year-earlier loss * Shares rise as much as 5 pct (Adds CEO comments, background, updates share price) By Karen Rebelo July 25 (Reuters) - African Barrick Gold Plc ABGL.L expects to push beyond its savings target of $185 million by the end of the year as it cuts costs at its Tanzanian mines in response to low gold prices. African Barrick's shares, which have more than doubled in the last year, rose as much as 5 percent on Friday after the FTSE-250 company also raised its full-year production forecast. Many gold and silver miners were forced to shelve new projects and slash costs last year after prices of the precious metals fell to their lowest in a decade. Gold XAU= fell 28 percent and silver XAG= plunged 36 percent in 2013. "The new norm for the industry is cost control," African Barrick Chief Executive Brad Gordon told Reuters in an interview. African Barrick launched an operational review in early 2013, focusing on boosting output and cutting costs after its majority owner, Barrick Gold Corp ABX.TO , was unable to sell the business to a Chinese company. Gordon said the company was on track to meet, or possibly surpass, its publicly stated cost-savings target of $185 million without the need to sell any of its three operating mines. "We're on a run rate of $175 million by the end of this year. We expect that that will continue to improve," he said. "The number we are targeting internally is $200 million of saving by the end of this calendar year." Cost cuts will continue beyond this year. "There are still some opportunities to reduce our overall workforce," Gordon said. "There are still improvements to gain from changing the mining methods ... particularly at Bulyanhulu, where we're changing the mine completely to a mechanised system rather than a hand-held system, which is a lot safer." Expected production from the upper east zone at Bulyanhulu, one of African Barrick's three mines in northern Tanzania, was a factor in the company raising its full-year production forecast to more than 700,000 ounces from 650,000-690,000 ounces. Production rose 13 percent to 346,581 ounces in the six months ended June 30. The average realised gold price for the six months fell to $1,290 per ounce from $1,480 per ounce a year earlier. ID:nPRrP1710a African Barrick posted a profit of $40.8 million for the first half of 2014, compared with a year-earlier loss, when it took a writedown of $727 million on the value of some of its mines. ID:nL6N0G01EP The company declared an interim dividend of 1.4 cents. African Barrick's shares were up 3.9 percent at 263.8 pence at 1130 GMT on the London Stock Exchange. (Editing by Ted Kerr, Gopakumar Warrier and Robin Paxton) ((karen.rebelo@thomsonreuters.com)(within UK +44 20 7542 1810)(outside UK +91 80 6749 1136)(Reuters Messaging: karen.rebelo.thomsonreuters.com@reuters.net)) Keywords: AFRICAN BARRICK GOLD RESULTS/

Sri Lanka sees $244.2 mln inflow in govt. securities after outflow

July 25, 2014 - reuters.com

COLOMBO, July 25 (Reuters) - Foreign investors bought 31.8 billion rupees ($244.24 million) worth of Sri Lankan government securities this week, official data showed on Friday, a week after the country saw a net $307.13 million outflow in the debts. The total foreign holding of government securities in the week that ended on July 23 rose 6.8 percent to 501.34 billion rupees, compared with 469.53 billion rupees a week ago. The total foreign holding fell 7.9 percent last week after there was an outflow of 40 billion rupees which the central bank said would not have an impact on the rupee currency. ID:nL4N0PW1V1 On Thursday, central bank governor Ajith Nivard Cabraal said the monetary authority would accommodate up to $500 million in inflows into government securities from the Reserve Bank of India after an agreement between the banks. ID:nL4N0PZ56G This week's inflow increased the foreign holding of total outstanding government securities to more than a 12.5 percent threshold set by the central bank. The rupee, which hit a more-than-one-year high last week, has been on an uptrend since late February in the absence of strong demand for imports and private sector credit. The central bank has absorbed about $750 million this year through to July 14 to prevent a sharp appreciation of the currency. Foreign holdings of Sri Lankan government securities rose 20 percent last year to 477.4 billion rupees. While the central bank has allowed some flexibility of the foreign holding threshold, by the end of the year, it has to fall within the 12.5 percent level. ($1 = 130.2000 Sri Lankan Rupees) (Reporting by Shihar Aneez; Editing by Robert Birsel) ((shihar.aneez@thomsonreuters.com)(+94-11-232-5540)(Reuters Messaging: shihar.aneez.thomsonreuters.com@reuters.net twitter:@shiharaneez)) Keywords: SRI LANKA SECURITY/INFLOW

London gold fix company appoints committee to oversee benchmark

July 25, 2014 - reuters.com

* Gold fix company to detail new code of conduct * New administrator, chairperson sought for gold fix * RFP process unlikely to be launched before new silver fix starts By Clara Denina LONDON, July 25 (Reuters) - The company operating the gold price 'fix' has appointed a supervisory committee to oversee the century-old system of benchmarking gold prices ahead of the implementation of stricter regulations, its website showed on Friday. The London Gold Market Fixing Ltd's new board is made up of compliance officers at the four banks that currently set the twice-daily auction process over the telephone. The appointment of the committee comes after the company said this month it was seeking a third party to take over administration of the process. ID:nL6N0PR2OF Other changes, which will include a new code of conduct for participants and the appointment of an independent chairperson, are widely seen as the first steps toward a move to an electronic platform which will broadcast it to a wider audience. A similar process to find a new price benchmark administrator recently took place in the silver market. That yielded an electronic auction mechanism to replace a daily conference call with just three banks. ID:nL6N0PL4ZL The gold fixing company said it would launch a request for proposal (RFP) process to find the new administrator for the benchmark. Two sources close to the matter said that this is unlikely to start before market participants see the new silver process get under way from August 15. Bank of Nova Scotia BNS.TO , HSBC HSBA.L , Societe Generale SOGN.PA , and Barclays BARC.L operate the gold fixing, while Deutsche Bank DBKGn.DE stopped in May after two decades. The new committee will promote the implementation of a code of conduct and will devise a process for reviewing the conduct of the fixing by including post review of the recordings and scrutiny of the submission process, the company said on its website. It will also be responsible for assessing any potential conflict of interest or complaints about the fixing process. SCRUTINY INCREASES Regulators across Europe and the United States have scrutinised financial benchmarking processes following the Libor manipulation case in 2012 and firms have been fined billions of dollars. ID:nL5N0JJ1NE Although market participants view many aspects of the existing gold process favourably, reforms still need to comply with the 19 principles on financial benchmarks outlined in July 2013 by the International Organization of Securities Commissions (IOSCO), an umbrella group of market regulators. The first phase of the IOSCO principles, which all benchmarks should follow, ends in July. IOSCO has six months to decide if any further action is appropriate, based on the take-up of the benchmark administrators to these principles, the regulator said. The new committee will recommend reviews of the gold fixing process to make sure it is compliant with the IOSCO principles, it said. The London Gold Market Fixing Ltd was founded in 1994 but only since 2011 have organisations wishing to reproduce or utilise gold fixing data been required to purchase a licence from the company. (Editing by Susan Thomas and Jason Neely) ((clara.denina@thomsonreuters.com)(+44 207 542 9420)(Reuters Messaging: clara.denina.thomsonreuters.com@reuters.net)) Keywords: GOLD FIX/

Asia Gold-Indian premiums drop on excess supply, weak demand

July 25, 2014 - reuters.com

By Siddesh Mayenkar and A. Ananthalakshmi MUMBAI/SINGAPORE, July 25 (Reuters) - Premiums on gold in India nearly halved in the latest week as higher supplies and low domestic demand in a seasonally slack period weighed, while appetite for the precious metal in rest of Asia picked up slightly as prices dipped below $1,300 an ounce. Premiums in India, the world's second-biggest gold buyer, fell on Friday to $5-$6 an ounce on London prices, against $10 quoted last week, traders said. Premiums struck a record $160 an ounce in December last year. "There's carry forward stock from June, and because of low demand, supply is available," said Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation. Demand is generally low during the monsoon period. Festivals will re-start in September and continue till November. India is estimated to have imported 100 tonnes of gold in June, about twice the normal average after private agencies were allowed to import the metal. Imports may be about 40-50 tonnes in July and August, Bamalwa said. However, traders will have to live with a record 10 percent import duty, as the government does not have a proposal to end it currently under consideration, the country's junior finance minister has said. ID:nD8N0PQ03O India, desperate to trim a gaping current account deficit, took several measures last year to curb demand for bullion, its second-biggest import after oil. Besides the duty imposed by the finance ministry, the Reserve Bank of India also imposed the so-called 80-20 rule that requires a fifth of all bullion imports to be re-exported. REST OF ASIA Buying interest for physical gold picked up slightly in Asia this week as prices dipped below $1,300 an ounce. "We saw some interest once prices fell below $1,300," said one dealer with a bullion bank in Singapore. "However, the volumes were not big as buyers believe there are more declines to come. There are no issues with supply right now as demand is quiet, so premiums have been very stable," the dealer said. Premiums to the global benchmark were steady at around $1 in Hong Kong and Singapore. Tokyo prices swung to a small premium from a discount earlier this month. GOLD/ASIA1 In top buyer China, prices were at a premium of about $3, up from flat rates last week. (Editing by Muralikumar Anantharaman) ((siddesh.mayenkar@thomsonreuters.com)(+91-22-61807163)(Reuters Messaging: siddesh.mayenkar.thomsonreuters.com@reuters.net)) Keywords: GOLD PHYSICALS/ASIA

INDICATORS - Kazakhstan - July 25

July 25, 2014 - reuters.com

Vietnam domestic market commodity prices-July 25

July 25, 2014 - reuters.com

July 25 (Reuters) - Following are domestic prices of Vietnam's key commodities. Unit: million dong VND= per tonne. Item July 21-25 July 14-18 Location Robusta beans 38.9-40.3 38.8-40.0 Central Highlands Cocoa 57.7-58.2 57.8-58.4 Daklak Black pepper 180.0-185.0 172.0-177.0 Southern region Refined sugar 13.0-15.5 13.0-15.5 Southern region Summer-autumn paddy 5.20-6.30 5.40-5.90 Mekong Delta ___________________ SJC gold 3.668-3.687 3.672-3.695 Hanoi, HCM City NOTES: Gold prices are low/high selling prices quoted in million dong during the week by top manufacturer SJC per 3.75-gram ingot. Coffee export prices COFFEE/ASIA1 Rice export prices RICE/ASIA1 Historical data VNCOMM01 Central bank's gold auction SBVGOLD2013 ($1=21,200 dong) (Compiled by Hanoi Newsroom) ((ho.minh@thomsonreuters.com; +844 3825 9623)) Keywords: VIETNAM COMMODITIES/PRICES

India Morning Call-Global Markets

July 25, 2014 - reuters.com

EQUITIES NEW YORK - U.S. stocks finished a quiet session mostly flat on Thursday as earnings painted a mixed picture of the economy, though the S&P 500 set another record closing high. The Dow Jones industrial average .DJI dipped 2.83 points or 0.02 percent, to close at 17,083.80. The S&P 500 .SPX gained 0.97 of a point or 0.05 percent to end at 1,987.98, its second record closing high in a row. The Nasdaq Composite .IXIC shed 1.59 points or 0.04 percent, to finish at 4,472.11 For a full report, click on .N - - - - LONDON - Britain's main equity index pushed forward on Thursday, as gains at media company Reed Elsevier REL.L helped offset a slump in home improvements retailer Kingfisher KGF.L . The FTSE 100 .FTSE closed up 0.3 percent, or 23.31 points, at 6,821.46 points. For a full report, click on .L - - - - TOKYO - Japan's Nikkei share average rose on Friday after the S&P 500 set another record closing high and as index heavyweight Fanuc Corp 6954.T jumped after reporting strong profits. The Nikkei .N225 rose 0.6 percent to 15,377.00 points by mid-morning, after falling 0.3 percent on the previous day. For a full report, click on .T - - - - HONG KONG - Hang Seng Index .HSI set to open up 0.4 percent. For a full report, click on .HK - - - - FOREIGN EXCHANGE SYDNEY - The dollar held gains versus the yen on Friday and the euro stood steady after rebounding from an eight-month low against the greenback as data painted a brighter picture of the U.S. and eurozone economies. The dollar was little changed at 101.76 yen JPY= after gaining more than 0.3 percent overnight to a two-week high of 101.86 after weekly U.S. filings for first-time jobless benefits fell to the lowest level since early 2006. For a full report, click on USD/ - - - - TREASURIES NEW YORK - U.S. Treasury debt prices fell on Thursday after data showed jobless claims in the world's largest economy dropped to their lowest in more than eight years, although losses may be limited by safe-haven buying given tensions in the Middle East and Ukraine. Yields, which move inversely to prices, on benchmark U.S. 10-year notes and 30-year bonds rose to one-week highs after the data, with the 10-year climbing above a pivotal 2.50 percent. For a full report, click on US/ - - - - COMMODITIES GOLD SINGAPORE - Gold retained sharp overnight losses to trade near a five-week low on Friday and was headed for a second straight week of losses, as strong global economic data offset the metal's safe-haven appeal. Spot gold XAU= was little changed at $1,292.10 an ounce by 0243 GMT, after losing nearly 1 percent on Thursday. The metal hit $1,287.46 in the previous session - its lowest since June 19 - before recovering slightly. For a full report, click on GOL/ - - - - BASE METALS SYDNEY - London copper edged down on Friday but was still set to log its fifth weekly advance in six, as investors grow more positive towards metals given encouraging signs of economic revival and a brighter outlook for China in particular. Three-month copper on the London Metal Exchange CMCU3 edged down by 0.2 percent to $7,155.75 a tonne by 0049 GMT, after gains of 1.7 percent in the previous session when it hit its loftiest level since July 14 at $7,175 a tonne. For a full report, click on MET/L - - - - OIL NEW YORK - Oil futures prices fell on Thursday as unseasonably weak demand and plentiful supplies of crude and refined products offset strong Chinese factory data that could presage higher energy demand in the world's No. 2 oil consumer. Brent for September delivery LCOc1 lost 96 cents to settle at $107.07 a barrel, after closing 70 cents higher on Wednesday. For a full report, click on O/R (Compiled by Indulal PM) ((indulal.p@thomsonreuters.com)(+91-22-6180-7183)(Reuters Messaging: indulal.p.thomsonreuters.com@reuters.net)) Keywords: MORNINGCALL INDIA/

UPDATE 1-Turn-out low in Ghana for protests against economic woes

July 24, 2014 - reuters.com

* Fewer than expected protester turnout * Commercial activities unaffected * Protesters blame govt for high inflation, weak currency (Adds details) By Kwasi Kpodo ACCRA, July 24 (Reuters) - Trade union leaders in Ghana failed on Thursday to mobilise significant support for a planned nationwide protest against what they say is the government's mishandling of the economy. The Trades Union Congress (TUC), the West African nation's largest coalition of workers' syndicates, had called upon its roughly 500,000 members to hold protest marches and observe a one-day general strike. Some 2,000 workers marched through the streets of the capital Accra while a just few hundred joined similar protests in other cities including Kumasi, Takoradi and Tamale. The demonstrations, which were meant to be the first nationwide protest since President John Dramani Mahama took office in January last year, had little impact on commercial activities. "Times are very hard for the majority of citizens and we are calling for immediate action to halt the depreciation of the cedi and rising cost of living," Kofi Asamoah, the TUC's secretary-general, told demonstrators in Accra. Once regarded as one of Africa's most promising frontier markets, Ghana is struggling with stubborn budget deficits, rising public debt and a currency, the cedi, that has shed around 45 percent of its value against the dollar this year. Consumer price inflation in Ghana - which produces cocoa, gold and oil - hit a fresh four-year high of 15 percent in June, mainly driven by the cedi's slide. Kudjoe Kyei, a 39-year old company driver said he joined the protest in Accra because the economic hardships had become unbearable. "Prices of goods are going up every day and we can't continue pretending," he told Reuters, adding that one of his two daughters had dropped out of school because he no longer had money to pay for her tuition. The demonstrators, many wearing red shirts, arm bands and headbands, red being the TUC's colour, chanted anti-government slogans and blew on Vuvuzela horns as they marched peacefully through the streets of Accra, escorted by dozens of police. "Fatal error, Mahama's government must reboot now", read one placard held up by a demonstrator. "Fix the cedi now" and "Eh? Somalia's shilling is doing better than Ghana's cedi?" were among others. (Editing by Joe Bavier and Susan Fenton) ((joe.bavier@thomsonreuters.com)(+225 07074101)(Reuters Messaging: joe.bavier.thomsonreuters.com@reuters.net)) Keywords: GHANA ECONOMY/PROTESTS

South Africa stocks weighed down by gold producers

July 24, 2014 - reuters.com

* All-share index falls 0.56 percent * Top-40 down 0.63 percent JOHANNESBURG, July 24 (Reuters) - South African stocks edged lower for a second straight session on Thursday as gold prices hit a one-month low on euro zone and Chinese data, pushing down the share price of producers such as Harmony Gold HARJ.J and AngloGold Ashanti ANGJ.J . Bullion's price fell to fresh lows on Thursday on the back of the robust numbers from China and Europe, which deterred investors from buying into safe haven assets which include the precious metal ID:nL4N0PZ2LE . Africa's top producer AngloGold fell 4 percent to 184 rand, making it the biggest blue-chip decliner. Harmony shed 2.06 percent to 33.79 rand and its larger rival Gold Fields GFIJ.J slipped 2.75 percent to 40.60 rand. Hopes of a recovery in the European economy was spurred by data from Germany which showed that its business activity was strong in July, while Chinese factory activity expanded at its fastest pace in 18 months. There are concerns that the local market might have run too hard after a streak of record highs which have made Johannesburg shares look expensive. "One can say that other than the resource sector there is no huge value to be found in the market but there is still value in the resources," said Greg Katzenellenbogen, a director at Sanlam Private Investments. "But the companies' earnings would have to come through to justify some of the share prices that we see." The Top-40 index .JTOPI edged 0.63 percent lower to 46,448. The broader All-share index .JALSH was down 0.56 percent to 51,621. On the flip side, Kumba Iron Ore KIOJ.J benefited from strong economic data in China, which is its biggest market by far. Its shares rose 2.47 percent at 360 rand. Shares of Alexander Forbes AFHJ.J surged 8 percent above its IPO price as the pension fund manager returned to the Johannesburg bourse on Thursday. Around 218 million shares were traded, higher than last year's daily average of 175 million. Decliners outpaced advancers 164 to 140. (Reporting by Zandi Shabalala; Editing by Ed Stoddard) ((zandi.shabalala@thomsonreuters.com)(+27 11 775 3158)(Reuters Messaging: zandi.shabalala.thomsonreuters.com@reuters.net)) Keywords: MARKETS SAFRICA/STOCKS

UPDATE 4-Indonesia offers tax cut to miners, Freeport to soon resume exports

July 24, 2014 - reuters.com

* Miners must pay bond or build smelter to get lower tax * Concentrate export tax cut to below 10 pct from 20-25 pct * Freeport set to strike deal * Newmont still in dispute (Recasts, updates details on export tax revision) By Fergus Jensen JAKARTA, July 24 (Reuters) - Indonesia has offered mining companies a tax concession to end a six-month dispute that has reduced mineral exports by half a billion dollars a month, pushed up the global price of some metals and led to thousands of layoffs. The company with the biggest mining operations in the archipelago, Freeport-McMoRan Copper & Gold Inc FCX.N , is set to become the first to take the deal and restart concentrate shipments from Grasberg, one of the world's largest copper mines. Freeport said on Wednesday that the signing of a memorandum of understanding (MOU) to resume exports was imminent. ID:nL2N0PY0PX After a cabinet meeting on mining policy on Thursday, Indonesia's chief economics minister Chairul Tanjung told reporters that Freeport was close to receiving an export permit. If other miners follow suit, the deal will take some of the pressure off president elect Joko Widodo. Widodo was declared the winner of Indonesia's presidential elections this week and has said solving the dispute - which has sapped government mining revenues - would be one of his top priorities when he takes power in October. It was unclear if the decision to revise the export tax rules was deliberately timed to coincide with the result of Indonesia's most tightly-contested election. The second-largest copper miner in the country, Newmont Mining Corp NEM.N , said on Wednesday that it, too, was negotiating an agreement to restart exports, but an Indonesian official denied any talks had taken place "There have been no MOU discussions with Newmont. None at all," Coal and Minerals director general Sukhyar said on Thursday. "The government's position is we will face them in court." The company has more work to do to rebuild its relationship with the government after angering authorities by suspending operation at its biggest Indonesian mine and filing for international arbitration in response to the move in January by Indonesia to raise export taxes on metal concentrates. "The government will take stern action towards Newmont," Tanjung quoted President Susilo Bambang Yudhoyono as saying on Thursday. He said also that Yudhoyono referred to the firm as "not valuing working on Indonesian soil, the birthplace of Indonesia's ancestors." Newmont officials were not immediately available to respond to the comments. Freeport and Newmont are Indonesia's top copper miners, and account for 97 percent of the nation's copper output. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ COLUMN - New president can bring certainty to Indonesia's mining policy: ID:nL4N0PZ0XQ ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> TAX BREAK FOR SMELTER BOND Indonesia will cut the tax levied on mineral concentrate exports to less than 10 percent for miners that pay a bond as a guarantee they will build a smelter later, Fiscal Policy chief Andin Hadiyanto told Reuters on Thursday, adding that the new regulation was due to be issued in August. As construction of the smelter progresses, the export tax on concentrates would fall to zero, he added. The government will also charge extra royalties on mineral sales to at least partly offset any loss in revenue, officials said. In January, Indonesia imposed an escalating tax policy, which penalised any company which had not made progress on building a smelter by slapping them with a 25 percent tax on copper concentrate exports or a 20 percent tax on lead, zinc, iron and manganese shipments. The tax was due to increase annually to 60 percent in 2017. The tax was intended to force miners to develop smelters and mineral processing facilities and part of a government push to derive bigger returns from Indonesia's mineral resources. But rather than pay it, most miners stopped exporting from Southeast Asia's biggest economy and one of the world's top mineral producers. The government also banned the export of unprocessed ore, and that ban will remain in place, FREEPORT'S AGREEMENT As part of its deal, Freeport has agreed to pay more royalties, Hadiyanto said. Its royalties will rise to 4 percent on copper sales, Sukhyar said. It previously paid between 1.5 and 3.5 percent under an old deal, and the higher rate will bring it into line with royalties paid by other companies. The government is expected to grant Freeport an export permit within two weeks, Sukhyar said. The company is Indonesia's biggest taxpayer, and earlier said its contributions would drop by $1.6 billion in 2014 as a result of declining output from the rule change in January. ID:nL3N0JR0YJ Under the agreement, Freeport said it would pay a "significantly reduced" export duty in 2014, 2015 and 2016 but higher royalties on copper and gold sales. It would also pay a $115 million "assurance bond" against development of a smelter. "It is a compromise to create a bridge for us so that we can return to normal operations," Freeport Chief Executive Richard Adkerson said of the MOU in an earnings call with analysts and investors. Freeport and Newmont need the MOU to secure billion-dollar expansion plans, but at this stage no other companies that have contracts to operate in Indonesia were being asked to sign such documents before being eligible for export permits, Indonesian Mining Association (IMA) Executive Director Syahrir Abubakar told Reuters. The older mining contracts that have their own tax rates are slowly being phased-out through renegotiation processes and are being replaced with special mining licenses that are subject to different rules and prevailing tax rates. "There are no other cases like Freeport," Abubakar said, adding that other miners were waiting for the government to revise its tax regulation. "And if it's a reasonable figure, they'll accept it." Investors in the copper market shrugged off news of the change. Copper on the London Metal Exchange (LME) CMCU3 was trading up 1.33 percent at $7,138.50 at 0112 GMT on growth in China's factory sector. ID:nL4N0PZ2ZH A North America-based concentrates trader said any resumption in exports from Indonesia would not be enough to dramatically increase supply, but would renew expectations of an oversupply in the market. "A lot of people expected the market to be over-supplied," he said, adding that recent delays to mine output expansions had led to tighter conditions. (Additional reporting by Nina Adriana Kusuma, Randy Fabi and Gayatri Suroyo; Writing by Simon Webb; Editing by Raju Gopalakrishnan) ((allison.martell@thomsonreuters.com)(+1 416 941 8196)(Reuters Messaging: allison.martell.thomsonreuters.com@reuters.net)) Keywords: INDONESIA MINING/COPPER

GLOBAL MARKETS--European stocks rise on euro zone data; sanctions hit Russia

July 24, 2014 - reuters.com

* European stocks hit 2 1/2-week highs on euro zone PMI * Russian debt insurance costs rise on EU sanctions * Emerging-market stocks at 17-month highs after China PMI * US tech stocks buoyed by Apple; Facebook at record high By Carolyn Cohn LONDON, July 24 (Reuters) - European stocks hit 2 1/2-week highs and the euro rallied from eight-month lows against the dollar on Thursday after the region's private sector expanded at its fastest rate in three months in July. Russian debt insurance costs rose after European Union leaders proposed sanctions on Russian banks which are majority-owned by the government. Those measures were proposed after a Malaysian Airlines plane was downed over Ukraine last week, killing 298, possibly by a missile furnished by Russia. European stocks .FTEU3 rose 0.4 percent and the euro EUR= hit the day's highs at $1.3484, pulling off eight-month lows, after Markit's Composite Purchasing Managers' Index (PMI) of companies across the euro zone, a good early indicator of overall growth, rose to 54.0 in July from 52.8, its highest since April. Any number above 50 indicates expansion. The services sector across the 18-member bloc performed better than any of the 39 economists polled by Reuters had forecast. Manufacturers also reported a stronger month than the median Reuters forecast had predicted. "The activity data offsets some of the weakness we saw last month and that has helped the euro," said Geoff Yu, a currency strategist at UBS. The dollar index .DXY dropped from an earlier six-week peak, although the U.S. currency hit a one-week high against the yen at 101.64 JPY= . Russia's five-year credit default swaps rose 17 basis points to 214 bps from earlier on Thursday, according to Markit, following the EU sanctions proposals, which the EU said were likely to be adopted next week. That means it costs $214,000 a year for five years to insure $10 million of Russian debt against default. Russian government bonds fell. "If the Europeans do manage to pass some of the new sanctions that are being talked about, and it's a big if, then it really would be a big step for Europe," said Viktor Szabo, portfolio manager at Aberdeen Asset Management. Emerging-market stocks .MSCIEF rose 0.25 percent to 17-month highs after stronger-than-expected HSBC flash PMI data for China, the world's second-largest economy. The index came in at 52.0 for July, well above forecasts and the highest reading in 18 months. There was also good news on the outlook, with a sub-index of new orders reaching 53.7. ECONCN ID:nL4N0PZ0N2 U.S. stock futures SPc1 DJc1 NDc1 were indicating a higher open on Wall Street after the S&P 500's record close on Wednesday. Those gains were powered by Apple Inc AAPL.O , while late trading was dominated by Facebook Inc FB.O , whose shares rose 5.5 percent after hours when its results beat forecasts. ID:nL2N0PY2HA A better-than-expected U.S. earnings season is helping sentiment generally. Barclays estimates that of the 22 percent of S&P 500 companies that have reported quarterly results since July 1, 64 percent beat earnings expectations and 65 percent beat revenue estimates. The prospect of more sanctions against Russia over the Ukraine crisis maintained a safety bid for high-rated bonds. For U.S. Treasuries, investors were buying more liquid shorter-dated paper, nudging two-year yields US2YT=RR below 0.48 percent. But German Bund yields DE10YT=TWEB , which have been trading near record lows, edged up on the euro zone data to 1.170 percent. Gold XAU= eased to 1,298.30 an ounce, close to earlier one-week lows. Crude oil prices ran into renewed selling after a bounce on Wednesday. Brent crude for September delivery LCOc1 fell 26 cents to $107.77 a barrel. U.S. crude CLc1 lost 28 cents to $102.84. (Additional reporting by Marc Jones and Anirban Nag in London and Wayne Cole in Sydney; Editing by Larry King) ((carolyn.cohn@reuters.com)(Reuters Messaging carolyn.cohn.thomsonreuters.com@reuters.net)(+44 207 542 6320)) Keywords: MARKETS GLOBAL/WRAPUP 4

GLOBAL MARKETS--Euro gets lift from business activity data, China PMI helps emerging stocks

July 24, 2014 - reuters.com

* Euro pulls off 8-month low on euro zone PMI * Emerging stocks near 17-month high on China PMI * US tech stocks buoyed by Apple; Facebook at record high By Carolyn Cohn LONDON, July 24 (Reuters) - The euro pulled off 8-month lows against the dollar on Thursday after the bloc's private sector expanded at its fastest rate in three months in July, and emerging equities hovered near 17-month highs after strong Chinese data. European stocks edged up too after digesting Markit's Composite Purchasing Managers' Index (PMI) of companies across the euro zone and a good early indicator of overall growth. The overall index rose to 54.0 in July from 52.8, its highest since April. Any number above 50 indicates expansion. The services sector across the 18-member bloc performed better than any of the 39 economists polled by Reuters had forecast, while manufacturers also reported a stronger month than suggested by the median Reuters forecast "The activity data offsets some of the weakness we saw last month and that has helped the euro," said Geoff Yu, currency strategist at UBS. "But there are concerns about domestic growth in the euro zone and possible sanctions on Russia are likely to have an impact." The euro EUR= hit the day's highs at $1.3471, pulling off eight-month lows, while the dollar index .DXY dropped from an earlier six-week peak. Against the yen, the U.S. dollar idled at 101.49 JPY= . EU states will meet later on Thursday to discuss harsher measures against Russia for its continued involvement in Ukraine and support for pro-Moscow rebels whom Kiev accuses of shooting down a Malaysian Airlines plane last week, killing 298. European stocks .FTEU3 rose 0.2 percent, reversing earlier losses on mixed earnings data and relatively weak manufacturing data from France, the euro zone's second largest economy. Benchmark emerging market stocks .MSCIEF , however, hovered near the previous session's 17-month highs. The HSBC flash PMI for China, the world's second-largest economy, came in at 52.0 for July, well above forecasts and the highest reading in 18 months. There was also good news on the outlook, with a sub-index of new orders reaching 53.7. ECONCN ID:nL4N0PZ0N2 The news helped China's index of leading Shanghai and Shenzhen A-share jump 1.8 percent .CSI300 to its highest close in more than three months. Also helping sentiment was a better-than-expected U.S. earnings season. Barclays estimates that of the 22 percent of S&P 500 companies have reported quarterly results since July 1, 64 percent beat earnings expectations and 65 percent beat revenue estimates. Apple Inc AAPL.O rose 2.6 percent as concerns faded about the iPhone maker's margins, taking the S&P 500 to a record close. Facebook Inc FB.O beat forecasts and its stock climbed 5.5 percent after hours. ID:nL2N0PY2HA The prospect of low U.S. interest rates is also helping equities and other riskier assets. "Investors are relaxed about the outlook for Fed policy and still hunting for yield," said Kit Juckes, strategist at Societe Generale, in a client note. S&P futures SPc1 , however, pointed to a slightly lower open on Wall Street. RUSSIA SANCTIONS The prospect of more sanctions against Russia over the Ukraine crisis maintained a safety bid for high-rated bonds. For U.S. Treasuries, investors were buying more liquid shorter-dated paper, nudging two-year yields US2YT=RR down to 0.4715 percent. But German Bund yields DE10YT=TWEB , which have been trading near record lows on the sanctions threat, edged up to 1.164 percent. Safe-haven gold XAU= eased to 1,297.50 an ounce, close to earlier one-week lows. Crude oil prices ran into renewed selling after a bounce on Wednesday. Brent crude for September delivery LCOc1 fell 26 cents to $107.77 a barrel, while U.S. crude CLc1 lost 34 cents to $102.77. (Additional reporting by Anirban Nag in London and Wayne Cole in Sydney; Editing by Ruth Pitchford) ((carolyn.cohn@reuters.com)(Reuters Messaging carolyn.cohn.thomsonreuters.com@reuters.net)(+44 207 542 6320)) Keywords: MARKETS GLOBAL/WRAPUP 4

CORRECTED-UPDATE 2-Australia's Newcrest braces shareholders for up to A$2.5-bln impairment

July 24, 2014 - reuters.com

(Corrects paragraph 3 reference to A$6.229 billion, instead of million) * Newcrest warns of A$1.5 bln to A$2.5 bln impairment * Move related to gold mines in Papua New Guinea, Australia, Ivory Coast * Produced 2.4 million ounces of gold in fiscal 2014 * Newcrest says has no present plans for equity raising By James Regan SYDNEY, July 24 (Reuters) - Australia's Newcrest Mining Ltd NCM.AX on Thursday braced shareholders for up to A$2.5 billion in fiscal 2014 after-tax impairments as it struggles to lower mining costs while bullion prices show little sign of rising. The latest charge is in addition to a A$47 million impairment included in Newcrest's first-half results. These follow A$6.229 billion in impairments and writedowns the Australian bourse's largest-listed gold miner took in fiscal 2013, leading to a A$5.78 billion loss for the year. Newcrest stock fell 6 percent on Thursday to A$10.73, 14 percent below its 2014 peak of $12.50 in early April UBS maintained its "sell" rating on the stock despite higher-than expected gold production of 2.4 million ounces in fiscal 2014, also reported by the company on Thursday. "We believe it is the simple function of size and liquidity that keeps Newcrest Mining as the 'go-to' gold stock in Australia for many investors and not a function of asset portfolio quality," UBS said in a client note. Managing Director Sandeep Biswas said a final decision was yet to be made but the impairment was likely be between A$1.5 billion and $2.5 billion. Depending on the size, the impairment will lift Newcrest's net debt by between three and six percent from roughly 29 percent now, he said. The impairment will not impact cash flow for the miner, though a reduction in book values of between A$1.5 billion to A$2.5 billion was under review by the company's board, Biswas said. Newcrest's Lihir gold mine, located in a long-dormant volcano in Papua New Guinea, faces the biggest deterrent to a turn around for the company despite billions of dollars in capital outlays over the last several years, Biswas said. "Lihir's cost perfomance was disappointing relative to the improvements made at our other sites," Biswas said. The need for fresh charges -- also related to performance at mines in Western Australia and Ivory Coast -- were unlikely to trigger any asset sales to raise cash, Biswas said. "The first order of business is to see the value of these assets in our stock price," Biswas said. Nor would the company turn to an equity raising for fresh capital, according to Biswas. "Our focus is to get our all-in sustaining costs down such that the more margin you have compared to the gold price, the more buffer you have in times of price volatility," Biswas said. "And of course you make more money when the price goes up." Biswas said Newcrest sold its gold for an average A$1,382 ($1,300) an ounce in the final quarter, providing a margin of A$469 ($440) an ounce. Australia & New Zealand Bank is forecasting an average gold price of $1,220 an ounce over the current quarter, equating to A$1,151 based on the current foreign exchange rate. ($1=1.0597 Australian Dollars) (Reporting by James Regan; Editing by Richard Pullin) ((jim.regan@thomsonreuters.com)(+612 9373-1814)(Reuters Messaging: jim.regan.reuters.com@reuters.net)) Keywords: NEWCREST AUSTRALIA/

INDICATORS - Kazakhstan - July 24

July 24, 2014 - reuters.com

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