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Police move to break fuel blockades in France

2010-10-20T07:41:00.000-07:00

By William L. Watts, MarketWatch

LONDON (MarketWatch) — French police attempted to clear protesters from fuel depots Wednesday, an effort to break a stranglehold on fuel supplies resulting from strikes and protests against the government’s plan to raise the retirement age.

Blockades of depots and strikes by refinery workers have resulted in shortages, with about a third of filling stations running dry on Tuesday, according to an Agence France-Presse report. Rail service and flights have also been disrupted.

But observers said disturbances are likely to fade after Tuesday’s widespread demonstrations, the latest in a prolonged series of strikes and protests. Tuesday’s action was the sixth day of nationwide protests in two months.

“The strike is losing momentum in the transport sector,” said Laurence Boone, economist at Barclays Capital, in a research note. “Paris pubic transport is running almost normally, international trains are running normally and about 50% to 70% of flights are maintained.”

The government has started to tap strategic oil reserves, which hold around three months of supply, and has begun reopening some refineries, Boone said. Also, college students will go on midterm vacations at the end of the week, which will likely curb their participation in any protests.

Meanwhile, the French Senate is expected to vote this week on President Nicolas Sarkozy’s proposal to raise the retirement age, to 62 from 60, while increasing to 67 from 65 the age at which retirees can claim full benefits.

The changes are needed to close a growing gap in the country’s state-run pension funds, Sarkozy has said.

“The biggest problem would be if I failed to do my duty, to make sure that we can pay for today’s and tomorrow’s pensions,” Sarkozy told journalists Tuesday, The Wall Street Journal reported.

“While positions have hardened on both sides ... the strikes which have crippled the French downstream oil sector are not likely to go on for an extended duration, and will probably be resolved by next week,” said Greg Priddy, global oil analyst at Eurasia Group in New York.

Union leaders are divided over what to do after the bill is voted on in the Senate, which is seen as virtually certain to approve the measure, the Financial Times reported.

Some unions see little point in extending protests beyond the Senate vote out of concern that further disruptions will turn the public against the protests.

But a poll by BVA published Wednesday found 59% of the French public backed a continuation of the strike even if the Senate passes the pension measure, AFP reported.

The strikes, shuttering all 11 of France’s refineries, have had a modest but contained impact on European petroleum-product markets, analysts said.

“France sources a third (around 445,000 barrels a day) of its crude imports from the FSU [former Soviet Union], but the impact of the loss of French demand on differentials for Urals and CPC blend should not be overestimated,” wrote analysts at JBC Energy in Vienna.

Both grades have weakened but remain within the band seen over the past year, they said.

William L. Watts is a reporter for MarketWatch in London.

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GLOBAL MARKETS-Equities recover from China shock, dollar slips

2010-10-20T07:36:00.000-07:00

* Markets recover after surprise China hike

* European stocks lifted by UK QE prospects

* Dollar slips against major currencies

By Jeremy Gaunt, European Investment Correspondent

LONDON, Oct 20 (Reuters) - Financial markets on Wednesday recovered some of the composure lost after China's surprise interest rate hike, with stocks slightly higher and the dollar falling back from the previous session's sharp gains.

Wall Street also looked set for small gains following Tuesday's 1.6 percent loss on the S&P 500 index .SPX.

China triggered a global risk sell-off on Tuesday when the People's Bank of China's (PBOC) raised benchmark interest rates by 25 basis points, the first increase in nearly three years.

The move stoked fears among investors about further tightening in one of the global economy's main drivers and coincided with an increase in tensions over global currency policies ahead of a meeting of Group of 20 finance ministers this weekend.

Investors also digested news that Bank of America (BAC.N) and possibly other U.S. banks may be forced to take back billions of dollars in mortgages that should not have been bundled into bonds.

Such concerns have brought to a halt a solid risk rally that saw MSCI's all-country world index .MIWD00000PUS hit a more than two-year high last week.

The underlying driver for the rally -- the Federal Reserve's expected buying of assets under a renewed quantitative easing programme -- remains in place.

But there are also jitters about whether this will be scaled back as a result of the week G-20 meeting.

Equity markets were playing it relatively safe.

The MSCI index was up 0.1 percent while Europe's FTSEurofirst 300 .FTEU3 was up about 0.3 percent, helped by the latest Bank of England Monetary Policy Committee minutes, which boosted expectations of further UK quantitative easing.

Earlier, Japan's Nikkei .N225 closed down 1.65 percent, with exporters shaken by fears of slowing Chinese growth.

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UK's Cameron announces military austerity plan

2010-10-20T07:32:00.000-07:00

David Stringer, Associated Press Writer, On Wednesday October 20, 2010, 9:19 am

LONDON (AP) -- Britain will lose thousands of troops, reduce its ability to fight complex missions like the wars in Iraq and Afghanistan and delay a program to upgrade its nuclear defenses, Prime Minister David Cameron announced Tuesday.

Outlining the first defense review since 1998 -- intended both to sweep away strategies crafted before the Sept. 11, 2001 attacks on the U.S. and to help clear the country's crippling national debt -- Cameron said 17,000 troops, a fleet of jets and an aging aircraft carrier would all be sacrificed.

Cameron's government has hinted for months that the cuts would be severe -- and sweeping. Communities around the country watched the announcement nervously, worried about jobs and the impact on local communities in a time of economic hardship.

The numbers were stark. Naval warships, 25,000 civilian staff and a host of bases will also be lost, while the country's stockpile of nuclear warheads will be trimmed from 160 to 120.

Two new aircraft carriers will be built at a cost of 5 billion pounds ($8 billion) -- but one will effectively by mothballed and another won't have any British fighter jets to transport until 2019.

Instead, Britain will invest in its much admired special forces and develop expertise on cyber threats to secure the country's status as a major global power, Cameron said.

"Britain has punched above its weight in the world, and we should have no less ambition for our country in the decades to come," Cameron told the House of Commons.

He said funding for the mission in Afghanistan, which does not come from the regular military budget, would not be trimmed, promising extra resources for troops there.

Military cutbacks come a day before Treasury chief George Osborne's long-anticipated announcement of a government-wide program to drastically cut department budgets and welfare bills. The largest cuts to public spending since World War II are aimed at virtually eliminating Britain's deficit, which stands at over 10 percent of gross domestic product.

Osborne's announcement will provide details of Britain's spending plans for its intelligence agencies, though Cameron confirmed there will be an extra 500 million pounds ($785 million) in funding to counter cyber threats.

Cameron said the overhaul wasn't just aimed at cutting the military budget -- saying he was breaking decisively with the strategy of predecessors Tony Blair and Gordon Brown.

"Iraq and Afghanistan have shown the immense financial and human costs of large-scale military interventions," Cameron told lawmakers. "While we must retain the ability to undertake such operations, we must also get better at treating the causes of instability -- not just dealing with the consequences."

He criticized the previous government's decision to sign contracts for two new aircraft carriers -- explaining that canceling the program would have cost more than building the vessels. "That is the legacy we inherited, an appalling legacy the British people have every right to be angry about," he said.

He said there would be an 8 percent cut to the annual 37 billion pound ($59 billion) defense budget over four years -- but insisted Britain's spending on defense would remain above a NATO-demanded benchmark of 2 percent of gross domestic product.

Cameron said some military bases would be closed -- though he didn't specify which, leaving communities anxious. In Morayshire, in the northeast of Scotland, residents warned that the closure of a Royal Air Force base there would savage the local economy.

About one in six jobs in the region, north of Aberdeenshire, including hotels, hospitals and retail are related to two threatened military bases.

"The closures will destroy the economy as we have nothing else here but the bases," said Winnie Ross, owner of the Sunninghill Hotel in Elgin, the main town near the bases. "Our hotel has been used by MoD suppliers like BAE Systems, families of RAF personnel, NATO personnel and visitors to the bases. That will all go now."

Late Monday, the British leader shared details with President Barack Obama in a phone call, hoping to assure the White House that Britain will still be equipped to fight alongside the U.S. on missions overseas.

The Pentagon's press secretary, Geoff Morrell, welcomed Cameron's defense policies Tuesday, saying the U.S. remains confident Britain will maintain its capacity to "provide top-tier fighting forces in Afghanistan and other future missions in defense of our shared interests and security."

However, Britain will be limited in the future to a force of about 30,000 personnel on major operations -- smaller than the 45,000-strong force initially sent into Iraq in 2003.

A total of 7,000 army troops will be axed, alongside 5,000 personnel each from the air force and navy. Britain's Army will number about 95,000 troops by 2015, Cameron said.

Cameron hopes a greater use of reservists and special forces will help retain British military might.

Lt. Gen. Graeme Lamb, a former adviser to U.S Gen. Stanley McChrystal and formerly director of Britain's special forces, said the cuts would not leave the military weakened.

"It's a bit like poker -- you never get the hand you want, you get the hand you're given. The art form is to play it well," said Lamb, whom Cameron has asked to review the use of reserve forces.

Cameron also announced that a planned 20 billion pound ($30 billion) program to replace Britain's four Trident nuclear missile-armed submarines would be delayed until 2016. He said the number of warheads on each boat would also be cut, helping to save about 750 million pounds ($1.18 billion).

The delay means decisions on the nuclear submarine program -- and the hefty bill -- will come after a scheduled 2015 national election, and be handled by the next defense review, due in five years time.

Some analysts accused Cameron of ducking his trickiest decision by putting off the nuclear program.

"This may be seen as passing the buck politically in the hope that an improved economic situation makes a decision easier," said Michael Formosa, of Jane's strategic advisory services.

Associated Press Writer Ben McConville, in Edinburgh, Scotland, contributed to this report.

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Bank of England minutes show three-way split

2010-10-20T07:31:00.000-07:00

FT.com / UK / Economy & Trade - Bank of England minutes show three-way split .arrow-colour {background-image: url(https://www.ft.com/FTCOM/Images/nidDefaultArrow.gif);} .primary-text-colour {color: #ffffff;} .secondary-text-colour {color: #ffffff;} .tertiary-text-colour {color: #003399;} .nav-highlight-colour {color:#990000 !important;background-image:url(https://www.ft.com/FTCOM/Images/arrow_right_red_sml.gif) !important;} .primary-bg-colour {background-color: #666666;} .secondary-bg-colour {background-color: #999691;} .tertiary-bg-colour {background-color: #f6f2ee;} .nav-border-colour {border-color: #d4ccc0 !important;} .nav-briefing-text-colour {color: #003399;}Skip to main content, accesskey 's'Homepage, accesskey '1'Financial Times FT.com Search FT.com
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FT Home > World > UK > Economy & TradeServicesEmail briefings & alertsRSS feedsPortfolioCurrency converterExecutive jobsSubscribe to FT.com or view and edit your subscription details. Bank of England minutes show three-way split

By Norma Cohen, Economics Correspondent

Published: October 20 2010 11:16 | Last updated: October 20 2010 11:16

The Bank of England’s monetary policy committee voted by seven to two to hold rates and monetary policy at its meeting earlier this month, with only one member supporting an increase in quantitative easing.

According to minutes of the meeting on October 6 and 7, released on Wednesday, the committee also opposed raising interest rates by 0.25 per cent from their current record low of 0.5 per cent by a majority of eight to one.

EDITOR’S CHOICEMinutes of the MPC meeting of October 6 and 7 - Oct-20Chancellor backs Bank of England action - Oct-09London shares steady ahead of spending review - Oct-20Osborne cuts to usher in ‘sober decade’ - Oct-19

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London shares steady ahead of spending review

2010-10-20T07:27:00.000-07:00

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By Michael Hunter

Published: October 20 2010 09:21 | Last updated: October 20 2010 14:10

The FTSE 100 traded around the 5,700-point mark again on Wednesday as traders digested details on government austerity measures.

Even before the full disclosure of the comprehensive spending review, there were already signs of the potential impact of major government announcements on the market.

EDITOR’S CHOICEIn depth: Spending review 2010 - Oct-18Osborne cuts to usher in ‘sober decade’ - Oct-19CSR: what to watch out for - May-20Lex: UK spending review - Oct-17Editorial: UK lets the axe fall - Oct-17

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Decline in Rare-Earth Exports Rattles Germany

2010-10-20T07:25:00.000-07:00

BERLIN — China’s curtailing of rare earth exports is causing so much concern in Germany that industry and government are joining forces by appealing to the European Commission and the World Trade Organization to intervene, industry officials said Tuesday.

China’s exports of rare earths declining by as much as 40 percent worldwide over the past ten months, according to the Federation of German Industry. That decline has set off alarm bells in Germany, one of the world’s largest export-driven economies and whose industry relies heavily on rare earths.

So great is the anxiety by the business community here that a special conference dedicated to the issue will be held next week in Berlin.

The speakers will include Pascal Lamy, director general of the World Trade Organization; Gary Litman, vice president for Europe and Euro-Asia at the U.S. Chamber of Commerce; Andris Piebalgs, the E.U’s development commissioner, and Rainer Brüderle, the German economics minister.

The conference will be attended by leading German companies that import rare earths for their production.

Mr. Brüderle, on a trip last week to China, called the country’s export restrictions on rare-earth metals an “unfriendly act.” Any shortage of metals such as tungsten and germanium would cause difficulties for sectors including wind turbine makers and car companies specializing in producing electric cars.

Germany imports between 3,000 and 5,000 tons a year of rare earths, mostly from China.

“China runs a virtual monopoly. There is real need to develop new sources,” said a B.D.I. official, who requested anonymity because he was not authorized to speak about the issue.

Chancellor Angela Merkel has stepped into the fray, saying it was “urgently necessary” to step up European investment in Eastern Europe and central Asia in order to prevent China from expanding its dominance in raw materials and rare minerals.

Mrs. Merkel last week told leaders of Germany’s Committee on Eastern European Economic Relations, a lobby group, that it was essential to deal with China’s increased control of access to commodities essential for economic growth.

“Considering the raw-materials policy of a country such as China, it’s urgently necessary to make capital available among European partners in order to secure long-term supplies,” Mrs. Merkel said. “That’s not only a reference to natural gas and oil but goes far beyond that to include minerals.”

Werner Schnappauf, chairman of the B.D.I., said the availability of rare earths was “decisive for the innovation and future of German industry and for jobs.”

An unusually hard-hitting strategy paper published last week by Mr. Schnappauf and Ulrich Grillo, chairman of Grillo Werke, criticized China's policies and the impact they would have, not only on the German economy but worldwide. Grillo Werke specializes in finished and semi-finished products made of zinc and zinc alloys and so relies on rare earth imports.

They wrote that reducing rare-earth exports would result in higher prices and would raise the question of energy and raw-materials security. The price of rare earths has increased threefold overall, according to industry sources here.

“It is not yet a trade war as such,” said an official from the B.D.I. “China is sending the message that if you want access to our raw materials then you better invest in our country.”

That is something German industry has been doing over the past several years, despite the continuing problems over intellectual property rights and the red tape.

Overall, German exports to China amounted to €36.5 billion, or $46.2 billion, last year, and imports totaled €55.5 billion, according to the German Federal Statistics Office. That was relatively unchanged from 2008, despite the economic crisis.

During the first four months of this year, German exports to China jumped nearly 50 percent over the same period in 2009, to €16.1 billion. That was spurred by China's stimulus package and the shift in economic development. By contrast, German exports to Russia were up around 25 percent, at €7.1 billion.

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[$$] Euro Rebounds After China Surprise

2010-10-20T07:23:00.000-07:00

NEW YORK—The dollar fell broadly Wednesday as investors turned away from seeing Tuesday's higher Chinese interest-rates as a negative for global growth.

Investors trimmed some of the positive dollar bets they placed after China suddenly raised interest rates Tuesday.

The euro and the Australian dollar in particular gained ground, while a broad swath of emerging-market currencies also rallied.

Early Wednesday morning, the euro was at $1.3866 from $1.3730 from late Tuesday. The dollar was at 81.24 yen from 81.55 yen, while the euro was at 112.63 yen from 112.01 yen. The U.K. pound ...

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Russia to join WTO within a year, Obama aid says

2010-10-20T07:20:00.000-07:00

Simon Shuster, Associated Press Writer, On Wednesday October 20, 2010, 6:06 am EDT

MOSCOW (AP) -- Russia will join the World Trade Organization within the next 12 months after almost two decades of negotiations, President Barack Obama's senior economic adviser said Wednesday.

Russia is by far the largest economy still outside the WTO, which regulates trade between its 153 member states, despite being in talks to join since 1993.

"The end is in sight," Lawrence Summers, the director of Obama's National Economic Council, told a briefing. "We are certainly hopeful that well before twelve months from now the process will have been completed."

U.S ally Georgia, which fought a war with Russia in 2008, has voiced objections to Russia's membership bid, and the United States held up Russia's WTO entry talks after that war.

But the talks were resumed during a thaw in relations with Russia initiated by the Obama administration, and Summers said the security situation in Georgia will not directly impact U.S. support for Russia's entry into the organization.

"It is not American policy to propose an explicit linkage between the developments in the security realm and WTO accession," Summers said.

Russia's quotas on U.S. meat imports is one of the outstanding issues that will need to be addressed, he noted.

Before Russia can join, it will have to complete a multilateral accession process in Geneva that satisfies the concerns of all WTO members.

Lawrence said U.S. assent is something that other nations will "watch closely" during the multilateral talks, but added that there is still "work to be done" in Geneva.

"To draw from American football, we have been in the red zone for some time with respect to WTO, and now it is first and goal," Summers said. "But first and goal is not a touchdown."

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Europe shares rise on BoE QE hopes; miners bounce

2010-10-20T07:17:00.000-07:00

* FTSEurofirst 300 index rises 0.2 percent

* Novo Nordisk gains on U.S. setback for rivals

* Investors eye British government spending review

* For up-to-the minute market news, click on [STXNEWS/EU]

By Joanne Frearson

LONDON, Oct 20 (Reuters) - European shares edged higher on Wednesday after the Bank of England's Monetary Policy Committee minutes boosted expectations of more quantitative easing, while Novo Nordisk (NOVOb.CO) gained on news of a rival's setback.

However, traders said rises could be limited ahead of a British government spending review due at 1130 GMT.

British public borrowing unexpectedly hit a record high for September and the coalition government will unveil its much-anticipated review that aims to cut public spending by 83 billion pounds by 2015.

By 0945 GMT, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was up 0.2 percent at 1,084.72 points after slipping 0.5 percent on Tuesday following China's surprise rise in interest rates.

"There is apprehension going into the UK spending review. This will dominate stocks in Europe as the UK is one of its biggest trading partners -- ramifications will be felt throughout Europe," Angus Campbell, head of sales at Capital Spreads said.

"Welfare is likely to see the biggest cuts, which could have an impact on consumer spending."

Novo Nordisk gained 6.6 percent after U.S. health regulators declined to approve a diabetes drug being developed by peers Amylin Pharmaceuticals (AMLN.O) and Eli Lilly (LLY.N), boosting prospects for its key new product hope Victoza.

Miners also provided support for the market, recovering some of Tuesday's losses.

BHP Billiton (BLT.L) gained 1.2 percent after it posted a 6 percent rise in quarterly iron ore output and said it was running most of its assets at full capacity. [ID:nSGE69I0L9]

Global miner Rio Tinto (RIO.L) was 1.4 percent higher after it approved a $3.1 billion iron ore expansion, staking a claim to become the world's top producer and defying industry concerns over a new Australian mining tax. [ID:nSGE69J01W]

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India Markets Wednesday Wrap-Up: Markets Get the Chinese Jitters

2010-10-20T07:13:00.000-07:00

Seeking Alpha var sector_slug = "india"; by: Equitymaster October 20, 2010 | about: ABT / EPI / IFN / IIF / INDY / INR / PIN / SCIF / SCIN Email

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It was yesterday all over again as the markets succumbed to last hour profit booking on yet another occasion. The BSE Sensex closed lower by 110 points (down 0.6%) whereas the NSE Nifty edged lower by around 45 points (down 0.8%). BSE Mid cap and Small cap indices were also not spared as both declined by around 0.5% each. More than two stocks declined for every one that gained on the Sensex today.

Most Asian stocks closed lower today whereas Europe has had a mixed opening. The rupee was trading at Rs 44.4 to the dollar at the time of writing.

Unlike yesterday, today's decline was more broad based and engulfed practically the whole of Asia. The decline, we believe, had mostly to do with China's decision to raise interest rates, a move that might hurt growth and stifle asset prices in the world's most populous and fastest growing nation. Investors are perhaps hoping that other Asian nations, including India, would follow suit thus leading to deflation in the asset price bubble that was threatening to get to alarming levels. While such a step would prove detrimental to asset prices in the near term, it is beneficial in the long run as it will lead to real economic growth and not cheap money induced inflationary growth.

In order to cash in on the IPO mania, a lot of realty firms had lined up their public issues. However, the lukewarm response to the listing of Oberoi Realty would perhaps force them to go back to their drawing board or shelve their plans altogether. Oberoi Realty, one of the more reputed names in luxury housing in Mumbai closed around 8% higher on its first day of listing today. Important to add that the company's Rs 10 bn issue was oversubscribed nearly 12 times and despite such a good response, the stock was not able to make much headway into the positive territory today. Perhaps, it had to do with the steep pricing of the issue. A lesson or two indeed for the other companies waiting in the wings.

Healthcare major Piramal Healthcare traded strong today and closed higher by around 1%. Interest was perhaps generated by an announcement by the company that its board would meet soon to consider a buyback of shares or a dividend. This decision is an outcome of the US$ 3.7 bn dollar windfall that the company earned after it sold its domestic formulations business to Abbott Laboratories (ABT).

Although Piramal Healthcare has received very good valuations for the domestic formulations business, how the management utilizes this cash is the key. Of course, part of the cash will be deployed towards repaying debt, paying taxes, rewarding shareholders in the form of a special dividend and investing in existing businesses. However, let us hope that the company does not venture into areas whose prospects are poor and returns low. This way, investors will stand to lose out in the long term.

Equitymaster.com is India's leading independent equity research initiative. Our research coverage extends to over 500 companies and 23 sectors. We provide in-depth analysis on the stocks and sectors under coverage. We also offer live stock or share market commentary and free newsletters – The... More
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Banks, miners lift European shares; earnings eyed

2010-10-20T07:08:00.000-07:00

* FTSEurofirst 300 up 0.4 pct

* Banks gain ahead of Morgan Stanley results, miners strong

* Novo Nordisk up on U.S. setback for rivals

* For up-to-the-minute market news, click on [STXNEWS/EU]

By Harpreet Bhal

LONDON, Oct 20 (Reuters) - European shares rose by midday on Wednesday as miners rebounded on a weak dollar and banks rose ahead of results from U.S. peer Morgan Stanley (MS.N), while Novo Nordisk (NOVOb.CO) gained after a setback for its rivals.

Shares were also supported by minutes from the Bank of England which reinforced expectations the central bank is edging towards further quantitative easing. [ID:nLDE69J0S9]

"We saw a bit of buying back into the market after the Bank of England minutes insinuated that the chances of more easing as opposed to more tightening have now taken a step onwards," said Joshua Raymond, market strategist at City Index.

By 1122 GMT the pan-European FTSEurofirst 300 .FTEU3 index of top shares was up 0.4 percent at 1,086.77 points, after slipping 0.5 percent on Tuesday.

Novo Nordisk rose 8 percent to the top of the FTSEurofirst 300 index, rebounding from losses in previous session after U.S. health regulators declined to approve a diabetes drug being developed by peers Amylin Pharmaceuticals (AMLN.O) and Eli Lilly (LLY.N).

That boosted prospects for Novo's key new product hope Victoza.

Miners were also firmer, drawing strength from strong metals prices as the dollar retreated following gains on Tuesday after a surprise interest rate hike by China.

Eurasian Natural Resources (ENRC.L), BHP Billiton (BLT.L) and Xstrata (XTA.L) added 1.8 to 2.2 percent.

Rio Tinto (RIO.L) added 2 percent after it approved a $3.1 billion iron ore expansion, staking a claim to become the world's top producer and defying industry concerns over a new Australian mining tax. [ID:nSGE69J01W]

Banks were also on the rise, with investors likely to focus on results from U.S. peers Morgan Stanley (MS.N) and Wells Fargo & Company (WFC.N) to gauge the health of the banking sector.

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FTSE rebounds as investors eye spending review

2010-10-20T07:06:00.000-07:00

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Iraq gas auction fizzles despite hopes

2010-10-20T07:02:00.000-07:00

{"s" : "fp","k" : "a00,a50,b00,b60,c10,g00,h00,l10,p20,t10,v00","o" : "","j" : ""} Sinan Salaheddin, Associated Press Writer, On Wednesday October 20, 2010, 6:47 am EDT

BAGHDAD (AP) -- A South Korean-led consortium walked away with the biggest prize Wednesday in Iraq's third energy auction since Saddam Hussein's ouster, while a Kuwaiti company nabbed a gas field along its border with its larger neighbor in a win as politically symbolic as it was a business coup.

Iraq had offered up three gas fields holding about 10 percent of its proven gas reserves. The auction was seen as key to helping the OPEC member revamp its dilapidated energy sector and boost gas supplies sorely needed to fuel its reconstruction.

Korea Gas Corp., or KOGAS, and Kazakhstan's KazMunaiGas EP JSC beat out a consortium grouping France's Total SA and the Turkish Petroleum International Co., or TPAO, for the 5.6 trillion foot Akkas gas field in western Iraq, the largest of the three fields offered during the licensing round.

Meanwhile, Kuwait Energy and TPAO teamed up to win the 1.1 trillion cubic foot Siba field near the Kuwait border, marking Kuwait's first foray into Iraq's energy sector since Saddam's invasion of the oil rich emirate in 1990. Kuwait Energy beat out Kazakhstan's KazMunaiGas EP JSC with an offer of $7.50 per barrel of oil equivalent and a targeted plateau production of 100 million cubic feet per day.

"This moment represents a turning point in relations between the two countries, and their improvement in the future," said Sara Akbar, Kuwait Energy's chief executive.

Iraq, which sits atop the world's third largest proven reserves of crude, has already opened up its coveted oil fields to international firms in two licensing rounds last year that attracted a strong turnout.

The country relies on oil for over 90 percent of its foreign revenues and desperately needs cash to rebuild after the 2003 U.S.-led invasion and the earlier decades of sanctions, war and neglect.

In stark contrast to the oil auctions, interest by foreign companies in the gas fields had appeared muted.

Ahead of Wednesday's licensing round, only 13 of the 45 firms that pre-qualified for the event paid a participation fee. Only five companies submitted bids for the fields, a showing that will likely disappoint Iraqi oil officials.

Opening the auction, Oil Minister Hussain al-Shahristani sought to assure the companies they would have the government's full backing in developing the projects.

He noted the technical and logistical challenges in boosting Iraq's oil and gas production, but said, "we are committed (to providing) all the support and help to the winning companies today, and we assure them that they will enjoy all the kinds of cooperation we are providing the oil companies that won contracts in the previous two bidding rounds."

Reflecting the companies' unease, only one bid was submitted for the second largest field on offer.

Turkey's TPAO teamed up with Kuwait Energy and KOGAS to offer $10 per barrel of oil equivalent for the 4.5 trillion foot Mansouriya field in the restive province of Diyala.

Iraq, however, rejected that offer and the companies requested a brief delay to evaluate the country's counteroffer of $7 per barrel of oil equivalent before accepting.

Akkas was the main prize of the auction.

The field is located in the deserts near the Syrian border in Anbar, an overwhelmingly Sunni province and former insurgent stronghold. It was offered in one of the earlier oil auctions, but not awarded, since most foreign firms were reluctant to stake claims to fields in the more volatile parts of the country.

The KOGAS-led consortium offered $5.50 per barrel of oil equivalent produced, with plateau output projected at 400 million cubic feet per day. France's Total and TPAO had wanted $19 per barrel of oil equivalent, with peak production targeted at 375 million cubic feet per day.

But in a window into the challenges they face, hundreds of people demonstrated in Ramadi, Anbar's capital, against the Oil Ministry's plan for developing Akkas. The demonstrators argued that the local government was not consulted and demanded that the winning bidders hire workers solely from the province.

Sunnis, a minority in Iraq, have been at the heart of the fight against the U.S-backed central government in Baghdad, arguing that they are being marginalized by the country's Shiite leadership.

Security in Iraq, or the lack thereof, has been a major factor restricting the country's efforts to rebuild and attract investment since Saddam's fall.

The withdrawal of U.S. forces in August has hiked concerns whether Iraq's security forces are up to the task amid persisting sectarian tensions. The political process remains fragmented, with no government yet in place after the March elections.

As in earlier bidding rounds, the companies were vying for 20-year service contracts that offer them a fixed fee for their services. The contracts, which can be extended for five years, are a stark contrast to the more lucrative production-sharing contracts most companies prefer.

The latest auction was pushed back from its intended Sept. 1 start as Iraq sought to sweeten the terms. The main changes included dropping a condition that the winning companies should find an export client for 50 percent of the output. Other changes including dropping signature bonuses and reducing the annual training commitment to $1 million from $5 million.

Iraq plans to channel much of the new production from the fields to its strained domestic power sector where shortfalls mean that most Iraqis find the lights on for just five to seven hours of power per day.

The country currently produces 950 million standard cubic feet per day, of which about 40 percent is burned off -- or flared -- at the well because of inadequate gas capture and sequestration facilities.

Associated Press writers Hamid Ahmed in Baghad and Tarek El-Tablawy in Cairo contributed.

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Qatar companies quit Greek energy project

2010-10-20T06:57:00.000-07:00

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By Kerin Hope in Athens

Published: October 20 2010 12:10 | Last updated: October 20 2010 12:10

Two companies from the Gulf state of Qatar are pulling out of a €3.5bn energy project in Greece, dealing a blow to the government’s hopes of attracting foreign investment to pull the country out of recession.

Qatar Petroleum International and Qatar Electricity and Water, both state-owned, said they were no longer interested in the project, a Greek government official said on Wednesday.

EDITOR’S CHOICEIn depth: Greek debt crisis - Jul-15Athens seeks $7bn investment from Qatar - Sep-23Insight: Greek discipline paying off - Oct-12EFG Eurobank raises €300m on interbank market - Oct-18

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UK court rules in favor of heiress on prenup deals

2010-10-20T06:54:00.000-07:00

Gregory Katz, Associated Press Writer, On Wednesday October 20, 2010, 7:53 am EDT

LONDON (AP) -- Britain's Supreme Court Wednesday ruled in favor of a German heiress seeking to protect her considerable fortune from her ex-husband -- a decision that gives new strength to prenuptial agreements in England.

The ruling marks a potential turning point in the legal battle over prenuptial agreements in England, where courts have generally refused to recognize them as valid, binding agreements.

Nicholas Phillips, the president of the Supreme Court, said the judges decided by an 8-1 margin to let stand an earlier Appeals Court ruling that the prenuptial agreement in this case was fair and should be applied.

It is a victory for Katrin Radmacher, 40, a paper industry heiress with a fortune of at least 55 million pounds ($86.5 million), and a defeat for her ex-husband, Nicolas Granatino, 39, a former investment banker who had been seeking a greater share of her wealth than had been spelled out in their pre-nup.

The case was complex: Radmacher is German, her ex-husband is French, but they married, lived and divorced in England. The prenuptial agreement was signed at Radmacher's father's insistence in Germany, and would have been recognized in both France and Germany, where pre-nups are commonly upheld.

"For Nicolas and I, in our homelands -- France and Germany -- these agreements are entirely normal and routine," Radmacher said in a statement. "We made a promise to each other that if anything went wrong between us, both of us would walk away without making financial claims on each other. The promise made to me was broken."

The heiress, deeply tanned and wearing a white knit coat-style mini-dress, appeared nervous before the ruling. She sat only a few feet from Granatino -- unkempt in jeans and a sweater -- but the two did not exchange pleasantries or even glance at each other.

The couple married in 1998, had two daughters and separated eight years later.

Granatino -- sporting both an iPhone and a BlackBerry -- declined to comment after the defeat. He paused long enough to embrace his legal team, then hurriedly departed on foot while his former wife made an appearance before the cameras outside the court.

Her lawyer, Simon Bruce, said the decision is a landmark ruling that "means pre-nups are binding as long as they are fair."

Suzanne Kingston, head of the Family Law Department at Dawsons Solicitors, said the Supreme Court had given the most clear sign to date that pre-nups will now be upheld in England as they are in the rest of Europe and the United States.

But others cautioned that the impact may be more limited.

Sharon Bennett, a family law expert a North London firm, said the law is unlikely to change as a result of Wednesday's ruling.

Granatino was awarded almost 6 million pounds in a divorce settlement, but a court last year slashed the payment, citing the prenup as justification.

The appeals court said he should receive a lump sum of about 1 million pounds plus a 2.5 million pound loan for a house that will be returned when the youngest of the couple's two daughters reaches the age of 22.

The Supreme Court backed that decision, ruling that the couple freely entered into the agreement and that it should be upheld

The case marks a change in the way courts view such agreements in a country where the starting point for big money divorces has generally been 50-50 -- or an equal distribution of assets.

Four years ago, the ex-wife of insurance tycoon John Charman was awarded 48 million pounds -- a sum so large that pressure rose to have pre-nups recognized.

Granatino did not seek half his wife's fortune, but his lawyers say the terms imposed by the lower court would leave him in financial jeopardy.

Granatino had been an investment banker making more than 300,000 pounds a year when the couple married. But in 2003 he left his job to pursue a doctorate in biotechnology at Oxford University. He now earns only a fraction now of his former salary.

Britain's Law Commission is currently reviewing the status of prenuptial agreements, and will recommend whether a change of law is needed -- but not until 2012.

Associated Press Writer Benjamin Timmins contributed to this report.

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[$$] Rakuten Files Protest Against Google-Yahoo Japan Tie

2010-10-20T06:53:00.000-07:00

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Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visitwww.djreprints.com

See a sample reprint in PDF format.Order a reprint of this article nowTECHNOLOGYOCTOBER 20, 2010, 8:13 A.M. ETRakuten Files Protest Against Google-Yahoo Japan Tie ArticleStock QuotesCommentsmore in Tech »BY JURO OSAWA

TOKYO—Online shopping mall operator Rakuten Inc. said Wednesday that it filed a petition with the Japan Fair Trade Commission asking the antitrust regulator to review Google Inc. and Yahoo Japan Corp.'s planned partnership in search engine and advertising systems.

"The tie-up between the two firms would result in Google monopolizing information, which could hinder the development and growth of not only search engines but many Internet-related services in Japan," the nation's biggest e-commerce company said ...

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Related Stories Rakuten Asks Japan FTC to Review Yahoo Japan-Google Partnership 19-Oct-2010 11:31:00 pm